Azerbaijani President Ilham Aliyev has chaired a meeting on private enterprise development in the sphere of agriculture in the Karabakh economic zone in Agjabadi.

The head of state made opening remarks at the meeting.

Opening remarks by Azerbaijani President Ilham Aliyev.

Today we are attending the opening of a dairy enterprise in Agjabadi District. This is a wonderful and major dairy enterprise. It holds a special place among the enterprises established in Azerbaijan’s non-oil sector in recent years.

I am very glad that the private sector is developing in Azerbaijan. Local businessmen are investing in Azerbaijani economy, the sectors that are important to the development of the non-oil sector in Azerbaijan, the sectors in which we still rely on imports. Therefore, the establishment of such major and modern facilities is a very important issue. This facility differs from others built in the region – not only in the South Caucasus but also in neighboring countries – both for its modernity and production capacity. I am very glad that such modern industrial enterprises are emerging in Azerbaijan. These enterprises will be serving the development of Azerbaijani economy for many years to come.

In general, there are positive trends in the establishment of an industrial and social infrastructure in Agjabadi District. Social facilities are built here – I have attended the opening of a village road today, important issues relating to agricultural development are being resolved. I have also attended a foundation-laying ceremony for a new modern hospital today. In other words, socioeconomic development is at the proper level here. Yesterday I examined the state of affairs in Sabirabad, Saatli and Imishli Districts. There is development in every district.

Azerbaijani economy is developing comprehensively. We have achieved positive results in diversifying the economy. We must ensure that these positive trends are further strengthened in the years ahead and the number of modern industrial facilities in the country increases.

Specific programs on the development of the non-oil sector are being implemented. The second stage of the State Program on the socioeconomic development of districts has begun. The second state program must be completed by 2013. As a result of its implementation, the key social and economic issues our country is facing will be resolved.

About a million new jobs were created in recent years. But unemployment is still there. The establishment of such wonderful enterprises is highly important to eliminating unemployment. At the same time, we are dealing with the issue of increasing domestic production, decreasing our reliance on imports and reducing poverty.

In the years ahead we will take extra steps to develop the processing sector of agriculture. There are great opportunities for agricultural development. First of all, there is a correct state policy, support is provided for private enterprise development. Major funds are provided to entrepreneurs every year through the National Fund on the support for private enterprise. This year business people will receive 125 million manats. State capacities were to some extent used in setting up this enterprise. But I have to say that the overwhelming majority of the investment was made by business people themselves, and this is also a very positive fact which shows that entrepreneurs have great confidence in Azerbaijan’s economic development.

Both local entrepreneurs and foreign investors are taking interest in Azerbaijan. This is the result of a wise investment policy of our country. Investment amounting to hundreds of millions of dollars has been made in agriculture alone in recent years. In general, the volume of investment made in Azerbaijan is nearing 100 billion manats. It is possible to say that a little more than half of this investment is domestic.

In other words, investment projects are implemented in Azerbaijan. The state investment company has very important functions in this sphere. The state investment company provides financial support for the establishment of major infrastructure and industrial enterprises, while the National Fund on the support for private enterprise supports the establishment of agricultural, processing enterprises and those of regional importance.

The overall economic development in Azerbaijan is very positive. Our economy grew even in the years of crisis. Very important issues will be reflected in this year’s investment program. Infrastructure projects are under way. A large-scale process of gasification is ongoing in the country.

The construction of village roads is successfully ongoing. More attention should be paid in the years ahead to the issues of drinking water, sewage, irrigation and water management. A State Program on the socioeconomic development of Baku and its suburbs has recently been adopted. As a result of its implementation, all social and economic issues of Baku settlements will be resolved before 2013.

As I have mentioned, the program on the development of districts is successfully under way. It has been under way since 2004, and its second stage will be completed in 2013. Afterwards we will see what extra measures should be taken. The task was set: to resolve the key infrastructure, social and economic issues of the country in 2004-2013, i.e. over the course of 10 years. We are approaching this goal. The experience of the last eight years shows that there are great results in any sphere. Jobs are being created, poverty reduced, industrial enterprises set up, infrastructure projects implemented. We have attracted major investment to the power engineering sector and are not only providing for ourselves now but have even built up an export potential.

We must aspire to making our processing enterprises export-oriented too. However, we first need to fully address our own needs using domestic production. This is a very important issue. If we succeed in doing that, we can resolve a number of important issues soon, including those relating to unemployment. But at the next stage, due to the exports of agricultural and processing goods, we must access new markets. For that, of course, our products must be of high quality. We must not only raise our potential and export opportunities to neighboring markets, but also access European markets. This, of course, requires production of high-quality goods. I am sure that this dairy enterprise, built at such a modern level, can export products to any country of the world.

