01 BFC Armenia Agriculture Finance Bulletin

06/2015

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1 A rm e n i a Agriculture Finance Bulletin Farmers to Receive Incentives for Cooperative Creation IBRD to Issue USD 30 Million for Rural Development in Armenia Agriculture Output from January-May 2015 Rises 6% to AMD 174 Billion Loans to Agriculture Sector Increase by 25.1%

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Armenian Agriculture Finance Bulletin Edition #1, June 2015

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6)

Farmers to Receive Incentives for Cooperative Creation ................................................................ 2 Belarus Considers Opening Agricultural Machinery Plant in Gyumri .............................................. 2 Government Plans to Quadruple Fishery Output to 50,000 tons ................................................... 2 Exporters Urged to Exploit Armenia’s Accession to EEU ................................................................. 2 Ministry of Agriculture Discusses Anti-Hail Measures .................................................................... 3 Cultivated Land to Increase by 15,000 Hectares in 2015 ................................................................ 3

Foreign Aid ................................................................................................................. 3 7) 8) 9) 10) 11)

IBRD to Issue USD 30 Million for Rural Development in Armenia................................................... 3 FAO to Open Representation in Armenia ........................................................................................ 4 FAO Led Workshop on Fisheries Held in Yerevan ........................................................................... 4 Ministry of Agriculture and USAID Discuss Expanding Projects ...................................................... 4 ENPARD Grants EUR 3.4 Million to Agriculture Development ........................................................ 4

Private Sector.............................................................................................................. 5 12) 13) 14) 15) 16) 17) 18)

Agriculture Deemed Armenia’s Most Attractive Investment Sector............................................... 5 Agriculture Output from January-May 2015 Rises 6% to AMD 174 Billion ..................................... 5 Apricot Exports Reach 10,000 tons ................................................................................................. 5 Price of Irrigation Water Will not Increase in 2015 ......................................................................... 6 Sour Cherry Exports Increase to 392 tons ....................................................................................... 6 Loans to Agriculture Sector Increase by 25.1% ............................................................................... 6 Dairy Farmers Cutting Livestock Numbers Due to Low Milk Price .................................................. 6

Note: The Armenian 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 Armenia. Currently, BFC is implementing the Agricultural Lending Programme for KfW. Read more »

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BFC. Armenian Agriculture Finance Bulletin. Edition #1, June 2015

State Initiatives 1)

Farmers to Receive Incentives for Cooperative Creation

June 30th, 2015, http://www.golosarmenii.am/article/30318/tam--gde-byli-sozdany-kooperativy--rezultaty-ochevidny

Due to the global success of cooperatives, their creation will continue to be pushed on a voluntary basis, said Minister of Agriculture Sergo Karapetyan.

The Ministry is to introduce an incentive scheme, he added.

2)

Belarus Considers Opening Agricultural Machinery Plant in Gyumri

June 29th, 2015, http://news.am/eng/news/274413.html

Belarus is interested in opening an agricultural machinery plant in Gyumri, Armenia’s second largest city, announced Viktor Guminsky, Deputy Chairman of the House of Representatives of Belarus.

The sides have been considering the plan for some time, with little progress, according to the Chairman.

Guminsky made the announcement during a wider discussion on economic cooperation between Armenia and Belarus.

3)

Government Plans to Quadruple Fishery Output to 50,000 tons

June 16th, 2015, http://agriculture.einnews.com/article_detail/271096515?lcode=hQOiMma10lYaZhS9hxwZlMDBeuUBJROfO9FgTx7A4_A%3D

In 2014, 250 fisheries covering 3500 hectares produced 13,000 tons of fish worth AMD 28.7 billion, a 24.6% increase year-on-year, said Minister of Agriculture Sergo Karapetyan.

With output doubling from 2011-2014, the government has developed a program that envisages an output of 50,000 tons of high-quality fish per year, added Karapetyan.

The Minister also called for appropriate processing facilities to be established.

