03/2017
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22 A rm e n i a Agriculture Bulletin Agricultural loan subsidy program approved for 2017 ArmBusinessBank to promote effective lending in Armenia Armenia and IBRD sign USD 1.8 billion grant agreement Four memorandums of understanding to benefit Armenia
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7)
Agricultural loan subsidy program approved for 2017 ................................................................... 2 Program to give cheaper seeds and fertilizers ................................................................................ 2 Funding set for 2017 agricultural leasing subsidy ........................................................................... 2 Cattle to be slaughtered exclusively in slaughterhouses ................................................................ 2 Armenia to have an agriculture development fund ........................................................................ 3 Loan subsidy project under development ....................................................................................... 3 Significant investments for Syunik province expected .................................................................... 3
Foreign Aid ................................................................................................................. 4 8) 9) 10) 11) 12) 13) 14)
EU to give EUR 10 million for drip irrigation system ....................................................................... 4 ArmBusinessBank to promote effective lending in Armenia .......................................................... 4 Armenia and IBRD sign USD 1.8 billion grant agreement................................................................ 4 Russia to help establish machine and tractor stations .................................................................... 4 Armenian-Canadian memorandum of understanding signed ......................................................... 5 FAO program to help Armenia strengthen food security ................................................................ 5 EBRD ready to loan to large agricultural producers ........................................................................ 5
Private Sector.............................................................................................................. 5 15) 16) 17) 18)
Four memorandums of understanding to benefit Armenia ............................................................ 5 AMD 740.4 in debt paid to farmers ................................................................................................. 6 Halal certification office opens in Yerevan ...................................................................................... 6 Agricultural and fishery output increased in January...................................................................... 6
Note: The Agriculture Bulletin presents a monthly roundup of headlines and news stories related to Armenia’s agricultural sector. This bulletin is prepared by Business & Finance Consulting—a Swiss-based development finance consulting company with a long history of working in Eastern Europe, Central, South and South East Asia and North Africa. Currently, BFC is implementing the “Financing the Agriculture Sector in Armenia” project for KfW. Read more »
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BFC Agriculture Bulletin
State Initiatives 1)
Agricultural loan subsidy program approved for 2017
March 30th, 2017, https://armenpress.am/eng/news/884816/agriculture-ministry-to-revise-agricultural-loan-subsidyprogram.html
The government of Armenia has approved the agricultural loan subsidy program for 2017. Last year, AMD 15 billion was spent on the agricultural loan subsidy program, helping 20,000 farmers. Since 2011, more than AMD 99 billion has been spent on subsidizing 119,000 agricultural loans. Although the government has spent a rather large sum on the program, Agriculture Minister Ignati Arakelyan noted that the program needed to be revised. This year, subsidized loans will be provided to those rural economies that present concrete programs. This change will help target and develop rural economies with needs much more efficiently than in the past.
2)
Program to give cheaper seeds and fertilizers
March 21st, 2017, http://times.am/?p=206902&l=am
The Ararat regional government’s ‘Helping Farmers’ program has procured 3,260 tons of nitrogen, 179 tons of phosphoric fertilizer and 170 tons of potassium as well as barley seeds, alfalfa seeds and corn seeds. The materials will be distributed to regional farmers for below market price based on applications submitted by community leaders in advance of the procurement.
3)
Funding set for 2017 agricultural leasing subsidy
March 17th, 2017, http://finport.am/full_news.php?id=28912&lang=3
The state program supporting the leasing of agricultural machinery will be funded with AMD 120 million in 2017, with the possibility of increasing that amount if there is considerable more demand. The Ministry of Agriculture announced that the government will closely monitor the process and quickly respond to identified gaps in the system. The program allows farmers to lease agricultural machinery at a rate of 2% per annum, with the state providing subsidies of 7%. The program does not restrict the choice of the country of the producer of the machinery.
4)
Cattle to be slaughtered exclusively in slaughterhouses
March 9th, 2017, http://arka.am/en/news/business/slaughtering_cattle_outside_butcheries_will_become_illegal_in_armenia/
The government of Armenia has decided to incrementally move to make the slaughter of cattle outside of slaughterhouses illegal. Beginning on May 1, 2017, the government will begin purchasing meat solely from slaughterhouses. Then on November 1, 2017, it will be required that meat producers and meat exporting companies do the same. On April 1, 2018, all public catering facilities in Yerevan will be required to buy meat exclusively from slaughterhouses. Prime Minister Karapetyan noted that the new measures should not create any obstacles for businesses.
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BFC Agriculture Bulletin
5)
Armenia to have an agriculture development fund
March 9th, 2017, https://news.am/eng/news/377666.html
The government of Armenia has decided to set up an agricultural development fund. The fund will be engaged in the implementation of all rural programs which will be implemented with the help of external donors. The Bureau of Agricultural Programs, previously responsible for similar activities, will be dissolved.
