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«AGRICULTURE AND FOOD PROCESSING IN ARMENIA YEREVAN 2010 Dedicated to the memory of the author’s son, Sergey Avetisyan Approved for publication by ...»

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SAMVEL AVETISYAN

AGRICULTURE AND FOOD

PROCESSING IN ARMENIA

YEREVAN 2010

Dedicated to the memory of the author’s son, Sergey Avetisyan

Approved for publication by the Scientific and Technical Council of

the RA Ministry of Agriculture

Peer Reviewers:

Doctor of Economics, Prof. Ashot Bayadyan

Candidate Doctor of Economics, Docent Sergey Meloyan

Technical Editor:

Doctor of Economics Hrachya Tspnetsyan Samvel S. Avetisyan Agriculture and Food Processing in Armenia – Limush Publishing House, Yerevan 2010 - 138 pages Photos courtesy CARD, Zaven Khachikyan, Hambardzum Hovhannisyan This book presents the current state and development opportunities of the Armenian agriculture. Special importance has been attached to the potential of agriculture, the agricultural reform process, accomplishments and problems. The author brings up particular facts in combination with historic data. Brief information is offered on leading agricultural and processing enterprises.

The book can be a useful source for people interested in the agrarian sector of Armenia, specialists, and students.

Publication of this book is made possible by the generous financial support of the United States Department of Agriculture (USDA) and assistance of the “Center for Agribusiness and Rural Development” Foundation. The contents do not necessarily represent the views of USDA, the U.S. Government or “Center for Agribusiness and Rural Development” Foundation.

INTRODUCTION

Food and Agriculture sector is one of the most important industries in Armenia’s economy. The role of the agrarian sector has been critical from the perspectives of the country’s economic development, food safety, and overcoming rural poverty.

It is remarkable that still prior to the collapse of the Soviet Union, Armenia made unprecedented steps towards agrarian reforms. Overcoming about seven decades of state monopoly, land and the main means of production were privatized;

legislative basis was created for varied forms of ownership, production management, liberalization of prices and for development of the banking system, production and social infrastructures.

These reforms were being implemented in conditions of distorted economic links, blockade of external communications, and the liberation war in Artsakh.

Meeting all these challenges, Armenia maintained its internal stability and developed active political and economic relationships with a large number of countries and international agencies.

There still remain many unsolved problems in the agri-food sector that are being addressed by the President of Armenia and the RA Government while consistently implementing the designed agrarian policies.

Versatile assistance is provided to Armenia by many international organizations and countries and the Armenian Diaspora. We value this assistance and pursue goals that lead to integration with the international community.

Armenia has opened its doors for businesspeople from all countries, tourists, compatriots from the Diaspora, and every visitor of good will.

This book will familiarize readers with Armenia’s agrarian potential, accomplishments and existing problems occurred after the declaration of independence in 1991 and, possibly, motivate some of them to become part of agriculture and agribusiness development in this country.

I thank all my colleagues who cordially provided their support in preparation of the materials of this book. I am grateful to Hrachya Tspnetsyan, Heriqnaz Lemberyan, Sos Avetisyan, and my son, Ashot Avetisyan for their valuable advice and contribution.

A special thanks goes to Fred Johnston, Director of USDA Caucasus Agricultural Development Initiative, Gagik Sardaryan, Director of the Center for Agribusiness and Rural Development, and Vahram Darbinyan, Director of Limush Publishing House.

I would much appreciate any comment and recommendation that you can send by email: samavets@yahoo.com.

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1. ARMENIA: GENERAL INFORMATION The Republic of Armenia occupies an area of 29,800 square kilometers. It is located in the verge of Southern Caucasus and Asia Minor, in the north-east of the Armenian Plateau.

Armenia borders Georgia in the North, Azerbaijan in the East, Iran in the South, and Turkey in the West. The average altitude is 1,800 meters above sea level. The highest peak is Mount Aragats (4,090m above sea level) and the lowest point is the gorge of Debed River (380m).

Population: The population of Armenia is 3,250,500, of which 98% are ethnic Armenians. National minorities residing in Armenia include Russians, Kurds, Greeks, Yezdis, Assyrians, Ukrainians, Jews, and others. Around 5-6 million Armenians reside outside Armenia, particularly in Russia, the U.S., Georgia, France, Iran, Canada, countries of Latin America and the Near East.

State Structure: Armenia is a republic. The President of the Republic leads the country. The highest legislative body is the National Assembly. The main executive body is the Government of Armenia.

Administrative division: The administrative-territorial units of the country are marzes (regions) and communities. Marzes consist of village and city communities.





Armenia is divided into 10 marzes. There is a special law on the capital city Yerevan

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that regulates its activity. State self-governance is carried out in marzes and communities. There are 48 urban and 866 rural communities in Armenia.

Language: Armenian is the official language in the Republic of Armenia. It is a separate branch in the Indo-European group of languages. Most of the population can speak also Russian. English is the third language by its dissemination and becoming more and more common in the society.

Alphabet: The Armenian alphabet is one of the most ancient ones in the world. It was created by Mesrop Mashtots in 405 A.D. The first sentence written by St. Mashtots was: “To know wisdom and gain instruction; to discern the words of understanding…”

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The bases of the economy of the marz are agriculture and industry. The industry is specialized in food and precious item production as well as construction material and mining operations. The climatic conditions and the geographic position of the marz are favorable for both crop growing (cereals, potatoes, fruits, and forages) and for animal husbandry.

–  –  –

This marz is known for the Khosrov State Nature Reserve (1,600m-2,300m above sea level).

