In an interview with AzVision.az, Firdovsi Fikratzade, Director of the Agricultural Research Center, Ministry of Agriculture of Azerbaijan, shared his views on this issue and touched upon the work the Azerbaijani state is carrying out to ensure food security in the country. 

- What are the factors that are driving the increase in food prices? Is it just a problem that began to arise 3-4 months ago or is it deep-rooted? 

- In fact, the main processes associated with rising food prices began to occur even before 3-4 months. Coronavirus-related restrictions on a global scale have caused supply chain disruptions. Global trade has slowed down, and serious negative effects of global warming have begun to appear. Many countries, especially grain exporting nations, have experienced a decline in production. After all, price fluctuations hit the global grain market. Later, Russia, one of the major grain exporters, introduced an additional tariff on wheat exports, which led to drastic price hikes. The beginning of the conflict in Ukraine itself has become a serious problem in the global food market. In other words, the consequences of the pandemic, global climate change and the Ukraine-Russia conflict have complicated the situation further. 

Ukraine and Russia are important exporters of grain and sunflower oil. These countries have also a market share in soybeans and poultry products. All this has also led to severe problems in the agricultural field as both Russia and Ukraine have a large share of the global fertilizer market. Numerous factors have added to the uncertainty in the global food market.

- Numerous countries have already begun to introduce severe restrictions on food exports. Do you think this factor can lead to food shortages on a global scale? 

- In principle, this factor indicates that the world is currently experiencing food shortages. As you know, the price of sunflower oil in European markets and supermarkets has risen sharply. The fact that supplies from Ukraine and Russia weakened caused food shortages in Europe. FAO (Food and Agriculture Organization of the United Nations) reports that the weakening of wheat supplies in the global market due to the ongoing Russian-Ukrainian conflict could cause problems in the Middle East and Africa. In other words, there is a definite shortage of products. Especially in countries with limited resources. For example, there is no shortage of any product in supermarkets in our country. Of course, there are price changes due to world trends, and the world market, and this is reflected in many food products. However, thanks to the support provided by the state [Azerbaijani state] to entrepreneurs, there is no shortage of goods in stores. Other countries have not been able to establish this supply system, and there is a shortage. That is, countries that do not take adequate measures face shortages.

- Can an irrational approach to food production be considered one of the causes of the global food shortage in recent years? For example, some experts allege that one-third of food produced for human consumption is lost or wasted globally…

- Yes… There are two sources of food waste. Losses in the production, collection and storage of these products in developing countries are high. Because infrastructure in developing countries is weak. In developed countries, losses occur only at the stage of consumption. In other words, the well-being there is high, products are consumed in excess, and waste is excessive. This is due to differences in income sources and in the distribution of income in the world, which, unfortunately, is a bitter reality. If today the people of a poor region have the opportunity to buy food, it will be exported to this region. However, a large amount of food goes to Europe and America, as their population is more solvent than poor regions. Therefore, the losses are great. There are also supply chain disruptions, and the report indicates this as one of the causes of global food shortages. 

- Russia and Kazakhstan have already begun to impose serious restrictions on exports of grain and grain products. Does this also apply to Azerbaijan?

- These restrictions apply everywhere. However, these deliveries were fulfilled under contracts signed by our companies, and there is no problem with our wheat stocks. True, this created difficulties. This is not widely discussed but is carried out with the direct support of the state. In other words, the state provided entrepreneurs with the necessary support, including diplomatic and political, as well as financial support. The process of forming stocks of wheat and other foodstuffs by entrepreneurs in Azerbaijan is proceeding normally. 

- What measures is the Azerbaijani government taking to neutralize possible risks? What additional measures are required?

- In general, even before this crisis, the policy of the Azerbaijani government to improve food supplies in the country was consistent. State support for grain products is carried out at a very high level. Yes, our production efficiency is not that high, and our production capacity is limited. Today, the support the state provides to the agricultural sector and direct subsidies cover 40 percent of the cost of grain production. This is a very high figure. Thanks to such measures, we have reached a certain level of production. After that, crises also create new problems for the country. By expanding the use of modern irrigation systems, new goals are set to increase the level of self-sufficiency in both grain and other food products, and accordingly, new advocacy and support mechanisms are being formed. In general, it should be taken into account that along with our agricultural production, the processing industry of agricultural products has been formed, as well as storage systems, which are also important factors in food security.

