The Food Processing industry is one of the most rapidly developing sectors in the economy of Azerbaijan. The vitality of the sector's basic products as well as the recent developments in quality to meet international standards and requirements are both enhancing the sector in the local market and increasing the export capacities of local producers.
The food processing industry in Azerbaijan consists of three main segments. These are meat processing, production of dairy products and processing and canning of fruits and vegetables. Food products are high on the Government's agenda for import substitution.
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Volume of Food Processing products has increased 2.4 times from 2000 to 2009. This increase is an indicator of the development and growth of the food industry. The volume of export of food products in 2009 was 396 mln USD.
Market studies reveal that the average family spends 42% - 45% of its income on food indicating the importance of this sector and the need for a competitive local industry to provide high quality food products.
Due to a beneficial climate, natural conditions and soil composition, the environment in Azerbaijan offers suitable conditions to potential investors wishing to achieve high yields in various subfields of agriculture and livestock farming. Taking into consideration that wage level in Azerbaijan is below the average index in Russia and Kazakhstan, and that the cost of agricultural inputs are competitive, one of the main advantages of food processing supply in Azerbaijan is its low level of cost. Not only is basic labour available at low rates, but there is a large pool of highly skilled workers available at reasonable cost. Through Azerbaijan's suitable position in the region and its liberal trade regime, Azerbaijan offers potential investors favourable place from which products can be exported, free of any customs duties to the CIS markets.
Azerbaijan's pomegranate, feijoa and grape juices and its olives, hazelnuts and other produce are all competitive in international terms. Azerbaijani wine and brandy are traditional export products. Currently the demand for agricultural products in Azerbaijan is higher than local supply can satisfy. In addition to the opportunities for export therefore, there is huge potential to fulfill local market needs.
In order to improve the competitiveness of the sector against foreign product and stimulate local production, The Government of Azerbaijan introduces various incentives for local producers. The promotion of food processing businesses, support for exports, the transfer know-how and simple access to favourable financial means are some further steps that, together with sufficient investor interest, can turn around this segment of Azerbaijan's economy and lead to the creation of a large export business.
Taking into consideration all opportunities of development in this sector, Azerbaijan offers global investors useful conditions for success in the food processing industry, combining skilled labour with cost advantages and access to quality raw materials.
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natural-climate condition is favourable for the development of agriculture;
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there are numerous private farms operating on market principles;
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there is work force consisted of the youth with formal education in rural areas and wages are the lowest compared to other sectors;
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a network of agricultural processing enterprises based on modern technologies gave been established within the policy aimed at developing the non-oil sector and regions;
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self-sustainability of the country in terms of food stuffs is substantially increased;
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programs have been implemented with budgetary funds in recent years to improve provision of agricultural producers with relevant machinery and equipment;
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the Governments carries out a subsidy program for improving supply of fertilizes to farmers;
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there is favourable transport infrastructure to all export markets of agricultural products;
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The Government carries out different credit programs based on funds received from international financial institutions to meet demand of farmers to financial resources;
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Azerbaijan has the opportunity to export goods with privileged terms to markets covering 70% of the world import. Thus, the Republic of Azerbaijan is included in the GSP program of Canada, Japan, Norway, Swiss an USA, as well as GSP+ program of the EU;
