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Vestnik Kavkaza, Russia
Sept 19 2012
Armenia enjoys excessive harvest
by David Stepanyan, Yerevan. Exclusively for VK
2012 was productive for Armenian agriculture. Fruits and vegetables
flooded the Ararat Valley, the main agricultural region of the
country. But instead of gaining additional income, farmers lost what
they earned in the previous years.
Supply of peaches, plums, grape and some vegetable types exceeded the
demand, resulting in average prices of about $0.25-1.25. The prices
were formed by resellers who pay half of it at best or a third in some
cases. But even that price does not allow farmers to make profit from
their hard work, because Yerevan cannot consume fruits and vegetables
in quantities offered.
Peasants had to sell their products, for example, peaches, at a
ridiculously low price of $0.13 per kg. Factories, for example, the
canned food factory in Borodino in the Ararat Region or Spaika, a
company exporting fruits and vegetables from Armenia) select only the
best fruits and leave the rest. Moreover, the little cash they offer
is not paid immediately. They are handed only in a few months after
being processed in affiliated banks. Farmers are forced to take loans
at the very same banks before they get their payments.
Armenian fruits and vegetables have high demand in Russia due to their
ecological benefits. Prices for fruits and vegetables in Russia are
tens of times higher. Armenia could have organized exports of
high-quality products to Russia, not to mention other CIS states,
instead of having it rot in fields and gardens. The question is why
cannot Armenian farmers organized exports of their products
themselves?
Gagik Agajanyan, Executive Director of Apaven, an international
transport company, told VK that exports of any products made in
Armenia do not undergo taxing. The mechanisms are simple, cargo
registration are customs offices on the border is realized basing on
documents presented by authorities of communities where the fruits
were grown. Then, an export declaration is presented. Verkhny Lars is
open, there are no car transport problems in Georgia, illegal fees are
only common in North Caucasus republics. Although Russian executives
are trying to resolve the problem. Thus, it seems that nothing gets in
the way of agricultural exports from Armenia, at first view. However,
Armenian tax laws set a 20% VAT for any goods being exported.
Exporters get the sum back later, but the process takes a year. Where
would a farmer get enough cash to pay VAT and wait a whole year to get
the money back. The government does not let itself remain idle.
Armenian Deputy Minister for Agriculture Robert Makaryan said that if
processing and exporting enterprises of Armenia use their potential at
full power, there would be not problems in realizing agricultural
products. A state structure monitoring harvesting and exports of
products has been organized this year. President Serzh Sargsyan
ordered grape prices to be set at 140 drams per kilo. Owners of
factories reacted to the urge and the situation started improving.
Ara Grigoryan, Executive Director of the Yerevan Cognac Factory, the
largest processing enterprise of Armenia, called the president's 140
drams price the happy mean and decided to prepare 24,000 tons of grape
in 2012, exceeding the previous year's quantity by 3,000 tons.
Purchases of grape started on September 10. The cognac factory (owned
by Pernod Picard) decided to increase purchase prices to 140 drams.
Grigoryan said that the factory will start signing long-term deals
with farmers in spring 2013, to purchase grape for 9 years. It would
help farmers solve their present problems and plan business for the
future with greater harvests. Long-term contracts will encourage banks
to give loans for development.
A new factory to process apricots, peaches, apples, plums and tomatoes
was launched. It belongs to Euroterm and is the only agricultural
processing facility built from scratch and equipped with advanced
European technologies, allowing 300-500 tons of fruits and vegetables
to be processed. Euroterm exports about 70% products to Russia, USA,
France, Germany, UAE, Kazakhstan and Australia.
But these achievements cannot resolve the problem of realizing
agricultural products in Armenia. In order to understand the reasons,
one needs to recall the collapse of the USSR, when Armenian
authorities started bringing their innovative plans to life.
Agriculture was the first to face the impact of reforms started in the
1990s. As a result, the situation in gardens and fields this year has
become unsatisfactory. Problems with realization of fruits and
vegetables are caused by fragmentation of farms and lands. 430,000
farms were formed during privatization of the 1990s, an absurd figure
for a country as small as Armenia. Finland, for instance, has 67,000
farms. According to the Ministry for Agriculture, only 470,000
hectares of fields were planted, which means that a farmer has an
average of only 1.1 hectares of land. Specialists VK interviewed say
that the optimal land size is about 100 hectares. It will allow
circulation of agricultural lands, solve watering issues, fertilizers,
efficient use of equipment and organized realization of products. 46%
of Armenian population is agricultura, compared with 2-6% in advanced
states.
These `results' were achieved after 20 years of market `reforms' and
market `development', proving that all agricultural reforms,
especially privatization, were ignorant and mischievous. They were so
mischievous that if there were no reforms and the collective farms of
the USSR were left as they were, the result would most likely be a lot
better. Belarus can boast the best confirmation of the idea.
Agriculture became so shattered with the help of almost all
governments since President Levon Ter-Petrosyan. Consequently, modern
farming resembles that of Medieval times, unproductive and
uncompetitive. The agriculture minister still calls for cooperation of
farmers in order to solve all agricultural problems, including
products rotting at `uncooperative' fields. Words and actions of
Armenian functionaries have always been contradicting each other,
although that would not stop them from announcing `increase of volumes
and income of processing industry' belonging to the wealthy part of
the population. The 430,000 farms of Armenia will probably feel no
better from this increase.
http://vestnikkavkaza.net/articles/economy/31579.html
Sept 19 2012
Armenia enjoys excessive harvest
by David Stepanyan, Yerevan. Exclusively for VK
2012 was productive for Armenian agriculture. Fruits and vegetables
flooded the Ararat Valley, the main agricultural region of the
country. But instead of gaining additional income, farmers lost what
they earned in the previous years.
