IFDC Plants Seeds of Change in Azerbaijan

With funding from the U.S. Agency for International Development (USAID), IFDC recently initiated a 3-year agribusiness development project, which is targeted to help boost that country’s agricultural production, spur agribusiness growth, and generate employment.  The Chief of Party of the Agro-Input Market Development in Azerbaijan (AMDA) project, Manfred Smotzok, understands the value of establishing good rapport with the people of a host country.  When asked what his primary goal would be, Smotzok replied, “Establishing good working relationships with the country’s entrepreneurs and cooperating to find a common solution to their problems.  If you do not obtain the trust of the people, you will not be able to achieve the economies of scale necessary to make a difference.”

The project’s leader has definite plans for the first year of work.  “One of my goals is to form clusters of agricultural input dealers in four key regions to improve their ability to supply vital inputs and technology to farmers.”

Agriculture has long been a mainstay for Azerbaijan; in fact, it is considered the country’s second most important natural resource, next to oil.  The country’s range of climatic zones can support a wide variety of crops, ranging from tomatoes to almonds and from rice to cotton.  According to the Food and Agriculture Organization of the United Nations (FAO), over 80% of Azerbaijan’s arable lands, which total more than 1 million ha, are irrigated by more than 40,000 km of canals and pipelines.  However, like other Azerbaijani industries, agriculture is struggling to cope with the country’s new market economy.  During the transition period following the collapse of the Soviet Union, agricultural output has declined sharply.

About 98% of the farmland has been distributed to more than 700,000 individual families, but the private landholders do not have good access to the agricultural inputs, services, know-how, and financing that would maximize their output and make the agricultural sector competitive. Since independence Azerbaijan has had to find new markets for its agricultural products and new suppliers for the necessary agricultural inputs.

The solution to Azerbaijan’s agricultural problems lies with the private sector.    According to Azerbaijan’s Minister of Agriculture and Food, Irshad Aliyev, the most critical task is to privatize the system and then help producers gain access to financial credit and provide opportunities and connections to compete in the world market.  The most urgent agricultural needs involve acquiring fertilizers, equipment, seeds, machinery and crop protection products.

IFDC’s new venture in Azerbaijan will help meet the objectives identified by USAID. “The new project in Azerbaijan will develop a competitive private sector system for the supply and distribution of inputs that is forged by training for both dealers and farmers, providing access to credit, and developing a trade association to provide organized ongoing business support,” says Ian Gregory, IFDC’s Institutional Development Program Leader. “With improved seeds, the application of adequate fertilizer and crop protection products, grain yields can be significantly increased.

The IFDC project will provide technical assistance to improve the efficiency and profitability of the agricultural input businesses and assist them in making the transition to a market economy.  Working with other USAID partners and donors, IFDC will provide business, technical and management training; market information; and improved access to credit and finance.  The objective is to provide missing vital components that will generate private-sector-driven economic growth and rural employment.

“The AMDA project will help to organize current and potential agricultural input suppliers to form a trade association,” Gregory says.  “The agricultural input dealers’ industry group and eventual federation with other agricultural trade associations can become an effective channel for advocating a more favorable business climate and policies.  This association will also serve as the catalyst for the much-needed transfer of improved technology to farmers.  The project will establish demonstration farms and technology transfer programs in the four main agricultural regions of Azerbaijan.  By teaching the private dealers the value and methodology of demonstration farms, the project will also help establish private sector extension services.”

As for specific targets, the new project in Azerbaijan expects to double the commercial trade in fertilizer, seed, crop protection products, and animal feed; support over 150 agricultural input dealer enterprises; help them establish an effective and sustainable trade association; and assist clients in gaining access to more than $750,000 in new credit and investment.

IFDC has demonstrated success in establishing effective and sustainable private sector agricultural input marketing systems, trade associations, small and medium enterprises, and technology transfer in Albania, Bangladesh, and Kosovo.  Based on its record of implementing holistic programs, the Center has been selected to undertake similar new projects in Kyrgyzstan and Nigeria.  Considering the vast potential for the future of agriculture in Azerbaijan and the determination of the country’s citizens, no doubt success stories will soon be written about that country as well.

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