(MENAFN - AzerNews) By Aygul Salmanova
As a country relying on oil as the main resource for development, Azerbaijan plans to minimize its oil dependence, which requires ensuring growth of non-oil sectors of economy, where production of tobacco is not an exception.
Recently, the amount of tobacco produced has witnessed a considerable increase, according to Namig Shalbuzov, expert at Center for Economic Reforms Analysis and Communication.
He told Azernews that if for 2016 some 3,600 tons of tobacco were produced in the country, then in 2017 this figure rose by 44.4 percent reaching 5,200 tons.
'The main reason for the increase is the attention shown to tobacco industry by the country's leadership in recent years. Thus, the purchasing price of tobacco was significantly increased in 2016 compared to the previous year and one kilogram of first class wet tobacco was taken at 0.25 manats ($0,14), and one kilogram of second class wet tobacco was 0.15 manats ($0.08). These figures in 2015 were 0.16 manats ($0.9) and 0.8 manats ($0.47), respectively, the expert noted.
Shalbuzov went on saying that from 2017, subsidies are given to producers in the amount of 0.05 manats ($0.02) per kilogram of dry tobacco and ten kilograms of second class wet tobacco. He added that support measures are expected to continue in the coming years as well.
Talking about the export of tobacco products, the expert noted that the exports consist primarily of raw tobacco.
'In 2015, the exported tobacco amounted to $7.4 million, while in 2016 this amount reached $8 million. It should also be noted that the quantity of exported cigarettes from the country has dropped. While this quantity amounted $2 million in 2015, this amount dropped to $0.9 million in 2016. This shows that actual cigarette exports are below potential capacities, he said.
Touching upon cigarette production in the country, Shalbuzov noted that the country's potential to produce cigarettes from local tobacco raw materials and to boost exports in this area is great.
He added that generally, in 2017, there were five main non-oil sectors in the world, including Russia, Turkey, Switzerland, Georgia and Italy.
The expert also noted that 96.7 percent of tobacco cultivated areas and 98.5 percent of the produced tobacco fell intoShaki-Zagatala economic zone's share, according to the data of 2016.
'In this economic zone, Shaki, Zagatala, Balakan and Gakh regions are particularly distinguished. More than 68 percent of tobacco produced by the country is allocated in Shaki and 14.7 percent in Balakan. In the coming years, along with the Shaki-Zagatala economic region, tobacco production is expected to be increased in other regions, where natural and climatic conditions are more favorable, he said.
The expert added that the country's targets and prospects for tobacco use are clearly outlined in the State Program for the Development of Tobacco in the Republic of Azerbaijan for 2017-2021, approved by the Decree of the President of the Republic of Azerbaijan No 3163 of August 10, 2017.
'Increasing the average productivity of 20 centners/hectare, the sowing area to 6,000 hectares, tobacco production up to 12,000 tons by 2021 are among the main tasks of the program,"he said.
Commenting on challenges and future plans on this field, Shalbuzov noted that in order to cope with the challenges, infrastructure will be strengthened, state support to producers will be further expanded, and mechanisms will be developed to provide preferential loans to tobacco producers as well as continued subsidies.
'Furthermore, the procurement, storage and processing of tobacco products produced in different regions, as well as the establishment of tobacco-drying stations will be supported. Along with these, measures have been identified in the fields of scientific support, information consulting services, marketing, export support, he noted.
The recent five-year program approved for the development of the tobacco production in Azerbaijan is going to decrease import of foreign products. Today, domestic production provides only 16-17 percent of consumer demand, and the implementation of the state program will bring this figure up to 70 percent.
Excise tax rate in Azerbaijan is quite low, [4 manats ($2.36) per 1,000 pieces of imported cigarettes and cigarillos and 10 manats ($5.91) per 1,000 pieces of cigars], so the changes envisage increasing excise rates on imported tobacco and alcohol products.
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