Directions for improving the regulation mechanism of the agro-processing sector in the sustainable and competitive development of agriculture

Abstract

The article examines the role of the agro-processing sector in ensuring the sustainable and competitive development of agriculture and explores directions for improving state regulation mechanisms in this field. The author substantiates the strategic importance of agro-processing in creating added value to agricultural raw materials, enhancing employment, regional development, food security, and export potential. Based on statistical data for 2013–2024, the current state of Azerbaijan’s agro-processing sector is assessed, revealing growth trends in its contribution to GDP, employment, and exports, alongside persistent structural imbalances and institutional gaps. A comparative analysis of agro-processing policy models in the United States, the European Union, Germany, and Turkey highlights the advantages of market-based regulatory instruments. The results of econometric modeling demonstrate a strong impact of agricultural output, fixed assets, and household incomes on agro-processing production volumes. The study concludes by proposing an improved state regulation model grounded in strengthened institutional coordination, expansion of cluster-based development, digitalization, and the adoption of green agro-processing principles to enhance long-term sustainability and competitiveness.