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The Armenian government anticipates a more than 10 percent increase in the domestic production of grapes, a major component of the country’s agricultural output, this year despite unfavorable weather conditions.

The Agriculture Ministry in Yerevan has also assured winegrowers that the ongoing economic recession will not reduce the vital wholesale purchases of their produce by wine and brandy distilleries.

According to the latest ministry projections, Armenia’s grape output will total at least 205,000 metric tons this year, up from the 2008 level of 185,000 tons. The projected growth would give a boost to its overall agricultural sector that contracted by over 2 percent in the first seven months of 2009.

The ministry forecast comes after an unusually cool and rainy summer that is certain to damage a crop that requires a lot of sunshine and hot air. Farmers in the southern Ararat Valley, the country’s main winegrowing region, have struggle to minimize the weather’s impact on their vineyards and now expect lower grape yields.

“It has been a very bad year,” said one elderly farmer in Aygeshat, a village 30 kilometers south of Yerevan. “There has been a lot of rain.”

“The weather has been terribly humid,” agreed one of his neighbors. “People have saved their vines with hard extra work.”

That the weather conditions have been bad for winegrowers was admitted by Deputy Agricultural Ministry Samvel Galstian as he visited the area stretching along Armenia’s border with Turkey on Thursday. The overall grape harvest, he explained, will be higher this year because of new vineyards that were planted there in recent years and are now starting to bear fruit.

Evidence of that is easy to find in the area. Hrayr Stepanian, another Aygeshat farmer, planted new vines four years ago. “I am about to collect my first big harvest,” he said.

Mesrop Andreasian of the nearby village of Mkhchian planted a new vineyard in 2007 and plans to expand it. “I have done everything by myself,” he said, proudly showing around his estate.

The vineyard expansion reflected a slow but steady revival of Armenia’s winemaking industry that had collapsed along with other sectors of the economy in the early 1990s. The post-Soviet slump forced many Ararat Valley villagers to cut down their recently privatized vineyards and start growing less sophisticated crops like wheat.

Nonetheless, finding grape buyers remains a big headache for the winegrowers. Most of them prefer to sale their produce to 40 or so wine and brandy distilleries operating in the country. According to the Agriculture Ministry, the latter purchased 138,000 tons of grape, or three-quarters of the total output, in 2008.

Galstian assured farmers that the volume of those purchases will not fall and should even rise this fall despite serious losses incurred by the export-oriented Armenian liquor companies as a result of the crisis. “The economic crisis has had a serious impact on our food-processing companies,” he told RFE/RL. “What was purchased by them last year has still not been fully sold [in the form of alcoholic drinks.]”

“But after our meetings and conversations with our large grape-processing companies, I am convinced that at least 140,000 tons of those 205,000-210,000 tons will be purchased by them,” said Galstian.

Armenia -- The cognac cellar of the Yerevan Brandy Company.
The largest of those distilleries, the French-owned Yerevan Brandy Company (YBC), has seen its cognac exports to Russia and other former Soviet republics shrink by almost half this year. Aram Grigorian, the YBC’s executive director, said that the company is undaunted by the global economic downturn and plans to buy 32,000 tons of grapes this fall. That would represent 3 percent increase from last year’s level.

“We will carry out this year’s grape purchases, which start in a few days’ time, without crisis-related adjustments,” he told RFE/RL. “We will be acting as if there is no crisis.”

Still, Grigorian revealed that the Armenian subsidiary of the French group Pernod Ricard, the world’s second largest alcohol producer, has cut the purchasing price from 140 drams (37 U.S. cents) to 120-130 drams per kilogram. “In my view, this is not a decrease, this is an increase,” he claimed. “In light of the existing economic situation, the grape supply and demand, the realistic price this year is 100-110 drams. But given the socioeconomic significance of the issue, we decided to raise the price by 20 drams.”

The explanation will hardly satisfy many grape farmers who have long accused winemakers of setting disproportionately low prices and making big profits at their expense. “We work so much and get so little,” complained one woman in Mkhchian. She claimed that her family’s vineyards earned it a net revenue of only 150,000 drams ($400) last year.

“One liter of cognac can cost 90,000 drams in shops, but they buy my grapes for only 140-150 drams [per kilo,]” lamented her husband. “This is so unfair.”
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