03/2016
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10 A rm e n i a Agriculture Finance Bulletin Russia Proposes a Zero Customs Duty for Orange Imports into the EAEU Innovative Value Chain Agro-Lending Scheme Launched Armenian Agriculture Blossoming in the Eurasian Union Armenian Agriculture Grew by 11.7% in 2015
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Agriculture Finance Bulletin Edition #10, March 2016
Contents State Initiatives ........................................................................................................... 2 1) 2) 3)
Agricultural Relations with Iran are High and Deepening ............................................................... 2 Russia Proposes a Zero Customs Duty for Orange Imports into the EAEU ..................................... 2 Agriculture Minister and Bank CEO Meet to Discuss Agriculture Financing ................................... 2
Foreign Aid ................................................................................................................. 3 4) 5) 6)
45 New Agricultural Cooperatives to Be Established with EU Assistance ....................................... 3 Innovative Value Chain Agro-Lending Scheme Launched ............................................................... 3 Armenia Agricultural Biodiversity Conservation Project Kicks Off .................................................. 3
Private Sector.............................................................................................................. 4 7) 8) 9) 10) 11) 12) 13)
Armenian Agriculture Blossoming in the Eurasian Union ............................................................... 4 Sevan Aqua to Produce 685 Tons of Fish per Year .......................................................................... 4 Processing Companies to Pay Outstanding Debt to Farmers by April 1.......................................... 4 Armenian Agriculture Grew by 11.7% in 2015 ................................................................................ 4 Russian Wheat Growing in Armenian Market ................................................................................. 5 Armenian Fish Exports Decline ........................................................................................................ 5 Tomato Exports to Russia Thriving .................................................................................................. 5
Note: The Agriculture Finance Bulletin presents a monthly roundup of headlines and news stories related to investments and financing flows 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.
BFC Max-Högger-Strasse 6 CH-8048 Zurich, Switzerland
Phone: +41 44 784 22 22 Fax: +41 44 784 23 23
info@bfconsulting.com www.bfconsulting.com
BFC. Agriculture Finance Bulletin.
State Initiatives 1)
Agricultural Relations with Iran are High and Deepening
March 16th, 2016, http://news.am/eng/news/317085.html
Agriculture Minister Sergo Karapetyan met with Mohammadali Najafi, governor of the Iranian Gilan province to discuss Armenian-Iranian relations in agriculture. While noting that the agricultural relations between the two countries are high, Karapetyan pointed that “the entire potential of cooperation between the two is still not fully utilized.” The two discussed how Armenia’s accession into the Eurasian Economic Union and the lifting of international sanctions on Iran can be maximized in bilateral cooperation. Najafi proposed the creation of a joint working group in the agrarian sector, and both sides expressed confidence that ties between the two sides will continue to deepen and bear fruit for both.
2)
Russia Proposes a Zero Customs Duty for Orange Imports into the EAEU
March 10th, 2016, http://news.am/eng/news/315949.html
Russia has proposed the launch of a zero customs duty for orange imports in the Eurasian Economic Union (EAEU) for one year. The proposal is also said to be applied to cumin, anise seeds, and salted leather. The objective of the proposed measures is to enrich the EAEU domestic market with some types of agricultural products whose volumes are not enough to satisfy the needs of EAEU member countries. The EAEU is currently comprised of Armenia, Russia, Belarus, Kazakhstan, and Kyrgyzstan.
3)
Agriculture Minister and Bank CEO Meet to Discuss Agriculture Financing
March 9th, 2016, http://minagro.am/2016/03/%D5%B0%D5%B0%D5%A3%D5%B5%D5%B8%D6%82%D5%B2%D5%A1%D5%BF%D5%B6%D5%BF%D5%A5%D5%BD%D5%B8%D6%82%D5%A9%D 5%B5%D5%A1%D5%B6-%D5%B6%D5%A1%D5%AD%D5%A1%D6%80%D5%A1%D6%80%D5%B6%D5%A8%D5%B6%D5%A4%D5%B8%D6%82-47/
Armenian Minister of Agriculture Sergo Karapetyan met with ACBA-CREDIT AGRICOLE BANK CEO Hakob Andreasyan to discuss current issues related to the financing of agricultural farms. During the meeting, Mr. Andreasyan said that the bank is ready to start the 2016 subsidized loans for farmers. Agricultural activities launched about a month early this year, and the government is taking action to make more loans available to farmers earlier. The state program provides subsidized loans to farmers at 8% interest and is seen as helping develop agriculture in Armenia. The two also discussed how to better encourage the creation and development of agricultural cooperatives within the country. Mr. Andreasyan believes that banks may be able to help foster the development of cooperatives by finding products with more affordable interest rates and offered his experience in implementing cooperative projects.
