The 6th Steering Committee Meeting took place on December 10th, 2020

The sixth meeting of the Project Steering Committee (SC) of the project took place on December 15, 2020. Due to travel restrictions related to the pandemic, the SC meeting was organized online via Zoom platform in order to allow the participation of the Members located in the EU.

Azerbaijani staff and the RTA Mr Riccardo Passero participated from the AKIA office in Baku.

The 6^th Quarterly Report covering 1^st of August– 31^st of October 2020, an overview of the future activities for the fourth semester covering 1^st of November – 30^th of April 2021 and proposed extension period were presented by the Resident Twinning Adviser Mr. Riccardo Passero based in Baku.

Nine expert missions were carried out in the 6^th Quarter covering activities 1.1, 1.2, 2.1, 3.1, involving 9 STEs, for a total of 50 working days. Consequently, on 31/10/2020, 52.7% (253/480) of the STE’s working days were consumed and the total number of working days left for the project was 227 (47%).

Concerning the activities implemented during the 6^th quarter, five indicators of achievement were completed:

Indicator 2.1, Indicator 1.2, Indicator 1.3, Indicator 6.2, and Indicator 6.3.

Indicator 2.1 “Report on alternative support measures (focus on livestock subsidy options)” was achieved. The final version of this Report was completed at the beginning of August 2020, with n. 6 alternative livestock measures proposed (two for sheep, one for buffalo, one for cattle and two for beekeeping) together with detailed procedures for their implementation.

Indicators 1.2 “Report on the analysis of the current domestic support and related conclusions” and 1.3 “Report and conclusions on possible areas of conflict with the WTO” were both achieved, with an analysis of the current subsidy system and farms structure in Azerbaijan. The Report highlights that the existing subsidies fall under the WTO Amber box definition and initial policy reform proposals were presented to gradually improve the efficacy and effectiveness of the current interventions.

In general terms, the proposed new architecture for agricultural support in Azerbaijan, presented by the RTA Mr. Passero, could be design around the following pillars:

Direct payments (subsidies):

• Simplified Farm Scheme (under 2 hectares) for a specific group of crops (i.e. wheat, barley, other cereals and legumes, sunflower, soybean and peanuts).

• Single Payment Scheme (over 2 hectares) for a specific group of crops (i.e. wheat, barley, other cereals and legumes, sunflower, soybean and peanuts).

• Top-up premia for industrial crops (i.e. cotton, tobacco and sugar beet).

• Top-up premia for crops with specific labour necessities (i.e. rice, saffron, tea and orchards).

Public Rural development policy:

Introduction of the necessary Rural development measures (call for applications) to accompany subsidies, aiming at:

• Competitiveness of the agricultural sector

• Sustainable management of rural resources

• Improving livelihood in rural areas and territorial development.

General services:

• Support of the agricultural research system.

• Functioning public extension and advisory service.

• Services for the control over pests and diseases.

The RTA Mr Passero presented a Roadmap as well to be applied in order to fulfil the WTO Green Box Commitments. The roadmap is divided into three phases to switch part of the domestic support classified from Amber box into Green Box category. For every stage, based on official WTO and available local data, a quantification of the Amber box reduction was calculated by Twinning.

This activity on policy reform will continue during the next months in consultation with BC authorities. The aim is to provide, as foreseen by the Twinning fiche, for a “Report on the necessary Switch actions from WTO Amber to Green box (result 2.2)” and the proper “draft of the new subsidy measures (result 2.3)”.

The activity that Twinning is carrying out on “policy options” is mainly aimed at providing solutions applicable in Azerbaijan, taking in account the local context. The proposals consider good practices developed in the EU and the WTO principles, but always bearing in mind the local context and the priorities set by the Azerbaijani Authority.

Furthermore, during the 6^th quarter, Indicator 6.2 “Report containing advice on how EU Rural Development framework may be used/adapted by Azerbaijan” was achieved. The activity was remarkable and involved several consultations with BC side (especially with local authorities and DAIMs). As previously decided, the idea was to test the EU Rural development model in two pilot areas for the definition of the local strategy and identification of the intervention measures. The Report was completed during the 6^th quarter with the effective definition of two pilot Rural Development programmes for the regions of Ismayilli and Lankaran and an explanation of the functioning of the “EU Project Management Cycle” for Rural Development, which is a new concept in Azerbaijan in public intervention.

