Azernews.Az

Nazrin Abdul

Read more

In recent years, Azerbaijan has focused on harnessing its economic potential and promoting export-oriented agricultural production. These efforts have led to significant progress in the development of traditional agricultural sectors. The modernization of infrastructure, better utilization of labor resources, and the effective use of natural resources have allowed for increased employment and entrepreneurial growth within the agricultural sector.

Cotton production, a historically strategic area within Azerbaijan's agricultural landscape, plays a critical role in the country's economy by generating substantial foreign exchange earnings. Characterized by high labor efficiency and total output, cotton farming is integral to Azerbaijan’s agricultural policy and economic stability.

Natural and economic advantages of cotton production

Azerbaijan benefits from favorable natural and climatic conditions that are well-suited for cotton cultivation. The region's long-standing tradition of cotton growing, coupled with the ability to meet the raw material needs of the local processing industry, positions cotton as a pillar of Azerbaijan's agricultural exports. Additionally, Azerbaijan's cotton production holds considerable export potential, particularly for finished cotton products. These factors underline the necessity of further developing and investing in the cotton sector as a key component of the country’s agrarian policy.

Given these advantages, it is crucial that Azerbaijan continues to focus on creating favorable conditions for cotton farming, ensuring the sector's sustained growth and competitiveness in international markets. Strengthening the value chain—from production to export—will be essential in boosting the sector’s economic contribution.

Current performance and export trends

In the first two months of the current year, Azerbaijan exported 18.6 thousand tons of cotton, valued at 28.4 million US dollars. However, this figure represents a notable decline compared to the same period in 2024, with a decrease of 5.4 thousand tons (22.4%) in volume and 9.8 million US dollars (25.7%) in value. This drop highlights the challenges facing Azerbaijan's cotton export sector, which may be influenced by factors such as fluctuations in global demand, changes in market conditions, or regional production issues.

Despite the decline in cotton exports, the overall foreign trade turnover of Azerbaijan showed positive growth. In the first two months of this year, the country’s foreign trade turnover reached 8.9 billion US dollars, marking an increase of 1.7 billion US dollars (23.2%) compared to the same period in 2024. This indicates that while cotton exports have experienced a downturn, other sectors have contributed to the country's positive trade balance.

The role of imports and foreign trade balance

During the same period, Azerbaijan imported cotton worth 1.6 million US dollars, a slight increase of 87 thousand US dollars (5.6%) compared to January-February 2024. This import increase suggests that while domestic cotton production remains a key component of the economy, the country still relies on external sources to meet certain processing and manufacturing demands.

Azerbaijan's foreign trade balance, although positive, showed a significant decrease in the reporting period. The trade surplus was 628 million US dollars, down 1.7 billion US dollars (3.7 times) compared to the previous year. This reduction in the trade surplus is largely attributed to a sharp rise in imports, which increased by 1.7 billion US dollars (69.2%) compared to the same period last year. While the increase in imports reflects strong demand for foreign goods, it also raises concerns about the sustainability of Azerbaijan's current trade balance and the dependency on imports to fuel the domestic economy.

Strategic outlook for cotton production

Moving forward, the Azerbaijani government must prioritize addressing the challenges faced by the cotton sector to maintain its competitiveness. Key areas for improvement include enhancing agricultural productivity, investing in technology for cotton processing, and optimizing logistics to reduce costs and increase efficiency.

Furthermore, expanding the processing capabilities for cotton and increasing the production of finished cotton products would not only help Azerbaijan move up the value chain but also enable the country to capture a larger share of the international market for high-value cotton products. Export diversification strategies, alongside strong domestic support for cotton growers, will also be pivotal in mitigating the risks associated with global market fluctuations.

While Azerbaijan’s cotton sector has faced some setbacks in export performance in early 2025, the broader trade picture remains positive. Strategic investments in cotton farming infrastructure, as well as policies to boost the sector’s competitiveness, will be key in ensuring the long-term success of cotton production in Azerbaijan. Strengthening the link between cotton farming, processing, and export will bolster the sector’s economic contributions, enabling Azerbaijan to maximize its agricultural potential and solidify its position as a regional leader in cotton production.