ReportNo. 13034-AM Armenia Agriculture and Food SectorReview (In Two Volumes) Volume II: SubsectoralAnalyses and StatisticalAnnex
February6, 1995 Public Disclosure Authorized Natural ResourcesManagement Division Country Department IV Europeand Central Asia Region Public Disclosure Authorized Public Disclosure Authorized
Documentof theWorld Bank Public Disclosure Authorized CURRENCY EQUIVALENTS Currency unit - Ruble (R) US$ 1 = R 684 (March 1993) US$ 1 = R 2,600 (October 1993)
Currency unit - Dram (D) - Introduced November 22, 1993 US$ 1 = D 14 (November 1993) US$ 1 = D 408 (January 1994)
WEIGHTS AND MEASURES Metric System
ABBREVIATIONS Al Artificial Insemination AU Animal Unit CFM Collective Farmer's Market CMEA Council of Mutual Economic Assistance CPF Collective Peasant Farms CSO Cooperative Support Organization CSQC State Commission for Seed Quality Control CST Commission for Seed Tests DBH Diameter at Breast Height DWSI Department of Water Supply and Irrigation EBRD European Bank for Reconstruction and Development EU European Union FSU Former Soviet Union FU Feed Unit GDP Gross Domestic Product GIS Geographic Information Systems GNP Gross National Product HICOOP Armenian Consumers Union MOA Ministry of Agriculture MOF Ministry of Food and Procurement NMP Net Material Product NPO Scientific Production Associations NTB Non Tariff Barrier O&M Operation & Maintenance OME Operation and Maintenance Enterprises RSC Rural Service Cooperative TA Technical Assistance TCFP Target-Oriented Comprehesive Food Production Program USDA United States Department of Agriculture VAT Value Added Tax WUA Water Users' Association CONTENTS - VOLUME II: SUBSECTORAL ANALYSES
VIII. AGRICULTURAL RESOURCE BASE AND CROP PRODUCTION ...... - 1 A. LAND ...... 1 B. IRRIGATION AND WATER RESOURCE DEVELOPMENT ..... 3 C. CROP PRODUCTION ...... 10 D. CROP INPUTS ...... 22
IX. LIVESTOCK SECTOR .35 A. LIVESTOCK POPULATION AND PRODUCTION .35 B. LIVESTOCK PERFORMANCE AND FEEDING EFFICIENCY ... 37 C. THE FEED BASE .38 D. MAJOR PRODUCTION SYSTEMS AND RECOMMENDATIONS . 41 E. LIVESTOCK SUPPORT SERVICES .46 F. LIVESTOCK PRODUCTION CONSUMPTION AND DEMAND . . 48 G. ECONOMIC ASPECTS OF LIVESTOCK PRODUCTION .49
X. AGRO-PROCESSING ENTERPRISES . . .53 A. FRUIT AND VEGETABLE CANNING SECTOR .54 B. DAIRY AND MILK INDUSTRIES .58 C. MEAT PROCESSING .60 D. THE MIXED FEED INDUSTRY .61 E. FLOUR MILLING INDUSTRY .62 F. WINERIES AND BRANDY PLANTS .63 G. RECOMMENDATIONS .64
XI. FORESTRY AND ENVIRONMENT .. 67 A. FORESTRY .67 B. ENVIRONMENTAL ISSUES .74
XI. STATISTICAL ANNEX .81
BOXES: 8.1 Soil Composition. 1 8.2 Main Vegetable Areas .14 11.1 Seabuckthorn. 69
FIGURES: 8.1 Land on Slopes. 1 8.2 Crop Areas .14 8.3 Tobacco Area and Production.15 8.4 Fruit Crop Areas and Production.16 8.5 Vineyard Areas and Grape Production.17 8.6 Seed Productionof Cereals .23 8.7 Mineral Fertilizer Supply .25 8.8 Crop Nutrient Ratios ...... 25 8.9 Use of Pesticides ...... 28 8.10 Agricultural Machine Delivery ...... 31 10.1 Raw Product Deliveries to MOF Canneries ...... 56 11.1 Budget Allocations to Forestry Operations ...... 68 11.2 Income from Forestry Sector Operations ...... 68 11.3 Agricultural Land Use ...... 74
TABLES: 8.1 Monthly and Annual Rainfall ...... 1 8.2 Irrigations Methods ...... 4 8.3 Annual Volume of Runoff by Region ...... 4 8.4 Historical Regional Cropping Patterns ...... 10 8.5 Recommended Crop Rotations ...... 11 8.6 Outputs of Cereals in Armenia ...... 12 8.7 Food Production Program ...... 18 8.8 Average Seedv.a.e.Sed.Ra Rates ...... t es 23 8.9 CropCrop Response Response toto Fertilizer Fertilizer ...... 26 8.10 Optimal Pesticide Use .28 8.11 Machinery PrivatizedM.h.n.r.Pri ...... vti z e d 32 9.1 Livestock PopulationL.e.t.c.Po ...... p u ati o n 35 9.2 Livestock Numbersi.e.t.k.Nu ...... m b e r s 36 9.3 Output ofof Dairy Dairy andand Meat Meat Products Products .Output 36 9.4 SuppliesSupplies ofo Forage-Feed f Forage-Feed ...... 39 9.5 Per Capita Consumption of Major Livestock Products .48 9.6 Actual and Profitable Farmgate Prices . . . . . 50 10.1 Design Capacity and Utilization .53 10.2 Canning Industry Capacity and Utilization .55 10.3 Sausage Plant Capacity and Utilization .61 10.4 Semi-Finished Meat Product Plant Capacity and Utilization .61 10.5 Production of Wine ...... 63 10.6 Wine and Spirit Production .64 11.1 Land Erodability in Several Regions of Armenia .71 11.2 Physical Characteristics of Lake Sevan .76 11.3 Reservoirs Designed to Contribute to Lake Sevan Solution .77 11.4 Annual Pesticide Use by Region .78 CHAPTER 8
AGRICULTURAL RESOURCES BASE AND CROP PRODUCTION
A. LAND
8.1 Armenia covers a total area of about 29,740 kin2, an area approximatelyequal to the size of Maryland. It is landlocked,lies between 390 and 410 north and 440 and 460, and occupies some of the most rugged and earthquake-proneterritory of the Caucasusregion. It borders Azerbaijanto the east and south, Georgia to the north, and Turkey and Iran to the west and south across the Araks River.
Elevation and Climate
8.2 Agriculturein Armenia, as in any country, is greatly influencedby its ARMEN1A climate, elevation, and slope of its cultivatedland, and condition of its soils. Its cultivated land lies between 6000 to 2,500 elevation. Only about 28% of the / land is located below 1,500 m elevation 7 and only 10% below 1,000 m (Figure 8.1). Much of the cultivated land is in narrow, fertile valleys arnong the mountains. The / > 30 broad flat and fertile Ararat valley along the left bank of the Araks river includes 0-30 important cultivatedland .
12-20 TopographicalZones and Agro-ecological Regions Source: Agricultural Atls. J964
8.3 The country is divided into Figure8.1 two major watersheds, the river basin of Kuri river in the north-east, and the basin of the Araks river in the south-west. The Araks river basin comprisesabout four fifth of the country, while the Kuri basin occupiesabout one fifth. Agroclimatically Armenia is divided into six regions, some of which are further split into subregions (see Map at end of report). Only two of the subregionsbelong to the Kuri River watershed; the other subregionsdrain into the Araks River watershed.
8.4 Crop growing periods range from 100 to 220 days and rainfall varies between 200 mm in the plains to over 1,000 mm in the mountains. A harsh continentalclimate (annual temperatures average 10°C in Yerevan at 1,000 m asl, and 4°C in Sevan at 1,925 m asl) limits grape and fruit productionto lower lying areas, while upland regionsare planted mainly in winter and spring cereals and fodders. Some 80% of all agriculturalproduction comes from the lower lying areas, particularlyfrom the Ararat Plain. Low relative humiditiesand high sunshine hours during the growing season create a favorableenvironment for crop growth, with relatively low incidenceof diseases and pests. 2 Chapter 8
8.5 Unless irrigated, agriculturalproduction is generally considered untenable for all areas receiving less than 300 mm during the growing season. The total annual precipitationand its seasonal distributionvaries widely among regions (Table 8.1). All grape and fruit production, 70% of vegetable growing, and 44% of fodder lands are irrigated, while only 26% of the cereal area is irrigated. Marked variation in year-to-yearannual precipitationcan occur, giving rise to considerablevariation in rainfed crop production. Hail and dry winds are frequent during the crop growing season. Only about 29% of Armenia's territory has slopes less than 30, another 27% has slopes of up to 70, and the rest of the land is steeper (Figure 8.1).
Table 8.1: Monthly and Annual Rainfall (mm)
Stations Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Yerevan 23 25 30 41 50 25 14 11 14 26 27 25 312 (Ararat Valley, 900 m)
Leninakan 22 25 30 62 87 70 47 32 30 32 32 21 490 (NW area, 1,600m)
Sevan 23 30 40 68 95 73 48 40 36 56 49 40 598 (Sevan Lake Area, 1,900 m) Source: FAD
8.6 Althoughagricultural land totals 1.4 million ha, only about 534,000 ha are A CoUproS considered arable (1991). Armenia has a great varietyof soils, including14 genetic soil groups, SoilTypes Area Area 42 soil types and some 140 sub-types. About 000h half of the arable land is fertile chemozemsand Cimamnonicforest 79.0 13.9 another 14% is reasonablyfertile chestnut soils; however, only about one third of the chernozems Chernozems 270.3 47.5 and one fifth of the chestnut soil have a deep Meadow-chernozem 8.0 1.4 humic horizon, while the rest are medium deep Chsnt 82.0 14.4 or shallow. Deeper agriculturalsoils are found generally in the plains areas of the Ararat valley Brownsemidesert 42.0 7.4 and in smaller valleys of the northeast and irriga meadow-brown 53.0 9.3 southeast (Box 8.1). Alluvial-terre 27.0 4.7
Other 7.7 2.4 Total 569.0 100.0
Box 8.1 Agricultural Resources Base and Crop Production 3
B. IRRIGATIONAND WATER RESOURCEDEVELOPMENT
8.7 Armenia has a long history of irrigation. Although about 100,000 ha were irrigated fifteencenturies ago, only about half of that area was still irrigated at the beginningof the century. Until recentlypractically all of the area equippedfor irrigation(the commandarea) has been irrigated. Because of the lack of energy, spare parts, pump replacements, and the war effects (when 18,400 ha were abandoned)the intensityof irrigation has declined by about 8%, compared with that of 1990.
8.8 Irrigation supplementsrainfall and varies between 2,000 to 10,000 m3/ha/year. Design delivery capacities(measured at the outlets) are generally about 0.85 I/s. Overall water use efficiency, from water source to crop, for gravity systems is not more than 30 to 35 % of use. Improved systems and meticulouswater schedulingcould almost double the overall efficiencyof use. Flow measurements are made at 3,621 locations all over the country and 64 of the stations are equipped with automatic recording devices. Measurementdevices and control devices do not exist yet on farms. Their absence hampers the implementationand monitoringof water schedulingprograms that would increaseutilization and efficiency.
