01/2018
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32 A rm e n i a Agriculture Bulletin State program to increase credit limit to AMD 1 billion Foreign citizens can no longer own agricultural land EUR 10 million program for developing irrigation systems Agricultural exports up 21%; agricultural imports up 17%
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11)
Armenia developing greenhouse leasing program ......................................................................... 2 State program to increase credit limit to AMD 1 billion ................................................................. 2 Three new subsidy programs launch ............................................................................................... 2 Slaughterhouse Development Program initiated ............................................................................ 3 Government considering diesel fuel subsidy .................................................................................. 3 Irrigated land in 2018 to reach 110,000 hectares ........................................................................... 3 Foreign citizens can no longer own agricultural land ...................................................................... 3 Six new agricultural development projects approved..................................................................... 3 Agricultural Development Fund allocates funding for 2018 ........................................................... 4 4,700 farmers attended subsidy program seminars in 2017 .......................................................... 4 First agricultural machinery station to launch in 2018.................................................................... 4
Foreign Aid ................................................................................................................. 5 12) EU-assisted program on milk procurement announced ................................................................. 5 13) EUR 10 million program for developing irrigation systems ............................................................. 5
Private Sector.............................................................................................................. 5 14) 15) 16) 17) 18) 19)
Agricultural exports up 21%; agricultural imports up 17% ............................................................. 5 Logistics issues causing problems for agriculture ........................................................................... 5 11% increase in meat product prices .............................................................................................. 6 Heavy Basket cooperative to begin agricultural exports................................................................. 6 Outstanding debt to farmers down to AMD 34 million .................................................................. 6 Vegetable and berry exports expected to grow in 2018 ................................................................. 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. Read more »
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BFC Agriculture Bulletin
State Initiatives 1)
Armenia developing greenhouse leasing program
January 30th, 2018, http://minagro.am/2018/01/%D5%A3%D5%B
The Ministry of Agriculture is developing a leasing program for the development of small- and mediumsized greenhouse farms in order to stimulate small family businesses and increase productivity. The Ministry is also working on a program for the installation of refrigeration equipment, which will ensure proper storage of products for export. At a meeting announcing the development of the two new programs, concerns were also raised regarding the import of Turkish fruits and vegetables, the possibility of conducting laboratory tests on the quality of fertilizers and pesticides, trainings for qualified specialists and the need for affordable credit, among other issues. To address some of the concerns, Agriculture Minister Ignati Arakelyan stated that the Ministry will continue to work to develop new initiatives aimed at helping the agricultural sector develop.
2)
State program to increase credit limit to AMD 1 billion
January 29th, 2018, http://finport.am/full_news.php?id=33281&lang=3
For 2018, Armenia is raising the limit for the amount of credit that can be taken as part of the state program subsidizing interest rates for enterprises engaged in the processing of agricultural products. The previous limit of AMD 150 million will be raised to AMD 1 billion for this year. The program provides loans to agricultural processing companies at a rate of 3% per annum. Last year, total financing under the program was AMD 2.4 billion. The program was first introduced last year as a way to solve problems related to the debts processing enterprises had to farmers. The program enables processing companies to create new relationships with farmers that are based on contracts and upfront payments (conditions for program participation).
3)
Three new subsidy programs launch
January 26th, 2018, http://minagro.am/2018/01/%D5%B4%D5%A5%D
Three new subsidy programs are launching within the agricultural sector that will create more affordable loan conditions for investments in intensive orchard gardens, hail protection networks and drip irrigation systems. Within the ‘Subsidizing of Loan Interest Rates for the establishment of Intensive Orchards’ program, businesses will be provided with a seven-year mortgage at a 5% interest rate for 110 hectares for intensive fruit gardens or 0.5-5 hectares for berth gardens. Within the ‘Subsidizing Interest Rates for Investment in Anti-hail Networks in the Agricultural Sector’ and ‘Subsidizing Interest Rates for Investment in Drip Irrigation Systems’ programs , entrepreneurs can obtain loans of up to seven years for anti-hail networks and up to three years for drip irrigation systems. Under both of the programs, an annual interest rate of up to 14% will be applied, with partial subsidization to drop interest rates down to 2% for grape and orchard operators.
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4)
Slaughterhouse Development Program initiated
January 24th, 2018, http://minagro.am/2018/01/%D5%BD%D5%
The State Food Safety Service is initiating the Slaughterhouse Development Program. Under the program, a slaughterhouse network will be developed, greatly improving food safety conditions. In total, 71 slaughterhouses are expected to be in operation throughout the country, including 21 new slaughterhouses expected to be built this summer. After the transition to the network, animals will be required to be slaughtered only at one of these approved locations. It is expected that the slaughterhouses will begin competing with one another, which will affect the price of meat for end consumers.