4)

Exporters Urged to Exploit Armenia’s Accession to EEU

June 10th, 2015, http://agriculture.einnews.com/article_detail/270076029?lcode=hQOiMma10lYaZhS9hxwZlMDBeuUBJROfO9FgTx7A4_A%3D

Minister of Agriculture Sergo Karapetyan urged fruit and vegetable producers to increase volumes and exploit export opportunities presented by Armenia’s accession to the Eurasian Economic Union (EEU).

However, long waiting times were reported at the Upper Lars border crossing between Georgia and Russia – the principle conduit of Armenian goods to Russia. Spayka, a cargo company, reported that waiting times were greatly reduced by issuing their trucks with Russian license plates.

Armenia exports between 300-350 tons of fruit and vegetables a day, with 8860 tons of cabbage, 2000 tons of cucumbers, 700 tons of tomatoes and 280 tons of cherries exported by early June, said Karapetyan.

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BFC. Armenian Agriculture Finance Bulletin. Edition #1, June 2015

5)

Ministry of Agriculture Discusses Anti-Hail Measures

June 5th, 2015, https://www.armenianow.com/economy/64110/armenia_agriculture_antihail_stations_yield_government

In 2015, roughly 1400 hectares of perennials – mostly apricot trees – and 350 hectares of vineyard were damaged by hail storms, according to Minister of Agriculture Sergo Karapetyan. However, the harvest was not particularly affected, he added.

To counter the damage, 412 anti-hail cannons have been installed in Armenia and a further 72 in Nagorno-Karabakh – including 80 in 2014 and 8 this year – said Minister of Territorial Administration and Emergency Situations, Armen Yeritsyan. A further 5,165 are needed, with 1021 urgently, he added.

More meteorological stations are also needed, said Yeritsyan.

With hail-cannon success rates at only 60-75%, the Ministry installed anti-hail nets in the Ararat valley and plans to deploy them across the country, said Karapetyan.

Hrach Berberyan, President of the Armenian Agrarian-Rural Union, argues that hail cannons are useless, pointing out that most countries have abandoned them completely and citing the damage caused in Armavir – despite the presence of 18 canon. Berberyan supports the use of hail nets, adding that, if they were produced in Armenia, they would cost only USD 1,500 to 2,500.

Despite the hail, agro-output increased by 4.8% from January-April 2015, said Karapetyan.

6)

Cultivated Land to Increase by 15,000 Hectares in 2015

June 4th, 2015, http://agriculture.einnews.com/article_detail/269044633?lcode=hQOiMma10lYaZhS9hxwZlMDBeuUBJROfO9FgTx7A4_A%3D

In 2015, cultivated land will increase by 15,000 hectares, of which 10,000 hectares will be sown with cereals, announced Minister of Agriculture Sergo Karapetyan.

One of the Ministry’s primary goals over the years has been to increase cultivated area, added Karapetyan, with the total increasing by 50,000 hectares over the past 4 years.

There are about 448,000 hectares of arable land in Armenia, of which 332,699 hectares are cultivated, amounting to 74.2% of the total.

Foreign Aid 7)

IBRD to Issue USD 30 Million for Rural Development in Armenia

June 19th, 2015, http://news.am/eng/news/272785.html

The International Bank for Reconstruction and Development (IBRD) – an arm of the World Bank – is to loan USD 30 million for rural development in Armenia, announced Vache Terteryan, First Deputy Minister of Territorial Administration and Emergency Situations. The funds have a maturation period of 25 years, with an expected interest rate of 1.25%.

The Armenia government and municipalities will co-finance the program to the tune of USD 11 million and USD 1.92 million respectively. The program will be implemented by the Territorial Development Fund of Armenia.

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BFC. Armenian Agriculture Finance Bulletin. Edition #1, June 2015

Of the funds, USD 24.3 million will be allocated to 120 micro social and economic development programs, with a maximum of USD 310,000 allocated to each program. A second USD 13.5 million component will be spent on 25-30 municipal programs with a maximum allocation of USD 500,000 per program.