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BFC. Agriculture Finance Bulletin.
Foreign Aid 4)
45 New Agricultural Cooperatives to Be Established with EU Assistance
March 16th, 2016, http://armenpress.am/eng/news/839634/45-new-cooperatives-to-be-established-in-armenia-this-year-witheu-assistance.html
Agriculture Minister Sergo Karapetyan received a delegation from the European Neighborhood Program for Agriculture and Rural Development (ENPARD) and expressed his thanks to the organization for the assistance in helping Armenian agricultural record dynamic increases in recent years. This year, after passage of a law on agricultural cooperatives and the creation of an administrative body to support them within the Ministry of Agriculture, 45 agricultural cooperatives will be set up with the continued support of European counterparts.
5)
Innovative Value Chain Agro-Lending Scheme Launched
March 10th, 2016, http://news.am/arm/news/316010.html
A new preferential agricultural lending scheme has been launched through the Financing the Agriculture Sector in Armenia program. The scheme is being implemented by the German-Armenian Fund and was developed in collaboration with the German Development Bank (KfW) with the assistance of Swissbased consultancy Business and Finance Consulting (BFC). The agro-lending scheme employs innovative “tripartite” value chain financing, in which lenders become full financial partners across the value chain. FINCA Armenia – a microfinance institution – and ArtAgro – an agro-services company with activities across the agricultural value chain – are participating in the pilot scheme. Beneficiaries receive between AMD 75,000-1,500,000 at nil or close to nil interest rates, with a service fee of 3%. Loan maturity will be 6-12 months. Loan terms do not require a visit to the applicant’s property and loans of up to AMD 750,000 do not require references. Investment loans must not exceed AMD 75 million, with minimum maturity of 2 years, while working capital loans are capped at AMD 33 million, with minimum maturity of 8 months. The scheme allows farmers to select preferential credit tailored to their needs, said BFC Managing Director Michael Kortenbusch.
6)
Armenia Agricultural Biodiversity Conservation Project Kicks Off
March 1st, 2016, http://news.am/eng/news/314522.html
A new project from the Armenian Ministry of Nature Protection entitled “Enhancing Livelihoods in Rural Communities of Armenia through Main-Streaming and Strengthening Agricultural Biodiversity Conservation and Utilization” kicked off this month with a project launch workshop. The objective of this project is to ensure enhanced conservation of the agricultural biodiversity that supports adaptation to environmental and agricultural challenges (including markets) in the country and provide a sustainable basis for enhanced utilization to improve rural livelihoods. The project will target the Ararat plain, Syunik Province, and the Lake Sevan basin and surrounding areas. The project is being funded by the Global Environmental Fund and assisted by the United Nations Environment Program.
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BFC. Agriculture Finance Bulletin.
Private Sector 7)
Armenian Agriculture Blossoming in the Eurasian Union
March 29th, 2016, http://news.am/eng/news/319413.html
Eurasian Economic Commission Member of the Board and Minister in charge of Industry and Agriculture of the EEC, Sergei Sidorsky, noted that Armenian agricultural exports to Russia and Belarus are finding new, big networks. Before Armenia’s accession into the Eurasian Union, Armenian agricultural products were primarily sold only in various local markets; however, since joining the Union, they have received, and are fully utilizing, access to large commercial networks. Armenia has also been quick to fill the gap left by Russian sanctions imposed on Turkey. There is a bright future for Armenian agriculture in Russia and other Eurasian Union countries.