6)
Loan subsidy project under development
March 7th, 2017, http://finport.am/full_news.php?id=28748&lang=3
The Ministry of Agriculture is working to elaborate a project which aims to subsidize loans provided to entities procuring grapes, tomatoes and milk. Under the plan’s current design, entities would have to pay for the products supplied by farmers within three days in order to participate in the program. It is believed that the project, within two years, would solve the problem of farmers not being paid in a timely manner for delivered products and could easily be expanded to include other agricultural products.
7)
Significant investments for Syunik province expected
March 7th, 2017, https://armenpress.am/eng/news/881479/ecotourism-development-orchard-planting-with-new-technologiesinvestments-expected-in-syunik-province.html
The Development and Investments of Syunik Province Foundation is making significant investments in agriculture and tourism in the Syunik province, with works in four major directions already underway: orchard development, cold storage facilities, updating agricultural machinery and ecotourism. The Development and Investments of Syunik Province Foundation is working to establish orchards with new technologies to serve as examples for the rural population. The newly established orchards will be run by the Foundation, with the goal of involving local villagers in order to impart knowledge on modern techniques to them. The Foundation is also working to establish cold storage facilities in the province, with such a project already expected in Meghri. Cold storage projects will help villagers solve harvesting issues and better regulate the transportation process of goods to consumer markets. The Foundation is also working with the government on an agricultural machinery rental center in Sisian. Under the program, new agricultural machinery of European production will be acquired and offered to locals as a way to update the aging machinery currently being used in the province. Currently, financing issues of this project are being discussed, but it is expected that the Foundation will finance a part of the project, with the government financing the rest.
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BFC Agriculture Bulletin
Foreign Aid 8)
EU to give EUR 10 million for drip irrigation system
March 30th, 2017, https://news.am/eng/news/381838.html
The European Union will allocate EUR 10 million to Armenia for drip irrigation in the Ararat Valley. The funds will also be used to build infrastructure for an irrigation reservoir in the area. The government of Armenia plans to budget allocations to co-fund this project. The government sees this endeavor as a worthy investment as it will make more effective use of water resources and reduce the costs of state subsidies for irrigation.
9)
ArmBusinessBank to promote effective lending in Armenia
March 28th, 2017, http://www.lragir.am/index/eng/0/economy/view/36925
ArmBusinessBank CJSC and the Savings Banks Fund for International Cooperation (SBFIC) have signed a memorandum of understanding within the ‘Responsible Funding in the Caucasus’ program. The cooperation aims to promote the development of effective lending in Armenia through increased consumer financial literacy and strengthening the bank’s potential in other sectors. Under this memorandum, foreign specialists will organize training courses for the employees of ArmBusinessBank. The ‘Responsible Funding in the Caucasus’ program is working to reduce the poverty level in Armenia, especially in rural areas, and aims to improve lending technology in order to prevent double lending and reduce credit risks.
10) Armenia and IBRD sign USD 1.8 billion grant agreement March 23rd, 2017, https://armenpress.am/eng/news/883858/armenia-wb-sign-agricultural-grant-agreement.html
Armenian Finance Minister Vardan Aramyan met with representatives of the World Bank’s International Bank for Reconstruction and Development (IBRD) to sign an agreement for a grant worth USD 1.8 billion. The grant was signed as part of the ‘Agriculture Policy Monitoring and Evaluation Capacity Building Project’ and will mainly target agricultural development, especially capacity building within the Ministry of Agriculture. It is expected that the grant will greatly contribute to overcoming problems in the agricultural sphere.
11) Russia to help establish machine and tractor stations March 23rd, 2017, http://arka.am/en/news/business/russia_to_help_establish_machine_and_tractor_stations_in_armenia/
Representatives of the Russian Ministry of Industry and Trade have offered assistance to the Armenian Ministry of Agriculture to draw up a plan to establish machine and tractor stations in Armenia. The two sides met and discussed possible options for financing the construction of machine and tractor stations, and Russian officials have invited Armenian Agriculture Minister Ignati Arakelyan and other Armenian specialists to Russia to become more familiar with Russian manufactured agricultural machinery and equipment. Machine and tractor stations would provide small farms in Armenia with access to modern machinery and equipment. Page 4
BFC Agriculture Bulletin
12) Armenian-Canadian memorandum of understanding signed March 22nd, 2017, http://card.am/mou-between-armenia-and-canada/
A memorandum of understanding was signed with the Canadian Livestock Genetic Association (GLGA), Canadian Pork International, the Canadian Swine Breeders Association, the Canadian Forage and Grassland Association and the Center for Agribusiness and Rural Development Foundation. The memorandum will promote agricultural cooperation between Canada and the Republic of Armenia in areas related to animal and plant production and development, with a view of fostering long-term cooperation. The cooperation will specifically focus on animal genetics improvement, meat and dairy production and trade as well as grassland and forage improvement.