Entrepreneurs will continue to receive state support. This will be political, economic and financial support. Necessary funds will be envisaged in the years ahead through the National Fund on the support for private enterprise. Financial problems in Azerbaijan are already being resolved. Investment of 15 billion dollars was made last year alone.

Amendments are to be introduced to our budget this year, certain corrections made. These corrections should cover infrastructure projects. At the same time, resources will be envisaged for the solution of social issues of our citizens. Issues of raising wages and pensions will be resolved.

In other words, the state is taking all measures necessary to develop the country. By investing in the country’s economy, entrepreneurs expand their own opportunities and, at the same time, contribute to the country’s development. I am very pleased that most entrepreneurs in Azerbaijan are responsible people. They also contribute to the solution of social issues. I am aware that entrepreneurs are also engaged in charity activities. Those who can afford this should certainly pay even more attention to this issue.

At the same time, entrepreneurs should give preference to the production of competitive goods. Speaking about production of high-quality goods capable of accessing European markets, I must say that the domestic market also needs quality goods only.

State bodies are working hard on this issue now. The process of removing poor-quality goods from the market is ongoing, there is monitoring. Very much attention should be paid to this issue. It is necessary to campaign against poor-quality products. This applies to both imported goods and those produced in Azerbaijan. Quality is a top priority issue.

I think that a very strong industrial potential, i.e. the processing industry potential will emerge in the country in the years ahead as a result of our policy. Wonderful new processing facilities, including dairy enterprises, are under construction in different regions, and this process will be continued.

At the same time, as competition becomes tougher, related issues will certainly manifest themselves more distinctly. We must ensure a fair competition in the country. This depends on both business people and, perhaps even more, on state bodies. Because unfair competition and monopolism sometimes pose major obstacles to our cause. Monopolism manifests itself in both imports and domestic production. We faced this situation on the eve of Novruz when prices on food produced in Azerbaijan were artificially increased. So very serious instructions were issued and control introduced so that prices on Azerbaijani products are not raised and, at the same time, there is transparency in imports. A fair competition is one of the important factors for improving the business environment.

Along with this, the stepped up fight against bribery and corruption is also producing positive results. This manifests itself in the social sphere too. The activities of state bodies are becoming more transparent, public oversight is strengthening. At the same time, an end to corruption and unfounded demands should be put in the business sector too. I have repeatedly spoken about this, relevant instructions have been issued. Entrepreneurs, for their part, should also fight against unfounded demands, resist any negative phenomena and inform relevant state bodies of this.

In general, we must ensure transparency in the entire financial system. We are doing this and have already made great strides. I can cite the State Oil Fund of Azerbaijan as an example. The State Oil Fund is the most transparent and effectively managed fund of this nature in the world. It is no coincidence that the Oil Fund has received good feedback of the United Nations and other international organizations. This state oil fund was established and is managed by us. This is evidence that where there is political will, prudent management and professionalism, we can achieve the best results. Therefore, there must be transparency and integrity in all other spheres. As for business, I want to repeat that there must be a fair competition.

This meeting is also being attended by heads of district executive authorities of the region. I have repeatedly said that they should assist private businesses, not hamper them. State attention to entrepreneurs must be shown in every region, every district, every village. I can say that very positive changes have occurred in this sphere in recent years. Most of the local executive bodies understand and implement the state policy correctly. As you know, I often travel to districts, visit all regions. I meet with people, ask them, so I have sources of information. I have enough information about what is happening. Therefore, I can say that in most cases local executive authorities prove themselves quite well. But if there are mistakes and shortcomings, we are paying due attention to them. Necessary measures were and will be taken.

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Minister of Agriculture Ismet Abbasov, Head of Executive Power Office of Agjabedi region Shahin Mammadov, founder of Atena Dairy Products Plant Mulhazil Balakishiyev, Executive Director of National Fund for Entrepreneurship Support of the Ministry of Economic Development Shirzad Abdullayev delivered speeches at the meeting.

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Closing remarks by President Ilham Aliyev

Agriculture is a priority sphere for us. As we have said, by developing agriculture we will succeed in eliminating unemployment and ensuring the development of domestic production, thus making the country’s economy even more sustainable. Considering that about 50 per cent of Azerbaijan’s population lives in the countryside, this is a major social issue. Therefore, all these issues will certainly be envisaged in the investment program in the years ahead. Even more attention should be paid to the development of villages in the coming years.

