Pakistan-Azerbaijan trade could spell great news for the agricultural sector

Azerbaijan’s Ambassador to Pakistan, Khazar Farhadov, announced in his speech at the Lahore Chamber of Commerce and Industry (LCCI) Azerbaijan’s intentions to establish a trade centre in Lahore. In 2023-24, bilateral trade stood at an abysmally low six million dollars, according to Business Recorder.

However, the LCCI President expressed the need to strengthen joint efforts to boost the ‘trade volume between both countries to at least one billion dollars’ in the next few years. Currently, Pakistan exports rice, fabrics, fruits, and water pumps to Central Asian countries, but there is great potential to increase the assortment of goods that Pakistan exports to Azerbaijan.

The establishment of the trade centre spells great news for businesses, especially in agriculture. Tobacco farmers are especially projected to benefit from increased trade with Azerbaijan because the country happens to be a net importer of tobacco.

According to the Observatory of Economic Complexity, the central Asian country imports $37.4 million in raw tobacco, making it the 49th largest importer in the world. Azerbaijan’s tobacco import bill alone is 523 percent larger than the existing value of the trade volume that currently flows between the two countries.

Pakistani farmers are in luck, as they have a surplus of tobacco. The excess tobacco in the market was a consequence of tobacco purchasing companies reducing their demand by 2.5 million kg. This left many plantation owners to find independent buyers themselves, which seemed impossible until now.

Tobacco farmers could export their surpluses to Azerbaijan, as the landlocked country currently imports tobacco from far-flung areas such as Brazil. According to Cargo Router, the time it takes for cargo to travel from Brazil to Azerbaijan is a staggering 48 days, whereas, from Pakistan, the time is cut down to just 7.5 days.

The reduction in transit times also translates into a drop in freight charges as the freight rate index is significantly lower for Azerbaijan from Pakistan, as opposed to Brazil.

Another sector expected to benefit immensely is sugar cane farmers and millers. This possibility stems from a whopping $159 million in sugar per annum imports by Azerbaijan. With Minister of Commerce Jam Kemal Khan ramping up efforts to boost sugar exports, experts are speculating that it is only a matter of time before Pakistani sugar is being consumed in Baku’s cafés.

Aside from the trade centre potentially boosting Pakistan’s exports, analysts are suggesting that the agricultural sector might also benefit from the import of Azerbaijan’s fertilisers since it is a net exporter of the commodity.

While the establishment of the trade centre will certainly create an environment conducive to trade activities, many doubt the LCCI’s claim that it can boost trade with Azerbaijan to one billion dollars in the next few years.