13) FAO program to help Armenia strengthen food security March 16th, 2017, http://arka.am/en/news/society/russia_to_help_armenia_strengthen_food_security/
The Food and Agriculture Organization (FAO) of the United Nations, using Russian funding, will provide assistance to Armenia, Kyrgyzstan and Tajikistan in strengthening food security. The USD 6 million program is designed for three years and is scheduled to begin in the near future. The program calls for an exchange of experience in food security, the development of policies and the planning and creation of projects which ensure food security and nutrition. As part of the program, local producers will supply schools with food for student meals.
14) EBRD ready to loan to large agricultural producers March 13th, 2017, http://minagro.am/2017/03/%D5%BE%D5%A5%D6%80%D5%
The European Bank for Reconstruction and Development (EBRD) has been active in providing credits for agricultural and entrepreneurial activities in Armenia. In December 2016, EBRD loaned ACBA-Credit Agricole Bank the AMD equivalent of USD 8 million for helping develop the private sector in Armenia, especially micro-, small- and medium-sized businesses (MSMEs) as well as to companies run by women. Another loan equivalent to USD 5 million will shortly be provided to viable and developing MSMEs which have limited access to finance, and loans equivalent to USD 13 million are being targeted for women’s entrepreneurship under the ‘Women in Business’ program. Against this backdrop, EBRD regional director for agribusiness, Nadia Petkova, met with Agriculture Minister Ignati Arakelyan and announced EBRD’s readiness to provide credit funds to large agricultural enterprises in Armenia. It is hoped that such a move would help ease the burden of high interest rates on agricultural loans that currently exist in the country.
Private Sector 15) Four memorandums of understanding to benefit Armenia March 29th, 2017, http://www.armradio.am/en/2017/03/29/armenia-to-supply-organic-food-to-luxury-hotels-in-six-arabcountries/
Four memorandums of understanding were signed within the framework of the Armenia-UAE Investment Forum held in Abu Dhabi in March 2017. The Hydro Corporation Group and Estekshaf Investment Company signed a memorandum of understanding on investments in the field of renewable energy. The agreement envisages implementing large-scale, long-term programs to upgrade small hydro-power plants. Page 5
BFC Agriculture Bulletin
Tamara Fruit CJSC and Natural Organic Healthy Food Company signed an agreement under which the Armenian company will supply organic food to luxury hotels in six Arab countries; the first delivery is expected in the first part of April. The Armenian-Emirati Business Union and the Natural Organic Healthy Food also signed a memorandum of understanding to open an organic food processing center in Armenia. A memorandum of understanding was also signed between the Armenian Ministry of Energy Infrastructures and Natural Resources and Ocean Holding. Ocean Holding intends to invest USD 100 million in solar photovoltaic power plants in Armenia and operate them using the best technology available.
16) AMD 740.4 in debt paid to farmers March 14th, 2017, http://finport.am/full_news.php?id=28843&lang=3
From February 8 – March 14, 2017, procurement enterprises paid AMD 740.4 million in debts to farmers for raw materials purchased in 2015 and 2016. The payments are the result of a Ministry of Agriculture proposal which set up a repayment schedule of debts owed to farmers. Prior to this proposal, farmers were owed more than AMD 1.5 billion for raw materials purchased in 2016 and a further AMD 105.6 million for materials purchased in 2015. Since the repayment schedule was developed and proposed, five companies have fully fulfilled their financial obligation to farmers.
17) Halal certification office opens in Yerevan March 10th, 2017, http://arka.am/en/news/business/halal_certificate_to_allow_armenian_food_companies_to_export_their_products_to_57_isl amic_countries/
The first certification office of the Halal World Organization has been opened in Yerevan. The office will be engaged in ensuring that Armenia-made food products conform to Iranian requirements. Receiving a Halal certificate allows Armenian producers to export their products not only to Iran but to all 57 member countries of the Organization of Islamic Cooperation (OIC). Moreover, the opening of an office in Yerevan is just the beginning of the process, with the potential for more offices to be opened in other regions of Armenia, especially those in the south which border Iran. Armenia’s trade with Iran fell 14.7% in 2016 to USD 238.8 million, with exports decreasing 8.4% to USD 74.8 million and imports decreasing 17.3% to USD 198.3 million.
18) Agricultural and fishery output increased in January March 1st, 2017, http://times.am/?p=204480&l=am
The gross output of agriculture and fisheries in January 2017 amounted to AMD 19.54 billion, a year-onyear increase of 0.7%. Of this, the total value of crop production decreased 5.3% year-on-year to AMD 335.5 million while livestock production increased 0.4% year-on-year to AMD 15.68 billion. The output of fisheries in January 2017 increased by 2.3% year-on-year and by 27.1% as compared to December 2016. Fishery outputs in January 2017 amounted to AMD 3.52 billion.
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