07/2017
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26 A rm e n i a Agriculture Bulletin New import requirements for fruit and vegetable products AMD 18 billion loan program for processing companies Agro-insurance pilot program to launch in 2018 Fruit and vegetable processing, exports show strong growth
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4)
New import requirements for fruit and vegetable products .......................................................... 2 AMD 18 billion loan program for processing companies ................................................................ 2 Agricultural machinery provided under leasing program ............................................................... 2 Budgetary results of agricultural programs announced.................................................................. 2
Foreign Aid ................................................................................................................. 3 5) 6) 7) 8)
Call for applications for organic development program ................................................................. 3 Minister Arakelyan hosts meeting on buckwheat program ............................................................ 3 Agro-insurance pilot program to launch in 2018 ............................................................................ 3 Armenia and EDB discuss expanding cooperation .......................................................................... 4
Private Sector.............................................................................................................. 4 9) 10) 11) 12) 13) 14) 15)
Fruit and vegetable processing, exports show strong growth ........................................................ 4 Cheese and milk production increasing .......................................................................................... 4 Spring sowing volume doubles in Artaskh....................................................................................... 5 First buckwheat processing factory to open in Armenia................................................................. 5 USD 50 million invested in agriculture so far in 2017 ..................................................................... 5 Agricultural sector declines in first 5 months of 2017 .................................................................... 5 AMD 15 billion in preferential agriloans in 2016............................................................................. 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)
New import requirements for fruit and vegetable products
July 28th, 2017, http://shamshyan.com/hy/article/2017/07/28/1073602/
Beginning on July 1, 2017, new requirements for importing phytosanitary products were put into force. The new requirements mean that importing more than five kilograms of a product of fruit or vegetable origin must be accompanied by a phytosanitary certificate, a restriction that upset many Armenian businessmen. This requirement was adopted by a decision of the Eurasian Economic Commission (EEC) and applies to all member countries of the Eurasian Economic Union (EEU).
2)
AMD 18 billion loan program for processing companies
July 26th, 2017, http://arka.am/en/news/business/government_earmarks_18_billion_drams_as_loans_for_processing_companies/
In August, the government of Armenia is expected to approve an AMD 18 billion program designed to support agricultural processing companies in purchasing raw materials from farmers. Funds will be made available to processing companies in the form of short-term loans with 12-month repayment periods and a 3% interest rate. This means that farmers can now be paid for their produce immediately and that processing companies can work without having debt owed to farmers. AMD 2.4 billion of the program funds will be used this year as part of a pilot project for the purchase of grapes and other crops. In the future, the program will be expanded to include all types of agricultural products.
3)
Agricultural machinery provided under leasing program
July 12th, 2017, http://minagro.am/2017/07/%D5%A3%D5%B5%D5%
Within the framework of the ‘Financial Leasing of Agricultural Machinery in the Republic of Armenia: State Support of Leasing’ project, 25 tractors and 32 units of other agricultural machinery have been provided to beneficiaries. Within the framework of the project, farmers can obtain necessary credit to purchase tractors, grain harvesters, collectors, press tractors, plows, grass mills, cultivators, frescoes, sprinklers and other agricultural machinery with a 20% prepayment, a 2% annual interest rate and a maturity of up to 10 years. Currently, SME Investments, CARD AgroCredit and ACBA Leasing are participating in the financing program.
4)
Budgetary results of agricultural programs announced
July 10th, 2017, https://armenpress.am/eng/news/898137/minister-arakelyan-sums-up-process-and-results-of-agriculturalprograms-set-under-state-budget.html
Agriculture Minister Ignati Arakelyan announced budgetary savings under two programs his Ministry carries out. The state-run program designed to acquire fertilizers at affordable prices had a planned budget of AMD 2.11 billion, of which AMD 887 million was used. Additionally, the fuel subsidy program had a budget of AMD 330 million, of which only AMD 171 was used. The Minister announced that the saved funds (nearly AMD 1.39 billion) were used in other Ministry programs. Page 2
BFC Agriculture Bulletin
Foreign Aid 5)
Call for applications for organic development program
July 25th, 2017, http://arka.am/en/news/business/acba_credit_agricole_bank_launches_third_organic_agriculture_development_program/
Armenia-based ACBA Credit Agricole Bank is partnering with the Nature and Biodiversity Conservation Union (NABU), one of the oldest and largest environment associations in Germany, to launch the third call for applications under the ‘Development of Organic Agriculture’ program. As part of the program, a competition has been designed for farmers in which the winners will get financial assistance from the bank and NABU to obtain organic production certification and significantly expand their production possibilities. The joint program was launched in 2015 to promote the development of organic agriculture and encourage local farmers. 10 companies have already been certified because of the program and are successfully exporting their products abroad.