Water Resources
8.9 Surface Water. There is an average total annual volumeof 2,400 Mm3 of surface water availablefor irrigation. About 1,400 Mm3 is denoted by run-of-riverand pump schemes and 980 Mm3 is stored in 74 irrigation dams (900 Mm3 live storage) from the total run-off of 8,700 Mm3/per year. Of this 8,700, 1,300 is usable by neighboring countries. Surface water is available in 18 principal river basins. However, only seven are particularlyimportant. Most of the run-off, close to 60%, flows at the four largest rivers (Araks, Debed, Kasakh/Sevdjurand Akhurian), and an additional 25% at the other three major rivers (Razdan, Arpa and Vorotan). The Araks river water is shared with Turkey.
8.10 Ground Water. Annual replenishmentof groundwater is estimated at 4,200 Mm3 , of which about 1,400 Mm3 reappear as springs within the country. The rest, 2,800 Mm3, is classified in three main categories: (a) groundwaterresources pumped by 2,105 irrigation and drainage wells, most of which are in the Ararat valley, (b) numerous industrial and municipalwells at various parts of the country, and (c) springs and aquifers reappearing outside Armenia's borders. At least 500 Mm3 (18%) of the 2,800 Mm3 are still available, and could safely be used annually, without significantlyreducing spring or river flows.
8.11 Water Oualitv. Water coming from the Sevan Lake and the Araks river are pollutedand their quality is quite low. Over the country, man-madepollution is limitedto some specific reaches of rivers and originates from industry, particularly mining, and introduction of sewage to the rivers. Groundwaterquality is generallygood except in some parts of the Ararat valley close to the Araks river and north of Artashat, where the level of salinity is problematic. Regular control of water quality is the responsibilityof the Water Quality Sectionof the Water Institute in Yerevan. 4 Chapter 8
The Regions
8.12 The Water Planning Instituteuses six Table 8.2: Annual Volume of Runoff, by Regions (Mm3 irrigation regions, together with the 38 different Region Annual Volume irrigationregimes for allocatingwater over Armenia. Practically,the regions are multi river basins. From Region I - Central 3,050 agricultural and water management points of view, Region II - North West 980 they are ideal homogenous units for planning and control of water schemes, as they share the same (+ 250 Mm' of Arpa) locations, climate, topography, altitudes, water resources, and utilization systems (Table 8.2) Region IV - South East 1,560 (+ 450 Mm' of Arpa) Region V - North East 350 Major Infrastructures Region VI - North 1,090
8.13 Irrigation methods can be broadly Total 7,500 classified as furrow systems (29%), border strip Source: FAO irrigation (10%), field flooding (41%), various sprinklersystems and pressure pipe systems(20%). All irrigation systemsare designedfor day and night operation. A summary of methods used and area equipped is provided in Table 8.3. Table 8.3: Irrigation Methods 8.14 A wide range of irrigation infrastructure IrrigationMethod Area % of exists in the country, includingirrigation reservoirs, run-of- Equipped total river-schemes,pumping stations, tubewells, and surface and (ha) area sprinklerirrigation systems. Mixedgravity/pumping systems I. Surface Irrigation exist in many of the irrigationschemes in Armenia. Surface - Furrow 84,000 29 run-off is stored in 83 reservoirs, of which 74 are designated - Border Strip 30,000 10 for irrigation. These reservoirs have a total storage capacity of 977 Mm3 and cover 96,000 ha. The largest existing g 116,000 41 3 reservoir, with 525 Mm capacity (Akhurian),is shared with sub-total 230,000 80 Turkey and provides water for about 30,000 ha in north II. PipeIrrigation' western Armenia. Ten irrigation reservoirs are under - Hydrants/Flexible 28,300 10 constructionwith a capacityof 396 Mm3 and eight reservoirs Hose 3 with a capacity of 460 Mm have been designed for future - Sprinkler 17,300 6 construction. In addition, five reservoir sites have been Irrigation Machines 7,000 3 identified for storage of a further 88 Mm3. If all 23 3 reservoirswere completed,an additionalstorage of 944 Mm - Center Pivots 3,200 1 3 wouldhave been added to the existing977 Mm . Fifteen of - Drip/Spray 200 - the irrigation dams are considered in need of major repairs. sub-total 56,000 20 The causes of their precarious condition include design Total 286,000 100 errors, constructionfaults, and lack of maintenance. 'Data on pipe irrigation vary considerably and should be regarded as indicative only. 8.15 The run-of-river schemes irrigate about Source:FAO 54,000 ha. The biggest scheme is the Armavir (previously Oktemberian) at the Araks river (built in 1930), which AgriculturalResources Base and Crop Production S provides27 m3/s and covers about 30,000 ha in the Ararat valley. The Armavir intake could be increased to 53 m3/s based on 1979 interstate agreement between the former Soviet Union and Turkey, thus providing an additional 26 m3/s for expandingthe irrigated area.
8.16 There are 365 pumping stations for irrigating about 133,000 ha. These stations have about 900 individualpumps with an installedpower of about 440 MW. Pumpingstation capacitiesrange from 100 1/s to 16,500 1/s. In additionthere are a few pumping stations for lifting drainage water into gravity outflow canals. Pumps with installedcapacities greater than 20 Kw were imported from other republics of the FSU. All are electricallypowered. More then 35 % of them need to be rehabilitatedor replaced.
8.17 The conveyancesystems are served by about 21,300 km of main, branch, and secondary canals/pipes. Three fourths of the canals are lined with concrete or are pipes. Also, there are about 91,000 hydraulic structures. The conveyancesystems are in a deterioratedcondition. Many canals are older than 30 years and need rehabilitation.
8.18 Irrigation wells contribute about 12% to the overall water supply in the country and irrigate about 34,000 ha. A large part of the wells are part of gravity systems, and only a small number serves pipe irrigation. Groundwateris exploitedby 2,105 wells, 40% artisan and the other 60% (1,276) need pumping. Of the latter, 76% (860 wells) are located in the Ararat valley. Part of the Ararat wells are used to add water to the flow of the irrigation canals. About 60 wells are used to control groundwater levels. With the new land reforms more then 700,000 irrigated units now must be served all over the country. It will be particularlydifficult to establish that number of outlets, combinedwith measurement devices and control devices.
8.19 Until 1960 little drainagework or reclamationof saline soils was done. Sincethen, about 60,000 ha have been drained and 4,000 ha reclaimed (including drainage) -- most of the area being locatedin the Ararat valley. About 34,000 ha have undergroundclay pipes, 12,000 ha vertical drainage systems, and the remainder 14,000 ha are open drains.
Energy in Irrigation
8.20 Irrigated agriculture is heavily dependent on electricity for pumping and, to a lesser extent, on fuels for tractors, combines, and the transport of products to the market. The averageannual pumping cost is estimatedas 2,340 kwh/ha which sums up to US$25 per ha irrigated at the low price of US$0.01/kwh. Using the West European price of $USO.08/kwhwould raise this cost to US$197/ha. At present, however, irrigation as well as domesticelectricity use, is highly subsidized. Only 20% of the low ($US0.01/kwh)cost of supply is charged. Becauseof the capricioustopography, and the large scale use of groundwaterand irrigating machines, irrigation uses excessive amount of energy (close to 500 M kwh/year).
Institutions - Operation and Maintenance
8.21 Water conveyance was administered in the Soviet period by the Ministry of Water and distributed at secondary and tertiary levels by the cooperative and state farms. Water conveyance is now administered by the Department of Water Supply and Irrigation within the Ministry of Agriculture 6 Chapter 8
(DWSI) through an autonomous Operation and Maintenance Enterprise (OME) staff. The Department of Water Supply and Irrigation (DWSI) evolved from the Ministry of Water in early 1991. The DWSI is based in Yerevan. It is led by a deputy Minister and is represented by 38 branches in the districts, throughout the country. The number of branches is under review. The DWSI has delegated the responsibilities for construction and operation and maintenance (O&M) of irrigation and drainage works to two autonomous state enterprises. Water is distributed by water users associations (WUAs) and by hired OME water masters. The maintenance of the schemes both of the main infrastructure and at the farm level has been seriously neglected either because of lack of funds or - at the farm level - because of organizational deficiencies. Much of the infrastructure was, however, depreciated and often in need of repair in the mid 1980s with the result that the present economic crisis accelerated malfunctioning and breakdowns. Furthermore, the energy crisis did not allow the pumping systems to be operated regularly and, in particular, high pressure sprinkler systems and irrigation machines were operated only partly or not operated at all. In addition, construction of new schemes was virtually stopped. In this environment the drainage infrastructure has also suffered - particularly when pumping systems were involved - and rehabilitation of saline lands stopped.
8.22 Planning and design of irrigation and drainage projects is done by the Water Planning Institute in Yerevan. The Institute has 13 departments and is staffed with 248 professionals, most of whom are directly engaged in irrigation matters. Other institutes concerned with planning and design of irrigation and drainage schemes include the Institute for Land Development, Institute for Hydro-electric Development, Institute for Electrification, and Institute for Communication.
8.23 The Institute for Water Sciences, headquartered in Yerevan, is responsible for applied research, hydraulic modelling, water quality, introduction of new technology, and other water related matters which are investigated in 11 laboratories and two research stations, Armavir (Oktemberian) and Abovian. The institutions' total staff is about 200 persons. In addition, there are 10 agriculturally related research institutes in Armenia. These are largely independent organizations, coordinated by the Office of Service and Evaluation within the MOA. These research institutes have been noted in the past for successful development of frost tolerant grapes and selection of wheats for performance under harsh conditions.
8.24 Construction of the works is executed by the Armenian Construction Corporation which is organized into 51 autonomous enterprises with a total of about 13,000 staff, of which 850 are engineers. They own about 3,500 units of various construction equipment, and operate 10 factories (four for reinforced concrete elements, three for metal works, and three for repair and maintenance of equipment). Due to the present economic crisis much of the construction capacity is idle.
8.25 The number of staff engaged by DWSI in its Operation and Maintenance Entity (OME) is about 14,000 persons, with 3,800 engineers and technicians and about 3,000 temporary staff employed only during the irrigation season. They also operate several workshops for repair of equipment and hydraulic structures. Salaries comprise only a small part of the budget, less than energy, equipment, material, and spare parts. The economic crisis has obliged OME to release part of the staff, mainly at the district level. Ten to 15% of the present staff will be released soon. Higher efficiency would be achieved by increasing the load of each employee, by releasing assignments to competing contractors from the private sector, and, above all, by transferring a larger part of the schemes (and/or the lower reaches of the large schemes) to the User Groups to operate and maintain. Agricultural Resources Base and Crop Production 7
8.26 Despite the nominal establishment of water users' associations (WUAs), there is little evidence in the field that such organizations actually function. In reality, water users are organized by villages, with outlet boundaries corresponding to village boundaries. In 1992, during the first irrigation season after privatization, the Operation and Maintenance Enterprise (OME) made agreements with each individual farm unit specifying the amount of water the unit would receive and the water fees for the season. The OME was overwhelmed by approximately 260,000 agreements and the Government was disappointed by a collection rate of a mere 27% of the water charges in 1992. Therefore, the government instructed OME to make agreements with Village Councils for delivery and charges for 1993. The Government expected the Village Councils to execute agreements with individual farmers and collect the water charges. This has yet to occur, and collection of water charges has not improved.
