100% price increase for the year

Azerbaijan has witnessed a surge in vegetable prices in recent months, particularly for tomatoes, with prices exceeding 5 manats in the capital's markets. The average cost of 1 kilogram of potatoes and onions is now 1 manat 50 gapik. Interestingly, even in most markets in Baku, vegetable prices do not differ significantly from those in stores. However, in rural areas, prices tend to be lower.

These price hikes come despite reported growth in agricultural production according to official data, which indicates a 1.9 percent increase in crop production for the same period compared to January-February of the previous year. Furthermore, there has been a decrease in tomato exports from Azerbaijan.

According to the State Customs Committee, tomato exports from Azerbaijan totaled 24,491 tons worth $31 million 170 thousand in the first three months of 2023. This represents a decline of 7 million 653 thousand dollars, or 24.6 percent, in value terms, and 7 thousand 272 tons, or 29.7 percent, compared to the corresponding period last year.

The Ministry of Agriculture's website, aqrarbazar.az, also reveals that tomato, cucumber, and potato prices have risen compared to last year. For instance, while the average price of tomatoes in supermarkets was 2.5-3 manats last year, it has now increased to 5-5.5 manats.

The website further indicates that potato prices have remained unchanged, while onion prices have increased from 80 gapik to 1.4 manats. This means that tomatoes have experienced a price hike of 100 percent over the past year, despite the country's official inflation rate being less than 14 percent.

Farmers attribute these price increases to the rising costs of fertilizers and saltpeter, which have seen a sharp increase due to the impact of the Russian-Ukrainian war on imports from Ukraine and Russia.

Experts and officials also acknowledge that there is an artificial inflation of prices in the market. Vahid Akhmedov, a member of the Milli Majlis committee on economic policy, industry, and entrepreneurship, stated that while measures are being taken by the State Service for Antimonopoly and Supervision of the Consumer Market, it is challenging to prevent such price increases. Akhmedov emphasized the need for a Competition Code to ensure market stability and fair pricing practices among entrepreneurs.

Azerbaijan is facing issues with agricultural product prices, specifically with tomatoes, cucumbers, onions, and potatoes, according to agriculture expert Vahida Maharramli. She believes that the production and sale of these products are controlled by a monopoly, where oligarchs, officials, and their relatives who have received state funding for greenhouses have displaced other manufacturers and dictate prices.

The production of cucumbers and tomatoes in Azerbaijan is reportedly twice as much as the country needs, leading to exports. However, the prices of tomatoes in Azerbaijan are higher compared to neighboring Turkey, with tomatoes being sold at 5-5.50 Azerbaijani manats per kilogram in Azerbaijan, whereas in Turkey, the price is 2-2.20 Azerbaijani manats per kilogram.

On the other hand, onion production in Azerbaijan is reportedly sufficient, even surpassing the world's average per capita production. However, poor storage conditions result in large losses, leading to a drop in prices during the summer when farmers try to sell their produce quickly. Maharramli believes that with proper storage conditions, onions can be stored and sold at normal prices even in winter, and there is potential for onion exports from Azerbaijan.

Potato production in Azerbaijan has reportedly decreased, despite an increase in population, resulting in dependence on imports and allowing monopolists who control potato imports to determine prices.

Overall, Maharramli emphasizes the issue of monopolies in the agricultural sector in Azerbaijan, controlled by oligarchs, officials, and their relatives, which has resulted in uneven production, poor storage conditions, and high prices for certain agricultural products. Addressing these monopolistic practices and improving storage and distribution systems could help stabilize prices and improve the availability of agricultural products in Azerbaijan.