6)
Minister Arakelyan hosts meeting on buckwheat program
July 19th, 2017, http://minagro.am/2017/07/%d5%a3%d5%b5
Agriculture Minister Ignati Arakelyan held a meeting on the results of a European Neighborhood Program for Agriculture and Rural Development (ENPARD) buckwheat production pilot program. The main purpose of the meeting was to clarify issues regarding buckwheat production in the country and identify areas where the Ministry of Agriculture could give greater assistance. More specifically, participants at the meeting discussed issues related to the activity of the plant producing buckwheat in Bavra and Tsovagyugh, the gasification of factories for better quality products and issues related to imported buckwheat prices, the training of specialists and the provision of needed equipment. The Minister spoke of the importance of expanding buckwheat production, especially given the government’s directive to replace imports with local products. As such, he will now direct discussions within the Ministry on filtering equipment and heating, packaging and marketing issues as well as explore ways to ensure that local production remains competitive against imports. Program beneficiaries expressed their gratitude for the opportunity to engage in the production of a new, non-traditional crop, especially one that is more profitable and allows for greater crop rotation to protect the soil. Beneficiaries were also thankful for the free seeds, fertilizers and trainings provided by the program.
7)
Agro-insurance pilot program to launch in 2018
July 10th, 2017, http://finport.am/full_news.php?id=30515&lang=3
EUR 10 million have been allocated for an agro-insurance pilot program. EUR 5 million is being provided by German development bank KfW, with the government of Armenia providing the other EUR 5 million. The three-year program is set to begin in 2018 and promises to cover losses to agricultural crops from all types of natural disasters, including hail, drought and floods. A visit from a KfW expert later this year will determine the exact sphere and region where the pilot program will be implemented. The first step in creating a working system will be to identify the most important tasks, including setting up a legislative framework for the program to operate under. Another important task will be to bring Page 3
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farmers into the legal framework through farm registration, which will require a lot of time and effort. One of the largest challenges to overcome will be in gaining the interest of local insurance companies. Currently, no local insurance company is interested in participating in the pilot; however, the Ministry of Agriculture is confident that local companies will join the program once they see profitability, especially with appropriate state support and reinsurance of risks from foreign companies. Damage to Armenian agriculture from natural and climatic conditions is estimated at less than 5% (AMD 32 billion) per year.
8)
Armenia and EDB discuss expanding cooperation
July 7th, 2017, http://finport.am/full_news.php?id=30485&lang=3
Suren Karayan, Minister of Economic Development and Investments, met with Dmitry Pankin, the chairman of Eurasian Development Bank (EDB), to discuss expanding bilateral cooperation. The two discussed the programs currently being prepared to be implemented in the fields of agriculture and energy. The parties also discussed issues regarding the accessibility of small investment credit programs. For his part, the Minister stressed the importance of EDB participation in private sector projects, and Mr. Pankin noted EDB’s active cooperation with Armenian commercial banks. At the conclusion of the meeting, the two agreed to continue active cooperation. As of December 31, 2016, EDB's investment portfolio in Armenia for 8 projects is USD 130 million. Additionally, EDB manages USD 490 million in financing for Armenia from the Eurasian Stabilization and Development Fund (EDF).
Private Sector 9)
Fruit and vegetable processing, exports show strong growth
July 27th, 2017, http://www.armradio.am/en/2017/07/27/armenian-apricot-exports-grows-impressively/
So far this year, Armenian processing companies have processed 67% more fruits and vegetables than during the same period last year. Additionally, 65,000 tons of fresh fruit and vegetables have been exported from Armenia so far this year. This includes 26,000 tons of apricots (as compared to 19,900 tons for the same period in 2016), 5,400 tons of potatoes (three times as much as in 2016) and 2,500 tons of strawberries (double last year’s amount). The main destinations of exported Armenian fruit and vegetables are Russia, Georgia, the United Arab Emirates, Belarus and Ukraine.