8.27 Under the Village Council arrangement, water is managed by water masters or water distributors who are supposed to manage distribution within an area up to 150 ha, generally supporting 300 to 400 farmers. This means two to four water masters per village. Originally, water masters were paid directly by OME. With the new agreements, the villages are to retain 7 to 10% of the collected water charges to pay the water masters a fair salary. According to official OME descriptions, the water masters gather information about crops to be grown the next growing season. With the technical assistance and approval of OME, and based on crop, area, and provisional delivery schedules, the village councils prepare a precise water demand estimate, upon which the water charges are levied. In actuality, most water users sign agreements with Village Councils, but few really understand the distribution schedule. Water users are given little information on the availability of water or appropriate times to irrigate. Therefore when water is available, water users irrigate with little or no cooperation among farmers. Without irrigation schedules or lack of compliance with proposed schedules, water is not available to those users farther away from the canal. To eliminate the unpredictability of water delivery to these end users, a responsible water master must establish irrigation schedules among farmers and ensure that water is delivered to the appropriate farm when scheduled.
Water Management - System Design
8.28 The Armenian irrigation system clearly indicates a state of transition. The irrigation delivery systems were designed to service large farms which may have irrigated 50 to 400 ha from a single headgate or canal outlet. At this time, no formal network of authority to implement on-farm infrastructure has been developed, and the result is an uncoordinated installation of earthen delivery ditches. Further consequences are that some farmers located even a minimal distance from the existing outlets have no way of directly receiving water and no dependable scheduling technique is used to benefit all farms. In some areas, water distribution is erratic and many irrigators have broken concrete canals and pipes at points closer than the originally installed outlets to have access to irrigation water, and then repairing the broken canal with soil or sod, which leaks. As the number of repaired points in the canal system increases, the delivery efficiency decreases. Consequently, those near outlets have a virtually unlimited water supply, and in many instances those near the end of the system remain water short.
8.29 Water delivery units are presently too large to be operated efficiently or to support the formation of water users' associations. The present design does not take private farm infrastructure into account. In many areas, secondary and tertiary canals need to be installed to deliver water to the approximate location of several farms with earth ditches strategically placed to deliver the water directly to individual farm plots. Other areas simply need earth ditches installed from the existing canal to deliver water to individual farms. In any case, water measurement and/or metering devices must be installed to 8 Chapter 8 ensure proper water managementand minimize the occurrence of situations where individualsbenefit without paying. The on farm infrastructurecan be simple, and in most cases, consistof precast concrete and earth ditches, simpleheadgates and weir control measuring devices. Nonetheless,before a complete redesignof the water distribution is implemented,it would be useful to carry out pilot projects in a few villagesto transformthe systemsby creatingmajor deliveryunits of perhaps 75 to 100 farm units, further broken into small farmer outlet units, encompassing 10 to 15 farm units. This should be done in consultationwith the Village Council and farmers.
8.30 The pilot projects shouldhelp to overcomethe difficultiesof irrigatingthe new smallplots during the transition from large scale farming to smallprivate farms. These projects vary in design and could includepipe with individualoutlets and water meters, concreteditches where siphontube irrigation can be demonstratedand ditches with automaticoutlets. In addition some areas where sprinkler systems now exist but are not in use, shouldbe includedin the pilot project which utilize sprinkler outlets, water control valves, water meters, and various methods to distribute water to the field. Technicalassistance would be required for the locationand design of pilot projects along with training of irrigators and water masters in irrigation water management. Afterpilot projectsare initiated,monitoring must be established to identifywhich one is best suited for particular situationsand practices.
Reliabilityof Water Delivery
8.31 The deterioration of the irrigation infrastructure in Armenia, together with the parcellizationof previously large farms, threatens the economic and social status of farmers. Priority shouldthus be given to rehabilitatingthe existingsystems to assure functioning;designing inner irrigation structure for improved water delivery, to make water more accessible to farmers; promoting gravity alternatives in systems that now depend on irregular energy supplies; and improving O&M and establishingprocedures to sustain O&M. All of these steps will improvereliability. Experiencein many countries has shown that the most critical characteristicof irrigation service is reliability. It is more importantfor farmers to have reliable water deliveriesthan it is to have adequatesupplies, because they can adjust to shortages if they know when to expect water. Reliable supplies enable farmers to work together cooperatively to meet their varying needs, while unreliable supplies encourage misuse, over-watering,and competitionamong farmers.
Discipline
8.32 Current water laws provide sanctionsfor destructionof canals and nonpaymentof water charges, but existing fines are small and there is no serious attempts at enforcement. Village Councils are responsiblefor imposingsanctions for destructionof canals and other infrastructure,as well as non- paymentof water charges. The Village Councilsdo not want to assumeresponsibility for enforcement, for politicaland other reasons, and they also prevent OME from taking action. OME has no authority to enforce sanctions, however, it is trying to get legislationthat will enable it to work through District Councils. OME would like to levy fines for nonpayment,which would be multipliedevery year that the farmer is delinquent. Such action is bound to be self defeating, however,as the larger the fine becomes, the less likely it will be paid. Consequently,this approachis unlikelyto achievethe objectiveof inducing compliance. Ideally enforcementshould be direct and immediate,such as cutting off the farmer's water supply. The existingphysical structure precludessuch action. However, if the commandarea is broken AgriculturalResources Base and Crop Production 9
into smallerunits, it would be possible to use group pressure to enforce paymentif small outletunits are cut off when farmers in the group are delinquent. Beforethis can occur successfullya clear policy must be developed, supported by necessary regulations or legislation, and enforceable regulationsmust be establishedand promulgated.
Institutional Reorientation
8.33 OME is an administrativeorganization, rather than a service organization. Like most bureaucracies,OME treats farmers as subjects rather than clients. One componentof technicalassistance shouldbe public relationsand managementsupport to transformOME into a focused, pro-activeservice enterprise. This would consist of several elements: (a) developing clear and effective communication channelsfrom top managementto farmers and back up the hierarchy; (b) developingregular information campaigns to inform staff and farmers about opportunities, constraints and schedules; (c) assisting regionaland lower level staff to develop more effective ways to communicatewith Village Councilsand farmers; (d) developingconsultative planning programsthat engage VillageCouncils and farmers in the process of setting O&M priorities and budgets; and, (e) preparing staff to be able to respond creatively to a growing role of water users associationsboth as advisinggroups and managemententities, including such actions as subcontractingmaintenance responsibilities to groups.
8.34 Village Councils currently have mixed roles in water management,depending on the interests of the chiefs. Technicalassistance should be availableto VillageCouncils to engage them more actively in technicalwater managementissues, rather than just politicalones. Informationand training could be directed to strengthen such a role, and at the same time, financingcould be used to structure the interest of the Councils. For example, Village Councils currentlyagree to collect water charges for OME, but then follow the agreementwith lesser interest. If the governmentadvanced funding to OME and billed the Councils, they would have incentive both to collect water charges from farmers and to demand high quality service from OME.
Water Users' Associations (WUAs)
8.35 Over time, WUAsshould be formed and given responsibilityfor O&M and water charge collection. A two-tiered structure should be developed, with outlet-levelwater user groups of 10-15 farmers, aggregated into a village level umbrella association. Present conditions are unsuitable for investment in forming WUAs, as the physical structure does not support user groups and the Village Councils are not suitable for the aggregating role. First, pilot programs to develop simple, low cost methods of dividing command areas into manageableunits trying different techniquesand methods to determinewhich approach is most appropriatefor Armenian farmers. Second, reorientingthe OME and Village Councils will create a better institutionalclimate for WUAs to develop. Third, as OME gains institutionalexperience as a service organization,it will learn which O&M tasks can be delegatedto local offices and eventually to WUAs, thus increasing the underlying rational for such groups. Technical assistancewill be structuredto facilitatethese processes and direct resourcesand attention appropriately, both directly and indirectly, through nongovernmentalorganizations, if promisingones are found. 10 Chapter 8
C. CROP PRODUCTION
8.36 Armenia has favorableconditions for production of a variety of crops including, in the agroclimaticallymost agreeableparts of the country, such high value crops as grapes, fruits, vegetables, tobacco and geranium (a monocotyledoncontaining aromatic oils). Generally low humidity and high sunshinehours during the growing seasoncreate a pleasantenvironment for crop growth, with relatively low incidenceof pests and diseases.
CroppingPatterns
8.37 The country's cropping structure underwenta dramatic shift in the two years 1991 and 1992. The proportion of annual food crops increased at the expense of forage crops, perennials and industrialcrops. The shift to annual food crops continuedin 1993. Grain area was higher than in 1992 and surpassed, for the first time in history, 200,000 ha. Vegetablearea was down by 7,000 ha, mainly due to farmners'disappointment with marketingin 1992;a further sizeabledrop affectedforage crops; and there were also decreases in area of fruits and vineyards. Preliminary data for 1994 indicate that this trend has not continued. Grain area has declined, while the area under potato and vegetableproduction has increasedby 10%.
8.38 Crop production in the past has been rather variable with large yield fluctuationslargely because of weather. Input suppliesunder the FSU, although not optimal, were much better than they are presently and more stable from year to year. However, crop yields have been generally low, and even accountingfor the country's harsh agro-ecologicalconditions, the yields of the major crops are believed to be only 50-60% of potential yields.
8.39 The regional distribution of cropping patterns depend largely on agro-ecological conditions,which can be grouped into three broad zones: low altitude (< 1,200 m), middle altitude(1,200 - 1,800 m) and high altitude (> 1,800 m). Irrigated areas within these broad zones are estimated at some 108,000 ha, 118,000 ha and 60,000 ha respectively.These figures must, however, be used with caution as they depend on district figures and districtsoften cover more than one zone. Typical croppingpatterns for the three zones in 1992 are summarizedin Table 8.4.
