05/2017
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24 A rm e n i a Agriculture Bulletin ACBA Leasing joins agricultural leasing program
EUR 10 million project for drip irrigation New program to support organic development in Armenia Armenian organic products exported to UAE
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3)
Minister Arakelyan presents reports to President .......................................................................... 2 CARD AgroCredit joins agricultural leasing program ....................................................................... 2 ACBA Leasing joins agricultural leasing program ............................................................................ 2
Foreign Aid ................................................................................................................. 3 4) 5) 6) 7) 8)
USAID launches new program in Ararat Valley ............................................................................... 3 EUR 10 million project for drip irrigation ........................................................................................ 3 FAO to support Armenia in preserving grape varieties ................................................................... 3 New program to support organic development in Armenia ........................................................... 3 EU to finance seven pilot projects with EUR 10 million .................................................................. 4
Private Sector.............................................................................................................. 4 9) 10) 11) 12) 13) 14) 15)
Armenian agricultural products in Azerbaijan................................................................................. 4 Machine and tractor station to open in Armenia ............................................................................ 4 Call for Armenian egg powder/egg mixture producer .................................................................... 5 Armenian wine quality, recognition increasing ............................................................................... 5 The potential of Armenian cheese production ............................................................................... 5 Armenian organic products exported to UAE ................................................................................. 6 New joint effort to combat agricultural hail damage ...................................................................... 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)
Minister Arakelyan presents reports to President
May 25th, 2017, http://finport.am/full_news.php?id=29831&lang=3
Acting Agriculture Minister Ignati Arakelyan reported to Armenian President Serzh Sargsyan on the structural reforms being undertaken by the Ministry of Agriculture as well as on priority tasks for the agricultural sector and targeted government assistance programs. Minister Arakelyan reported that this year’s works include continuing to provide fertilizers, diesel fuel, seeds and subsidized loans to farmers at affordable prices. Minister Arakelyan also reported about the programs implemented by the Armenian Viticulture and Wine Foundation, which are working to ensure the development of viticulture and winemaking, improve the quality of wine production, raise the prominence of Armenian wines and stimulate exports. Additionally, the Minister’s report included both current and expected results on other programs such as the implementation of an insurance system, the protection of the Lake Sevan basin, livestock breeding and seed production. In his turn, President Sargsyan instructed the Minister to continue efforts to promote the export of competitive agricultural products, to replace imported agricultural goods with domestically produced ones, to modernize agricultural machinery and to target and develop programs which increase rural incomes, improve efficiency works, stimulate the creation of gardens and introduce modern technology such as drip irrigation systems and anti-hail systems.
2)
CARD AgroCredit joins agricultural leasing program
May 20th, 2017, http://minagro.am/2017/05/%D6%84%D5%A1%D6%8
Deputy Agriculture Minister Robert Makaryan and Karen Petrosyan, executive director of CARD AgroCredit, have signed a memorandum which will mean that CARD AgroCredit will now take part in the state-run program for the leasing of agricultural equipment. Mr. Petrosyan expressed confidence that the program will greatly contribute to the modernization of agricultural machinery in Armenia as well as the application of new technologies into the country’s agricultural sector. The Deputy Minister added that he expects the number of suppliers and financial institutions in the program to grow given the high demand in the country and farmers’ increasing ability to afford such equipment. Participants in the program can purchase various types of agricultural machinery with a 20% down payment, an annual lease rate of 2% and a maturity of 3-10 years, depending on the specific type of equipment.
3)
ACBA Leasing joins agricultural leasing program
May 4th, 2017, http://minagro.am/2017/05/%d5%a1%d5%a3%d
ACBA Leasing has joined the state subsidy program for the leasing of agricultural machinery following the signing of the necessary memorandum between Deputy Agriculture Minister Robert Makaryan and Arsen Bazikyan, general manager of ACBA Leasing. Bazikyan noted that this will enable farmers to purchase agricultural machinery with unprecedented conditions and that it will serve as a basis for expanding their business. Deputy Minister Makaryan added that the Ministry of Agriculture is also negotiating with other organizations to have more financial institutions involved in the program. He noted that, the more open the market and the more suppliers and financial institutions, the greater the benefits for farmers and agricultural cooperatives. Page 2
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Foreign Aid 4)
USAID launches new program in Ararat Valley
May 25th, 2017, http://times.am/?p=214403&l=am
To address the problem of water scarcity in the Ararat Valley, the United States Agency for International Development (USAID) is launching the ‘Participatory and Effective Use of Water Resources’ program. The program will promote responsible water management in the Ararat Valley through increasing public awareness and civic participation. The program will also facilitate the monitoring of water resources as a way to reduce the intake of underground water resources in the Ararat valley. Emphasizing the importance of reducing water losses to individuals and civil society, USAID plans to increase public awareness of the problem in many communities and promote dialogue on regulatory changes. USAID will also assist in the design of small water infrastructure projects to ensure the water needs of affected communities. The program will also complement ongoing activities such as USAID's current initiatives aimed at introducing water-efficient technologies and management systems, supporting environmentally safe fishing and encouraging investments in clean energy in the Ararat Valley.
