There is no doubt that cotton in Azerbaijan carries significance
far beyond its meager 2% contribution to the overall output in the
agriculture sector. At a recent regional conference held in the
Sabirabad District, which was tasked with implementing the
decisions made by President Ilham Aliyev during the May 25
agricultural development conference, Agriculture Minister Majnun
Mammadov gave the numbers behind the significance of cotton. The
production and processing of cotton alone employ about 50,000
permanent and temporary employees and thus affect the lives of up
to 200,000 to 300,000 people, out of a population of about 10.2
million. Given that only 6.3% of land is used for crop cultivation,
this has quite a large impact on the country’s economy.
Historically, “white gold” (cotton) contributed around 25% of the
nation’s agricultural revenue. While that share has fluctuated, it
remains a heavily state-subsidized, strategic pillar of the non-oil
economy.
However, the global market environment surrounding such
attention has been more complex than that suggested by the boom.
According to the June 2026 forecast from the International Cotton
Advisory Committee, global cotton area will fall 1% to 30.1 million
hectares and global production to drop 2% to 25.7 million tonnes
during the 2026/27 season because of poor sentiment regarding
demand, rising costs and ‘strategic downsizing’ in China where it
is expected that inefficient, water stressed areas will be retired
and high productivity areas planted instead. The cost of
fertilizers have increased more than 12% in Q1 of 2026 because of
tensions in the Middle East and the disruptions of global supply
chains as a result of issues at the Hormuz Strait. The price of the
Cotlook A index for the 2025/26 crop season from ICAC is forecasted
to remain between 73 and 84 cents per pound, with an average of 78
cents per pound.
The honest starting point for any assessment of Azerbaijan’s
cotton sector is that it has, for most of the past decade,
underdelivered against its own ambitions. According to the State
Programme for the Development of Cotton Growing 2017–2022, the goal
of 500,000 tonnes of yearly production was established.
This objective was not fulfilled. Declining yields due to
climatic factors from 2022 to 2024 further exacerbated this
situation. As a result, the production figures remained
significantly behind not only those achieved during the era of the
Soviet Union (when Azerbaijan produced over 800,000 tonnes of
cotton per year and was considered one of the main cotton-growing
republics in the USSR), but also behind the objectives it had
outlined recently. Only 2025 was the year when a breakthrough was
finally achieved.
The new State Programme for 2026-2030 defines much more targeted
targets: 50 centners per hectare (almost 40 percent up from 2025’s
36.1 centners), a 17% increase in production, and, most
importantly, an increase in processing capability four times over.
And the latter is the number that deserves attention because it
signals a structural change in priorities: from increasing the
output of cotton to increasing the value extracted from existing
cotton crops. At present, Azerbaijan produces far more raw and
partly processed cotton than textiles: 114,300 tonnes of raw cotton
in 2025 compared to 15,100 tonnes of yarn and 12.8 million metres
of fabric. It is obvious what economic forces lie behind this
disparity: raw cotton fiber is worth substantially less than yarn,
cloth, and clothes.
Production vs processing
Out of all the stages of cotton’s production chain, raw cotton
and yarn show the biggest gap deficit in terms of value capture.
Both fabric and garments show the highest value-add in the finished
product.
The difference between the quantity of raw fibre exported
(114,300 tons) and the amount of yarn exported (15,100 tons)
demonstrates exactly the problem that the four-fold increase in
processing ability aims to address. While one ton of raw cotton
fibre at the present rate of procurement ($470 per ton – 800 manat)
provides only a part of the revenues one ton can provide when
turned into yarn, fabric, and garments. Deputy Minister of Economy
Samad Bashirli’s statements made at the Sabirabad conference, about
aiming to “extend the domestic value chain” by establishing yarn,
fabric, and textile production capacities, represent an economic
policy that Azerbaijan was slower than its neighbors, such as
Uzbekistan and Türkiye, to adopt.
Investment
Uzbekistan is leading with its advanced textile initiatives,
including a significant agreement signed in July 2024 for
cultivation and cottonseed oil production at the Imishli Agropark,
along with a commitment of $54.4 million for yarn, textile, and
garment facilities in Mingachevir Industrial Park, set to take
place between 2025 and 2029. Notably, a garment factory is already
operational in Khankendi, creating over 200 jobs as the first major
textile investment in the liberated territories.
In Türkiye, the TÜİB (Turkish-Azerbaijani Businessmen and
Industrialists Public Union) Karabakh Project anticipates
generating between 5,000 and 10,000 jobs as the Turkish-Azerbaijani
Businessmen and Industrialists Public Union drives a large textile
manufacturing expansion in the Karabakh region, aiming to be one of
the largest employment drivers in the post-conflict reconstruction
efforts.
Meanwhile, in China, Chinese agricultural techniques have
already been implemented in the Ujar District and the Shirvan
Experimental Station, with expectations of future investments in
Azerbaijani textile manufacturing, though these have not yet
matched the scale of commitments from Uzbekistan or Türkiye.
Lastly, early-stage discussions are ongoing with the UAE and India,
as AZPROMO confirmed at the 5th Agribusiness Development Forum in
May 2026, covering plans for a fully integrated production chain
from cultivation to textile manufacturing, though no contracted
figures have been disclosed yet.
If the renaissance of cotton production in Azerbaijan is timely
or not is largely determined by the relative weight of ICAC
forecast used, but even the forecasts provided by the committee
itself have changed their meaning in the last several months, from
a projection for a 4% reduction in production in March/April to a
milder 2% contraction by June along with price ranges that have not
fallen off the face of the map and still remain in the 73-84 cent
range without drastic falls or rises. The market that Azerbaijan is
returning back to is one that slowly finds its equilibrium and does
not undergo a sudden shortage crisis, certainly not as exciting as
the shortage explanation, but much more beneficial than prices of
60 cents and below in mid-2025.
Rather, the key issue becomes whether, by the time the next
price cycle comes around, the processing capacity, the contract
farming reform, and the irrigation infrastructure development have
been done on an adequate scale. This is because the fourfold
increase in processing capacity, if realized, will allow
Azerbaijani cotton producers and processors to protect themselves
from much of the commodity price fluctuations which have
characterized this sector in the recent past. In other words, it
will provide greater security from whatever the Cotlook cotton
price happens to be during each particular season, as they add
value along the chain. This, rather than the favorable harvest
experienced this year, will form the criterion on which the State
Programme for 2026-2030 will be judged.
*image generated with AI