08/2017
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27 A rm e n i a Agriculture Bulletin Government to support intensive garden creation
Prime Minister announces agricultural reforms USDA to continue assisting agricultural development Apricot market is strong; other crops face difficulties
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8) 9) 10)
Minister Arakelyan meets with Farmer Movement members ........................................................ 2 First machine and tractor station opens in Gegharkunik ................................................................ 2 Government to support intensive garden creation ........................................................................ 2 New loan subsidy program for agricultural processors................................................................... 3 Agricultural Development Fund plans for growth ........................................................................... 3 Agricultural Development Fund starts consulting services ............................................................. 3 State program has provided 82 units of equipment ....................................................................... 4 Prime Minister announces agricultural reforms ............................................................................. 4 Assistance for farms destroyed by natural disasters....................................................................... 5 Government to assist in switch to drip irrigation ............................................................................ 5
Foreign Aid ................................................................................................................. 5 11) USDA to continue assisting agricultural development .................................................................... 5
Private Sector.............................................................................................................. 6 12) 13) 14) 15) 16)
Low growth projected for Armenian agriculture in 2017................................................................ 6 Dwarf varieties can increase agricultural output ............................................................................ 6 Agricultural output down 4.3% in July ............................................................................................ 6 Armenia’s grape production to be less this year ............................................................................. 7 Apricot market is strong; other crops face difficulties .................................................................... 7
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 meets with Farmer Movement members
August 30th, 2017, http://minagro.am/2017/08/%D6%86%D5%A5%D6%80%
Agriculture Minister Ignati Arakelyan visited the non-governmental organization (NGO) Farmer Movement to discuss existing issues and new projects developed by the Ministry. At the meeting, representatives from the NGO expressed confidence that the new projects will have a positive impact on the agricultural sector and also presented their concerns to the Minister, especially those regarding high interest rates, the need to upgrade the irrigation and horticultural technologies, the need to upgrade agricultural machinery and the need for an agricultural insurance system. The Minister, for his part, reaffirmed his readiness to continue further cooperation with nongovernmental organizations. Specifically, the Minister highlighted the government’s efforts to try to provide farmers with affordable financial resources for irrigation systems and modern machinery. Additionally, he spoke of the plan to implement a pilot program for agricultural insurance in 2018. The Minister also informed the group about ongoing efforts with the private industry to create a new agricultural machinery plant in the country.
2)
First machine and tractor station opens in Gegharkunik
August 26th, 2017, http://finport.am/full_news.php?id=31135&lang=3
The first machine and tractor station has been opened in Tsovak (Gegharkunik region) under the framework of the state program to support the provision of agricultural machinery. There are 30 units of modern European agricultural machinery available for farmers to rent for agricultural works, including harvesters and tractors. The implementation of such projects is expected to have a long-term impact on the agricultural sector of the country, especially since the correct choice of equipment for the specific demands of each land plot is important. Under the program, farmers will be able to purchase agricultural equipment such as combine harvesters, balers, seeders, plows, mowers, potato-sowers, potato diggers, cultivators, trucks and sprayers. Different brands will be made available for purchase with a down payment of 20%, an interest rate of 2% per annum and a maturity of 3-10 years, depending on the type of equipment. A further 7% will be subsidized by the state. It is expected that AMD 2.2 billion will be spent on the program in 2017.