Table 8.4: Historical Regional Cropping Patterns
Item Low Altitude Middle Altitude High Altitude Percentage
Cereals 10 28 33 Fodder/Pasture 25 34 41 Vegetables/Potatoes 19 13 Technical Crops 2 1
Kitchen gardens 14 18 23 Vineyards 16 - - Fruit/Forests 14 6 3 Total 100 100 100 Source: Ministry of Agriculture AgriculturalResources Base and Crop Production 11
Crop Rotations
8.40 Recommendedcrop rotations havebeen developedfor the main three topographicalzones on the basis of agriculturalresearch results, the FSU government'scentrally allocatedproduction quotas, farmers' empiricism, and specific conditions and requirements of the country's nine agro-ecological subzones. The rotations last seven years, and are thus generallyshorter than in most other countries of the FSU (such as Russia, Ukraine, Moldova),where they are designed to last between eight to 10 years (Table8.5). It is likely that with the recent privatizationof land, rotations will undergo fturtherrapid modificationsand will be much more responsiveto prevailing market conditionsthan was the case in the old centralizedsystem. The agricultural advisoryservice will have to take care, however, that the less experiencednew private farrnersmaintain agro-ecologicallywell foundedrotations and that they do not succumbto wrong crop sequencesor monoculturein response to good market opportunitiesfor some of the crops. Such changes could prove counterproductivein terms of natural pest control and soil conservation.
Table 8.5: Armenia, Recommended Crop Rotations
Year Ararat Plain Submountains Mountains (middle altitude) (high altitude)
I Wheat + alfalfa' Wheat + alfalfa Fallow2 2 Alfalfa Alfalfa Wheat + esparcet 3 Alfalfa Alfalfa Esparcet 4 Wheat Wheat Esparcet
5 Vegetables, early potato., Potatoes, tobacco Wheat, barley geranium 6 Vegetables, early potato., Vegetables Potatoes geranium 7 Wheat (+ alfalfa) Wheat (+ alfalfa) Potatoes
Second crop in all cases undersown 2 For weed control and moisture preservation
Cereals
8.41 Cultivationof cereals in Armenia has a long history. Archeologicalexcavations have revealed seeds of wheat, emmer (Triticum dicoccum, Schubl; the oldest of the cultivatedwheats), and barley which were 3,000 years old. Apart from these, a number of wild relatives of wheat, (such as Aegilops,a genus closely relatedto wheat),barley, and rye found in Armeniarepresent invaluablegenetic material for breeding purposes.
8.42 The cereals of major economic importance are wheat and barley; both are grown as winter and spring crops, although the area of spring wheat is less important than the area of spring 12 Chapter8 barley. The cereal area increasedfrom 131,000 ha in 1989 to 208,000 ha in 1993 and then decreased slightly in 1994 (182,000 ha). Production oscillatedbetween 374,000 t in the favorableyear 1988 and a mere 192,000 t in the much less favorable 1989, with a similarly correspondingyield differentialof almost 50%. Total grain output in 1993 was 316,000 tons (see Table 8.6) The averageyield was 1.47 t/ha in 1989 and a record 2.81 t/ha in 1988, while the unimpressivemean yield for the decade was 2.04 t/ha. In 1993 yields of cereals were only 1.5 t/ha, reflecting the increasedapplication of non-imported seeds and lack of major chemical. Armenian statisticsgenerally do not differentiateamong the cereals, nor are they normally very specificabout the winter and spring crop. A communicationof the Ministry of Agriculture(MOA) indicatesthat in the period 1980-90the averagecereal area was about 137,000ha, of which about 67,000 ha was winter wheat and 53,000 ha winter barley. It is possible, however, that the difficultiesimporting foodgrainsand declining livestock numbers will lead to a wheat area increase at the expense of barley.
Table 8.6: Outputs of Cereas in Armenia 1988-1993
Item 1988 1989 1990 1991 1992 1993
Area Grown 132,951 130,650 138,164 152,509 180,582 207,600 (ha)
...... '000). .(tons Winter Wheat 193.0 106.8 165.2 172.1 137.9 209.0
Winter barley 20.1 11.8 17.5 14.6 8.7 4.7 Sumnmer 2.4 1.9 1.3 2.0 3.6 8.8 Wheat Summer 140.8 62.7 77.1 103.5 142.2 78.5 Barley Legumes 3.8 2.6 3.1 2.1 2.6 4.3 Others 13.7 6.6 6.8 9.7 14.6 11.1
Total Output 373.5 192.1 271.0 304.0 309.6 316.4 Source: Ministry of Agriculture
Grain Legumes
8.43 Grain legumesare grown on a surprisinglysmall area in Armenia, particularlywhen one considers their well known high nutritional value for people, as well as animals, and their excellent agronomicalproperties in crop rotations. Accordingto the MOA, in an averageyear grain legumes are cultivatedon only about 1,600 ha. The main speciesgrown are lentils, chickpea,peas, and beans. Yields tend to be low, whichindicates unadjusted genetic material and inappropriateproduction technology. The missionbelieves there is a good potential to introducemodern, high yielding varieties, particularlypeas, and to increase area and productivity. Agricultural Resources Base and Crop Production 13
Potatoes
8.44 Potatoes are a vitally important food staple for Armenia, it is the country's "second bread". Both, early and fall potatoes are being grown, with the former representingnormally about 10- 15% of the potato area. The potato area has been hovering around the 20,000 ha mark for most of the past decade,and started to increasearound 1989, with a particularlysteep increasein the last three years, reaching32,100 ha in 1994. Early potatoes are grown exclusivelyunder irrigation in the warmer, lower lying areas, mainly in the Ararat Plain, while fall potatoes are concentrated in the Shivak and Sevan regions. Early potatoes have a good export potential. Over the past decade Armenia was self-sufficient in potato production, and in an averageyear about 7,000 t of early potatoes were exported to other FSU republics. In 1993 both yield and total production reached record high levels with an average yield of 13.4 t/ha, and total production of 414,300.
8.45 Farmersare well familiarwith available potato growingtechnology, including impeccable, inexpensivestorage over winter under natural conditionsin various kinds of well proven cellars. Despite this familiarity,potato yields are generallyquite low. The mean yield for the decade was 128 q/ha, the best average annual yield achieved in the past decade was a credible 179 q/ha (1985), but in an unfavorableyear the mean yield can be as low as 98 q/ha (1988), or even 95 q/ha (1990). These yields represent a very poor crop multiplicationratio since the average planting rate is 35-40 q/ha. Several factorsaccount for the low yields. There is a lack of appropriatetechnology; there are inherentproblems with proper seed supply; the seed material has low geneticpotential; crop nutrition is grossly inadequate (a crop of 179 q/ha removes about 260 kg of pure nutrients, an amount which is seldom appliedto potato fields in Armenia);and the state of crop protection is pitiful. Particularly fungicidesand insecticidesare grossly inadequate.
Vegetablesand Melons
8.46 Vegetables, grown on about 14% of total arable area in 1993, are of considerable economic importance to Armenia. Agro-ecological conditions for vegetable production are good, particularlyin the lower lying areas, and the country can not only fully supply requirementsof its own populationbut there is also substantialpotential for exports in both fresh and canned form. About forty species of vegetablesare grown in Armenia, but the by far most important crop are tomatoes, usually grown on about half of the vegetable area; they are followed in importanceby cabbage and onion, both grown normally on more than 10% of total vegetablearea.
8.47 As is evident from Figure 8.2, vegetable area has been very stable until 1990. The cultivatedarea rose quite spectacularlyin 1991, and by 1992 it had increasedto 26,000 ha (by more than 43% comparedwith 1990). Althoughoverall production increasedin the same two years only by 27%, the marketing infrastructure was apparently unable to handle the increase, resulting in considerable spoilage in the fields and on farms. As a result of this experiencethe area in 1993 was loweredby some 7,000 ha. Preliminary data of 1994 indicate an area increaseof about 2000 ha over 1993.
8.48 About forty species of vegetablesare grown in Armenia, but by far the most important crops are tomatoes, usually grown on about half of the vegetablearea. They are followedin importance by cabbage and onions; each account normally for more than 10% of total vegetable area (Box 8.2). The structure of vegetable productionhas changed substantiallyin recent years. The share of tomatoes 14 Chapter8 declined by about 50%, while the share of other vegetables (mainly eggplant, l Crop Areas (1988-94) green beans, onions, and . Vegetables peppers) tripled. Overall 250,- Potatoes yields of vegetables seem to 2e0 _e_ls | be very good by any standards, particularly 1 considering that the overwhelming part of the 100l crop is produced in the open. In the period 1983-92 mean 5so yield was 26.7 t/ha, with IE ~-- _- r-_A fluctuations between 26 and 0 34uct/a,thenbestimted yield 1988 1989 1990 1991 1992 1993 1994 34 t/ha, the estimated yield in 1993 was 25t/ha. Tomatoes yield even better Figure 8.2 achieving a mean yield of' Source: Ministry of Agriculture 36.1 t/ha over the decade.
Tobacco
8.49 Tobaccohas a long tradition in Arnenia, dating back to the 17th century when it was introduced MainVegetable Vareties from the Middle East and Iran. It used to be, and still is, (% of total Vegetable Area) one of the important industrial crops grown for domestic 1986-88 1993 consumption and export, although its area declined drastically over the past years due to pressures from the Tomteos 55.7 27.8 environmental lobby. C 14 Cabbage 14.1 14A4 0 8.50 Tobaccoarea decreasedfrom some 7,000 Onions 11.6 7.4 ha and production from almost 18,000 t in 1980 to only Cucuinbers 4.5 -
604 ha and 1,030 t in 1991, but it picked up again _ 6 1.9 slightly to 632 ha in 1992 and around 700 ha in 1993. In R Bects 1994 however, only about 200 ha were planted. Yields Camrrts 1.1 3.0. were a record 32.7 q/ha and production 2,070 t in 1992 Garlic Garlic 0.3 3.4 and in 1993 overall production declinedagain to 1500 t. (Figure 8.3). Agro-ecological conditions for tobacco Gren Peas 0.2 0.4 production appear to be very favorable, and farmers' Others 10.9 33.0i know-how to produce the crop seems to be very good, as can be seen from the generally impressivelyhigh yields s 8.2 of 2.5- 3 t/ha. Presently there are two types of tobacco being produced,the oriental(aromatic) type with the main variety "Samsun",and a burley (filler) type ("skeletnii"). Agricultural Resources Base and Crop Production 15
Geranium
8.51 Geranium is an annual, monocotyledonous plant containing a Tobacco Area and Production valuable aromatic oil used in the cosmetic industries, notably for production of 16ff perfumes. The whole green mass of the 14 Area crop is harvested and processedfor raw oil 12 - Production in extraction plants; 1 ton of green mass 1O1 TE gives 800-900 g of oil. Geranium is grown only in two rayons of the Ararat O 6 \ Plain (Armavir and Etchmiadzin), where 4 t the country's two processing plants are 2 located. o 40oV 0la 0o0 coo, 0o 0a) 0>o0 0 >aN 8.52 Agro-ecological conditions I______for geraniumproduction appear to be good Figure 8.3 in the Ararat Plain, foreign markets Source: Ministry of Agriculture apparently exist, and thus government would be well advised to create conditions for stimulating higher production in the near future. An unwelcomeproblem with the intendedresurrection of production was the lack of energy in the 1992/93 winter, whichprevented heating of some of the greenhouseswith geraniumseedlings which consequently froze. Therefore the whole harvest was used for reproductive purposes and harvests in 1993 and 1994 were significantlyless than before.
