Armenia’s struggling agricultural sector will steadily grow in the coming years after a more than 14 percent expansion registered in 2011, Agriculture Minister Sergo Karapetian said on Friday, promising greater government assistance to farmers.
“The programs that are implemented by the state, the assistance that is provided to farmers, the president’s directives on rural development will lead to a full cultivation of our lands within five years, which will mean more revenues for farmers,” Karapetian told journalists. But he declined to make any concrete growth projections for this year.
According to the National Statistical Service (NSS), Armenian agricultural output soared last year thanks to a near doubling of fruit and vegetable yields as well as an almost 35 percent rise in the production of wheat and other cereals. These gains followed highly unfavorable weather conditions that caused the sector to shrink dramatically in 2010.
Karapetian insisted that the sector’s improved performance resulted not only from better weather but also a range of measures taken by the government. In particular, he pointed to the distribution of high-quality wheat and barley seeds to farmers as well as the provision of agricultural loans subsidized by the government.
According to the Ministry of Agriculture, last year some 23,000 Armenian farmers received such loans worth a total of 15 billion drams ($40 million) and carrying interest rates of 8-10 percent per annum. Karapetian said earlier that the government intends to continue the scheme in 2012.
The minister announced on Friday that the state will also purchase thousands of tons of diesel fuel and fertilizers and sell them to farmers at prices below the market level. In his words, the fuel will be sold for 350 drams per liter, down from its current market price of around 450 drams. He did not specify the total amount of government spending on farmer subsidies.
It emerged that the government will buy the diesel only from one fuel-importing companies owned by a businessman reputedly close to President Serzh Sarkisian. Karapetian claimed that the company, Flash, was awarded the supply contract without a tender primarily because of a lack of time left before the start of the farming season. “Organizing a tender would take one or two months because there are [bidding] procedures that would have to be followed,” he said.
Karapetian also said that the government will continue to promote consolidation of Armenia’s modest agricultural land holdings through the establishment of rural cooperatives. The government plans to enact a special bill for that purpose, he said.
Prime Minister Tigran Sarkisian said last October that at least such 55 cooperatives would be set up by the end of 2012 in mostly low-income communities located in mountainous areas. Cattle breeding is the principal form of agricultural activity in those areas.
Armenia has approximately 403,000 hectares of arable land owned by as many as 340,000 physical and legal entities, most of them low-income farmers.