In a scheme which it hopes will benefit tens of thousands of struggling farmers, the Armenian government has started subsidizing the price of diesel fuel used by tractors and other agricultural machines.
Prime Minister Tigran Sarkisian’s cabinet approved the scheme last month as part of its promised efforts to boost government support for the domestic agricultural sector. The Armenian Ministry of Agriculture was allocated 1.3 billion drams ($3.4 million) to offer a total of 12,600 tons of diesel to farmers for 350 drams per liter in time for the upcoming spring crop planting.
The ministry is to buy the fuel from a private company for 440 drams per liter. Deputy Agriculture Minister Samvel Galstian told RFE/RL’s Armenian service (Azatutyun.am) on Monday that more than 10 percent of it has already been sold to farmers across the country.
The program’s implementation appears to be less than smooth, with local government officials and villagers saying that many farmers lack the money and storage facilities to buy large quantities of fuel at once.
Tigran Virabian, a senior official at the administration of southern Ararat Province, questioned local residents’ ability to use up a fuel quota of 2,000 tons which was set by the government for the fruit-growing region south of Yerevan. In his words, only seven of the 97 Ararat villages have paid for and received the subsidized fuel so far.
Some residents of one provincial village, Lusarat, claimed that they can buy it for only 300 drams per liter from Gagik Tsarukian, a wealthy businessman leading one of Armenia’s three governing parties. They said that unlike the government a Tsarukian-led charity does not require them to pay up front.
In the neighboring village of Pokr Vedi, some farmers complained that they have no fuel tanks. One of them also said the government should have handed out cash instead of financing the price discount.
“If we paid cash, I’m not sure it would be sent on fuel,” countered Galstian. “This is a deliberate policy aimed at having agricultural land cultivated by farmers. This is not social security.”
Under the government scheme, farmers are to sign up and pay for a specific amount of fuel by March 15 and have it delivered by March 20. Galstian admitted that the government may have to extend the registration deadline.
The government is also due to subsidize the equally important prices of fertilizers as well as interest rates on agricultural loans this year. According to the Ministry of Agriculture, 23,000 farmers already received 15 billion drams ($40 million) worth of subsidized loans from commercial banks last year.
Government data shows that Armenia’s agricultural output soared by 14 percent in 2011 after a sharp fall registered in 2010 mainly because of poor weather. Agriculture Minister Sergo Karapetian insisted last month that the sector’s improved performance resulted not only from more favorable weather conditions but also increased government assistance to the mostly low-income farmers.