Other Industrial Crops
8.53 Sugarbeet used to be grown in the north of the country on about 3,500 ha, with a fair yield of 330-340 q/ha, giving an annual production of some 120,000 t of bulbs. A sugar mill in Spitak was destroyed in the 1988 earthquake. Since then area grown dropped to some 600-700ha and the beet is probably used for domesticprocessing and/or fodderpurposes. The governmentintends to reestablish production to at least former levels.
8.54 Linseedused to be cultivatedon some 300-400ha, producingat a low yield of aboutthree q/ha some 100 t of seed. Although area dropped to just over 100 ha in the past few years, there still seems to be interest, by both the governmentand by farmers, to develop the crop. Growing conditions for both, seed and fiber, are good in the midlandsand lower mountains and linseed and/or flax could become an interesting crop for small farmers, provided attractive prices and small-scale processing facilitiesare available.
Fruit Crops
8.55 Fruit crop production has an old tradition in Armenia. Some very valuable and popular fruit crop varietieshave been developedwhich are consideredby the localpopulation unsurpassed in their organoleptic and aromatic properties. Traditional varieties include the apricot "Erevani", the pears "Malatcha"and "Dzmernuk", the apple "Siunika", the peaches "Narndzheni"and "Lodz". Most of the 16 Chapter 8 varieties produced apparently have reasonable resistance to pests, a good shelf life, and some of the seed fruits (notably apples) can be successfully stored in traditional cellars up to the middle of the next year. Average yields, however, are not very high. In the past decade stone fruit yields have varied from 2.4 to 8.3 t/ha, while seed fruits had smaller variations and more stable yields from 4.0 to 6.4 t/ha.
8.56 The collection of fruit and berries cultivated in Armenia is quite impressive; it includes apricots, peaches, plums, green plums ("alitcha"), cherries, sour cherries, apples, pears, quince, walnuts, hazelnuts, pistachios, pomegranates, persimmons, Cornelian cherries, mulberries, olives, figs, black and red current, gooseberries, strawberries, raspberries, and blackberries.
8.57 The fruit crop area has been around 50,000 ha over most of the past decade, but declined substantially (10%) from 1990 to 1992. By 1994 the area had further declined to 28,000 ha. About 60% of the orchards are seed fruits and 40% stone fruits. The decline in area coincides with the economic blockade and suggests that parts of the older, less productive orchards were cleared and probably sown with foodcrops. Clearing of the less productive orchards was a step in the right direction. The generally low mean yields suggest that overall orchard management was not very good, partly due to low yielding germplasm, but also due to lack of other management practices such as very low orchard populations with as many as 15-20% of trees missing, inadequate pruning, unsatisfactory crop nutrition, and pest control. As can be seen from Figure 8.4, total annual fruit production varied over the past decade between 153,000 t in 1992 and 357,000 t in 1984. There is undoubtedly FruitCrop Are andProduction an excellent potential for 250------fruit production in Armenia, not only in the Ararat Plain 200-- but also in the midlands and Area['000ha) lower parts of the mountains. P The key to better utilization loo X-X P-od---ioneld 't of this potential is in the Y2IdIDe introduction of more 50 - - - -- productive, cold tolerant, disease-free and pest- 0 resistant germplasm, and 19E5 1990 1991 1992 1993 more professional management, including modern cultural techniques, Figure8.4 marketing and processing. Source: Ministry of Agriculture
8.58 Only about 70% of the orchards (35,000 ha out of 50,000) were considered productive over the past decade, which is quite low. Even considering an unnecessary short orchard renewal period of 10 years (i.e.replacement of 1/10 of the orchard area every year) and considering that fruit bearing would start only five years after transplanting, the productive area should be about 80%. AgriculturalResources Base and Crop Production 17
Viticulture
8.59 Armenia is a country with a long standing grape growing tradition. Archeological excavationsdiscovered in the south-westernpart of Yerevan, in an area called "Karmir blur urartami" include the site of an irrigated vineyard established at least 3,000 years ago. The excavationsalso unearthedseed of the grape varieties "Voskeat","Mskhali" and "Garandmak", which are being widely cultivatedto-date. These varieties are reported to produce even now high quality wines and serve as raw material for the famous Armenian brandies (cognacs).
8.60 Ninetypercent of the grapes grown are for industrial purposes and 10% are table grapes. Grape area decreasedfrom V d Ares andGrape PRodudion 36,000 ha in 1983 to barely 24,000 ha in 350------1994 (Figure 8.5). A number of reasons 30 - .-. -. are given for the decrease, including the 25 . -X -.-. laboriousness of work in the vineyards 200-. xA"rOMhl coupled with inadequate mechanization, 150------.------. Pmdcuonrash absenceof frost-resistantvarieties requiring lo-.,- *YWd(q% hilling of soil around each plant for the winter period, inadequate pest resistance of _ _ _. _. _ _ many of the varieties, damage done to ,i6 19s9 1s 1952 ism vineyards by late spring frosts, and last but Figure 8.5 not least an improper agricultural policy Source: Ministry of Agriculture towards the subsector, which presumably also includedlow producer prices.
8.61 Lax managementof plantations, improper cultural techniques,and inadequatesupply of suitable inputs were not mentioned, but are undoubtedly also responsible for the general decline of viticulture and for the relatively large changes in average yields, which in the past decade averaged around seven t/ha but fluctuated between 4.5 t/ha (1989) and 9.6 t/ha (1985). Yields in other grape producing countries are generally much more stable. For comparison, mean yields for the three year period 1988-91were in the U.S. around 17 t/ha, in Egypt around 14 t/ha, in Germanyaround 12-14 t/ha, in Australia 15 t/ha; in France and Italy, however, only around 8-9 t/ha, and in Spain not quite 4 t/ha.
8.62 If yields could be stabilized around 8-10 t/ha, Armenian viticulture would be quite competitivewith some of the best wine producing countries. The potential for more stable production of high qualitygrapes definitelyexists in Armenia, but realizationof this target will not be easy. Some of the plantationshave becomeinfested with virus diseases,and a major concertedeffort will be required if they are to be sanitized.
The Target-oriented Comprehensive Food Production Program
8.63 In 1992 governmentplanners and agriculturalprofessionals worked out a comprehensive planningdocument called the "Target-orientedComprehensive Food ProductionProgram" (TCFP). The planning departure base of the TCFP is the mean performanceof the years 1986-88. Two target dates are foreseen in the document 1996-97 and the year 2005. Two scenarios are developed, a less and a 18 Chapter 8 more ambitiousone. All calculationsand projections are based on domesticconsumption, possibilities for exports and import needs.
8.64 The statedobjective of the TCFP is to providethe populationby the year 2005 completely with a number of agriculturalproducts through own production and imports; includingshort shelf-life produce entirely through own production; cereals, sugar, milk and meat partly through domestic production;and vegetable oil through imports. The main means to achievethis target should be highly efficientuse of availableresources, includingland, water, infrastructure, labor and financial resources. The general target is to increase the volume of agriculturalproduction by 50% and to increaseexports of raw materials, foodstuffand produce of agriculturalorigin by 50 to 150%. The table from the TCFP presentedas Table 8.7 gives an overview of the projected changes in areas.
Table 8.7: Armenia, Food Production Program
Land/Crop ('000 ha) 1986-88 1996-97, scenario 2005, scenario
1 2 1 2
Arable 452.4 498 546 509 582 Grains 133 171 205 178 217 Industrial, of which: 8.7 6 11.5 9 15.5
Tobacco 3.8 3 5.5 4 7
Geranium I 1 1.5 1 2.5 Sugarbeet 3.5 1 3 3 4 Linseed 0.4 1 1.5 1 2
Hort.crops, of which: 42.1 56 60 57 63 Potatoes 20.3 27 29 28 30 Vegetables 17.9 25 27 25 28
Melons 0.4 1 1.5 1 2 Fodder crops 42.1 56 60 57 63 Source: Target-oriented Comprehensive Food Production Program
8.65 The TCFP puts an emphasison five "strategic"crops for Armenia -- tomatoes, grapes, fruits, tobacco and geranium, but it also considersand calculatesvery carefully the balances of grains, potatoes and other vegetablecrops. The program reflectsGovernment concerns about food security and is aimed to achievea high level of self-sufficiencyin major products. The self-sufficiencytargets set by the TCFP are justified only by present conditionsand are not justified by the natural endowmentof the country, nor by economicconsiderations (see Chapter2).
Major Constraints
8.66 Major limitationsprevent a better performanceof the crop production subsector. These limitationsinclude serious deficienciesin infrastructure,technology, and upstream and downstreamfarm AgriculturalResources Base and Crop Production 19 services, often coupled with inexperienced farm management. The qualification, expertise and experience of agricultural professionals in the various service organizations (research, district extension, Agroservis, Armplodorodie, etc) is generally very satisfactory but their numbers are too small to service the great numbers of new private farmers. Farmers indicate that major inhibitions to better yields and production include the inadequate availability and quality of major inputs, and the disproportionate increase in input and for product prices. The input prices, notably fuel and all fuel based inputs, are reported to increase much faster than the product prices, thus discouraging satisfactory and sustainable production.
8.67 Other important problems related to inputs include:
(a) unsatisfactory access to open pollinated seeds and planting materials of superior genetic potential as well as hybrids, which would be well adapted and of high quality;
(b) inadequate availability and poor quality of mineral fertilizers for new private farmers;
(c) drastic lack of advanced formulation, low application rate, and fast biodegradability of plant protection chemicals, notably fungicides and insecticides, but also herbicides;
(d) obsolete seeding, planting, fertilizer distributing, spraying and harvesting machines causing high losses; and since privatization, even more importantly an almost total lack of small-scale machines suitable on farms of one to a few hectares;
(e) lack of post-harvest handling and storage capacities for agricultural produce; and
(f) the critical lack of and exorbitant prices for fuel, lubricants, and spare parts.
Reconunendations
8.68 General. The agricultural production potential of Armenia is substantially underexploited. With the availability of modern technology, preferably in joint venture cooperation with western companies, yields of most of the main crops could be increased substantially within a period of two to three years. The recommendation is to introduce advanced technology, particularly for small grains, potatoes, vegetables, fruit trees, vineyards, and forage crops as quickly as feasible. However, the introduction of modern technology will greatly depend on a stable economic environment which would encourage foreign investment and technical assistance, and on the future farm structure and size. Presently farm machinery and equipment, have to be adjusted to smaller production units than has been the case before land privatization. Employing high quality seed, a reduced number of field operations with the assistance of modern chemicals and machines, optimal rates of good quality fertilizer, and appropriate machines for seeding, crop protection and harvesting, are essential to sustainable improvements in crop production.
