Azerbaijan: Using Soviet Methods to Revive Cotton Industry

In September, at the beginning of the cotton harvesting season, Azerbaijani President Ilham Aliyev convened a conference on cotton growing.
 
At the meeting, held in the city of Sabirabad, in the country’s agricultural heartland, he fondly recalled memories of the 1970s and 1980s, when he would accompany his father, Heydar Aliyev – then the first secretary of the Communist Party of Azerbaijan – to Sabirabad to meet with cotton growers in the fields. Azerbaijan, Aliyev noted, was at the time producing a million tons of cotton per year, compared with a mere 35,000 tons in 2015.
 
“Unfortunately, cotton-growing in Azerbaijan is experiencing a downturn these days,” Aliyev told the assembled experts.
 
But under a new state plan to boost the industry, he promised, “we will return cotton growing its former glory.”
 
This pursuit of glory comes at a hidden cost: according to farmers, workers, and independent experts, students and state employees are forced into the fields to pick cotton to fulfill production quotas. And the farmers are paid well under market value by firms that have a state monopoly.
 
The system is reminiscent of the Soviet planned economy, which Aliyev mentioned in his speech as a historical relic. It is also a system still utilized in Uzbekistan to this day. “In those years [the 1970s and 80s], we engaged students in the harvesting of cotton, which is no longer necessary today, because we have sufficient manpower,” Aliyev said.
 
Many others, though, say that Baku is in fact bringing back that Soviet system. This harvest season, “every government institution was given a quota to fulfill and because of this order, we saw teachers, students, doctors and government employees in the field,” said Vahid Maharramov, an expert on Azerbaijani agriculture at the Economic Research Center, a Baku think tank, in an interview with EurasiaNet.org. “They received an order from above and they had to implement it.”
 
Information on this forced labor is hard to come by in Azerbaijan's restrictive media environment, which is especially forbidding outside the capital. But several reports have surfaced this harvest season. In the city of Goychay, for example, one hospital sent all its staff to work picking cotton, according to a report for Radio Free Europe/Radio Liberty's Azeri service. The head of the local executive committee, Ikram Valiyev, acknowledged that doctors and other hospital employees were working in the fields, but said that it was voluntary. “The whole country has been informed. Whoever wants to can go work … after work hours, on Sundays, [and] bring us the cotton they collect, and get paid for it,” Valiyev said.
 
But one Goychay resident told RFE/RL that the labor was not voluntary: “They force everyone into cars when people show up at work in the morning and send them to the fields. They only tell us it’s the order of the director of the hospital,” the resident said.
 
It is not clear whether the practice started before this year, or how many people were involved, but Javad Javadov, an independent labor law expert, told EurasiaNet.org he estimated that it was “in the thousands” in the most recent harvest season.
 
Another controversial element of the cotton-farming push is that Azerbaijani farmers are forced to sell their goods at prices well below market value. Aliyev, in his Sabirabad speech, noted that farmers are now paid 50 gapiks per kilogram of cotton (about $0.28), “a very serious increase” over the previous price of 40 gapiks, thanks to an additional government subsidy. Aliyev said that further price increases were being considered, but only to a point.
 
“The focus should be on people's income here. At the same time, we need to ensure the economic viability of the business,” Aliyev said.
 
But the 50 gapik price is still well below market rates. In Iran, farmers are paid three times as much, 1.5 Azerbaijani manats, and in Turkey, 90 gapiks, Maharramov said. In international markets, cotton trades for about $1.60 per kilo, or 2.85 manats.
 
Namiq Pashayev, a farmer from Azerbaijan’s Imishli region, said in an interview with EurasiaNet.org that he does not mind the arduous labor of cotton collection. But he complained that low prices allow him to barely make ends meet. “They are the ones who set the price. When we complain, they threaten us, telling us they might lower it even further,” Pashayev said.
 
Azerbaijan's cotton industry is dominated by two companies, CTC-Agro and MKT Istehsalat Kommersiya. Little is publicly known about these companies, but analysts believe they are somehow connected with government officials. “The Ministry of Agriculture, as well as Ministry for Economic Development, have financial interests in this business. They are not interested in farmers, but in making profits,” Maharramov said.
 
An official at the Ministry of Agriculture acknowledged that state employees and students may be picking cotton, but denied that the ministry had anything to do with it. "It is possible, but as the Ministry of Agriculture, we do not intervene in these things,” Imran Cumshudov, the ministry's Director of Crops Production, told EurasiaNet.org. Company representatives did not respond to requests for comment.
 
“The government subsidy of 10 gapiks makes very little difference for a farmer, and does not solve any of the problems,” Maharramov said. “Authorities need to take stronger steps, such as encouraging the cotton companies to share some of the revenues received from their exports with the farmers.”
 
The new interest in cotton growing is a result of the collapse in world oil prices, which has forced Baku to try to quickly diversify its largely hydrocarbon-based economy. The cotton industry was largely neglected during Azerbaijan's oil-and-gas boom in the early 2000s; the 35,000 tons produced last year is down from annual figures of 130,000-150,000 tons in the mid-2000s.
 
“The government became lazy. Rather than investing in industry, it opted for easy solutions, relying on energy revenues. If they [officials] had focused on serious reforms [in the cotton industry] at the time, we wouldn't be facing these problems now,” said Natig Jafarli, an independent economist, in an interview with EurasiaNet.
 
Aliyev, in his September speech, said that the country's goal for 2016 was to harvest 100,000 tons of cotton. The Ministry of Agriculture has reported that, as of December 12, the total collected stood at 84,494 tons.
 
“I believe that next year cotton acreage should be even greater, which will also increase the number of people employed,” Aliyev said. “Hundreds of thousands of people will be attracted to this work in cotton-growing districts.”