Azerbaijan’s soaring food prices

A recent increase in food prices has left many in Azerbaijan reeling. As debate around the causes and possible solutions to the problem continue, it is the most vulnerable who are paying the biggest cost.

‘Everything increases in price while the salaries stay the same’, says Sahib Mammadov, a shopkeep from Ganja. Sahib earns ₼380 ($220) per month, and a recent spike in food prices means that, he, like thousands of his compatriots, has found his budgets stretched to the limit. 

‘At the beginning of the summer, we could buy tomatoes for ₼1 ($0.59) or ₼0.80 ($0.47). Now they cost ₼2 ($1.20), good quality tomatoes cost ₼2.50 ($1.50). And they will be even more expensive in autumn’, he tells OC Media. 

According to the State Statistical Committee, in January–July of 2019, the prices of food products, alcohol, and tobacco products were 3.1% higher in comparison to the same period of 2018. Industrial products and services went up by 2.7%, non-grocery goods by 1.3%, and services by 3.0%, according to official statistics.

But economist Natig Jafarli disputes the official figures; he says that the real rises in prices are much higher than those reported by government sources.

‘There is always a significant difference between the official statistics and reality’, he told OC Media. ‘Because there are no alternative centres of calculation of price rise and inflation.’

Jafarli says that the increase in food prices can be explained by the devaluation of the Azerbaijani manat since 2015, as well the government’s privileging of agricultural exports. 

They are interested in [promoting agricultural exports] in order to attract foreign currency to the country’, he says. ‘It means that exports grow, but this leads to a mismatch with production for domestic consumption.’

He adds that the growth of tourism has also played a part.

‘In recent years, the number of tourists coming to Azerbaijan increased by 1 million people. And this means a rise in consumption. That is, export and consumption exist, but production is very weak and this leads to food shortages and creates a rise in prices’. 

The causes and the solutions

Vahid Maharramli, the chair of Support for Agrarian Reforms, an advocacy group, says that high food prices could be addressed without harming agricultural exports by organising ‘village fairs’. 

‘At a fair, a  villager would present products that he couldn’t sell for a normal price or those which are not appropriate to sell at in Moscow bazaars’, he tells OC Media. ‘Those products which are slightly spoiled or spoiling.’ 

‘Azerbaijani agricultural production doesn’t meet the existing demand, there is a global consumption rate for how much food one person should consume, but in Azerbaijan, the government doesn’t consider this rate and acts according to their self-created rules. And they use minimal numbers.’ 

‘For example, while the World Health Organisation has determined [the optimal] meat consumption for one person per year to be 76 kilogrammes, Azerbaijan lowered this number to 30 kilogrammes.’ 

‘In Azerbaijan, production of potatoes is half that of neighbouring Armenia’, he adds.

Sahil Ahmadov grows tomatoes and potatoes on a small field in the village of Kolayir. He told OC Media that selling his produce abroad was the only way to make ends meet. 

‘I carry products to Baku twice a month, I have to sell them for a good price to pay back the price of petrol, but they don’t want to buy expensive produce’, he says. ‘I have to find [someone] who will bring my produce to the Moscow bazaar’. 

Tofig Yagublu, a member of the opposition Musavat Party, says that monopolies are largely responsible for the price increases. 

‘All economic fields have been captured by oligarchs and officials’, Yagublu tells OC Media. ‘There is false advertising that agriculture is developing and is supported [by the government].’ 

According to Yagublu, corruption arises out of such conditions, and even when investments in the agricultural sector are announced, ‘the funds are not used for that which they have been allocated for’. 

On 22 August, Deputy Prime Minister Ali Ahmadov visited the bazaars of Baku. In his interview with journalists, the deputy minister said that the prices at the bazaars were relatively higher than at fairs. 

‘The big difference between the prices of products at bazaars and fairs can be seen; the government should think about this seriously. Moreover, most of the needs of citizens for food and grocery products is met by domestic production. An Azerbaijani citizen must not suffer from a shortage of grocery goods. We want both parties involved in the chain “from farm to the table” — both farmers and consumers — to be satisfied’.

‘The price rises most affects low income families’

Gubad Ibadoghlu, a political economist and a visiting scholar at Rutgers University says that whatever is to blame for the sudden surge in prices, it is the poorer and most socially vulnerable who feel it most.

‘The rise in the price of products has more of an affect on low-income families, IDPs, pensioners, people with below-average salaries, and people receiving social benefits’, Ibadoghlu tells OC Media.

‘If we look at the composition of the living wage we will see that 70% of it is spent on food products.’ 

This high household expenditure on food, he says, means that when the price of food increases, there is barely any money remaining in families’ budgets for anything else.

‘This reduces a person’s expenses on education and healthcare’, he says, ‘which is essential for a person’s development in other directions. 

‘The price increases also affect the consumption structure of low-wage earners. They spend the money they earn to buy the most important products and cannot consume better quality or higher calorie products; they have to buy cheap, low quality products. Therefore they are having problems with their health.’

‘We used to buy meat and chicken twice a week’, says one retired Ganja resident, ‘but now we can only buy it once because everything costs more, butter, onions, potatoes…’

‘The weather is cold but I haven’t got [winter] shoes for my son yet. I’m waiting, maybe next month I’ll manage to save something’, she adds.