Information for fruit and vegetables business in CIS
Azerbaijan to increase presence in Russian fruit and vegetable market
The issue of non-oil export has attracted increasing attention within industry and government circles, as Azerbaijan, the largest economy in the South Caucasus, seeks to diversify its economy.
The Russian market, which has traditionally been an importer of Azerbaijan goods, gained more importance when the Russians imposed a full ban on certain agricultural products, foods, and raw materials from countries that in turn sanctioned Moscow.
Azerbaijan has a good chance to gain a foothold in the Russian consumer market by increasing the supply of fruit and vegetable products and expanding the construction of modern greenhouses there, believes Nariman Agayev, of the Center for Sustainable Development Research.
Agayev said Azerbaijan is not making full use of its potential to supply of fruits and vegetables to Russia.
“Since 2008, we actually lost the Russian market. Uzbekistan, China, and other countries captured the market then. The problem is that they import more products at slightly cheaper costs. The fact that labor cost is much lower in these countries also contributes to this,” he explained.
However, Agayev assures that the time has come for Azerbaijan to regain its share in this vast market. Through Russia, Azerbaijani goods could also enter Eastern Europe.
Expert Ogtay Hagverdiyev shares this view, saying that Azerbaijan could greatly increase trade turnover with Russia through agriculture export.
“We can not export our fruits and vegetables to the European market because they do not meet EU standards yet. Therefore, during the Soviet period, Azerbaijan mainly sent its fruits and vegetables to Russia. "
The expert also added that these products have been exported not only to Moscow but also to other cities, as Russians seem to love Azerbaijani agriculture products.
“Some of the goods from Azerbaijan have become a brand in Russia. For example, in Russia they say the most delicious tomatoes are Azerbaijan’s. Azerbaijani tomatoes have become a brand in Russia. But as for the engineering and other spheres, trade relations are not developed in these sectors,” he said.
Nariman Agayev believes Azerbaijan needs to open joint ventures together with its northern neighbor to invest in the construction of greenhouses to boost agriculture exports.
About 24 modern greenhouse complexes will soon appear in Azerbaijan’s capital city Baku aimed at increasing exports of fruits and vegetables to Russia, but it is still much more profitable to build them in Russia, he claims.
“Azerbaijan has long had the opportunity to begin to engage in the development and construction of greenhouses both inside the country and abroad. All unused land area of at least 100 hectares should be used for greenhouses. The situation concerning climate change and the relocation of some people simply obliges us to grow, produce in abundance,” he said adding that investment in this sector will bring revenues within five years.
Through the National Entrepreneurship Support Fund of Azerbaijan, entrepreneurs were able to build 24 modern greenhouses in the settlements of Baku over the past few years using preferential loans worth a total of 61.4 million manats ($58 million).
Azerbaijan’s exports of fruits and vegetables to different countries rose slightly this year. In the first seven months of 2015, exports of fruit and vegetables amounted to $136.9 million, which is 1.1 million manat, or 0.8% more compared to the same period last year, according to the State Customs Committee of Azerbaijan.
Nariman Agayev repeated once more that Azerbaijani entrepreneurs should accelerate the construction of modern greenhouses in hopes of exporting to Russia. Moreover, Azerbaijani entrepreneurs could make active use of soft loans through the NFES.
For example, modern greenhouses with a capacity of 2,300 tons of vegetables are currently being constructed in the Turkan settlement of Baku’s Khazar district using NFES soft loans. The construction of modern greenhouse complexes will not only increase the export of fruits and vegetables to neighboring countries, but will also by saturate the domestic market with fresh vegetables to prevent a sharp rise in prices during the winter period, he said.
Moreover, the construction of modern greenhouses would create new jobs and thus address issues of employment. The NFES, operating in Azerbaijan since 1992, issued loans worth 145.4 million manats since early 2015, estimated to create about 9,000 new jobs.
Meanwhile, Sverdlovsk Region Governor Yevgeny Kuyvashev announced that a logistics center for imported Azerbaijani fruits and vegetables will be constructed in the region
“We are also looking for a partner to head the project on the Russian side,” he said. “In general, we are ready to start the construction even now.”