5)
EUR 10 million project for drip irrigation
May 18th, 2017, https://news.am/eng/news/390359.html
The European Union (EU) is planning to allocate EUR 10 million to Armenia for drip irrigation project in the Ararat and Armavir provinces. The objective of the project is to build water filter pools and help drip irrigation networks reach farms. Deputy Agriculture Minister Armen Harutyunyan hopes that an official agreement will be signed in the fall of this year and will include measures which also give farmers advice on cultivating crops with a higher added value.
6)
FAO to support Armenia in preserving grape varieties
May 17th, 2017, https://news.am/eng/news/390306.html
The Food and Agriculture Organization of the United Nations (FAO) will support Armenia in creating vineyards with local grape varieties which are resistant to phylloxera, a disease discovered to be on the Ararat plain several years ago. The Ministry of Agriculture then plans to intergraft these phylloxeraresistant varieties with other local varieties. While the specifics of a program to this end are still being determined, FAO and the Ministry of Agriculture plan to kick off the program soon. It has yet to be decided whether farmers will need to purchase the intergrafted roots on their own or if the state will pay for them.
7)
New program to support organic development in Armenia
May 17th, 2017, https://news.am/eng/news/390480.html
Deputy Agriculture Minister Armen Harutyunyan announced that Armenia is planning on launching a program to support organic products in the near future. The program, which will receive EUR 3.3 million in funding from the European Union (EU) and Austrian Development Agency (ADA), will engage in efforts to support farmers and small- and medium-sized businesses wishing to produce organic goods. In the first stage of the program, support will be provided to small enterprises in preparing fields, orchards or factories for organic production. The program will also provide funds for the marketing of Armenian Page 3
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organic products, and the Ministry has already arranged for large supermarkets in Armenia to open organic sections. Currently, there are more than 40 producers in Armenia which hold organic certificates, and the Ministry hopes that increased awareness will increase this number and make the sector an important part of Armenian agriculture, both in terms of exports and domestic consumption. The program is part of a wider Ministry effort at developing a green economy in Armenia, including organics, agro-tourism and clean energy.
8)
EU to finance seven pilot projects with EUR 10 million
May 6th, 2017, http://arka.am/en/news/business/eu_to_finance_seven_pilot_projects_in_armenia_s_regions/
The European Union (EU) will finance seven pilot developmental programs in various Armenian regions, worth a total of EUR 10 million. The funds will be provided as grants in 2017 and 2018 and will create an estimated 600-700 new jobs. The projects are designed to provide integrated assistance to stable economic development of the mountainous regions, to stimulate technological development of the second-largest town of Gyumri, to support the competitiveness of small and medium-sized businesses, to help resolve environmental issues and to boost development in the resort town of Dilijan and the adjacent territories in Tavush province. Additionally, the United States Agency for International Development (USAID) and the government of Switzerland will also be providing grants amounting to USD 8 million and USD 2.4 million, respectively. Those funds will be used for the purchase of agricultural machinery. The Ministry of Territorial Administration and Development also announced that they have received 151 investment program applications from all regions of Armenia, 51 of which have already been approved by the government. The programs are expected to help raise per capita GDP as well as replenish community budgets for the further self-financing of local projects.
Private Sector 9)
Armenian agricultural products in Azerbaijan
May 27th, 2017, http://www.panorama.am/en/news/2017/05/27/Armenia-agricultura
Azerbaijani economist Vahida Maherramova has noted that a large portion of agricultural products being imported from Georgia actually originate from Armenia, including potatoes, livestock and fruit (especially apricots). Mr. Maherramova added that the products are particularly successful in Azerbaijan because of their quality and the fact that many are organic. If friendly relations can be established between the two countries, Azerbaijan would be able to purchase the same products at a lower price, instead of using Georgia as a middleman.
10) Machine and tractor station to open in Armenia May 18th, 2017, https://news.am/eng/news/390742.html
The results of a tender for the management company of the first public-private machine and tractor station were approved at a Cabinet session, paving the way for the station to be opened in Armenia in the near future. Idas LLC will invest AMD 242 million, with the state investing an additional AMD 700 Page 4
BFC Agriculture Bulletin
million, for obtaining agricultural equipment for the station. The costs of the investments, with interest, are expected to be returned within four years of the station opening. The ability of farmers to borrower equipment from the station is expected to raise the overall mechanization of agriculture in Armenia, increasing its effectiveness. Originally, investors were supposed to cover 80% of the initial costs and the government only 20%; however, due to the fact that only one company responded to the proposal, the government negotiated different terms with them in order to begin the project.