10) Cheese and milk production increasing July 15th, 2017, http://www.panorama.am/en/news/2017/07/15/Cheese-milk/1808388
The National Statistics Service (NSS) has reported more than 6.8 thousand tons of cheese have been produced during January-May 2017, a 4.5% year-on-year increase. Additionally, milk production levels during the first five months of the year increased to 217.4 million liters, a 0.3% year-on-year increase. NSS data also shows a 4.7% year-on-year increase in yogurt production during the same period.
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At the same time, production levels of sour cream and curd cheese decreased by 19.6% and 7.6% respectively, amounting to approximately 2 thousand tons of sour cream and 360 tons of curd cheese produced.
11) Spring sowing volume doubles in Artaskh July 14th, 2017, http://en.aravot.am/2017/07/14/196856/
Spring sowing has nearly doubled in the Artaskh region, with 14,743 hectares being planted this year, as compared to the 7,553 hectares last year. Wheat, barley, spelt, corn, buckwheat, soybeans, linseed, peas, beans, sorgo, potato, tobacco and other vegetable crops were planted as part of the spring sowing effort in the region. So far this agricultural year, more than 115,000 tons of wheat, barley and spelt have been harvested from approximately 46,000 hectares of land, with another 58,000 hectares still to be harvested. In total, the cereal crop harvest is expected to exceed last year’s harvest and reach record numbers. This is largely due to the average wheat crop yield in the region nearly tripling in the past 6-7 years.
12) First buckwheat processing factory to open in Armenia July 14th, 2017, http://www.armradio.am/en/2017/07/14/first-buckwheat-processing-factory-to-open-in-armenia/
The first Armenian-produced buckwheat will soon be available in the local stores thanks to the European Neighborhood Program for Agriculture and Rural Development (ENPARD) and the ‘Hayastan’ AllArmenian Fund. In 2016, the project provided primary producer cooperatives with buckwheat seeds and fertilizers, and processing cooperatives were provided with factory machinery. As a result, 520 hectares were sowed, with an average of 1.2 tons of buckwheat per hectare being harvested in 2016. Local and international experts also provided local entrepreneurs with trainings on buckwheat sowing, fertilizing, harvesting, storage and processing as well as buckwheat-related beekeeping and honey production. ‘Hayastan’ All-Armenian Fund provided funding for the construction of Bavra factory, a buckwheat processing plant.
13) USD 50 million invested in agriculture so far in 2017 July 10th, 2017, http://finport.am/full_news.php?id=30517&lang=3
40% of the USD 120 million in declared financial investments in Armenia so far in 2017 has been invested in the agricultural sphere, amounting to approximately USD 50 million. A large part of the investments has been made in the laying of intensive gardens and the creation of modern greenhouses.
14) Agricultural sector declines in first 5 months of 2017 July 10th, 2017, http://arka.am/en/news/economy/armenia_s_agriculture_faces_3_5_year_on_year_decline_in_jan_may_2017/
Agriculture Minister Ignati Arakelyan announced that the agricultural sector of Armenia experienced a year-on-year decline of 3.5% in the first five months of 2017. More specifically, crop production decreased 16.8%, but cattle breeding grew by 1.3%. The Minister said that the decline in crop production was due to a colder than normal winter and longstanding frost. The growth of cattle Page 5
BFC Agriculture Bulletin
breeding is due to second stage of the CARMAC program being implemented, which is using financial resources from the World Bank to equip pastures with water and develop cattle breeding in rural areas.
15) AMD 15 billion in preferential agriloans in 2016 July 3rd, 2017, http://arka.am/en/news/business/in_2016_armenian_farmers_attracted_15_billion_drams_in_subsidized_loans_/
In 2016, more than 20,000 Armenian farmers utilized a total of AMD 15 billion in government-subsidized loans. The loans have a minimum 6-month grace period and 24-month repayment period and also have a 14% interest rate, 6% of which was subsidized by the government. The largest loan taken under the subsidy program was for AMD 3 million. This year, AMD 1.1 billion has been allocated for subsidized loans to farmers. The preferential agricultural loan program began on April 1, 2011. Since that time, the average loan size within the program has been AMD 625,000.
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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.