8.69 Reports indicate that the limited area of generally high quality land is being used less than optimally. It has been pointed out that particularly the orchard area, which has shrunk from 50,000 ha in 1990 to 28,200 ha in 1994, is grossly underexploited by low productive, over-aged plantations, some of which are planted with obsolete varieties, non-responsive to market demands. Horticulture experts in Armenia estimate that the total perennial crop area, which decreased from 90,000 ha in 1983 to 54,000 20 Chapter 8 ha in 1994, shouldbe restored to some75,000-85,000 ha by 1997. With introductionof modern varieties and technology,the level of productioncould be increased,and more attractiveproduce could be offered to the market. Unproductiveorchards shouldbe gradually replantedwith varieties respondingto present market demands, and more professional managementshould be introducedto improve both, fruit and grape yields, which are quite low when comparedto real potential and internationalstandards.
8.70 Crop S2ecific. Basedon the precedingreview of the crop productionsubsector, the more detailed technical suggestionsand observationsfor selected crops are as follows:
(a) Through breeding work and variety screening of high yielding varieties of wheat and barley, developedunder similar agro-ecologicalconditions elsewhere, introducegenetic material with higher yield potential, to at least reach the mean yields of 28 q/ha already achieved in 1988. In order to be effective, the introductionof improved genetic stock must be accompanied by improvementsin crop nutrition and protection, and better quality harvesting techniquesensuring lower losses than experiencedat present.
(b) There is still a considerablearea of cereals and other relatively low value crops grown under irrigation in the Ararat Plain. With the introductionof higher yielding, and more frost and pest tolerant varieties, some of the lower value crops shouldbe shifted to the midlands and mountains, and the country's limited, most favorable crop growing environmentshould be preferentiallyutilized for production of the quite wide range of high value crops.
(c) In grain legumes it is recommendedto start intensive variety screening and basically "import" technologysince areas grown are quite small and yields are low. It is further suggestedthat research work and commercialproduction be strengthenedfor all the main species suitable for Armenia, i.e. beans, peas, chickpeasand lentils.
(c) Potatoes have a good to excellent production potential in Armenia, for consumption purposes, as well as for producing seed. To fully realize the potential will require introductionof high yielding, cold tolerant and disease resistant germplasm,preferably from high elevation growing areas of countries such as Austria, Germany, France, Switzerland,and the Netherlands. Ensuringadequate nutrition with organic and mineral fertilizers, introductionof much better pest control, particularlyof fungus diseases,such as late and early blight, based on IPM (integrated pest management)and reduction of field harvest losses should be the targets for potato research and policy makers.
(d) Armenia's record in vegetable production is quite impressive, with very satisfactory yields and produce of good quality. However, the quest for improvementshould never rest, and the mission suggeststhat Armenian vegetableresearch and producersestablish contactswith reputable research institutes and producers' cooperativesin such countries as the Netherlands,Germany, Italy, France, Spain, and possiblythe highlandsof Turkey, mainly for purposes of exchangeof improvedgenetic materials, but also for production and storage technology, and marketing techniques. It will be equally important to gradually introduce better prognostic, diagnostic, and integrated pest management techniquesfor crop protection. Reducing losses during harvest, transport and handling should be another high priority. Further, all the country's state owned greenhouses should be privatized, to improve their poor performance and ensure some supply of Agricultural Resources Base and Crop Production 21
vegetablesduring the off-season.
(e) Armenia has favorable conditions for grape production but yields are relatively low mainly due to pest, management and pricing problems, and also quality could be improved. The industryfaces a major challenge -- infestationof some of the plantations with virus diseases. A long-term, well planned and concerted effort is necessary to sanitize the vineyards. One of the main problemsis that in the wholeFSU are reportedly no competent and knowledgeablescientists in the field of virology. Ergo, apart from virus-free rootstock and grafts of high yielding, cold and disease resistant varieties, and apart from modern production and processing technology which should be imported, Armenia will urgently require technicalassistance in virology. One of the foremosttasks will be to fully inventory the extent and seriousnessof virus infestation, and work out and implementa vineyard sanitationprogram. It will take time and it will cost money, but if Armenia wants to remain in competitiveviticulture, and it definitely should, policy makers and potentiallyforeign donors should assist with the program.
(f) In order to realize the substantiallyunderutilized good potentialfor fruit production, the research establishmentshould concentrate on developing and dissemination, through imports and own breeding, of higher yielding, frost and disease resistant and/or tolerant rootstock and varieties. Policy makers and advisoryservices should launch an intensive education campaignin orchard management,particularly fruit plantationestablishment, pest control through integrated pest management(particularly weeds, fungus diseases, insects and viruses), proper plant nutrition according to the plantation's development stage, optimal irrigation scheduling,reduction of losses during harvesting, transport and storage, and last but certainly not least proper pruning techniquesand their timing. Since correct timing of some of the operations in orchards (e.g. pest control, harvest) is absolutely critical, the subsector should be equipped with corresponding reliable mechanization.
(g) Tobacco, although controversial,is a high value crop doing extremely well in Armenia. Yields and quality are very good, and farmers know production and curing techniques well. The mission believes that from a purely technical and economic view, a disadvantagedcountry like Armenia should continueto increaseits tobacco production, because it is a potentiallysubstantial foreign exchangeearner. Besides, if Armeniadoes not produce tobacco, somebodyelse will.
(h) Aromatic and medicinalplants represent another group of high value crops that can be successfullyproduced in Armenia. There appears to be good potential for expansionof these crops, but any further production increaseshould be guided by medium and long term market demands; the mission believes that an analytical market study should be carried out to ensure that Armenia produces these crops to its optimal potentialand that the whole harvest can be always marketed. Particularly geranium, but also other crops such as thyme and valerian, have excellent production potential and could bring substantialbenefits to producers. 22 Chapter 8
D. CROP INPUTS
Seed Production
8.71 The seed industry is an important component of the agricultural sector. The republic producesconsiderable amounts of seed for its own needs, plus exports, mainly to other republics of the FSU. The main seed exports have included vegetable seeds (e.g. eggplants)and planting materials of fruits and grapes. Armenia has taken advantage of a number of well adapted and locally appreciated traditionalvarieties of cereals, fruits and grapes, and the presence in the country of a number of wild relatives of cultural plants, which can be successfullyused in breeding work.
8.72 The seed industryperforms well by FSU standards,but is not equal to the state-of-the-art qualityof genetic materials, breeding techniques,production technology and quality of seed produced in advancedindustrialized nations. Agro-ecologicalconditions are well suited for successfulproduction of planting material of a number of crops, includingcereals, potatoes, small forage legumes and grasses, tobacco, flax, geranium, vegetables, fruits, and grapes. Further, the professional know-how and experiencenecessary for quality seed productionexists in Armenia. Armenia did not produce more seed when it was part of the Soviet Union because of the administrativelydirected specialization and centralizationof seed production in various republics. This policy led to cross-exportsof seed materials and increasedthe economic inter-dependanceamong the republics.
8.73 Organizationof Seed Multiplication. With the dissolutionof large socialistfarms and the privatizationof land in 1991, the well establishedstructure of seed multiplication,based on some 120 socialist farms is reported to have disintegrated, despite a governmentdecree issued in an attempt to maintain the seed farms. Most of the former seed farms were totally privatized, some were partially privatized, and only a very few continueto farm the same areas as earlier. It is estimatedthat it will take some three to five years to fully reestablishan appropriate structure of seed multiplicationin Armenia.
8.74 Major research and seed multiplicationwork of annual field crops is organizedunder so calledScientific Production Associations (Nautchno-Proizvodstvennoe Obedinenie, or NPO). NPOs were establishedin the 1970sand were usually based on the then existing research institutes. Their mandate includedseed multiplication,and transfer of technology related to new varieties. NPOs are umbrella organizationsfor all researchactivities, includinggenetic and varietyscreening work doneby the research institutes(Nautchno-issledovatelskii Institut - NII), for early seed multiplicationstages on own farms, as well as contract seed productionon specializedseed farms called "elitkhozy",of which there were about 21 in Armenia. The NPOs also manage seed processing plants. They further oversee delivery of seed from the "elitkhozy"to specializedseed productionfarms called "raysemkhozy"which producedseed for commercialproduction. There were about 102 (two to three per district).
8.75 Seed Production. Despite the disintegrationof most of the large socialist farms and a partial collapseof the seed multiplicationinfrastructure after land privatization,availability of wheat and barley seed, which is easy to produce, has been adequate. Apart from that, the governmentis keeping annuallya 15-20% reserve stock for unforeseencalamities (Figure 8.6).
8.76 Potato seed was produced in Armenia until 1978. Then USSR officials decided to regionalizeseed production in Latvia, Byelorussiaand three oblasts of Russia, which suppliedArmenia until about 1988 when the system started breaking down. Since then Armenia has embarkedon potato AgriculturalResources Base and Crop Production 23 seed production again, and has succeededthrough tissue culture and ARMENIA classicalreproduction of its own seed SEED PRODUCTION OF CEREALS and with the assistance from (000to Armenian diaspora which imported 50 several hundred tons of seed from 404- Belgium and Holland. 3Xi
8.77 The seed situationis R more difficult for other species, 20 _- _ . particularly with planting materials _ i. for fruits and grapes. Until about 10-7 1990 Armenia produced annually ,L three to four million cuttings of 1988 1989 1990 1991 1992 1993 grapes and two to three million fruit seedlings, of which Armenian needs Ell Cereals total 1 Spring cereals lWinter cereals were about 2.5 million cuttings and Source SInIstry or Agricullure 1.5 million seedlings. The difference _ was usually exported to Russia, the Figure 8.6 Ukraine and Azerbaijan. Production in 1993 was only about 0.5 million fruit seedlings and 0.8 million grape cuttings. There is the real danger that some of the planting materials produced may be infested with the virus prevalent in grape vineyards.
8.78 Seed Legislation. A draft of the "Law of the Republic of Armenia on the Plant Genofond, Protection of Breeders' Achievements(Rights), and Seed Production" (Zakon Respubliky Armenie o Genofonde Rastenii, Zashchite SelekcionnychDostizhenii, i o Semenovodstve)has been prepared and is expectedto be approvedby parliamentin the near future. The legislationhas been drafted in conformity with international conventions ruling seed production so that Armenian seed can be eventually also exported to westerncountries.
