Azerbaijan Fresh Tomato Producers Need Export Diversification in the Current Market Situation

Azerbaijan is one of the leading producers of fresh tomatoes in the South Caucasus region, which is geographically in a convenient location to reach the biggest fresh tomato importers, such as Germany, United Kingdom, France and other European countries. According to Tridge, Azerbaijan produced around 774.9K metric tons of tomatoes in 2020, 11.04% YoY increase compared to the previous year and 50.41 % increase in the previous 5 years. In 2021, fresh tomato production in Azerbaijan reached around 916K metric tons. Recently, in order to keep the quality of tomatoes and protection from extreme weather conditions, greenhouse tomato production has significantly increased in Azerbaijan. The State Statistics Committee of Azerbaijan reported that in Jan-Sep 2022 period 318.2K metric tons of fresh tomatoes were produced in greenhouses, which was 14% increase compared to the same period of last year. According to the State Statistics Committee of Azerbaijan, as of October 1, 2022, there were 3,117 greenhouses operating in the country with a total area of ​​1.6 thousand hectares.

Figure 1: Production Trends of Fresh Tomato in Azerbaijan

Source: Tridge

Tridge data shows that the export value of Azerbaijan was USD 160.94M, and the export volume was 145.99M metric ton in 2021, 70.89% increase in the past 5 years. According to government sources, Azerbaijan exported 141,419 tons (around 128.3M metric ton) of tomatoes in 2022, which is 2.6% less than in 2021.

Figure 2: Azerbaijan Fresh Tomato Export Value and Volume in 2021

Source: Tridge

As can be seen in Figure 3 below, the share of export of fresh tomato from Azerbaijan in 2021 was dominated by Russia with almost 98% of the total exports. Russia’s dominance in Azerbaijan’s fresh tomato export can be attributed to proximity sharing a direct border with Russia which makes it earlier and cost-effective to transport tomatoes, having FTA and strong cultural and historical ties between the two nations.

Figure 3: Top Export Destinations of Fresh Tomato from Azerbaijan

Source: Tridge

Azerbaijan has a strong and growing fresh tomato industry, which is one of the country's leading agricultural sectors. The good quality and competitive price of Azerbaijani tomatoes make them popular in foreign markets. The production and export of fresh tomatoes have increased in Azerbaijan over the last few years. The country's favorable climate conditions and rising emphasis on contemporary farming methods like smart greenhouses have helped the tomato business expand. Positive trends in export volume and value can be noticed in terms of fresh tomato exports in Azerbaijan. The government of Azerbaijan has been aggressively promoting the growth of the tomato sector by making infrastructure investments in smart greenhouse and tomato post-harvest processing facilities, giving farmers financial assistance, and enhancing phytosanitary controls to guarantee the quality and safety of the goods. The Government of Azerbaijan collaborated with the International Bank for Reconstruction and Development (IBRD) on the Agriculture Competitiveness Improvement Project (ACIP) to fund tomato farmers. The ACIP project cost $52.8 million in total, with IBRD providing $34.4 million in investment project financing. The Azerbaijani government contributed the remaining $18.4 million as counterpart funding. The Azerbaijani tomato industry has the potential to become a big player in the global tomato market with the ongoing expansion in production and export. To maintain the long-term success of the sector, it is crucial to address challenges including expanding export markets and implementing sustainable production processes.

The Azerbaijan fresh tomato market is heavily reliant on Russia, as Russia is the largest importer of Azerbaijani tomatoes, accounting for approximately 97% of the market. Because of their close proximity and strong trade relationship, Russia is a natural market for Azerbaijani tomatoes. As a result, the tomato industry in Azerbaijan is heavily influenced by Russian market demands, such as price fluctuations, regulations, and phytosanitary issues. For example, due to phytosanitary issues which were discovery of quarantine pests such as South American tomato moth (Tuta absoluta Povolny) and the oriental fruit moth or peach moth (Grapholita molesta Busck), the Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) imposed a temporary import ban on Azerbaijan tomatoes in 2020, resulting in a significant decline in exports and lost revenue for tomato producers and exporters. While the Russian market has historically been an important export destination for Azerbaijan's fresh tomato industry, diversifying export markets can help reduce reliance on any one market and open up new opportunities for growth. Fresh tomato exporters in Azerbaijan should seek to expand their customer base by exploring new markets in Europe and the rest of the world where currently fresh tomato shortage can be observed. Many industry experts believe that in the current market situation, Azerbaijan has more chances to enter new prospective markets.

The government of Azerbaijan has taken measures to aid the growth of the nation's tomato sector, including the formation of the Azerbaijan Fruit and Vegetable Producers and Exporters Association and the implementation of initiatives to raise production and quality standards. Yet, the sector also has to contend with difficulties like phytosanitary problems, alterations in market demand and prices, and competition from other fresh tomato producers. As long as the sector continues to solve these issues and concentrate on enhancing quality and productivity to satisfy the needs of foreign markets, the future of Azerbaijan's fresh tomato industry is promising.