IFC announces introduction of 2 instruments to finance agricultural sector in Azerbaijan

The International Finance Corporation (IFC) is currently implementing two initiatives in Azerbaijan's agricultural sector, IFC Financial Sector Specialist Kyrylo Mukhomedzyanov said on the third day of the Baku Climate Action Week (BCAW2025), Report informs.

Mukhomedzyanov noted that agriculture is one of the most important sectors of the Azerbaijani economy, contributing nearly 6% to GDP.

"This sector employs 35% of the population. An interesting trend is that agricultural exports are also growing – they have almost doubled since last year. However, agriculture is vulnerable to the impacts of climate change, and we recognize the challenges we face: critical water shortages, a lack of modern irrigation systems, and land degradation. Addressing these issues requires financial resources. Two instruments we are currently implementing in Azerbaijan are agricultural receipts and warehouse receipts. An agricultural receipt is essentially a pre-harvest financing tool that allows farmers to obtain the necessary funds before harvest. This provides access to higher-quality seeds, fertilizers, fuel, as well as modern technologies and equipment to improve climate resilience," said the corporation's representative.

The IFC representative noted that warehouse receipts are the next stage of agricultural cycle financing, allowing farmers to store their produce in certified warehouses for longer periods, extending the post-harvest financing cycle and enabling significantly better prices for their produce.

"These instruments, while seemingly simple, actually form an entire ecosystem of agricultural finance. They not only expand access to financing but also reduce the risk perceived by financial institutions and value chain lenders. They help increase profitability and productivity through access to better technologies and agricultural inputs, and they contribute to market stabilization, as longer shelf life makes prices more predictable. They are also applicable to contract farming. Furthermore, a tailored regulatory framework is created for the needs of a specific sector, in this case, agriculture. These instruments also enhance climate resilience by providing financing for the implementation of climate-smart practices in agriculture," Mukhomedzyanov added.