Ararat marz is one of the most economically developed marzes in Armenia.

Agriculture is the basis of the economy. It is mainly specialized in grape growing, horticulture, and vegetable growing.

Processing industry is the main direction in the marz’s economy, the following

three branches being the most important ones:

a) food processing (fruit and vegetable processing and canning, production of distilled alcoholic beverages);

b) tobacco production (tobacco fermentation);

c) production of nonmetal mineral produce (cement, lime, asbestos cement items, stone cutting and processing).

–  –  –

Armavir marz is known for its developed agriculture and agribusiness. The geographical position of the marz and its climatic conditions are favorable for development of both crop production and livestock breeding. Fruits, cereals, legumes, vegetables, and melons in crop production and cattle, sheep, pig, and poultry in livestock breeding are the most important.

The industry sector is specializing in production of electric power, food and alcoholic beverages, and in mining operations for building materials.

–  –  –

on the ecological balance and the economy of the marz.

Sevan National Park (established in 1978) includes Lake Sevan that makes the bottom of the Sevan intermountain concavity and the adjacent areas freed from water.

The surface is 150,100 ha, of which 24,900 ha is the coastal land area. The lake is surrounded by Areguni, Geghama, Vardenis, Pambak, and Sevan mountain ranges.

1,600 types of plants and 330 types of animals have survived here.

Agriculture is the leading industry in the marz’s economy. Especially cereal, potato, and vegetable production and livestock breeding are popular. Gegharqunik marz is the main fish supplier of in Armenia.

Mining industry is another main branch in economy. Processing industry is also an important trend, with food processing (including beverages) having the largest share.

–  –  –

Agriculture and industry are the leading trends in the economy of this marz.

Production of cereal crops, potato, vegetables, and animal produce make the significant portion of the overall agricultural product.

The major industrial developments take place in production of metallurgical and meat products.

–  –  –

Kotayq is one of the marzes with comparatively developed and versatile economy.

Industry is dominating in the overall economic capacity. This marz plays an exceptional role in the energy sector and tourism development.

Agriculture is specialized in poultry production, fruit growing, dairy cattle breeding, and cereal production.

–  –  –

Akhuryan Reservoir on Akhuryan River bordering Turkey is the largest one in Armenia: it contains 526 million m3 of water.

The leading branches in the industry in Shirak marz are: food (including beverage) production, textile industry, and nonmetal mining. Artik and Ani tuf stones are known well beyond the region.

The most developed agricultural industries are cereal production and animal husbandry. Beekeeping is another developing and prospective sector.

–  –  –

Syuniq is the richest marz of Armenia in minerals, most important of them being non-ferrous metals (copper, molybdenum, zinc, and lead) and precious metals (gold, silver), as well as nonmetal minerals.

In the gorge of Tsav River, south of city of Kapan, is the largest natural relic pine grove in the world occupying 60 hectares, with hundreds of years old trees. There are 40m-45m high trees with 3-meter diameter in this unique pine grove.

The gorgeous Shikahogh state reserve with its bushy woods is on the right side of Voghji River.

In the overall economic capacity of the marz, industry and agriculture are the leading sectors.

–  –  –

40.3% of the marz’s overall area is occupied with mixed forests, remarkable for the diversity of their flora and fauna. The Dilijan state reserve and the Ijevan botanical garden-forest (dendro-park) established in the Aghstev river basin are to preserve the primeval natural state, to develop it and to select new species.

This marz is one of the most pronounced agricultural regions of the country. Cattle and pig breeding are the leading sectors in livestock operations, and cereals and grapes predominate in crop production. Fruit orchard rehabilitation projects are now underway. Beekeeping is another sector facing positive developments.

Food processing industry is developed in Tavush marz. Products of Ijevan and Berdavan wineries, Tavush branch of the Yerevan Brandy Factory, and the branch of Grand Tobacco are marketed locally as well as are exported.

–  –  –

Vayots Dzor marz has a rich and diverse fauna and flora. Natural forests make 6.7% (13,240.1 ha) of the marz’s territory.

In the overall economic capacity of the marz, agriculture is the dominating sector.

Farmers are mainly involved in animal husbandry, the share of which in the gross agricultural output is 60.0%. In the rest of the gross agricultural product volume, poultry, grape, fruits, and vegetables are the most important.

–  –  –

Armenia acquired independence from the Soviet Union on September 21, 1991.

Prior to this historical date, impetuous political processes were underway during about three years. Because of those processes, the communist party lost its monopoly position, and political parties with national background and democratic trends took over.

–  –  –

As of 1993, farm production was more than 50% of the dramatically decreased GDP. Starting from 1994, active steps have been taken to stabilize the country’s economy. First, due to a tough tax/budget and monetary/credit policy, the existing hyperinflation was restrained, and budget expenses appeared under control. In addition, liberalization of trade and prices, promotion of small and medium size entrepreneurship, activation of privatization of state-owned enterprises, as well as creation of necessary legal bases for business development motivated the development of competition and establishment of market relationships.

Over the recent years the RA Government makes pronounced efforts to improve the general business environment and stimulate investments. The macroeconomic environment was favorable for development of economy until 2008. Indicators of continuous economic growth are the explicit evidence of this. The global economic crisis notably affected the Armenian economy: a 14.4 percent decrease was reported in 2009 which was unprecedented during the last decade (Table 11).

–  –  –

**) export/import of commodities and services Although the GDP in agriculture and food processing has been growing in absolute numbers over the last decade, however its share in the total GDP has decreased (Table 12). This is logical and indicates that other industries are gradually rehabilitating and expanding their capacities.

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