Overview of Azerbaijani Agricultural Sector

Overview of Azerbaijani Agricultural Sector


Agriculture accounts for only 5.3% of Azerbaijan’s GDP in 2014 (against 9.1% in 2005) but it still employs 37% of the workforce and plays therefore a key social role. Contrary to other Caucasian countries, the population of Azerbaijan is young and growing. Job creation is therefore a constant economic issue especially as the economically active population has been lagging vis-à-vis population of working age for lack of sufficient job creation.

After an acute drop at the beginning of the 1990s, agriculture rebounded to much higher levels than at the time of Independence. Compared with other countries of the region, and especially with Georgia, the performance of Azerbaijani agriculture has also been quite positive. Not only has output increased, but also labour productivity even though Azerbaijani agriculture has managed to create some jobs instead of shedding labour as in Russia or the Ukraine.  However, agriculture must still be much more productive to reduce the wage gap with other sectors through higher value-added per capita.

Azerbaijan mainly imports grains from neighbour Kazakhstan and Russia, the most cost efficient producers worldwide, and animal products. Its main net exports are fruit, vegetable and oil products. While consumption per capita of cereals will not increase much, consumption of dairy products lags behind that of other countries of similar levels of development and will keep on increasing. Per capita consumption of beef is also currently much lower than in some other post-Soviet Muslim countries where consumption of pork is marginal. It will mechanically increase with income. Apart from animal products that need to be import substituted, there are also good prospects for higher consumption of fruits such as apples for which intake is lower than in other countries of the region. The same applies to high value vegetables. These value added products are also key exports towards Russia, even before the embargo. One of the main advantages of Azerbaijan for regional trade of value-added products requesting sun and warm temperatures is that it is the closest South partner of Russia with only one border to cross and excellent logistical connections.

For value-added animal, fruit and vegetable products, there will thus be a combination of a vibrant domestic market and of massive imports needs of Russia and other members of the Eurasia Customs Union. Their development is therefore a priority.

Agriculture: what financial resources?

Credit to agriculture makes only for 5% of the portfolio of banks despite the fact that agriculture takes time and therefore requires large financial resources. It constrains the capacity to use agriculture as a key vector for economic diversification despite untapped productive potential and strong local and regional demand: Azerbaijan combines low levels of credit to GDP with limited share of agriculture in credit allocation. Loans to agriculture make for only 1.4% of GDP and 27.1% of agricultural GDP (37.8% when accounting for the leasing finance provided by Agroleasing).

The main findings of AZAFF team during the macroeconomic analysis of the country are as follows:

  • Beyond sound macroeconomic management, there is a need for more proactive sectoral support to insure effective diversification.

  • Agriculture has proven that it can play such a role, despite bad access to inputs and insufficient use of modern technology.

  • Azerbaijan has large untapped potential for import substitution and export promotion of agricultural products.

  • While there is reasonably good access for long term finance in agriculture, seasonal crop finance is very limited and constraints the capacity to buy inputs and use land effectively.

  • Beyond crop finance, there are bottlenecks for small and medium farmers to access subsidized financial schemes promoted by the State.

  • AZAFF can contribute to reduce the gap between farmers and banks by providing both readily mobilized refinancing resources and targeted technical assistance.

Our Partners


The technical assistance funds of the project are provided by the EU Neighborhood Investment Facility.


This project is financed by the European Bank of Reconstruction and Development (EBRD).


The technical assistance services within the project are provided by Frankfurt School of Finance and Management.