- What is the level of Azerbaijan’s internal potential for the supply of essential food products? 

- In percentage terms, today we provide ourselves with meat and dairy products by an average of 85 percent. We are an exporter of potatoes, fruits, and vegetables, gourds. In general, we provide ourselves with grain products by 60 percent. Our wheat supply is 60 percent, of which 40 percent depends on imports. The share of wheat imports is higher here, especially for the milling industry. There is a double point in our supply of vegetable oils. The level of self-sufficiency in olive and cottonseed oil is acceptable. However, we are almost 98-99 percent self-sufficient in sunflower and corn oil. About 90 percent of sugar supplies are imported.

These are the main critical products, i.e. we have a high dependence on imports for sugar and sunflower. At the same time, about 98 percent of soy feed for livestock is imported from South America. In general, we provide high, acceptable, and low internal capacity. For example, our supplies of meat and dairy products and potatoes are at a normal level. 

- All difficulties also mean the door to new opportunities. From this point of view, what innovations can we observe in the export potential of Azerbaijan? 

- The fact is that the main part of our exports falls on the post-Soviet space, which is natural. There is a logistics factor here and historical traditions play a role since our main grain suppliers are Russia, Ukraine, and Kazakhstan. These are the countries included in the group of 10 largest exporters of the world and are our neighbors. Of course, we must bring wheat and grain from there. Similarly, our region is one of the largest importers of fruits and vegetables and foodstuffs in the world. Many countries are interested in exporting products to the region, especially to Russia. However, now the difficulties caused by the conflict in Ukraine are forcing entrepreneurs to think about alternative markets.

The fact is that no matter how much we, the experts, have talked about the expediency of entering alternative markets, this call has practically not interested entrepreneurs. Because Russia is a very profitable market for entrepreneurs. Now new realities require new searches for the market. These are several vegetable products. We also have a range of fruit products - for example, pomegranates, dates, and hazelnuts - processing them; we have great potential to enter other regions. The production of pomegranate, hazelnuts and palm trees are good opportunities for Azerbaijan. These products are in demand on the world market. Because we are one of the few countries in the world that produce these foods. Therefore, it is still expedient for our farms to specialize in these products. Then it will be more convenient for us to enter other segments of the world market.

- How can the Caspian states, as well as Turkey and Georgia, take advantage of the existing opportunities in the current situation?

- Turkey is the country on which we can most rely in the process of integration into the world market outside the post-Soviet space. At first glance, this seems paradoxical, because we have similar export structures with Turkey. In any case, our future access to the markets of Europe, the Middle East, or the Persian Gulf depends on our cooperation and integration with Turkey. Through Azerbaijan, Turkey gets the opportunity to enter the post-Soviet market at a lower cost. Now this seems to be a theoretical approach. Nevertheless, conceptually, it is worth making calculations and assessments using this approach, because the prospect is only in this direction.

Let me make a comparison. For example, our export structure is the same as that of Uzbekistan. However, part of our products exported to the post-Soviet space, to the Russian market, has a share of 98-95 percent, and for Uzbekistan – 30 percent. Why? Because, for example, 28 percent of fruits are exported to Kazakhstan and 24 percent to Kyrgyzstan. It has already been completed by 50 percent, then there are neighboring countries such as China and Pakistan, and the remaining 25-30 percent go to the Russian market. Thus, the regional issue is a decisive factor. Our main regional country is Russia. Georgia is a small market, and along with us, Iran and Turkey participate in this market. We have not yet signed a peace agreement with Armenia, and the prospects are very small, the market is without potential. The cheapness and structure of energy carriers in the Iranian market are almost the same as ours. What we export, Iran exports, and what we import, Iran imports. The only direction on which we can agree here is cooperation with Turkey.

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