5)
Government considering diesel fuel subsidy
January 23rd, 2018, https://armenpress.am/eng/news/919944/government-to-subsidize
The government of Armenia is considering a subsidy program aimed at mitigating or reducing the impact of the price increase for diesel fuel on the prices of agricultural products. According to Agriculture Minister Ignati Arakelyan, the specific mechanisms for how such a program would work are being discussed. The Minister further stated that the government intends to also focus on increasing the effectiveness of agricultural production by expanding the leasing program to include small greenhouse economies and other equipment.
6)
Irrigated land in 2018 to reach 110,000 hectares
January 19th, 2018, http://finport.am/full_news.php?id=33153&lang=3
Irrigated areas in Armenia increased by 8,930 hectares to 97,470 hectares in 2017, a 9.2% increase. In 2018, the area of irrigated land in the country is expected to further increase to 110,000 hectares in total. Arsen Harutyunyan, chairman of the State Water Committee, noted that 2017 was one of the most arid years in the last century, causing an increase of nearly 900 cubic meters of water for the irrigation of one hectare of land.
7)
Foreign citizens can no longer own agricultural land
January 16th, 2018, http://arka.am/en/news/business/foreign_citizens_will_not_have_right_to_own_agricultural_land_in_armenia/
Changes to Armenia’s land code were passed by Parliament this month and will deny foreign citizens the right to own agricultural land within the country. The changes will affect both foreign nationals as well as former Armenian citizens who do not have the special status of foreign citizen. The changes were made in response to an increasing amount of uncultivated agricultural land (including in irrigated and high yielding regions) in rural communities. Verification of citizenship data will be continually monitored.
8)
Six new agricultural development projects approved
January 12th, 2018, http://finport.am/full_news.php?id=33077&lang=3
Six new investment projects aimed at developing agricultural production will be implemented in Armenia. A sparkling wine factory capable of producing 110,000 bottles annually will be constructed in the Vayots Dzor region; berry production will be expanded in the Lore region; and feed production Page 3
BFC Agriculture Bulletin
capabilities will be enhanced for the fishing and livestock industries in the Gegharkunik region. The government also approved a procedure for granting subsidies for the implementation of investment programs in the country's regions. In the near future, a commission will be formed of various department representatives, which will determine the size of subsidies.
9)
Agricultural Development Fund allocates funding for 2018
December 27th, 2017, http://finport.am/full_news.php?id=32982&lang=3
The Agricultural Development Fund has allocated AMD 2.5 billion for the implementation of programs in 2018. The Fund plans to concentrate on building greenhouse farms, allocating AMD 900 million for construction works on such farms and AMD 800 million for the procurement of agricultural machinery. In 2017, the Fund opened tenders for 32 projects in 22 communities, including for construction projects in 10 communities and for 16 food programs. The Fund also helped in the purchase of 42 units of agricultural equipment in 2017. In total, the Fund is estimated to have created 15-20% more jobs, increased livestock numbers by 20% and increased milk productivity by 20%.
10) 4,700 farmers attended subsidy program seminars in 2017 December 27th, 2017, http://finport.am/full_news.php?id=32978&lang=3
As of the end of 2017, more than 4,700 farmers participated in seminars as part of the state interest rate subsidy program for agricultural loans, giving them the necessary knowledge to successfully use loans to further develop their farms. In total, 204 seminars were held with the assistance of various partners on topics ranging from financial literacy to the basics of veterinary medicine. Free individual counseling services were also provided. The most active farmers were from the Aragatsotn region (1,020 participants at 33 seminars) and the Ararat region (802 participants at 29 seminars). The Agricultural Development Fund plans to continue to conduct group seminars in 2018, focusing on cattle-breeding cooperatives.
11) First agricultural machinery station to launch in 2018 December 27th, 2017, http://arka.am/en/news/business/first_station_of_agricultural_machinery_to_be_launched_in_armenia_in_2018/
The first station of agricultural machinery, created jointly by the government and the private sector, will be launched in Armenia in 2018 following successful pilots in the Gegharkunik and Shirak regions. The government has allocated AMD 700 million for the purchase of 14 pieces of agricultural machinery for the station. The machinery will ensure that farmers who cannot afford to purchase their own machinery can still cultivate their lands. It is expected that the station will help in the cultivation of 16,000 hectares of land per year.
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Foreign Aid 12) EU-assisted program on milk procurement announced January 24th, 2018, http://minagro.am/2018/01/%D6%84%D5%B6%D5
A European Union (EU)-assisted program is planned to be launched in 2019 with the aim of regulating the process of milk procurement in Armenia. The program will assist processors in establishing collection stations. In their turn, processors will provide villages with food and necessary counseling. At a meeting announcing the program, dairy entrepreneurs noted other significant problems related to increasing production and quality, creating farms, making effective use of pastures and ensuring proper care of animals. To help with some of these issues, Agriculture Minister Ignati Arakelyan also announced new government measures aimed at expanding the rage of products provided within the state program on leasing agricultural machinery.
