Azerbaijan’s agroparks: billion-dollar investments, but what’s the return? Caliber.Az review

Over the past 25 years, structural reforms and technological modernisation have helped Azerbaijan’s agricultural sector significantly reduce dependence on food imports, with domestic production now meeting around two-thirds of total consumption. A key step in promoting large-scale commercial farming has been the creation of agroparks.

At the recent forum, Customs-Business 2025: Dialogue and Trust, it was reported that Azerbaijan currently has 53 agroparks, into which 2.4 billion manats have been invested. However, the development of these large farming conglomerates has yet to resolve the sector’s underlying challenges. Notably, in 2024, production from agroparks accounted for just over one per cent of total agricultural output—a surprisingly modest contribution given the scale of investment.

According to the National Priorities for Socio-Economic Development “Azerbaijan 2030” and the Law on Food Security, reforms in the domestic agricultural sector are focused on boosting productivity through advanced agrotechnologies, efficient irrigation systems, digitalised management, and the development of new farmland in the Karabakh region. The plans also aim to reduce costs in the processing and food industries by expanding localised production within agroparks, with the ultimate goal of increasing the share of export-oriented products.

The urgency of accelerating these reforms stems from the persistent challenges facing Azerbaijan’s agricultural sector. Small-scale farms—estimated at 150,000–200,000 in number—are often poorly equipped with modern technology and struggle to access preferential financing. Consequently, limited use of chemical inputs, inefficient irrigation, and restricted access to modern agricultural machinery prevent these farms from achieving yields comparable to those of the country’s large agribusiness enterprises. Small farmers, whose production profitability lags far behind that of crop-focused agroparks, intensive livestock farms, and greenhouse operations, often fail to meet required quality standards. In several sectors, the combination of high production costs and low output reduces the competitiveness of small-farm products both in export markets and domestically.

Given this, it is no surprise that today around half of Azerbaijan’s agricultural exports come from agroparks, large-scale farms, and greenhouse enterprises. In the processing segment, the majority of external supplies are provided by major food industry enterprises, including canneries, wineries, and similar facilities. Consequently, in recent years, state agricultural policy has largely focused on the development of specialised agroparks to more rapidly achieve the goals outlined in the National Priorities. This strategy has promoted sectoral clustering and the adoption of modern technologies.

“To date, approximately 2.4 billion manats [$1.4 billion] have been invested in the country’s 53 established agroparks,” stated Zaur Aliyev, Advisor to the Minister of Agriculture of Azerbaijan, at the recently held forum Customs-Business 2025: Dialogue and Trust. He emphasised that the agricultural sector’s role in non-oil exports and the country’s foreign trade is becoming increasingly significant.

In April of this year, by the presidential decree, the authority to establish and regulate agroparks was transferred from the Economic Zones Development Agency (IZIA) under the Ministry of Economy to the Ministry of Agriculture. The only exception is the pilot agropark in Yevlakh, which spans 2,000 hectares of saline land and specialises in intensive horticulture.

Given that the country’s top priority is the production of grain and fodder crops, around 35 agroparks currently focus on crop farming. Large grain-producing agroparks account for more than 25% of Azerbaijan’s wheat output. This is largely because these clusters host around 80% of all pilot and other efficient irrigation systems, roughly a quarter of all elevators and storage facilities, and enterprises producing high-yield wheat seeds and other crop varieties.

Another fifteen agroparks operate on a mixed cycle, combining crop and livestock production, while approximately two specialise in sorting, packaging, processing, and logistics. Special mention should be made of the Azerbaijan-Türkiye agropark “Dost” in the Zangilan district, which has established farms for 3,500 head of livestock, built a fodder base with circular irrigation systems, and, crucially, is developing facilities for producing final meat and dairy products.

The development of agroparks in Azerbaijan can certainly be seen as a positive initiative, but it is not without shortcomings. Unfortunately, among the country’s existing agroparks, very few—like “Dost”—operate on a fully integrated cycle: producing feed, raising livestock, processing raw materials and by-products, and delivering finished goods to consumers. In fact, the original concept of agroparks envisioned the integration of agricultural production, processing, and packaging into a single, seamless system.

Even more concerning are the still modest production volumes. Just over a year ago, agroparks employed only around 5,000 people permanently.

According to the State Statistics Committee, in 2024 Azerbaijan’s total agricultural output slightly exceeded 12.995 billion manats (approximately $7.6 billion), a mere 1.5% increase over the previous year. Meanwhile, the output from agroparks amounted to only 150 million manats ($88 million)—roughly 1.15% of total agricultural production. In other words, the “mountain has given birth to a mouse.” Despite significant investments in these agricultural clusters, it is difficult to claim that agroparks have yet become true drivers of large-scale commercial production in the country.

Data for January–October 2025 suggest that this inertia in the agricultural sector persists. Total output reached just over 12.529 billion manats (approximately $7.3 billion), growing by only 1%. Some sectors even recorded declines: vegetable production fell by 2.8%, potatoes by 1.3%, melons and gourds by 6.3%, wool by 1.3%, and silk by 22.1%.

The situation in livestock farming is far from rosy. During the reporting period, production reached just under 6.080 billion manats ($3.5 billion), growing by only 0.4%—essentially within the margin of error. There are several reasons for the sector’s stagnant productivity; the main ones are as follows:

Over the past 12 years, Azerbaijan has carried out a large-scale process of importing high-yield elite breeds of cattle, while a significant portion of the meat and dairy herd was shifted from extensive grazing to stall-fed systems, mainly in large farms and agroparks. Despite their high-tech advantages, automation, and other benefits, maintaining elite breeds increases costs for compound feed, energy, heating, labour, and so on. These overheads raise the production costs of meat and dairy products, increase retail prices, and reduce market demand, which in turn limits production growth.

The situation is further exacerbated by the fact that in many regions, small farmers who have grazed their livestock on municipal and state lands for decades are now deprived of this opportunity. This is partly due to desertification and soil erosion in foothill and mountainous pastures; to prevent further land degradation, grazing in these areas has been restricted. At the same time, in recent years, municipalities have begun leasing pasture lands to large dairy farms and agroparks, leaving small farmers without grazing access and driving them out of livestock farming.

In recent years, the reduction in competition in the sector has led to noticeable increases in retail prices for meat and dairy products, while the decline in domestic supply has been offset by a significant rise in imports.

All of this is regrettable, especially considering that not long ago—in 2013—the Food and Agriculture Organisation of the United Nations (FAO) recognised Azerbaijan as a leader in the post-Soviet space, ahead of schedule in meeting the UN’s Millennium Development Goals. According to FAO experts, Azerbaijani farmers were supplying more than 92% of domestic demand for livestock and poultry products.

Notably, he imbalances and challenges in the country’s agricultural sector are currently under close government scrutiny, with measures being prepared to optimise operations. The Ministry of Agriculture has announced plans to develop a new concept for agropark management in Azerbaijan. This initiative will include expanded digital services and the application of artificial intelligence (AI) to accurately assess risks of plant disease, select crops based on soil type, optimise reclamation and energy use, and address environmental concerns. The overarching goal is to increase production volumes, expand processing and packaging capacities, and boost exports of competitive agricultural products.

In the Ministry’s near-term plans is the accelerated development of fertile lands in the Karabakh region. Specifically, around 200 hectares are slated for a greenhouse agropark, alongside a horticultural agropark covering more than 2,000 hectares.