Supply of peaches, plums, grape and some vegetable types exceeded the
demand, resulting in average prices of about $0.25-1.25. The prices
were formed by resellers who pay half of it at best or a third in some
cases. But even that price does not allow farmers to make profit from
their hard work, because Yerevan cannot consume fruits and vegetables
in quantities offered.
Peasants had to sell their products, for example, peaches, at a
ridiculously low price of $0.13 per kg. Factories, for example, the
canned food factory in Borodino in the Ararat Region or Spaika, a
company exporting fruits and vegetables from Armenia) select only the
best fruits and leave the rest. Moreover, the little cash they offer
is not paid immediately. They are handed only in a few months after
being processed in affiliated banks. Farmers are forced to take loans
at the very same banks before they get their payments.
Armenian fruits and vegetables have high demand in Russia due to their
ecological benefits. Prices for fruits and vegetables in Russia are
tens of times higher. Armenia could have organized exports of
high-quality products to Russia, not to mention other CIS states,
instead of having it rot in fields and gardens. The question is why
cannot Armenian farmers organized exports of their products
themselves?
Gagik Agajanyan, Executive Director of Apaven, an international
transport company, told VK that exports of any products made in
Armenia do not undergo taxing. The mechanisms are simple, cargo
registration are customs offices on the border is realized basing on
documents presented by authorities of communities where the fruits
were grown. Then, an export declaration is presented. Verkhny Lars is
open, there are no car transport problems in Georgia, illegal fees are
only common in North Caucasus republics. Although Russian executives
are trying to resolve the problem. Thus, it seems that nothing gets in
the way of agricultural exports from Armenia, at first view. However,
Armenian tax laws set a 20% VAT for any goods being exported.
Exporters get the sum back later, but the process takes a year. Where
would a farmer get enough cash to pay VAT and wait a whole year to get
the money back. The government does not let itself remain idle.
Armenian Deputy Minister for Agriculture Robert Makaryan said that if
processing and exporting enterprises of Armenia use their potential at
full power, there would be not problems in realizing agricultural
products. A state structure monitoring harvesting and exports of
products has been organized this year. President Serzh Sargsyan
ordered grape prices to be set at 140 drams per kilo. Owners of
factories reacted to the urge and the situation started improving.
Ara Grigoryan, Executive Director of the Yerevan Cognac Factory, the
largest processing enterprise of Armenia, called the president's 140
drams price the happy mean and decided to prepare 24,000 tons of grape
in 2012, exceeding the previous year's quantity by 3,000 tons.
Purchases of grape started on September 10. The cognac factory (owned
by Pernod Picard) decided to increase purchase prices to 140 drams.
Grigoryan said that the factory will start signing long-term deals
with farmers in spring 2013, to purchase grape for 9 years. It would
help farmers solve their present problems and plan business for the
future with greater harvests. Long-term contracts will encourage banks
to give loans for development.
A new factory to process apricots, peaches, apples, plums and tomatoes
was launched. It belongs to Euroterm and is the only agricultural
processing facility built from scratch and equipped with advanced
European technologies, allowing 300-500 tons of fruits and vegetables
to be processed. Euroterm exports about 70% products to Russia, USA,
France, Germany, UAE, Kazakhstan and Australia.
But these achievements cannot resolve the problem of realizing
agricultural products in Armenia. In order to understand the reasons,
one needs to recall the collapse of the USSR, when Armenian
authorities started bringing their innovative plans to life.
Agriculture was the first to face the impact of reforms started in the
1990s. As a result, the situation in gardens and fields this year has
become unsatisfactory. Problems with realization of fruits and
vegetables are caused by fragmentation of farms and lands. 430,000
farms were formed during privatization of the 1990s, an absurd figure
for a country as small as Armenia. Finland, for instance, has 67,000
farms. According to the Ministry for Agriculture, only 470,000
hectares of fields were planted, which means that a farmer has an
average of only 1.1 hectares of land. Specialists VK interviewed say
that the optimal land size is about 100 hectares. It will allow
circulation of agricultural lands, solve watering issues, fertilizers,
efficient use of equipment and organized realization of products. 46%
of Armenian population is agricultura, compared with 2-6% in advanced
states.
These `results' were achieved after 20 years of market `reforms' and
market `development', proving that all agricultural reforms,
especially privatization, were ignorant and mischievous. They were so
mischievous that if there were no reforms and the collective farms of
the USSR were left as they were, the result would most likely be a lot
better. Belarus can boast the best confirmation of the idea.
Agriculture became so shattered with the help of almost all
governments since President Levon Ter-Petrosyan. Consequently, modern
farming resembles that of Medieval times, unproductive and
uncompetitive. The agriculture minister still calls for cooperation of
farmers in order to solve all agricultural problems, including
products rotting at `uncooperative' fields. Words and actions of
Armenian functionaries have always been contradicting each other,
although that would not stop them from announcing `increase of volumes
and income of processing industry' belonging to the wealthy part of
the population. The 430,000 farms of Armenia will probably feel no
better from this increase.
http://vestnikkavkaza.net/articles/economy/31579.html