8.79 Institutions. The two most important institutions involved in the regulation of seed multiplication are the State Commission for Seed Testing (CST), in short called in Russian "Gossortispitanie"(Gosudarstvennaya Komisia po SortoispitaniiSelskokhozaistvennykh Kultur), and the State Commission for Seed Quality Control (CSQC), called "Gosseminspektsia"(Gosudarstvennaya Komisia po Inspektsii Semenovodstva). Both are functionally independent,have their own budget, but fall administrativelyunder the Principal Departmentof Crop Production (GlavnoeUpravlenie Table 8.8: Average Seed Rates (kglha) Zemliedelia)of the Ministry of Agriculture. Armenia Germnany F' U' 8.80 Seed Rates. Seeding rates in Armenia of most Wheat 300 140 230 crops are higher than in West Europeancountries (Table8.8). This W.Barley 220 110 180 is probably mainly attributable to less reliable seed quality, for Barley 200 120 200 which farmnerscompensate by using increasedquantities of seeds. Potatoes (t) 3.5-4 2 3 For instance, reported seeding rates for cereals are 220-300 kg/ha and for potatoes 3.5-4 t/ha. The box shows a comparison between ' F-favorable conditions Armenian seeding rates in some of the more important crops, and U-unfavorable conditions 24 Chapter 8 seeding rates recommended, for example, in Germany. The data indicates that if Armenian seed could be guaranteed high quality, considerable savings could be realized each year. If German average seeding rates (the mean of favorable and unfavorable conditions) had been applicable in 1992 the country could have saved about 16,520 t of cereals, and 36,210 t of potatoes (assuming half wheat and half barley area in cereals, with rates of 300 kg/ha for wheat and 220 kg/ha for barley).
8.81 Major Constraints and Recommendations. Since the formerly well established structure of the seed industry suffered a major blow after dissolution of socialist farms and land privatization, a speedy reestablishment of a functioning network of seed multiplication enterprises is urgently required; it should be achieved through cooperation with the remaining kolkhozes and sovkhozes, the best of the more stable farmers' collectives, and larger successful private farmers. At any rate, the private sector should be allowed to play a much more important role in seed multiplication, processing and trade. The nursery industry should be, to the extent possible, also privatized; government's main role should be to approve, register, and supervise the private nurseries.
8.82 Main difficulties in creating new varieties include the inadequate access of Armenian biological scientists and plant breeders to state-of-the-art germplasm, modern plant propagation technology and breeding techniques. These difficulties result in production of vegetative materials with a yield potential generally 30-40% lower than in the world's most advanced countries. A lack of financial means, lack of information and exchange of genetic materials, lack of personal contacts and exposure of Armenian scientists to more advanced research establishments abroad, are mainly responsible for this difference. The lack of information and contact with more advanced establishments is also acutely felt in the seed testing and seed quality control area. Both the state commissions responsible for this work use outdated methodology and their field and laboratory equipment has fallen behind international standards; their specialists, too, need contacts and training abroad.
8.83 The grape industry (and possibly also the fruit orchards), including planting material production, face a major challenge -- infestation of some of the plantations with virus diseases. A long- term, well planned, and concerted effort is necessary to sanitize the vineyards. One of the primordial elements in this effort will be production of healthy rootstocks and cuttings. One of the main problems is that in the whole FSU there are reportedly no competent and knowledgeable scientists in the field of virology. Consequently, Armenia will urgently require competent technical assistance and training in virology. It should become one of the priority tasks of foreign donors, including the World Bank, to urgently assist with the program.
8.84 Armenia has a diversified and rare collection of plant genetic materials, including some very old varieties of traditional cultivated crops and some wild relatives of modern cultivated crops. However, there exists no genebank; foreign financial and technical assistance is needed to preserve the rich Armenian germplasm.
8.85 There are good opportunities for the Bank to support the Armenian seed and vegetative material production subsector, including seed production related research, processing, packaging, conditioning, storage, and marketing. Technical assistance and training of promising scientists and technicians in reputable western research, seed production, and processing establishments should equally bring a high return to the country's agricultural sector. Bank support could either take the form of a self- standing seed production and research project, or it could be an important component in a larger agricultural project. AgriculturalResources Base and Crop Production 25
Fertilizer
8.86 Accordingto various estimates Arnenia optimally needs ARMENIA between 140,000 and 170,000 t of MINERAL FERTILIZER SUPPLY fertilizer in pure nutrients per year, 180(.000 t) which translatesto about 450,000 to 140 _ 550,000 t by physical weight. In the 120 F///, past 14 years this optimal supplywas I00 //, m for the last time achieved in 1980, lMn IYIIYIIFI,IV when about 148,000 t were supplied 1 to Armenian agriculture. Since then 40 supply varied between a high of 20 124,000 t in 1986 and an extremely 20 low 4,000t in1993 (equivalent to 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 0.2 kg per ha for cereals). Figure 8.7 gives an overview of total E3 Pure nutrients supplies during the period 1980-92. SO.r: Minlty of Arc-ltur.e
8.87 Estimates of Figure 8.7 fertilizer needs in Arrnenia vary. Armplodororidie,the parastal company responsible for supply of agrochemicals,estimates a need for 200,000 tons (nutrient basis) of NPK. The Institutefor Soil Scienceand Agrochemistry'srecommended usage of fertilizer on irrigated and non-irrigated arable land imply a need for 153,000 tons. Possible fertilizing of national meadows and pastures could add another 15,000 tons. However, more efficient use of livestocKwanures could reduce the optimal needs of chemical fertilizers. Further, the estimates probably imply fertilizer-productprice ratios similar to those of past years. These ratios and, therefore, the profitabilityof using fertilizers, of course, may be drastically different in the future. ARMENIA CROP NUTRIENT RATIOS 8.88 Own Production. Armenia had only one fertilizer 1.2 Rato factory. It was producing nitrogen I fertilizer in the forrn of carbamide (urea). It was, however, located in 0.8 Kirovakan, just a few km east of oL Spitak, the site of the 1988 devastating earthquake. The factory 0.4 was damaged considerably during 0.2 the earthquake and production has not resumed since. 0 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 0 = Recommended Ratio (1:0.8:0.8)
8.89 ImbalancedNutrient 3 N 3 P M X Supplv. The inadequate total quantitiesof all fertilizers available SOLro.1o.Ot Soil S,i.nd Arooh.m. to agriculture are not the sole Figure 8.8 26 Chapter 8 concern important to crop nutrition and maintenance of soil fertility. Another concern is the imbalanced supply of nutrients, which means that, on one hand, some fertilizer is wasted, and, on the other hand, the nutrient potential of other fertilizer cannot be fully utilized. The guideline fertilizer reconunendations of the Institute of Soil Science and Agrochemistry imply that a balanced nutrient supply should have an average NPK ratio of 1:0.8:0.8. The fertilizer supply data for the past decade reveal that in many years, but not all, the P supplies were 80% of N supplies, as recommended (Figure 8.8). But K supplies were only 30% of N supplies, instead of 80% as recommended.
8.90 Crop Response to Fertilizer. Trials carried out by the Institute of Soil Science and Agrochemistry showed a very satisfactory response of crops to fertilizer. Pot trials were conducted with three types of soil (Table 8.9).
Table 8.9: Armenia, Crop Response to Fertilizer
Soil Nr.of Yield (g/pot) Yield increase (g/pot) trial 0 NPK NPK NP N P
Brown meadow, 7 6.1 23.2 17.1 16.6 10.3 0 irrigated Brown 25 5.9 22.6 16.7 15.9 7.3 0.7
Chemozem 27 8.1 25.3 17.2 15.9 5.5 1.9 Source: Agricultural Atlas of the Armenian SSR, 1984
8.91 Fertilizer Spreaders. Serious difficulties are also being encountered in application equipment, both for mineral and organic fertilizer. There is an insufficient number of fertilizer spreaders, the equipment is heavy, it suffers from breakdowns, it is difficult to adjust, and it applies fertilizer unevenly. An estimated 15 % (260 out of 1,700) of mineral and organic fertilizer spreaders are reported to be in the hands of the rayon stations of Armnplodororidie, which performs field work for farms on a contract basis. The rest was earlier owned by the kolkhozes and sovkhozes, and is now either in private hands (private farmers and farmers' cooperatives), with village councils or with the few remaining socialist farms.
8.92 Fertilizer Storage. Fertilizer storage at the about five Armplodororidie supply bases and the 38 rayon bases (raybaza) is considered to be adequate; the situation on farms is not precisely known but is believed to be less satisfactory. Storage of organic fertilizer is rudimentary, nutrient losses occur through sunshine, rainfall, and runoff. Management of organic fertilizer in the fields has been also deficient; manure used to lie for days and weeks in heaps on the soil surface. It was not distributed and incorporated into the soil and therefore there were serious nutrient losses through volatilization and leaching of N and other nutrients. It is to be expected that with privatization of land and livestock the individual farmers will take much better care of organic manure, particularly in view of the high prices for mineral fertilizer.
8.93 Short-term Constraints and Recommendations. In a situation of grossly inadequate mineral fertilizer supply and high prices, the first task should be to take much better care of storage and application of organic fertilizer. Large quantities are produced annually but their on-farm storage and maintenance, as well as speed and quality of application in the fields needs to be improved. The advisory services of the Ministry of Agriculture and of Armplodororidie should launch an education campaign through public media, field days and lectures, on the proper handling and application of organic fertilizer. AgriculturalResources Base and Crop Production 27
8.94 The secondpriority shouldbe to achievefuture applicationsof mineral fertilizers greater than appliedin 1992 and spring 1993. It is unlikely that an optimumlevel of applicationcan be ensured, but the aim should be to match at least the fertilizer use levels of 1989 and 1990, which were around 50,000 t which corresponds to about 100 kg/ha of NPK. Becausemany of the new, private farms are financiallyweak and credit is difficult to obtain, innovative low-risk credit schemes might have to be considered. One such example could be collateralizationduring planting season of a part of the prospectiveharvest, in exchangefor credit tied to procurementof agrochemicals.
8.95 Commercializationand demonopolizationof Armplodororidieshould be continuedat all levels, and at the same time there should be active support in creating a competitiveprivate sector input supply network. The means to support developmentof such private competitionshould include simple and fast procedures for issuingbusiness licenses, tax breaks, and easy availability of credit for starting the enterprises.
8.96 Medium-termConstraints and Recommendations.An economicevaluation of saline soil reclamationshould be carried out and land reclamationcontinued if economicallyjustified. Increase on- farm actual (excludingall transport and storage losses) fertilizeruse to at least the 1984-88levels of some 180 kg of pure nutrients per ha of arable land. At the same time, the NPK mix should be improved to the scientificallyestablished, balanced nutrient ratio of 1:0.8:0.8. In addition, attention shouldbe given to the following:
* fertilizingsome permanent grassland, at least the more productive one third of the 900,000 ha naturalmeadows and pastures, which have a substantialpotential for increasedfodder production and which would greatly benefit from N (and PK) applicationsof around 40-50 kg/ha;
- shiftingprocurement and distributionfrom low nutrientfertilizer to high grade formulations,such as urea, triple superphosphateand various complex formulations. A large share of high-grade and compound fertilizer would entail considerable savings in transport, storage and field applicationcost;
* increasingimportation of specializedfertilizers for greenhouseand open vegetable production, includingpotassium and calcium nitrates;
* reducingfertilizer losses during transport and handlingthrough better organization,management and supervision;
* supportingactively a program to increase the organic matter content in Armenian soils through higher applicationsof organic fertilizer, improved cropping patterns and rotations, includinga higher percentageof perennial grasses and legumes, and through reduced and minimum tillage operations, wherever these are applicable;
* strengtheningagrochemical laboratories through recruitment of qualifiedstaff where needed, and through supply of chemicalsand analytical equipment; ensure that all farms have well adapted fertilizer recommendationsaccording to the soil nutrient status and crops grown; strengthenthe agrolab role in monitoringand protectionof the environmentfrom agriculturaland agrochemical pollution; and
* increasingthe availabilityof more efficient machinesand equipmentused to apply mineral and 28 Chapter 8
organic fertilizers.