Indicator 6.3 "Report with proposal concept and a draft of Rural Development measure fiches" was achieved. The content of these measure fiches was identified in consultation with BC authorities and local DAIMs and according to the local rural development strategies prepared for Ismaylli and Lankaran. A total of n.10 technical measure fiches based on EU guidelines, and customized to the Azerbaijani context, including eligibility conditions, eligibility of expenditure and selection criteria for the following Rural Development measures were prepared, as follows:

Four measure fiches for Lankaran:

1. “Cooperation among rural actors” in Lankaran Region (i.e. cooperation among small farms in organizing joint work processes and sharing facilities; set up of new supply chains, new products).

2. “Development of handicraft activity (production of pottery, clay products)” in Lankaran region.

3. “Organized tourist trips with hunting and angling opportunities” in Lankaran region.

4. “Projects associated with the maintenance, restoration and upgrading of the cultural and natural heritage of villages” in Lankaran region.

Five measure fiches for Ismayilli:

5. “Cooperation among rural actors” in Ismayilli Region (i.e. cooperation among small farms in organizing joint work processes and sharing facilities; set up of new supply chains, new products).

6. “Creation and development of agritourism activities on farms” in Ismayilli Region.  

7. “Basic services and quality of life” in Ismayilli region.

8. “Development of handicraft activity (hand-weaving carpets)” in Ismayilli region.

9. “Wool and silk products processing” in Ismayilli region.

10. Nationwide measure for “Advisory services, farm management and farm relief services” in Azerbaijan FAS (Farm Advisory Services).

Moreover, Indicator 8.1 is ongoing in the 7^th quarter “Legal base for administration and control of subsidy payments in line with IACS principles and proposal for further alignment with relevant EU legal base”. An advanced draft was provided with reference to planting/sowing subsidy (which account for 81% of total subsidy budget allocation in Azerbaijan). An analysis of the current procedures for administration, payment and control of such subsidy was conducted, together with the proposal of corrective checklists (for the short and medium-term) in order to align as much as possible, the current planting/sowing subsidy management to IACS principles.

As a result of this analysis, four stages of the current “planting/sowing subsidy” were found not to be compliant with IACS principles. One of the most relevant issues that were found: the insufficient control of the application documents and related data entry. To solve this issue, the mentioned Report (for result 8.1) presented some concrete administrative solutions that could be implemented in the short-term at DAIM level and by AKIA. Furthermore, the document proposed a practical solution to integrate, in a systemic way, the existing satellite remote-sensing functionalities with the control’s procedures of land-based subsidies.

Overview of the future Activities.

During the ongoing 7^th quarter, the 3^rd Rolling Work Plan was approved on the 2^nd of September 2020 and Addendum No.2 was signed and approved by the Delegation at the end of November 2020.

A Mission on Result 2 Indicator 2.2 was held in early December 2020, with 2 STEs and 10 working days consumed. The purpose of the mission was the preparation of a Report containing advice on “Switch actions” (actions needed to transform part of the current subsidies from amber to green box) to be done in order to comply with Green Box requirement to obtain access to AoA Art. 6.2.

RTA further presented a plan to launch three technical working groups between the beneficiary country and the Twinning team. One Component 1 technical working group would intend to discuss in detail and make decisions on crop subsidy reform, while another group will concern livestock subsidy reform.

A technical group for Component 2 (Rural Development) is also planned to be launched. The intention of this technical group would be to define the future actions to support the launch of a proper national Rural Development policy in Azerbaijan by MoA and AKIA.

RTA further detailed the proposed timeline of activities to be conducted in the 4^th semester (until 30.04.2021) and activities that could be carried out during the extension period. He noted that consultations with BC team would be necessary before every mission and every action taken.

EUD provided information about the extension of the project that EUD fully supports but it is still to be formalized.

At the end of the meeting, SC members approved the 6^th Quarterly Report, thanking the RTA for the excellent work conducted so far.