13) EUR 10 million program for developing irrigation systems December 27th, 2017, http://arka.am/en/news/business/armenia_to_spend_10_million_euro
The French Development Agency and the European Union (EU) are providing the government of Armenia with EUR 10 million to develop irrigation systems for gardens. The four-year program is specifically aimed at improving irrigation systems in the Armavir and Ararat regions. The financing will be channeled into to the introduction of drip irrigation systems, the laying of secondary irrigation canals and the consolidation of land. The program calls for establishing agricultural gardens with modern irrigation systems on an area of at least 2,000 hectares as well as for providing technical and financial assistance in forming cooperatives.
Private Sector 14) Agricultural exports up 21%; agricultural imports up 17% January 27th, 2018, http://finport.am/full_news.php?id=33274&lang=3
In 2017, Armenia increased its agricultural exports by 21%. At the same time, agricultural imports into the country grew by 17%. According to the National Statistical Service of Armenia, the gross agricultural output of Armenia fell by 3.0% in 2017, to AMD 906.8 billion. Armenia has plans to continue to develop its agricultural sector in the coming year. As part of this plan, the country intends to increase the area of intensive gardens by 200 hectares, introduce drip irrigation systems on an area of 1,600 hectares, install anti-hail nets on an area of 1,350 hectares and provide AMD 2.8 billion for the state program on the leasing of agricultural equipment.
15) Logistics issues causing problems for agriculture January 22nd, 2018, http://finport.am/full_news.php?id=33168&lang=3
Prime Minister Karen Karapetyan has identified that logistics issues at the Upper Lars checkpoint are the cause of many problems in the agricultural sector, further clarifying that these are mostly related to weather conditions and seasonal loads. The Prime Minister added that alternative options for logistics are currently being discussed. Page 5
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Armenia is implementing a number of programs aimed at creating a modern, profitable and industrial agricultural sector, including the creation of new intensive gardens and greenhouses, the transition to a new drop irrigation system, an anti-hail system, programs for leasing agricultural machinery and programs to create affordable loan conditions. At the same time, work is underway to increase the level of representation of Armenian products at various exhibitions, which should contribute to increased exports and the emergence of new markets.
16) 11% increase in meat product prices January 11th, 2018, https://www.panorama.am/en/news/2018/01/11/Armenia/1889223
An 11% year-on-year increase in the prices of meat products was recorded in the domestic market in December 2017. This also represents a 0.4-3.8% increase over November 2017 prices, depending on location. For fish and seafood products, a 24.8% year-on-year increase was recorded. It should also be noted that a year-on-year increase of 0.1% was recorded in December 2017 for confectionery products and that prices remained unchanged for alcoholic drinks and tobacco products.
17) Heavy Basket cooperative to begin agricultural exports January 11th, 2018, http://finport.am/full_news.php?id=33063&lang=3
The ‘Heavy Basket’ agricultural cooperative offers ecologically clean products from the Vayots Dzor region to domestic markets. In 2018, however, the cooperative will begin exporting 10 types of ecologically clean, high-quality and flavorful foods items (including dried fruits, nuts and seeds and various herbs and teas) to business partners abroad. Heavy Basket was established in 2017 and received financial support and technical assistance from Lydian Armenia, Partnership and Teaching (a non-governmental organization) and the HDP Foundation.
18) Outstanding debt to farmers down to AMD 34 million December 25th, 2017, https://ru.armeniasputnik.am/economy/20171225/9942818/minselhoz
In 2017, 90% of the outstanding debt owed to farmers by agricultural processing companies was repaid, leaving four agricultural processing companies with a total remaining debt of AMD 34 million (USD 70,000) owed to farmers. This is planned to be paid back to farmers by April 1, 2018. Deputy Agriculture Minister Robert Makaryan has stated that farmers should be wary in dealing with agricultural processing companies going forward and should consider only accepting advanced payments for their harvests. That being said, the Deputy Minister also noted that there are some examples of positive relationships between farmers and processors that have been working for many years without advanced payments. To solve the problem of the outstanding debt, the government launched a program in September 2017 to provide loans of up to AMD 1 billion (USD 2 million) to companies owing debt to farmers. Under the program, loans were given at 12% per annum, with the government subsidizing 9% of the loan. Loans were also only given if the company concluded contracts with farmers for the procurement of harvests. In total, the government allocated AMD 18 billion for the program (USD 37 million dollars).
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19) Vegetable and berry exports expected to grow in 2018 December 25th, 2017, https://ru.armeniasputnik.am/economy/20171225/9943127/zamministra
Exports of Armenian vegetables and berries in 2017 amounted to 119,200 tons, most of which was sent to traditional markets in Russia. Deputy Agriculture Minister Robert Makaryan is predicting that this number will rise in 2018 thanks to several state initiatives that will work to both increase productivity and promote Armenian products in new markets. In particular, the Ministry has developed pilot projects related to warehousing centers and refrigeration techniques/equipment. Additionally, the Ministry plans to update agricultural machinery and equipment in the country via a loan subsidy program as well as a program for agricultural machinery stations.
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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.