A lot has been done. The process of gasification is now under way. The issue of electricity supply has practically been resolved. Gas lines are being laid in all regions and villages. Gasification activities in most villages must be completed before the end of 2012, according to my instruction. As for the Karabakh zone, I think gasification must be complete here, and we are working on this.

Problems involving drinking water and sewage are traditionally worrying because the lack of sewage lines and proper supply of drinking water is the most serious problem, especially in rural areas. Specific programs are under way at the national level to resolve this issue. We will try to resolve this issue completely before the end of 2013. Very major investment is envisaged here, there are technical difficulties involved. However, relevant instructions have been issued and, let me repeat, we will try to ensure that the program on districts covers these issues as well. By 2013 we must do whatever we can.

The construction of village roads is progressing faster. We opened new village roads in four districts yesterday and today, and this process must be continued. Not only in this region, but also in all others. Extra funds are allocated, the construction of roads is a very important issue from both social and economic standpoints. Additional funds are envisaged in this year’s budget for this issue, while even more attention should be paid to the construction of village roads in next year’s budget too.

An instruction has been issued to the Presidential Administration, you have received all proposals from the ground. These proposals have been forwarded to me. On the basis of these proposals funds have been allocated from the Reserve Fund of the President for these roads – village roads in Sabirabad, Saatli, Imishli and Agjabadi Districts. These were the most important roads. For instance, the 68-km road in Sabirabad, the 24-km road in Agjabadi, the 27-km roads in Saatli and Imishli Districts connect large villages. But such proposals are coming from every district. Therefore, we must incorporate them into the program for this and especially next year, so that to restore village roads to the maximum extent possible. Besides, we are building these roads at a high level. These used to be earth roads, there was no asphalt on them. Now these are wonderful asphalt roads. This will give a major impetus to the development of villages as well.

Restoration is under in the villages affected by last year’s mudslides. A lot has been done. But a lot still remains to do. While in the Gasimbayli village yesterday, I attended the opening of a new school. New homes have been built there. Most of the work has been completed not only in Sabirabad but also in all other districts. But attention should be paid to all villages.

When returning from Gasimbayli, I saw residents of a neighboring village standing on the side of the road and waiting for me. I stopped the car, got out and asked what the matter was. They answered that things were not progressing too fast in their Asgarbayli village. In some villages things go fast, in others not. My program included the Gasimbayli village, maybe because it is better off. But if I hadn’t been to the neighboring Asgarbayli village, I wouldn’t have found out the state of things there. So it is necessary to pay attention to such issues.

I do understand that the scope of work is vast. The work we are doing is quite impressive. In a short period of time, in a matter of months, we have done most of the work at our own expense. Thousands of homes, schools and social facilities have been built in at state expense. A total of 70,000 hectares of land were flooded. Thousands of homes were completely destroyed. Thousands more were in emergency condition. Now, after some time, we need to revisit this issue. The homes that were not registered as being in emergency condition eventually turned out to be unsafe. So it is necessary to audit them again and take additional measures before winter to restore all these houses and take a good care of those affected.

Nevertheless, I want to say that a lot has been done – both on strengthening the dams and on building houses and roads. The people of Azerbaijan have displayed tremendous heroism. Both those living in villages and affected by the mudslides, and rescue workers. All state bodies worked very well and our countrymen were assisted in a dire situation.

Issues of irrigation and amelioration hold a special place among infrastructure projects. If we want to keep on developing our agriculture, and we certainly do, we should pay more attention to these issues. Major projects are being implemented in the country. Thanks to them, thousands, possibly even tens of thousands of new plots will be irrigated. The Shamkirchay and Takhtakorpu water reservoirs are under construction, there are other projects. Canals are to be built, the Samur-Absheron water canal is under construction. All these projects require major investment. Hundreds of millions of manats are invested in this in order to bolster agricultural development.

Following the introduction of new lands, agricultural production will increase. At the same time, as we have repeatedly said, agricultural development must be intensified. It is necessary to apply the latest technologies. We should engage the agrarian science. There was an exchange of views on this subject at a recent annual meeting of the Academy of Sciences. Afterwards a special commission was set up on my resolution. A commission led by the prime minister was established and I hope it will provide specific suggestions in the near future. There is a great need for the proper development of agrarian science.

