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NOT GOING GREEN: ASSOCIATION HEAD SAYS HIGH TAXES, GAS PRICES MAKE BUSINESS INCREASINGLY UNPROFITABLE FOR ARMENIA'S YEAR-ROUND INDOOR FARMING
By Gohar Abrahamyan
ArmeniaNow
26.10.12 | 10:58
NAZIK ARMENAKYAN
Greenhouses that supply fresh fruits and vegetables as well as flowers
year-round in Armenia may go out of business soon unless they get
proper attention from relevant government agencies, says the head of
their association.
President of the Greenhouse Association NGO Poghos Gevorgyan says
running greenhouses in Armenia is becoming increasingly unprofitable
for a number of reasons.
The data that he presented show that there is approximately an area
of 130 hectares turned into private greenhouses in Armenia, with
60 percent of them cultivating vegetables and fruits and 40 percent
engaged in growing flowers.
"About 95 percent of flowers in Armenia are grown in greenhouses.
Generally, still in the Soviet times Armenia was considered to be the
best place for greenhouse economies considering the average duration
of daylight, local soil and water, which gives the yield an additional
flavor," Gevorgyan said during a meeting with reporters on Thursday.
He regretted that today greenhouses can make no headway because of
what he described as a heavy tax burden.
"There was a time when greenhouses were a very lucrative business
and people engaged in this business would develop it... But today the
increasing natural gas prices and taxation are putting huge pressure
on this business," complained Gevorgyan.
The Association head also complained about the practice of asking
advance payments, such as for natural gas supply, which, he said,
forced greenhouses to take loans and then work throughout the year
to pay the high interest on those loans.
"It turns out that greenhouses work for the banks," said Gevorgyan,
stressing that such a situation does not give them an opportunity to
work for development through acquiring new technologies, etc.
At the same time, the Greenhouse Association president said that a
20-percent value-added tax and a 12-percent customs duty for importers
at the border put off potential investors for the sector.
"For example, some entrepreneurs came from China with an intention
of investing some $100 million here, but because of the high taxes
they left without making any investment," said Gevorgyan, adding
that many of the association farmers who own large greenhouses are
actually selling them off as scrap metal.
According to the specialist, greenhouse space of six hectares provides
up to 120 jobs, with their monthly average salaries being 70,000 drams
(about $175). Most of these workers, he said, will become unemployed
when the greenhouses close down.
Recently, the Armenian Harvest Promotion Center announced the launch
of a process to develop small greenhouses in Armenia, which aims to
enable individual farmers and households to build, with a relatively
small investment, greenhouses based on new technologies that would
provide a relatively high yield.
But Gevorgyan spoke skeptically about this initiative too. He predicted
that these small greenhouses would not withstand the high tax pressure
and would eventually go out of business, leaving the field open to
a monopoly.
By Gohar Abrahamyan
ArmeniaNow
26.10.12 | 10:58
NAZIK ARMENAKYAN
Greenhouses that supply fresh fruits and vegetables as well as flowers
year-round in Armenia may go out of business soon unless they get
proper attention from relevant government agencies, says the head of
their association.
President of the Greenhouse Association NGO Poghos Gevorgyan says
running greenhouses in Armenia is becoming increasingly unprofitable
for a number of reasons.
The data that he presented show that there is approximately an area
of 130 hectares turned into private greenhouses in Armenia, with
60 percent of them cultivating vegetables and fruits and 40 percent
engaged in growing flowers.
"About 95 percent of flowers in Armenia are grown in greenhouses.
Generally, still in the Soviet times Armenia was considered to be the
best place for greenhouse economies considering the average duration
of daylight, local soil and water, which gives the yield an additional
flavor," Gevorgyan said during a meeting with reporters on Thursday.
He regretted that today greenhouses can make no headway because of
what he described as a heavy tax burden.
"There was a time when greenhouses were a very lucrative business
and people engaged in this business would develop it... But today the
increasing natural gas prices and taxation are putting huge pressure
on this business," complained Gevorgyan.
The Association head also complained about the practice of asking
advance payments, such as for natural gas supply, which, he said,
forced greenhouses to take loans and then work throughout the year
to pay the high interest on those loans.
"It turns out that greenhouses work for the banks," said Gevorgyan,
stressing that such a situation does not give them an opportunity to
work for development through acquiring new technologies, etc.
At the same time, the Greenhouse Association president said that a
20-percent value-added tax and a 12-percent customs duty for importers
at the border put off potential investors for the sector.
"For example, some entrepreneurs came from China with an intention
of investing some $100 million here, but because of the high taxes
they left without making any investment," said Gevorgyan, adding
that many of the association farmers who own large greenhouses are
actually selling them off as scrap metal.
According to the specialist, greenhouse space of six hectares provides
up to 120 jobs, with their monthly average salaries being 70,000 drams
(about $175). Most of these workers, he said, will become unemployed
when the greenhouses close down.
Recently, the Armenian Harvest Promotion Center announced the launch
of a process to develop small greenhouses in Armenia, which aims to
enable individual farmers and households to build, with a relatively
small investment, greenhouses based on new technologies that would
provide a relatively high yield.
But Gevorgyan spoke skeptically about this initiative too. He predicted
that these small greenhouses would not withstand the high tax pressure
and would eventually go out of business, leaving the field open to
a monopoly.