Agricultural Value-Chains Assessment Report April 2020.Pdf
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1 2 ABOUT THE EUROPEAN UNION The Member States of the European Union have decided to link together their know-how, resources and destinies. Together, they have built a zone of stability, democracy and sustainable development whilst maintaining cultural diversity, tolerance and individual freedoms. The European Union is committed to sharing its achievements and its values with countries and peoples beyond its borders. ABOUT THE PUBLICATION: This publication was produced within the framework of the EU Green Agriculture Initiative in Armenia (EU-GAIA) project, which is funded by the European Union (EU) and the Austrian Development Cooperation (ADC), and implemented by the Austrian Development Agency (ADA) and the United Nations Development Programme (UNDP) in Armenia. In the framework of the European Union-funded EU-GAIA project, the Austrian Development Agency (ADA) hereby agrees that the reader uses this manual solely for non-commercial purposes. Prepared by: EV Consulting CJSC © 2020 Austrian Development Agency. All rights reserved. Licensed to the European Union under conditions. Yerevan, 2020 3 CONTENTS LIST OF ABBREVIATIONS ................................................................................................................................ 5 1. INTRODUCTION AND BACKGROUND ..................................................................................................... 6 2. OVERVIEW OF DEVELOPMENT DYNAMICS OF AGRICULTURE IN ARMENIA AND GOVERNMENT PRIORITIES...................................................................................................................................................... 7 3. SOCIO-ECONOMIC PROFILE OF TARGET MARZES AT A GLANCE AND DESCRIPTION OF MAIN AGRICULTURAL VALUE CHAINS ................................................................................................................... 11 DESCRIPTION OF MAIN AGRICULTURAL VCs IN TARGET MARZES .......................................................... 13 4. METHODOLOGICAL APPROACH IN BRIEF ............................................................................................ 21 MAPPING AND PRIORITIZATION OF VALUE CHAINS IN TARGET MARZES ............................................... 22 5. ASSESSMENT OF THE VALUE CHAINS .................................................................................................. 26 DIMENSION A: ECONOMIC SCALE ........................................................................................................... 26 DIMENSION B: ASSESSMENT OF DEMAND GROWTH.............................................................................. 28 DIMENSION C: VALUE-ADDED INCREASE POTENTIAL ............................................................................. 30 DIMENSION D: ASSESSMENT OF SOCIAL IMPACT ................................................................................... 31 DIMENSION E: ASSESSMENT OF ENVIRONMENTAL SUSTAINABILITY ..................................................... 31 6. SUMMARY OF ASSESSMENT RESULTS ................................................................................................. 33 7. ANALYSIS AND DESCRIPTION OF SELECTED VALUS CHAINS ................................................................ 38 ANALYSIS AND DESCRIPTION OF LEGUMES VALUE CHAIN...................................................................... 38 ANALYSIS AND DESCRIPTION OF FRUITS & BERRIES VALUE CHAINS ...................................................... 46 ANALYSIS AND DESCRIPTION OF VEGETABLES VALUE CHAIN ................................................................. 56 ANALYSIS AND DESCRIPTION OF SHEEP BREEDING VALUE CHAIN ......................................................... 62 ANALYSIS AND DESCRIPTION HERBS VALUE CHAIN ................................................................................ 70 8. RECOMMENDATIONS ON POSSIBLE INTERVENTIONS IN SELECTED VALUE CHAINS .......................... 77 9. SOCIO-ECONOMIC IMPACT OF THE DEVELOPMENT OF SELECTED VALUE CHAINS ............................ 80 Annex 1: Climate Change and DRR Assessment .......................................................................................... 81 Annex 2: Assessment framework of Environmental sustainability of the Value chains ............................. 85 Annex 3: Detailed description of Dimension B: Assessment of Demand Growth ....................................... 87 Annex 4: Detailed description of Dimension C1: Assessment of VC extension potential ........................... 94 Annex 5: Detailed description of Dimension D: Assessment of Social Impact ............................................ 96 Annex 6: Details of Environmental Impact Assessment and Green opportunities ................................... 