Assisting entrepreneurs in Agricultural sector

Agriculture is one of the largest sectors of the economy. 47-48% of the Azerbaijan population is rural and works in the agricultural sector. Reforms in agriculture are already coming to the end. State and collective farm lands have been distributed among people and various farm enterprises based on special ownership established.

In order to complete successfully the agrarian reforms, influential international organizations implement a number of projects in the country. One of these projects is Farm Privatization Project financed by the World Bank, IFAD and the Azerbaijan Government.

The Project objective is to provide 6 pilot farms established in different regions of the Republic with land registration, information and advisory, credit services, to organize rational water utilization, to design and implement development program of these populated areas, and to spread the experience throughout the Republic.

10,600 hectares of land in the Project farms were handed out among 6,645 families and State Land certificate issued to them. There are regular training courses provided for farmers within Pilot farms in order to improve their knowledge, acquaint them with foreign experience in this field. Scientists from Research institutes, agricultural specialists with modern knowledge empirically and theoretically educate farmers in the field of farm management, enterprise development, finance and credit, etc.

Information and Advisory Centers supplied with stands, posters, video-films, seed samples, visual aids reflecting information on various spheres of the agricultural development are functioning in all Project region.

60 training courses covering 47 subjects have been conducted and 9,600 farmers given comprehensive knowledge. 240 farmers have been trained through 24 training courses with the participation of 3 International Consultants.

15 "Farmer leaflets", 24 "Information Bulletins for Farmers", as well as 2 "Worldwide Farmers Experience" brochures and 15 booklets have been published in 980 copies and disseminated among farmers. Various topics concerning different areas of agricultural sector have been regularly discussed through the radio and television channels. Central Information and Advisory Service regularly provides farmers with comprehensive agricultural information obtained trough the Internet.

Moreover, 17 researchers from several Scientific Research Institutes continue cooperating with 287 farmers in the field of application of modern scientific achievements on crop production technologies and veterinary services in livestock production.

In order to provide farmers with visual knowledge, trial fields for wheat, cotton, vegetables, feeds demonstration and auction areas for wheat trials have been established in 5 pilot farms. At present, the rotation planting scheme is applied in 110 pilot farms. Farmers in the pilot farms have started using reductive Account Record System.

The collection and analysis of information on the price of agricultural products have commenced in the regions and industrial cities of the Republic.

The establishment of private farms created the opportunity for joint responsibility in management of water resources within those farms. For this purpose water users have set up Associations. The purpose of these Associations is to organize fair, effective and timely water distribution for irrigation, to form groups, to maintain and preserve water resources, to educate and organize farmers in the field of responsibility over reimbursement and management of expenses.

Associations registered in May-August 1998 currently operate in 26 farms, serving in the fields of irrigation and water management more than 6,500 landowner families on the territory of 11,792 hectares.

According to the Project, WUAs have been provided with appropriate technical equipment, office supplies, vehicles, motorcycle and communication equipment.

Thanks to the irrigation water, WUAs have raised funds in the amount of AZM204.9 mln from water users (according to the price identified at a general meeting). AZM155.8 mln from this amount has been transferred to the account of the Department of Irrigation Systems, while AZM49.1 million remained within WUAs'.

The purpose of the credit service semi- component is to provide conditions for an effective activity of farms.

This service is being carried out on the basis of an Agent Agreement signed between the Ministry of Finance of the Azerbaijan Republic and the Agro Industrial Bank (now named "Agrarcredit" Joint Stock Credit Organization). Within the Project framework, the Agent Bank has been provided with modern computers and software, office appliances, vehicles, other facilities and staff. International Consultants on Rural Credit and Information System were invited to support the Bank.

Credit sanction is provided when the loan amount is up to $30,000 by the Local Credit Commissions where majority of members are farmers and land owners and when the credit amount exceeds $30,000 by the State Steering Commission for Support in Formation of Private Farms.

AZM30.5 billion was sanctioned to be disbursed in credits to 3,176 landowners in pilot private farms from the begining of the project till June 30, 2001, AZM11.5 billion (37.7%) of short-term credits for cropping, AZM17.7 billion (58.1%) mid-term credits for livestock development and in the frames of community (social) development, AZM1.3 billion (4.2%) of long-term credits were disbursed from this amount. AZM25.7 billion (82.8%) of the sanctioned credits were utilized by farmers, while the remaining AZM4.1 billion will be utilized in next months as per business plans.

In the frames of the project, medium term credits are also disbursed within the community development program to landowners for settlement and social development purposes. So, AZM0.2 billion was sanctioned for the purpose to 2 legal and 44 physical entities where AZM0.1 billion has already been already utilized by farmers.

Long-term (10 years) credits were sanctioned for melioration works on farmers private lands. AZM199,972 was sanctioned for leveling and cleaning works on 21 land plots in Barda and Khachmaz.

25% of these credits will be disbursed on grant basis.

At the same time, AZM778,688 was sanctioned as long-term credits (7 years) for orcharding purposes to 97 landowners of Khachmaz.

Expanding coverage area of credit service in Project regions, 67 villages were added and credit in the amount of AZM8.8 billion given to 1,231 landowners.

"Farm Privatization Project" has been implemented since January 1997 and works related to land reforms started in former collective and state farms since the very beginning. Before mid-1998, all the work related to land privatization in pilot farms had been completed.

Within the frames of the land reforms, 96.4% of 7,912,200 hectares of arable land and 100% of 1,288,350 hectares of perennial crops area was handed out among 23,282 people in 21 villages.

The implementation of agricultural reforms in pilot farms already shows their efficiency.

In comparison with 1997, the 1999 crops increased 2.1 times, cotton - 2.3 times, vegetables - 1.1 times, fruits - 1.3 times, forage crops - 2.5 times.

At the same period, livestock population increased 121%, sheep and goats - 135%, horse population - 112%, poultry - 152%.