When Will Activities of Aqrar Tədarük və Təchizat OJSC Become Transparent?

The reduction in oil revenues in recent years makes it necessary to increase the efficiency of public spending and budget savings. In particular, this issue becomes relevant when ensuring the transparency of public procurement.

To this end, we conducted a study of the activities of Aqrar Tədarük və Təchizat OJSC (Agricultural Procurement and Supply), which carries out the procurement of food products in a centralized manner by state institutions and organizations at the expense of budgetary funds. By the way, the shares of this company belong to the state. OJSC Aqrar Tədarük və Təchizat carries out activities in the field of procurement, provision and sale of agricultural products. This structure was created in order to stimulate the production and processing of agricultural products in the country, to improve the efficiency and systematization of centralized purchases of agricultural and food products by state order.

It should be noted that the Decree of the President of the Republic of Azerbaijan No. 859 dated April 11, 2016 approved the "Rules for centralized food purchases at the expense of the state budget."

In accordance with these rules, in Azerbaijan, purchases of agricultural and food products under state orders are implemented through the involvement of numerous government agencies in these purchases. So, in order to organize centralized procurement of agricultural and food products under state orders, although Aqrar Tədarük və Təchizat OJSC was created, the Ministry of Agriculture, the Ministry of Economy, the Ministry of Finance, as well as about 60 state centers operating in the regions were involved agricultural development. Moreover, according to the “Rules for the procurement by state institutions and organizations (departments) of food products in a centralized manner at the expense of the state budget,” the purchase price for each type of food is determined by the Ministry of Agriculture in coordination with the Ministry of Economy. Every year, the state budget provides for a large amount for the purchase of food. The following diagram shows the amount allocated from the state budget over the past 4 years for the purchase of food products at the expense of the state.

Chart 1. Costs of the purchase and provision of food in the state budget, in million manat.

In 2017, 343.4 million manat was allocated in the state budget for the purchase and provision of food products, in 299.2 million manat in 2018, and 412.5 million manat in 2019. In 2020, the cost of purchasing and providing food products will amount to 414.0 manat.

In its activities, Aqrar tədarük və t ”chizat OJSC is guided by such principles as trust, efficiency, sustainable development, honesty, transparency, quality, responsibility, efficiency, innovativeness and respect for the environment.

Despite the fact that OJSC Aqrar Tədarük və Təchizat accepted at first glance the basic principles of public procurement, which are guided in civilized countries, our studies show that the activities of this society are not at all transparent.

Since the creation of the State-owned Joint-Stock Company to this day, on its website there has not been any information about its activities and purchases. And it is difficult to determine the principles by which an opaque Society works.

It should be noted that OJSC “Ərzaq məhsullarının tədarükü və təchizatı”, whose successor is OJSC “Aqrar Tədarük və Təchizat”, published its semi-annual report in the press in 2018. According to this information, “in the first 6 months of the year, purchase contracts were signed with 850 enterprises and organizations, according to which specified needs were posted on the http://tedaruk.az/ portal, and from 286 manufacturers and sellers online proposals for 173 products were received. As a result, over 6 months these producers and sellers procured 28,000 tons of food and agricultural products worth 52 million manat, which was delivered to 1,934 procurement points owned by central and local executive authorities.

In the information provided in 2018 by Ərzaq Məhsullarının Tədarükü və Təchizatı, it was noted that according to the results for 9 months of 2018, the Joint-Stock Company procured 53 thousand tons of agricultural products with a total value of 106 million manat from local farmers. Part of the procured products worth 81 million manat was sent to state procurement organizations (kindergartens, hospitals, the penitentiary system, military units), and products worth 25 million manat were exported abroad.

 In contrast to Ərzaq Məhsullarının Tədarükü və Təchizatı OJSC, whose successor is Aqrar Tədarük və Təchizat OJSC, so far it has never published statistical data on state and other purchases. According to press reports, the Ganja regional branch of the Ganja regional department of Aqrar Ticarət və Təchizat OJSC supplies agriculture and food products to various government agencies in the Samukh, Goygol, Dashkesen and Kalbajar districts, including Ganja.

Food products are provided twice a month to 92 kindergartens, 20 medical and law enforcement agencies. A total of 250 tons of products of 125 items are being organized. Of course, it is impossible to deliver kindergartens, hospitals with fresh vegetables, fruits, berries through delivery twice a month.

We looked at prices for “From village to city” fairs organized by Aqrar Ticarət və Təchizat OJSC in Baku. When comparing prices at fairs and markets of Baku, we did not see anything pleasing to the eye. Paradoxical as it may seem, in the capital markets, products of the same quality with products exhibited at fairs were sold cheaper. So, in Taza Bazaar 1 kg of beef was sold for 9-10 manat, and at fairs in Nasimi and Yasamal districts for 9-11 manat. The cost of eggs at Taza Bazaar was 13 qepiks apiece, while at fairs it was 13-15 qepiks. At the Nasimi Bazaar, 1 kg of chicken meat was offered at 4-6 manat, and at the Nasimi and Yasamal fairs - at 5-7 manat.

At the “From Village to City” fairs organized by Aqrar Ticarət və Təchizat OJSC in Baku, the products offered were of poor quality and the price was high. Agricultural products exhibited at fairs are mostly not sold in bazaars - shriveled and rotted fruits and vegetables. The meat and meat products offered at fairs to customers differ in quality from those offered at bazaars. Photos are attached.

Centralized procurement of food at the expense of budgetary funds by the only joint-stock company created by the state is likely to lead to the creation of a monopoly in this area. To prevent this, it is necessary to improve the procurement process, monopolize this area, protect the rights of producers and consumers of foodstuffs and agricultural products, and create a competitive environment in public procurement, as this is very important. It would be good if the government created the necessary conditions for the procurement of foodstuffs and agricultural products not centrally, but on the basis of competition and publicity.

Efficient and prudent use of government funds during public procurement is possible only in the conditions of publicity, as well as equal participation of contractors in tenders. Realizing state purchases of foodstuffs and agricultural products through an open tender at the expense of the state budget, the state, along with the performance of its functions, will create conditions for private entities to participate in competitions, and will also perform another function - creating healthy competition in this area.

Thus, the creation of an equal competitive environment for private sector participation in food purchases by state institutions and organizations at the expense of state funds will create conditions for the efficient and economical use of budget funds.