8)

FAO to Open Representation in Armenia

June 18th, 2015, http://www.golosarmenii.am/article/29831/v-armenii-budet-otkryto-predstavitelstvo-FAO

The UN’s Food and Agriculture Organization (FAO) is to open a representation in Armenia, said Minister of Agriculture Sergo Karapetyan. Armenia will continue to seek financial and technical assistance in the fields of emergency response and rural development, including productivity, food quality and safety, and resource management.

9)

FAO Led Workshop on Fisheries Held in Yerevan

June 16th, 2015, http://minagro.am/en/2015/06/workshop-on-wto-access-to-market-and-trade-related-issues-in-the-field-offisheries-launched-in-yerevan/

The UN Food and Agriculture Organization (FAO) – in collaboration with Eurofish International – held a three day workshop entitled “WTO: Access to Market and Trade-Related Issues in the Field of Fisheries”.

The event was attended by representatives of 20 Central and Eastern European countries.

In his welcoming speech, Minister of Agriculture Sergo Karapetyan stressed the potential of aquaculture – namely in food security and foreign trade – adding that, in Armenia, resource-efficient technologies must be introduced and international quality and safety standards met.

In recent years, the state has provided support to fisheries, with total revenues reaching AMD 28.7 billion in 2014, a 24.6% increase year-on-year.

10) Ministry of Agriculture and USAID Discuss Expanding Projects June 16th, 2015, http://minagro.am/en/2015/06/the-ra-minister-of-agriculture-discussed-the-joint-projects-with-the-usaiddelegation/

Minister of Agriculture Sergo Karapetyan met with the USAID Deputy Assistant Administrator Jonathan Katz and the Agency Mission Director for Armenia Karen Hilliard to discuss the agency’s ongoing projects in Armenia, including an agricultural census, the promotion of clean energy and water, and the building of an agribusiness research and education center. Some of these programs may be extended, said Mr. Katz.

Karpetyan also spoke of the Ministry’s current priorities, highlighting livestock identification and registration and investment in resource-efficient aquaculture technologies. Numerous agriculture sectors in Armenia have the potential to double or triple in size, according to the Minister, stressing the importance of the EU and US export markets.

11) ENPARD Grants EUR 3.4 Million to Agriculture Development June 10th, 2015, http://agriculture.einnews.com/article_detail/270099251?lcode=hQOiMma10lYaZhS9hxwZlMDBeuUBJROfO9FgTx7A4_A%3D

Armenia has received EUR 3.4 million for the development of cooperatives and the agriculture valuechain through the European Neighborhood Program for Agricultural and Rural Development (ENPARD), according to John Barker, the EU Agriculture Program Attache in Armenia.

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BFC. Armenian Agriculture Finance Bulletin. Edition #1, June 2015

The funds are part of a 3 year, EUR 20 million, agriculture and rural development program launched in January 2015 and sponsored by the EU and the Austrian Development Agency. Further a total of EUR 5 million will be allocated to the Ministry of Agriculture for the development of cooperatives and the agriculture value chain.

The program aims to open new markets to Armenian farmers by increasing output and quality standards, said Barker, adding that farmers will be urged to unify their small, fragmented plots into cooperatives.

The funds will be provided in three tranches: EUR 6 million in 2015 and EUR 7 million in 2016 and as much in 2017. The program will be implemented by the UNDP, FAO and UNIDO.

Private Sector 12) Agriculture Deemed Armenia’s Most Attractive Investment Sector June 30th, 2015, http://agriculture.einnews.com/article_detail/273544804?lcode=hQOiMma10lYaZhS9hxwZlMDBeuUBJROfO9FgTx7A4_A%3D

Agriculture is Armenia’s most attractive investment sector, according to Chairman of the ArmenianAmerican Chamber of Commerce Tigran Jrbashyan.