We now have several agrarian institutions. They should work more efficiently. Their produce must be of higher quality, specific suggestions should be made on how to improve these institutions. It is up to you to determine what these suggestions will be – submit a proposal and we will examine it. We must pay more attention to the agrarian science. This sphere has not received sufficient attention. But this is the time and we can achieve a major turnaround in the development of agrarian science and attract progressive technologies to Azerbaijan – especially now when we are buying machinery and the best pedigree cattle. But if the conditions and the entire infrastructure are not at the required level, this will not produce the desired result. So all these issues must be considered together. The relations with foreign agrarian scientific research centers should be further stepped up. We must engage foreign specialists because we must know what is happening in the world, how these issues are addressed in a certain country, in developed countries. We must apply their experience – of course, by adapting it to domestic conditions.

Therefore, all these issues, i.e. the issues of irrigation, amelioration and development of the agrarian science, are of special importance. We will be resolving irrigation and amelioration issues using state investment. There is a great need for that. Additional proposals must be submitted. We must expand the areas under crop. When I was visiting the Imishli sugar plant yesterday – as you know, new enterprises are starting to operate there – it was indicated that domestic production accounts for 12 per cent of the plant’s operation. This is a positive fact because we had very little sugar beet before the plant started operating. Now, sugar beet is produced and processed in different regions and districts. But we are aware that sugar plants in other countries work primarily on local raw materials. I think 12 per cent is not enough. It is not higher because there is not enough fertile land. Therefore, irrigation work must be carried out not only to grow sugar beet but also in connection with all other spheres. We will be setting up major grain production farms now. Places have also been identified. How much has been identified?

Ismat Abasov: At the initial stage 100,000 hectares. But the broader program envisages 200,000 hectares.

President Ilham Aliyev: 200,000. Have these areas been identified yet?

Ismat Abasov: 100,000 hectares have been. At present, the state land and mapping committee is studying the quality of soils to find out what needs to be done on these lands or what is their current condition, what crops can be cultivated there in the future. Afterwards we will tackle amelioration, and then cultivation.

President Ilham Aliyev: Good, have a seat. But the introduction of 100,000 and 200,000 hectares additionally will require extra resources. Additional machinery and fertilizer must be purchased now. Everything must be calculated. So we must be prepared. We must approach this issue very seriously, take comprehensive measures so that the result of this work meets our interests.

At the same time, we should pay more attention to the creation of a social infrastructure in villages. Modern hospitals, sports facilities, culture centers and schools are under construction in all districts. This process has gained momentum. Even more attention should be paid to that in the years ahead. All unsafe schools should be renovated. There is a list of such schools. The Ministry of Education, the Presidential Administration have received instructions. Local executive authorities have also prepared and submitted lists. These issues will be incorporated into the state investment program for both this and next year. Unfortunately, there are unsafe schools, including those in Baku and suburban settlements. Renovation of schools must be completed before the end of 2013. We must try to link the issues associated with schools and their material and technical base with the completion of the program on districts, so that this issue is resolved by 2013.

Enough grain storages have been built in this and other districts. It seems that there is no need for the construction of additional grain storages. Don’t you envisage funds for these ends any more, or is there still a need for that?

Shirzad Abdullayev: Mr. President, if there is an initiative from entrepreneurs, the issue of financing this project will be considered. But it is generally possible to have grain storage facilities in the republic now. Because there are already modern grain storage facilities with a capacity of up to a million tons in the country.

President Ilham Aliyev: But considering that our grain production will increase, perhaps we will have to build more at a certain stage.

Ismat Abasov: Mr. President, at present, as part of the existing projects, there are grain storage facilities with a capacity of around 267,000 tons. Besides, if we consider that these measures have also been taken by the Ministry of Emergency Situations, I think this is sufficient for the time being. But if such a need emerges in the future, we can discuss this issue again with the Ministry of Economic Development.

President Ilham Aliyev: Very good, sit down. We have resolved this issue in a short period of time. Specific instructions were issued, funds allocated, and we resolved the issue. The construction of cold-storage warehouses is also ongoing now. A lot of work has been done there too. But it must be continued. There is a need for that. You will probably incorporate this into the investment program.

Issues associated with “Agroleasing” are being addressed. Several years ago we set up “Agroleasing”. While visiting an “Agroservice” base yesterday, I reviewed new hardware. And I was further convinced that if we hadn’t established “Agroleasing” in good time, it is not known how agriculture would be developing now.

Ismat Abasov: Mr. President, “Agroservice” branches were established in districts on your initiative. In other words, if you hadn’t provided your support, they wouldn’t have emerged. The branches were set up on your initiative and with your approval. There were suggestions that this hardware should be provided only on leasing terms. But considering the fact that combine harvesters are required only for 1.5 months in a season, there is no need for farmers to pay a huge amount to buy them.