11) Call for Armenian egg powder/egg mixture producer May 15th, 2017, https://news.am/eng/news/390098.html
Sergey Stepanyan, chairman of the Union of Poultry Breeders of Armenia has called for an Armenian facility specialized in the production of egg powder and egg mixture (composed of pasteurized yolk and white). According to Stepanyan, 15% of domestically produced eggs are either not purchased or are unqualified for sale due to flaws or cracks, all of which are non-issues when producing egg powder or egg mixture. Stepanyan argues that the creation of such a facility in Armenia would mean greater income for farmers and lower eggs prices for consumers. Moreover, the cost of such production is not particularly high, at only EUR 1.5 million. Unfortunately, poultry plants in Armenia are overloaded with old loans and are unable to take out new ones. This is why the Union of Poultry Breeders of Armenia is requesting co-financing from the government for a period of five years, after which the Union would buy out the government’s interest.
12) Armenian wine quality, recognition increasing May 13th, 2017, https://news.am/eng/news/389682.html
Armenian wine exports have increased, most notably to the Russian Federation. Moreover, the average price of Armenian wine has risen as well, indicating a better quality and more well-established brand overall. It is worth noting that, in 2016, Armenia wine exports increased to Belgium, Poland, Japan and the United States as well as entered new markets in the United Kingdom, the Netherlands and Sweden.
13) The potential of Armenian cheese production May 13th, 2017, http://www.panorama.am/en/news/2017/05/13/Cheese-production-Armenia/1776539
The cheese production sector has undergone serious reforms in recent years, and there are now more than 60 cheese manufacturing companies operating in Armenia (ranging from small, family farms to large enterprises). There have also been measures undertaken to boost the production of cheese in the country as well, and they seem to be paying off as cheese production in Armenia has been increasing in recent years, with more than 22,000 tons of cheese being produced in 2016 (a 20% increase over 2015) and cheese exports volumes reaching 5,600 tons the same year. The Armenian government has also taken an interest in cheese production, trying to help the sector develop by improving the legal framework governing the sector and bringing it in line with international standards in order to ensure high-quality products. There are, however, still issues needing to be resolved if Armenian cheese production is to continue to grow. Among the most crucial for the sector’s development are: a lack of financial resources for investments, re-equipment and marketing; an absence of information on potential sales points; and a shortage of experts. If these issues are successfully resolved, Armenia cheese production growth will continue to rise in the years to come. Page 5
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14) Armenian organic products exported to UAE May 10th, 2017, http://finport.am/full_news.php?id=29637&lang=3
Armenian company Tamara Fruit has begun the export of organic canned food, jams and juices to the United Arab Emirates (UAE). Tamara Fruit’s Arabian partner has already placed orders for 15 containers of Armenian organic products, which will be distributed in the UAE under the NOHF (Natural Organic Healthy Food) label. The agreement between the two sides came about as the result of the efforts of the DFA Development Fund at the Armenia-UAE Forum. The Fund has stated that it will continue to look for export opportunities as a way to help Armenia’s economy grow.
15) New joint effort to combat agricultural hail damage May 5th, 2017, http://www.finport.info/full_news.php?id=29596&lang=3
ACBA Credit Agricole Bank, the Armenian office of the United Nations Development Program (UNDP) and the National Platform for Reducing Natural Risks (ARNAP) have signed a tripartite memorandum for mitigating the effects of hail in the agricultural sector. Within the framework of the agreement, ACBA Credit Agricole Bank will provide targeted loans to farmers for the purchase of anti-hail grids. The loans will have a maximum maturity of seven years and will have an interest rate of 12.5% per annum. For its part, UNDP will provide grants of 20% of the cost for the purchase of the anti-hail grids. ARNAP will work with farmers on how to set up and maintain the anti-hail grids. Currently, approximately 4-5% of crops are damaged each year due to hail, costing farmers an estimated AMD 16-20 million, with vineyards and fruit and vegetable farms suffering the most losses from hail damage.
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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com Articles are taken directly from local sources without any fact-checking; they are provided as a convenience and for informational purposes only. Business & Finance Consulting (BFC)’s editing is limited to providing a short summary in English of the texts, highlighting the main points of the original articles. All rights reserved by the authors. BFC takes no responsibility and does not make any representation or warranty, express or implied, or assume any responsibility whatsoever for the content, accuracy, and reliability, or completeness of any of the articles.