Today, 98 percent of the nation's agricultural land is in private hands, an important achievement in Azerbaijan's privatization program. Guba has benefited from this privatization, but cash flow and access to affordable credit are major obstacles to business development for Azeri agribusiness. There is great potential for development of the food processing industry supported by a wide variety of Azeri crops and excellent climatic conditions and extended growing seasons. Fruits (apples, cherries, grapes, olives, lemons, persimmons, melons, watermelons, raspberries, strawberries, currants, plums, peaches, pears, quince, pomegranates and tomatoes); vegetables (potatoes, carrots, beets, cabbage, cucumbers, and onions), grains (wheat, maize, barley), tea leaves, and nuts are of high quality, have minimal unit production costs, and have strong brand recognition in former Soviet markets and in Eastern Europe. The Guba region features much of this agricultural production. Azerbaijan can regain its edge as a supplier of processed and packaged food products throughout the former Soviet Union, however this will be only be possible through procurement of new or refurbished equipment. Several upstart Azeri private firms including the Guba Tinning Factory (based in Guba), Mpro, and the Azerbaijan Dairy Corporation have already made the move to European equipment and are interested in further sourcing of U.S. equipment. Best prospects for U.S. exporters are: v Machines for the preparation of fruits, nuts, and vegetables; v Machines for cleaning, sorting, grading seeds, grains, and vegetables; v Juice extractors; v Machines for filling, closing, and & sealing bottles, cans, boxes, or other containers v Fruit dehydrators. There is great demand for food processing and packaging equipment, especially for processing of meat products and fruits and vegetables. There is also a need for production of packaging materials for different market segments given the lack of a broad-based food processing and packaging equipment industry. In interviews with the U.S. Embassy Commercial Service, several food processing and packaging companies located in Guba have expressed interest in purchasing U.S. equipment to produce high quality food products for local consumption and for export. This market is limited, however, to a handful of credible buyers given the lack of financing for the deal. U.S. firms are best advised to work with well-established firms with a proven market track record. Start-ups are quite difficult to sell to and finance in this challenging market, requiring the sharp focus of potential U.S. suppliers and patience. Cash flow remains a chronic problem for Azeri importers including those in the Guba. The Azeri government recognizes this problem and plans to establish credit unions in every village to help Azeri farmers access credit. The World Bank has a pilot program in six regions to teach farmers how to use credit. While this is a longer-term development strategy of little practical relevance to U.S. suppliers interested in immediate sales, a credit scheme will help this key sector to re-establish itself. The key industry weakness, however, is the failure to convert Azerbaijan's agricultural wealth into value-added product ready for export to European and Middle Eastern markets. For example, Russian and Georgian buyers purchase large amounts of high-quality fruits and vegetables from the Guba region, to be dried, canned or packed in Georgia or Russia. These products are then sold to other CIS buyers - at a handsome profit and with all value added done offshore. A U.S. project developer and equipment supplier could take advantage of this and leverage minimal operating costs for such an attractive project.