8)
Sevan Aqua to Produce 685 Tons of Fish per Year
March 25th, 2016, http://arka.am/en/news/business/sevan_aqua_to_produce_685_tons_of_fish_a_year/
Sevan Aqua is planning on creating 16 new jobs with average wage of AMD 215,000 and earning AMD 2.4 billion in the next three years with a new fish farm established on Lake Sevan. In three years, the company is projected to reach full capacity and be producing 685 tons of fish per year. Sevan Aqua is working under a government project for the eventual production of 50 thousand tons of trout per year in the next ten years. The government, for its part, exempted the company from the payment of import duties on equipment and raw materials and awarded it a 3 year VAT payment deferment. Six companies whose total investments are expected to make USD 50 million and create 450 new jobs were exempted from the payment of customs duties. Other companies which promised to make AMD 186 billion in investments and create a total of 4,500 jobs were given VAT payment deferment.
9)
Processing Companies to Pay Outstanding Debt to Farmers by April 1
March 16th, 2016, http://arka.am/en/news/business/processing_companies_promise_to_pay_outstanding_debts_to_farmers_before_april_1/
Agriculture Minister Sergo Karapetyan met with top managers from Armenian wineries and processing companies earlier this month and was assured that farmers would be paid the approximate AMD 2.5 billion owed to them from wineries and processors prior to April 1 of this year. Armenia’s processing enterprises bought a total of AMD 39 billion worth of fruits and vegetables in 2015.
10) Armenian Agriculture Grew by 11.7% in 2015 March 12th, 2016, http://news.am/eng/news/316452.html
The gross production volume of Armenian agriculture grew by 11.7% in 2015, representing AMD 1.2 trillion. Agricultural processors reported procurement of 43.5 thousand tons of vegetables and 20.6 thousand tons of fruit, 27.6% and 48.3% more than in 2014, respectively. There were also 76.7 thousand tons of fruits and vegetables exported in 2015. Helping the production increase were a 78.8% growth in use of targeted croplands and a government program to subsidize loans to farmers — the total of which was approximately AMD 15.2 billion in 2015. Page 4
BFC. Agriculture Finance Bulletin.
11) Russian Wheat Growing in Armenian Market March 5th, 2016, http://news.am/eng/news/315159.html
Russian wheat now occupies a 30% share in the Armenian market, and Armenian flour producers are struggling to compete. The recent decline of the Russian ruble has made importing Russian flour more profitable for importers than purchasing it in Armenia. This has had the effect of pushing prices down, and Armenian producers are now concerned as they are now selling their products at close to cost just to survive. Russian wheat made its entrance into the Armenian market once Armenia joined the Eurasian Union.
12) Armenian Fish Exports Decline March 3rd, 2016, http://www.panorama.am/en/news/2016/03/03/Arthur-Atoyan/1538614
President of the NGO Fish Producers and Exporters Arthur Atoyan has noticed a sharp decline of 70% in fish exports. He believes the problem relates to a lack of institutional coordination and a lack of knowledge by those coming into the industry. According to him, this has led to low quality which has pushed the price of fish up, increased fish imports, and pushed the sector in Armenia towards monopolization.
13) Tomato Exports to Russia Thriving March 3rd, 2016, http://arka.am/en/news/economy/growth_of_tomatoes_exports_from_armenia_to_russia_ensured_by_local_products/
Armenian tomato exports to Russia are booming. Armenia exported 1,000 tons of tomatoes to Russia in January and February of 2016, after having no tomato exports to Russia in the same period of 2015. Armenian greenhouses are actively working to fill the Russian demand and are confident in the quality and integrity of their products. It should be noted, however, that Russian agricultural watchdog Rosselkhoznador has expressed some concern over the considerable increase of plant products, particularly tomatoes, from Armenia, Egypt and Azerbaijan to Russia.
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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com In this bulletin, BFC provides extracts from articles that have been published by others and as a result cannot be held responsible for such content. The articles do not necessarily reflect the opinions of BFC, its staff, its associates or its partners. Copyright of articles is retained by their authors.