3)
Government to support intensive garden creation
August 21st, 2017, http://minagro.am/2017/08/%D5%AB%D5%
Starting in 2018, Armenian farmers will be able to obtain affordable loans for the creation of intensive gardens based on the latest technology. The loans will be issued for a period of 5 years at rate of 5% per annum for the creation of intensive gardens with an area of not more than 10 hectares. The creation of intensive gardens can become commercially viable as the yield produced is higher. This will also help the country with import substitution. The program for intensive gardens is under development until the end of 2017 and will be implemented from 2018 through 2022. This is part of the government’s efforts to increase the annual gross agricultural output by at least 5%. The government will also implement measures aimed at increasing the capacity of breeding stations for the production and growing of seeds, providing plant protection and providing a wide range of fertilizers. Page 2
BFC Agriculture Bulletin
4)
New loan subsidy program for agricultural processors
August 17th, 2017, http://finport.am/full_news.php?id=31015&lang=3
The Ministry of Agriculture has signed a three-way agreement with SME Investments and the Office of Agricultural Economic Development Programs for the implementation of a pilot program for the partial subsidization of loans to agricultural processors for the procurement of raw materials. Many processing enterprises face difficulties with financing as it is frequently provided to them at high interest rates, making it difficult for them to meet their obligations to contractors. Implementation of the program will allow processing enterprises to increase the volumes of procurement and exports as well as expand product offerings. For the pilot program, the maximum amount of each loan will be AMD 150 million; however, it is expected that this will increase following the piloting period. Loans will be made available at an interest rate of 3% per annum and for a period of 1 year. Based on the results after the pilot, program details will be improved before the program is officially launched on a larger scale. So far, three banks have agreed to join the program, with more expected to follow.
5)
Agricultural Development Fund plans for growth
August 11th, 2017, http://arka.am/en/news/business/armenia_s_agricultural_
Gegham Gevorgyan, executive director of Armenia’s Agricultural Development Fund, has announced that the Fund will help set up a plant that will produce enough organic fertilizers to cover production on at least 20,000 hectares. The overall goal of the plant is to help make agriculture in Armenia more organic, healthy and attractive for foreign markets. Gevorgyan also noted that the Fund will continue with the second stage of the five-year World Bankfunded ‘Community Agricultural Resource Management and Competitiveness’ (CARMAC) project. CARMAC was designed to improve the productivity and sustainability of pasture-based livestock farms in mountainous communities by increasing milk production, improving pasture management and enhancing sales of livestock products. It helps address the key constraints facing these activities, including unsustainable pasture management, underutilization of pastures, persistent diseases and processing and marketing constraints. Under this project, the World Bank lent USD 32 million to Armenia for improving the management of agricultural resources in communities and the enhancement of agricultural product competitiveness. 111 communities in Armenia are already involved in the project.
6)
Agricultural Development Fund starts consulting services
August 11th, 2017, http://finport.am/full_news.php?id=30955&lang=3
Speaking at a press conference in mid-August, Gegham Gevorgyan, executive director of Armenia’s Agricultural Development Fund, stated that the Fund has started providing consulting services to farmers and offers consultations in groups, as individuals or as part of a program. Consultations are seen as important for the development of the agricultural sector as a lack of knowledge is holding the sector’s potential back. The annual amount allocated by the state for group consultations is about AMD 360 million, enough to reach around 340,000-350,000 thousand farms in Armenia. In expanding the range of consulting services, the Fund intends to provide individual consultations to farmers at the expense of the Fund; however, in the future, the Fund is likely to introduce paid individual consulting services as a way to form its own budget. Page 3
BFC Agriculture Bulletin
Initially, individual counseling will be provided on several topics, in particular on horticulture, cattle breeding, the use of agricultural machinery and field works. In the future the range of topics will be expanded. Speaking about the observed negative trends, Gevorgyan noted the difficulties with the sale of agricultural products, adding that the Fund intends to provide consulting services in this. He also mentioned that a part of consulting means raising awareness about programs being implemented, in particular, on state subsidy programs. In this context, he explained that the specialists will help farmers assess the effectiveness of the programs and weigh their risks.
7)
State program has provided 82 units of equipment
August 11th, 2017, http://www.panorama.am/en/news/2017/08/11/82-units-of-equipment-provided-within-the-stateprogram-of-leasing-agricultural-machinery/1819091
As of mid-August 2017, a total of 82 units of agricultural machinery, including 46 tractors and 36 units of equipment, have been provided to farmers within the state program to support the financial leasing of agricultural machinery. The government adopted the state support program in March, with the goal of providing agricultural machinery and equipment to farmers on affordable conditions. At present, SME Investments, Card Agro Credit and AGBA Leasing are involved in the state-run program.