100 Annex 7: Detailed statistics on selected Value chains ............................................................................... 108 Annex 8: SWOT Analysis of selected Value chains .................................................................................... 110 4 Annex 9: list of producers in target marzes ............................................................................................... 113 LIST OF ABBREVIATIONS ASME Agricultural Small and Medium Enterprises AMD Armenian dram CAGR Compound Annual Growth Rate CIS Commonwealth of Independent States DRR Disaster Risk Reduction EU European Union EU-GAIA EU Green Agriculture Initiative in Armenia FAO The Food and Agriculture Organization GDP Gross Domestic Product LSU Livestock Unit NACE Statistical Classification of Economic Activities in the European Community SC RA Statistical Committee of the Republic of Armenia SME Small and Medium Enterprises VC Value Chain UN United Nations USD United States Dollar 5 1. INTRODUCTION AND BACKGROUND The purpose of the current study is to prioritize Value Chains in the targeted 3 Marzes (Shirak, Lori, Tavush). The study covered the identification, defining and mapping of the perspective agricultural value chains and conducting their assessment based on the framework (proposed by Consultant and approved by Client) which is built on the set of prioritization criteria such as the potential for green growth and competitiveness, accessing local, national and international markets, the potential for positive environmental, gender and social impacts, potential for addressing negative impacts/risks and identification of mitigation measures, and identified specific bottlenecks and opportunities in the respective value chains that can be addressed and leveraged through EU-GAIA interventions. 6 2. OVERVIEW OF DEVELOPMENT DYNAMICS OF AGRICULTURE IN ARMENIA AND GOVERNMENT PRIORITIES Agriculture is one of the largest sectors of Armenia’s economy though the share of its contribution to the value-added of the country has been declining during the last 5 years due to a decrease in the production of agricultural produce and higher growth rate of other sectors. Given the favorable soil and climate conditions, agriculture can become one of the main drivers of economic growth in the coming years. To reverse the declining trend and boost the development of the agricultural sector, the Government provides continuous support to facilitate access to finance, promote wider use of advanced technologies and enhance the productivity of farming, as well as to reduce risks connected to natural disasters through introducing agricultural insurance. Chart 2.1. Agricultural Value Added Trends Chart 2.2. Growth Rates of GDP and Agriculture, in % to the previous year Source: SC RA, Statistical Yearbook of Armenia, 2019 Source: SC RA, Statistical Yearbook of Armenia, 2019 Chart 2.3. Total Land Area and Agricultural Lands by Chart 2.4. Number of Livestock (horses and poultry Types, 1,000 ha excluded), as of 1 January, 1 000 heads 1,800 2,500 1,600 2,000 1,400 392 392 392 391 391 778 1,200 718 746 727 660 1,500 1,000 1,054 1,051 1,051 1,051 1,052 800 1,000 140 142 175 176 167 600 500 400 678 689 702 656 591 448 447 446 446 446 200 - 2014 2015 2016 2017 2018 - 2014 2015 2016 2017 2018 Arable land Perennial grass Plough-land Pastures Other Sheep and goats Pigs Cattle Source: SC RA, Statistical Yearbook of Armenia, 2017, 2018, 2019 Source: SC RA, Statistical Yearbook of Armenia, 2017, 2018, 2019 7 Overall, agricultural lands cover about 70% of the total land area. Arable lands and pastures occupy about 50% of total lands and over 70% of agricultural lands. In terms of livestock, since 2016 the number of livestock has been decreasing due to the increasing number of sheep and goat export from Armenia. Particularly, 207.6 tons of sheep and goat (live) exported from Armenia in 2016, while the volumes for 2017 and 2018 were 621 tons and 428 tons, respectively. Qatar, Kuwait, and Lebanon were the major countries of export of sheep and goat. The situation is different in the case of poultry. In 2018 the heads of poultry exceeded the level of 2015 (4.1mln heads) and reached 4.4mln heads. Chart 2.5. Gross Agricultural Output, at current Chart 2.6. Output per Employed person, thousand AMD prices, bln. AMD 3,500.0 3,009.4 2,865.3 1,000 3,000.0 2,489.9 2,494.5 2,598.3 800 2,500.0 595 550 469 416 600 487 2,000.0 400 1,500.0 477 200 388 395 392 439 1,000.0 - 500.0 2014 2015 2016 2017 2018 - animal husbandry plant growing 2014 2015 2016 2017 2018 Source: SC RA, Statistical Yearbook of Armenia, 2017, 2018, 2019 Source: SC RA, Statistical Yearbook of Armenia, 2017, 2018, 2019 The share of plant growing sector in the gross agricultural output of Armenia decreased slightly in 2014- 2018.