The world bank

Access to Agricultural Inputs

80. Even though small holders used seeds, fertilizers, chemicals, and animal feed for their agricultural production during the past year, access to these inputs was uneven and, in most cases, inadequate. There is a discrepancy between the number of households using these goods and the number of households who are engaged in agricultural production; not every household who is engaged in agriculture had access to agricultural inputs. The following table indicates the percent of households in each rayon using these goods and the average amount used for production during the past year.

81. Inadequacy of timely access to good quality farm inputs and services is one of the major causes of declining agricultural productivity levels in rural Azerbaijan. There are a number of important issues blocking access to farm inputs. In Salyan, for instance, investments in land do not pay off mainly due to lack of electricity necessary to operate pumps, lack of seeds, fertilizers and necessary equipment and lack of fuel. These residents would like to see a rayon-wide warehouse from which they can obtain fertilizers and pesticides. In Khachmaz, lack of agro-enterprises causes a portion of the produce to be not used and spoiled. Overall, the main agricultural problem of small holders (with the exception of Lenkeran) is the inadequate and untimely availability of agricultural inputs (figure --: state is still the most important supplier of agricultural inputs). Even though most rural households included in the survey had access to seeds, the majority did not have access to other inputs such as fertilizers, pesticides and animal feed. Small holders also complain about the lack of fuel; the number of households who used fuel for agriculture purposes is too small to produce statistically significant tables. Most small holders could not engage in larger scale agriculture mainly due to lack of necessary equipment and materials. Instead, they only engaged in subsistence farming and sold part of their surplus in the market.

82. The availability of equipment operators for plowing, sowing, cultivating, and harvesting farms without excessive delays, for affordable fees, and with reasonable quality, is an important need for farmers. Currently, there is considerable concern over accessibility and affordability of such services. In some cases, ex-farm managers who oppose privatization have been hindering independent farmers’ access to such services while preserving the equipment for their purposes. In addition, most available equipment is already in a deteriorated state and does not operate efficiently because of lack of maintenance, further hindering the ability of individual farmers to cultivate effectively.

Market Conditions

83. Even though most households seem to have access to local markets, there are major problems with the functioning of these markets (figure --: people confront several constraints in marketing their produce). Most sales are done by the roadside, where corruption and extortion is a big hindrance to entrepreneurship and profitability. Lack of transport to bigger markets also disrupts farmers’ ability to cultivate and sell in larger quantities. The absence of local food processing centers and agri-businesses also discourages farming at a larger scale. Since the markets do not exist to absorb even the existing surplus production, the produce sometimes spoils on the ground, is consumed at home or sold at lower prices. Focus groups confirm these findings and point to regional variations in the difficulties encountered. In Salyan, people face transport problems in selling their produce on the market. In Udjar rayon, participants do not have clear ideas on how to market their products, however, for cotton, they think production facilities in or around the rayon are necessary. Despite these limitations, a large number of rural households have been engaged in agricultural sales. The following table shows the percentage of households having sales.

84. Invariably, there are differences among primary agricultural products sold in different regions. In Barda, tomatoes, onions and other vegetables are sold frequently. In Lenkeran, lemon and tangerine sales dominate the market. In Salyan, wheat is the basic product while in Udjar tomatoes, pears and meat are sold. In Khachmaz wheat, tomatoes and meat are dominant market staples. The variety of crops cultivated in each rayon also points that people experiment with various crops to find product mixes to yield the highest profit.

85. Local market conditions and the existence of food processing plants are two major determinants of agricultural sales potential in rural areas. In Barda, where processing plants do not function, 90 percent of the people could only sell their products at local markets. In Lenkeran, 76 percent of the respondents sold it at markets while the rest was able to sell their products wholesale. In Salyan, products were sold both at markets and wholesale to food processing plants. In Udjar, most people sold their produce to wholesalers while a significantly high portion also sold it on local markets. In Khachmaz again close to 90 percent sold their produce directly to consumers in markets and roadsides.

86. Product prices are usually determined in the market through direct bargaining. Most producers are unhappy with their inability to set prices high enough to cover their costs, and in some cases, when the purchaser dictates prices. About 16 percent of the producers were able to make sales at their prices while the rest either had to bargain or take the price offered by the customer. Food processing centers sometimes offer low prices for products or do not make payments on time.²¹ Since transport from villages is usually expensive, representatives of these centers purchase products directly from villagers at a cheaper price. Price competition from existing state and collective farms is also an important disruption to agricultural sales of small independent farmers; people complain that these farms dump their products on the market at cheaper prices.

87. Inadequacy of transport between and within rural rayons is the most important problem in placing goods in markets (80 percent). Lack of proper storage space also disrupts small holders’ ability to store and have more flexibility in timing of the sales. Other rayon-specific concerns include lack of permanent market places in Khachmaz rayon (74 percent); lack of distribution and storage channels in Barda and Udjar (69 and 62 percent, respectively); and artificial reduction in prices (49 percent) and transport problems (14 percent) in Salyan rayon. In Lenkeran, transport emerges as the most important problem in the local markets (58 percent).

88. Demands of people to ease their access to markets invariably stem from the above mentioned problems. For instance, in Barda, 50 percent would like to see improved distribution channels and 36 percent a marketplace in their villages. In Lenkeran, the improvement of pricing practices and provision of means of transport is demanded (33 and 44 percent, respectively). Establishment of local marketplaces and improvement of pricing methods is important in Salyan (29 and 49 percent). In Udjar, people demand distribution channels (85 percent) and in Khachmaz, marketplace in village and distribution services are important (64 and 22 percent, respectively).