8)
Prime Minister announces agricultural reforms
August 10th, 2017, http://www.arka.am/en/news/business/armenian_premier_declares_launch_of_comprehensive_agricultural_reforms/
Prime Minister Karen Karapetyan has announced a comprehensive agriculture reformation program designed to solve social problems and create an up-to-date, profitable and industrial agricultural sector in Armenia. The key components of the Prime Minister’s reforms are minimizing spending, combatting the effects of natural disasters, increasing the efficiency of water consumption, introducing advanced technologies and forming a consultation system. More specifically, the reform program will lay the groundwork for the creation of intensive gardens and will also contribute to development of small-, medium- and large-sized farms. The government will continue to allocate subsidies for this, with loans being provided to farmers for up to 7 years at a 5% interest rate. Additionally, farmers will be allowed to borrower up to AMD 10 million as opposed to the previous maximum of AMD 3 million. The program will also give preferential prices on natural gas to greenhouses, canneries and producers of dairy and drink products. In an effort to update technology in the sector, the program will make the leasing of agricultural machinery more affordable for farmers. Transition to a drip irrigation system has also been set as a priority, and a government program will be created for this that will offer three-year loans to farmers at a 2% interest rate for this purpose. The government will also examine opportunities to deploy hail suppression systems.
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BFC Agriculture Bulletin
9)
Assistance for farms destroyed by natural disasters
August 3rd, 2017, http://finport.am/full_news.php?id=30845&lang=3
Prime Minister Karen Karapetyan announced that Armenian farmers that suffered damage due to hail, mud, drought and frost last year may be eligible for government assistance. The Prime Minister directed government officials to take the necessary steps within the next month to ensure that farmers who suffered 80% or more damage from natural disasters will have land taxes and irrigation fees cancelled as well as the amounts used to purchase seeds provided under state programs. The effects of natural disasters on Armenian agriculture in recent years have led the government to introduce a system of agricultural insurance in the country. The pilot agricultural insurance program is scheduled for launch in 2018. The government is also looking into the installation of anti-hail networks.
10) Government to assist in switch to drip irrigation August 1st, 2017, http://minagro.am/2017/08/%d5%b0%d5%b0-%d5%a3%d
The government of Armenia is launching a program to support the development of drip irrigation systems in the country. The program will make loans available for drip irrigation system installation at a rate of 2% per annum and for a period of 3 years. Drip irrigation systems increase the efficiency of the use of water resources, reduce water consumption by up to 40% and increase the yield and quality of produce. The move to drip irrigation is seen as an important move as, last year, the water reserves in reservoirs decreased and the government was forced to switch to an economic regime for irrigation. Without drip irrigation and the introduction of new technologies, agriculture would not be able to move forward. Consultants from Armenia’s Agriculture Development Fund will present the advantages of drip irrigation to farmers in more detail, and the possibility of setting up example in some communities is being examined.
Foreign Aid 11) USDA to continue assisting agricultural development August 30th, 2017, http://finport.am/full_news.php?id=31179&lang=3
Gegham Grigoryan, executive director of Armenia’s Agriculture Development Fund has met with a delegation from the United States Department of Agriculture (USDA). The parties discussed the programs being implemented in the Armenian agricultural sector with the assistance of the USDA as well as possible ways to expand cooperation. Grigoryan expressed interest in the gradual introduction of modern technologies in Armenia, especially the introduction of a geographic information system that will allow for the analysis and processing of space images to assess damage and collect data on agriculture. Representatives from the USDA stated their willingness and readiness to continue assistance to Armenia for the further development and improvement of the agricultural sector.