President Ilham Aliyev: Of course, when “Agroleasing” was set up, there were different views. But I think that life has proved that this was a very correct step. Certain suggestions are made now that “agroservices” are the heritage of Soviet times. But there were quite a few positive phenomena and initiatives in the Soviet time. It was in the Soviet time that Azerbaijan produced 2 million tons of grapes and 1 million tons of cotton. That was the result of Heydar Aliyev’s work. When he came to power, production of cotton in Azerbaijan did not exceed 150,000 tons.

Ismat Abasov: 150,000 tons of cotton and 264,000 tons of grapes were produced.

President Ilham Aliyev: Yes, cotton production reached 1 million tons and grape 2 million tons.

Ismat Abasov: Over 260,000 tons of grapes were produced in Jabrayil District alone, which was more than the total grape harvest of Armenia.

President Ilham Aliyev: Yes, this is why we must apply the positive experience. Especially if we consider that my instructions on viticulture are and must be implemented. We must adopt a comprehensive program. I am aware of the difference of opinion on this issue. There are views that we must preserve areas under crop to ensure food security, for grain production. Of course, food security is very important, and we are heeding great attention to that. But we also know that thanks to the development of viticulture in the 1970s, tens of thousands of farmers made money, built houses and bought cars. So they improved their well-being. So attention is and must be paid to the development of viticulture. Several days ago Azer wrote and sent me a note. I forwarded it to the Ministry of Economic Development. Consider it together – the Ministry of Agriculture, the Administration, the Ministry of Economic Development. I think it is necessary to adopt a comprehensive program.

Ismat Abasov: Of course, viticulture, as you have said, will be developed. As you have indicated, more attention should be paid to ensuring food security and increasing the yield. We, specialists, think it would be good if the farmers who have irrigation areas could engage in food security.

President Ilham Aliyev: That is grain production.

Ismat Abasov: Yes, grain production. In dry-land conditions it would be appropriate to develop viticulture. We have calculated: if there are around 50,000 hectares of grape plantations in Azerbaijan and each hectare provides 100 hundredweights of harvest, this means 500,000 tons. Considering that this produce needs to find a market, 500,000 tons is enough for Azerbaijan at the initial stage.

President Ilham Aliyev: Yes. However, this issues must certainly be dealt with comprehensively. We can increase production, then address the issues of processing enterprises and marketing. I don’t think there may be problems with marketing. Because we used to have traditional markets before, and I think we have the opportunities to access these markets.

Let me repeat, we must approach this issue comprehensively – from production to marketing. We need to determine this chain, and you should work on this. How much public funds there should be. Divide public funds by the years. We must know how much is required to buy hardware and stimulate farmers, because this sector is slightly forgotten.
Ismat Abasov: Last year 130,000 tons of grapes were cultivated. However, Mr. President, we must take into consideration that there is a need for grape production not only for industrial processing, but also for table grapes. Cold-storage chambers are built to market table grapes in off-season. Besides, processing and marketing of table grapes in the form of raisins and others will also have a positive impact on our economy.

President Ilham Aliyev: It is necessary to pay attention to this too. In some cases table grapes are imported to Azerbaijan today.

Our advantage is that all of Azerbaijan’s agricultural produce is natural. It is called organic. You know very well that organic or natural products are sold at higher prices abroad. We must preserve this natural quality. So it is necessary to pay very serious attention to this issue. It is important both in terms of economic development and from the standpoint of solution of social problems of people, farmers. We must revitalize this tradition. The Soviet government destroyed our vineyards. The bias against Azerbaijan and Azerbaijanis manifested itself in that too. Grapes were also grown in other republics at the time – Ukraine, Moldova, Armenia, Georgia. Their vineyards were not destroyed for some reason. The central government and their local butlers vehemently destroyed all our vineyards and left people without a source of living. We must revive this sector.

So, I want to repeat that all the issues relating to the development of agriculture must be viewed comprehensively and be resolved. We regularly meet over these issues. In our meetings with business people we also focus on agricultural development. Most of the funds allocated through the National Fund on the support for private enterprise are channeled into the development of the processing sector of agriculture. So this sector is always in the spotlight, and all state bodies – the Presidential Administration, the ministries of agriculture and economic development, the Fund, local executive authorities – must work in a coordinated manner so that our country’s policies in this sphere are effective and goal-oriented.

In general, major successes and good results have been made in agricultural and private enterprise development in Azerbaijan. This wonderful dairy enterprise is a graphic example of that. There is no such enterprise not only in the region, but also in Eastern Europe. I want the number of such remarkable enterprises to increase.

I wish you success and further achievements.

Thank you.