THE IMISHLI SUGAR FACTORY: A NON-OIL SECTOR

UNCLAS SECTION 01 OF 02 BAKU 001595 SIPDIS SIPDIS USTR FOR CELIA KLEIN DEPT PLEASE PASS TO USTDA DAN STEIN DEPT FOR EB, EUR/CARC, EB/TRA/AN, EB/CIP GROSS, EB/CBA MERMOUD E.O. 12958: N/A TAGS: ETDR ECON EAGR EIND PGOV PREL AJ SUBJECT: THE IMISHLI SUGAR FACTORY: A NON-OIL SECTOR DEVELOPMENT SUCCESS STORY ¶1. (U) SUMMARY: The Imishli Sugar Factory is credited with bringing much-needed development to the rural and impoverished Imishli region. Owned by agricultural import-export conglomerate Azersun Holding, the factory processes 5,000 tons of sugar beets and refines 1,000 tons of raw sugar daily. Annually, the factory produces 300,000 to 450,000 tons of crystal sugar, an accomplishment which has allowed Azerbaijan to become a sugar exporter. 2,000 workers are engaged in sugar production within the factory, and an additional 45,000 employees work the 7,000 hectares of sugar-beet seeded land in the rural regions. Azersun Holding cooperated with the American company Valmont Industries, Inc. to develop a successful pilot irrigation project for sugar beet production. In addition, the Imishli Sugar Factory supplies all of Coca Cola and Pepsi Cola's sugar needs in Azerbaijan. END SUMMARY AN INTERNATIONAL ENDEAVOR -------------- ¶2. (U) Located in the Imishli region, approximately 230 kilometers southwest of Baku, the Imishli Sugar Factory occupies 108 hectares of land. The factory was constructed over a two-year period, and became operational in March, an occasion publicly commemorated by President Ilham Aliyev's participation in the March 23 inauguration. Most of the technical equipment for the factory was imported from Germany - a whopping 90 percent - but equipment from Ukraine, Turkey, the Czech Republic, and the United Kingdom was used as well. Local companies completed most of the factory's construction, with the assistance of specialists from Ukraine, Turkey, the Czech Republic, and Poland. Approximately USD 87 million has been invested in the factory. PRODUCTION AND EMPLOYMENT -------------- ¶3. (U) Since becoming operational, the Imishli Sugar Factory has processed an average of 5,000 tons of sugar beets and has refined 1,000 tons of raw sugar each day - producing a total 300,000 to 450,000 tons of crystal sugar annually. Production is expected to increase to 500,000 tons per year in the near future, as Azersun Holding moves forward in its plan to invest an additional USD 15 million into the factory. Within the sugar factory Azersun Holding employs 2,000 workers, in addition to the 45,000 employees involved in the farming of 7,000 hectares of sugar-beet seeded land throughout Azerbaijan's rural regions. THE SUGAR MARKET -------------- ¶4. (U) Prior to the opening of the sugar factory, due to the lack of domestic-processing capability, Azerbaijan's sugar beets were processed abroad. Now, due to the factory's high processing ability, there is a demand for more raw product - equally increasing the demand for more land to be designated for sowing sugar beets. U.S. irrigation company Valmont Industries is helping Azerbaijan increase its production of sugar beets through a USD 5.7 million pilot project that brings modern irrigation and farming technology to this growing sector. Valmont hopes to expand its project through an additional USD 15 million investment. In addition, the factory processes and refines raw sugar from abroad, which eliminates the need for sugar imports and allows Azerbaijan to export sugar as a finished product - primarily to Russia, Iran, and Georgia. Domestic production of sugar is expected to counter foreign influence on the local market and to prevent to outflow of currency abroad. WORK WITH AMERICAN COMPANIES -------------- ¶5. (U) Mujahit Hun, the Director General of the Imishli Sugar Factory told Emboff that the factory is the sole sugar supplier for American companies Coca Cola and Pepsi Cola in Azerbaijan. According to Hun, Coca Cola alone consumes three percent of the factory's daily output. Azersun's cooperation with Nebraska-based Valmont Industries is key to Azerbaijan's ability to supply sugar beets to the factory. BAKU 00001595 002 OF 002 COMMENT -------------- ¶6. (SBU) Viewed in terms of production as well as the significant development it has brought to the Imishli region, the Imishli Sugar Factory can be lauded as a success in Azerbaijan's non-oil sector development. In addition, Azersun Holding's work with American Valmont Industries, Inc. has brought modern farming technology to Azerbaijan - critical to the development of Azerbaijan's agricultural industry. We hope to attract more U.S. firms to this and other non-energy sectors. DERSE