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Private Sector 12) Low growth projected for Armenian agriculture in 2017 August 29th, 2017, http://hetq.am/eng/news/81593/armenias-central-bank-issues-more-optimistic-gdp-numbers-for2017.html
Armenia’s Central Bank is projecting that the slowdown in the growth of the agricultural sector first observed in the second half of 2016 will continue throughout this year. As a result, the Bank is projecting that the agricultural sector will show a growth of 1.6-2.4% this year. Overall, the Bank is predicting that the country will experience 3.9-4.8% total economic growth this year, up from its original estimate of 3.3-4.8% released after the first quarter. Official statistics put GDP growth in the first half of 2017 at around 6%.
13) Dwarf varieties can increase agricultural output August 29th, 2017, http://novostink.ru/economics/211052-biznesmen-s-karlikovymi-sortami-urozhaynost-armyanskihabrikosov-mozhet-vyrasti-v-25-raza.html
Agrointex Vahe Saroyan plans on opening the first nursery in Armenia for dwarf seedlings of fruit and nut trees. The company is hopeful that dwarf varieties will allow Armenia to grow its output. The company believes that dwarf varieties will lead to up to 2.5 times the output as from regular varieties. For example, apricot trees grow to 15 meters, whereas dwarf varieties do not exceed 3.2 meters. This means that 3.5 times as many trees can be planted on 1 hectare and 50 tons can be yielded from that same space (as compared to a maximum of 20 tons with regular trees). In addition, under the anti-hail nets that generally protect such orchards, fruits are protected from most of external influences and ultraviolet radiation, resulting in 85-90% of fruits being obtained in a commercial form. This significantly increases the income of farmers, but available finances to start such orchards are difficult to come by. So far, local banks do not offer specialized loans for intensive gardens, meaning that demand has only come from medium and large farms that can afford the USD 40,000-50,000 per hectare to start. This, however, is starting to change as several banks are discussing complex loans for intensive gardens. Agrointex Vahe Saroyan has already received a site from the state for a nursery and is expecting to produce its first seedlings in 2019-2020.
14) Agricultural output down 4.3% in July August 22nd, 2017, http://novostink.ru/economics/210430-predvaritelnye-dannye-po-promyshlennosti-i-selskomu-hozyaystvuarmenii-za-iyul-2017-go.html
The volume of gross agricultural output in July 2017 fell by 4.3%. The reason for the decline was mainly due to a 6.5% decrease in plant growing. In particular, the harvest of cereals fell by 53.2%, and the harvest of potatoes fell by 25.7%. 65,000 tons of fruits and vegetables, including 26,000 tons of apricots, were exported, a not-particularlyimpressive figure for Armenia. It should be noted, however, that the price of fruit in July, as compared to December 2016, was 12% higher. It is thought that this is due to the larger-scale export of fruits leaving less supply for domestic consumption.
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15) Armenia’s grape production to be less this year August 21st, 2017, http://arka.am/en/news/economy/armenia_s_grape_production_to_be_20_percent_less_this_year_expert_says/
Armenia’s grape production is predicted to be 15-20% less this year as compared to 2016. This year, the real production is expected to be only 70-75 thousand tons due to natural disasters and low prices last year putting winegrowers in a difficult financial situation and unable to properly protect vineyards from winter frosts. This all means that approximately 10,000 tons of grapes will likely fail to find buyers. There has been a proposal that the government purchase the grapes at AMD 140 kilogram; however, there is a risk that this could cause around 30,000 tons of grapes to not be sold due to a lack of available funds from processing companies.
16) Apricot market is strong; other crops face difficulties August 4th, 2017, https://ru.armeniasputnik.am/economy/20170804/8171997/arakelyan-abrikosy-realizovali-a-s-baklazhanyvoznikli-slozhnosti.html
According to Agriculture Minister Ignati Arakelyan, this year’s crop of apricots was strong, with the product consistently in demand. The same, he noted, cannot be said of other crops, especially eggplant. While farmers produced a large harvest of the crop, buyers are simply not prepared to purchase such quantities. That, coupled with the lack of refrigeration facilities, is making for a difficult situation for many farmers. To offset this problem in the future, the Minister noted that the government is now in the midst of negotiations with international organizations for the development of refrigeration farms in different regions and communities of Armenia.
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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.