Profitably in the sector is above the national average, he added.

13) Agriculture Output from January-May 2015 Rises 6% to AMD 174 Billion June 30th, 2015, http://agriculture.einnews.com/article_detail/273544841?lcode=hQOiMma10lYaZhS9hxwZlMDBeuUBJROfO9FgTx7A4_A%3D

From January-May 2015, agriculture output grew by 6% year-on-year to AMD 174 billion, according to the National Statistics Service (NSS). The figure for agriculture plus fisheries totals 7.7% to AMD 187.3 billion.

Fisheries grew by 30.6% to AMD to 13.3 billion, while the livestock sector grew by 4.9% to AMD 136.6 billion; and crop production by 10.5% to AMD 37.4 billion.

According to the NSS, 778.7 tons of fish were produced over the same period, representing a 22.7% increase year-on-year.

14) Apricot Exports Reach 10,000 tons June 29th, 2015, http://news.am/eng/news/274399.html

To date in 2015, 10,000 tons of apricots have been exported, compared with 1,800 tons during all of 2014, according to the Ministry of Agriculture. The fruits are mainly exported to Russia, while the rest goes to Kazakhstan, Belarus, Georgia, Uzbekistan, United Arab Emirates, Norway, Austria and Switzerland.

Fruit and vegetable exports totaled 35,000 tons, up from 25,000 tons during the same period in 2014.

Armenia exports between 300-500 tons of fruit and vegetables a day, according to official figures.

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BFC. Armenian Agriculture Finance Bulletin. Edition #1, June 2015

15) Price of Irrigation Water Will not Increase in 2015 June 19th, 2015, http://news.am/eng/news/272589.html

The recent decision to raise the price of electricity will not lead to an increase in water prices – and hence irrigation water – said Chairman of the State Committee on Water Economy, Aram Harutyunyan.

Moreover, subsidies to compensate for the increased operation costs of water pumps will be introduced, added Harutyunyan.

It is widely believed the decision to raise electricity prices will cause a hike in the price of numerous goods and services across the country.

16) Sour Cherry Exports Increase to 392 tons June 11th, 2015, http://www.golosarmenii.am/article/29560/pervye-lastochki-eaes

This year, exports of sour cherries totaled 392 tons, of which 323 tons went to Russia, said Deputy Minister of Agriculture Samvel Galstyan. In the same period last year, 286 tons were exported, of which 255 were delivered to Russia – an increase of 10 tons and 68 tons respectively, added Galstyan.

The increase can be attributed to an abundant harvest and Armenia’s accession to the Eurasian Economic Union (EEU), said Galstyan.

17) Loans to Agriculture Sector Increase by 25.1% June 9th, 2015, http://www.express.am/news/view/bankovskaj%D0%B0-sistema-armenii-narashivaet-kreditovanie-bazovyhotraslei.html

Banking sector lending to the agriculture sector increased by an average 25.1% to AMD 166.3 billion from January–May 2015 compared with the same period last year.

Loans for crop cultivation increased by 41.5% to AMD 80.3 billion, while loans for cattle breeding increased by 8.4% to AMD 55.7 billion; for meat processing by 25.6% to AMD 9.7 million; for milk production by 47.8% to AMD 13.7 billion; for fruit and vegetable processing by 40.4% to AMD 6.8 billion.

Loans for bread and flour products decreased by 25.3% to AMD 13 billion.

18) Dairy Farmers Cutting Livestock Numbers Due to Low Milk Price June 7th, 2015, http://www.golosarmenii.am/article/29410/grach-berberyan-iz-za-nizkix-cen-zakupki-moloka-fermery-rezhutskot

Due to low milk prices, dairy producers are cutting livestock levels, according to President of the Armenian Agrarian-Rural Union Hrach Berberyan.

In the Vardenis region, intermediaries are buying milk at 100 drams per liter said Berberyan. According to him, the price of milk has decreased by 30% since 2014.

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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.

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