8.97 Long-term Constraints and Recommendations. Increase the use of fertilizers to the scientificallyestablished requirement level of 170,000 to 200,000 t of pure nutrients, supported by efficient use of high quality farmyard manure and other organic fertilizers, to secure sustainablesoil fertility and crop production.
Pesticides
8.98 The supply of pesticideshas also fallen over the past ARMENIA three years to dangerously low levels USE OF PESTICIDES (Figure 8.9). The optimal use of pesticidesin Armeniais consideredby ('000 t) (Ii plant protection specialists to be e 1.4 around 6,500 tons of physical weight. 1.2 A more detailed breakdown,provided 4 I to the mission by Armplodororidie in 0.8 mid-1993, is shown in Table 8.10. 0.6 The amount of fungicides is high 2 0.4 because of their importance to the I 0.2 productionofhigh vlue crops 0 0 production of high value crops 1987 1988 1989 1990 1991 1992 1993 including fruits, vegetables, and Supply 1987 & 88 considered as optimal grapes. The actual use of plant -I.n-ecede. (Y2) Fun.gide. (YI) protectionchemicals however has been Herbicides (Y2) Other .1 ents (YZ) only about 1% of the suggested optimal amount. Source: ARIPLODORODIE
8.99 Use of pesticides in Figure 8.9 the early to mid 1980s were considerably higher. In the second half of the 1980s total planned pesticide requirementsstarted dropping substantiallyin Table 8.10: Optimal Pesticide Use in the FSU includingArmenia. This decreased demand coincided Armenia with: (a) a more widespreaduse of seed dressing which reduces tons % later pest occurrencein the crops and thus demand for pesticides; (b) the gradual introduction by FSU industries of higher Insecticides 1,315 21 concentration and better quality pesticides, mostly through Fungicides 4,475 70 advancedactive ingredientsimported from western countries;(c) Herbicides 423 7 greater attention to ecologicalconsiderations; (d) an increase in integrated pest management (IPM), including a wider use of Seed Dressing 37
Total 6,362 100 AgriculturalResources Base and Crop Production 29
8.100 Oualitv and Safety of Pesticides, Environmental Effect. There is a great qualitative difference among pesticides produced in the republics of the FSU, and western countries. The latter are much safer, much more efficient, and require much lower quantities of active ingredient (a.i.) per unit of area. Some of the best pesticides require only several hundred grams, or even less, of a.i. per ha, while with many of the FSU pesticides five to eight kg/ha of a.i. must be still applied, and in extreme cases even well over 30 kg/ha are required to achieve the desired pest control effect. The environmental consequences of these pest control practices were serious and partially account for the development of an environmental lobby in Armenia. Two new laws particularly related to pesticides have been drafted in Armenia -- the Law of Crop Protection, and the Law of Agrochemical Services. Both laws were presented to parliament in 1993 but have not been approved yet.
8.101 Advisory and Supervision Services. Armplodororidie's Crop Protection Stations (CPS) have the multiple function of advice, supervision, early warning of pest infestatioi1 s, and pest monitoring. Each CPS consists of two units -- a Pest Control Advisory Service, and a Pest Forecasting and Monitoring Service. The former consists on the average of two to three crop protection graduates (plant pathologists and entomologists), who used to advise farms (kolkhozes, sovkhozes) on crop protection technology, and timing of applications, and supervise safe handling of pesticides at the farm level. The latter service involves two graduate crop protection specialists usually who are responsible for pest phenology, pest identification, and forecasting. With the dissolution of the about 1,000 large socialist farms and creation of about 300,000 small private farms, the pest control advisory services will have to change drastically its modus of operation to be able to cover the more dispersed and much larger number of clientele.
8.102 Maior Constraints. In addition to limited availabilities, poor quality and high prices relative to farm product prices, the effective and efficient use of pesticides in Armenia suffers from a lack of competition in supplying pesticides and obsolete application equipment.
8.103 With only one supplier of pesticides, there is, for the time being, no competition, and although it is trying to open new stores, Armplodororidie is unable to cover all major villages with adequate supplies and technical advice. Pesticide sprayers are of obsolete design with numerous faults, and reportedly cannot be properly adjusted, often causing serious over- or under-application of chemicals, and consequently unnecessary crop losses and contamination of the environment. The U.S. company Monsanto introduced in Ukraine an innovative pilot system of giving away free sprayer improvement kits with sales of pesticides. The kits consist of nozzle bodies, antidrip nozzles and filters. The kit does not make a good sprayer out of a poor one, yet it increases efficiency by some 20-30%; consequently, the interest by farms to acquire the kit is reported to be enormous. Armenia should endeavor to introduce a similar scheme as well.
8.104 In addition, with the dissolution of large socialist farms and creation of more than a quarter million of small private farms, the present arrangement for agrochemical services is unable to cope adequately with supply and advice to all areas.
8.105 Recommendations. The goal of the crop protection strategy should be a speedy conversion to modern pesticides with high safety standards, together with the introduction of the integrated pest management system (IPM), including wide use of biological agents, and new agrochemical methods. The government should encourage more competition in pesticide supply by issuing commercial licenses to private agrochemical importers and distributors; these new dealerships should have easy access to credit, should receive technical advice from crop protection services, and should initially benefit from 30 Chapter 8 tax breaks. The dealers should be in a position not only to sell agrochemicals, but also to provide professionaladvice on proper use and safety measures. Government should forbid illegal, unlicensed trade in pesticides which is reportedly going on now, particularly through smuggling from Russia of chemicals of often unknown age and origin, inadequatelylabelled and packed.
8.106 Apart from the inadequateamount and quality of pesticides, other major constraints that shouldbe addressedsoonest by the republic's authorities,and with support from foreign donors, include:
(a) low quality and safety of packagingfor crop protection chemicals;
(b) lack of appropriate, safe storage for pesticidesat farm level;
(c) inadequatenumbers and low quality of pesticide applicationequipment and machinery, particularly for low-volumeand ultra-low-volumeapplication (unsuitablenozzles, bad seals and gaskets, impossibilityto regulate precise applicationrates);
(d) unavailabilityof urgently needed hand operatedknapsack sprayers and ULV sprayers to the large number of small farmers;
(e) inadequatesupport of biological control research and its application(in particular, the government'splan incorporatedinto the CTFP for a "biofactory"should be supportedby foreign donors as a matter of priority);
(f) substantialtransport losses of plant protection products;
(g) inadequate procedures for safe disposal of old and/or prohibited pesticides and used containers; and
(h) inadequate attention to the possible rapid introduction of the latest technology breakthroughof disposabletypes of containersof polyurethanetype materials, soluble in water and liquid fertilizer.
Mechanization
8.107 In the FSU, Armenia was one of the republics better supplied with tractors and agricultural machines. Although tractor numbers declined from more than 15,000 in 1986 to about 12,500 in 1993, the country still has about 2.5 tractors for 100 ha of arable land, or 1 tractor for some 107 ha of agriculturalland, whichcan be consideredas more than adequate. Someof the other important machines,such as grain combines, appear to be relativelyadequate as well. Althoughthe ratio declined from one combine for 94 ha in 1988 to one for 130 ha in 1992, they appear still to be in sufficient numbers, particularlybecause the country's complex topographicrelief allows a gradual harvesting of grains whichprobably spans a maturityperiod, over the various elevations, of 30 days or more. A more difficultproblem is the rapidly aging machineryfleet with declining replacements,particularly over the past three years (Figure 8.10). Agricultural Resources Base and Crop Production 31
8.108 Although Armenian farms are in possession of a large ARMENIA fleet of tractors and equipment, a DELIVERY OF AGRICULTURAL MACHINES number of important machines for land preparation, harvesting, post 2 500 harvest handling, and in animal __ 400 husbandry are in short supply. 1.5 _300 However, under the current situation 300 of land privatization and farm _ l_ q - Hill restructuring, with an estimated more than 250,000 of private farms 0.5 - 100 created, the most limiting factor to mechanization of agriculture is 1964 1987 1990 1991 1992 clearly the almost total absence of Tractors and trucks YI, rest Y2 farm machinery adapted to the small E Tr.ctor. E Combines M F-s h-rave r average farm size of about 1.3 ha, = Se*der Es Spray... EVIlTrucks and to the even smaller average land plot of about 0.4 ha. Although the Source: ARAGROSERVIS farmers apparently try to compensate Figure 8.10 for this disadvantage through blocking of cropping patterns and field operations, this will very likely prove to be only a transitional and unsatisfactory solution. Availability of adequate machinery for new pumping structures via commercial channels should be facilitated in the near future.
8.109 Apart from the mismatch between capacity of tractors and machines and size of farms and plots, there are problems with machinery performance, quality of work, maintenance and repairs, and cost of operation. The privatization of about 40-50% of the machinery fleet has exacerbated these problems. Some of the new machine owners have been to keep their equipment in good working condition. In addition, there have been serious shortages of fuel and spare parts.
8.110 The Government is trying to ease the situation through supporting the creation of parastatals in the rayons to perform mechanized contract field work. Private tractor and machine owners should be encouraged to compete with these parastatals, the GShKs. In addition, the formation of "Machinery Rings" should be encouraged.
8.111 Agricultural Machinery Fleet. Armenian farmers presently work with about 12,500 tractors, 1,400 grain combine harvesters, 950 forage harvesters, 2,300 drilling machines, 2,300 grass mowers, 1,700 fertilizer spreaders, 2,200 spraying machines, 9,700 trucks, and a number of smaller agricultural machines and equipment. The 12,500 tractors in Armenia in 1993 is the equivalent of one tractor for 40 ha of arable land. The 1,400 grain combine harvesters suggest that one combine serves about 130 ha (160 in the FSU) of grain crops. This situation is better than in the FSU as a whole.
8.112 Repair Services. Armagroservis has in the districts 38 repair stations (workshops), which take care of the more common repairs of tractors and agricultural machines. In addition, Armagroservis has several highly specialized repair enterprises ("spetszavody") which do repairs and reconditioning of engines, transmissions, hydraulics, trucks, heavy tractors, and other special machines or their components. 32 Chapter 8
8.113 Supply of Machinery. Most of the machines used in Armenia were produced in the FSU. Imports from other sources were very limited, but included diesel and electric loaders from Bulgaria, and forage harvesters from former East Germany.The agricultural machinery industry in the republics of the FSU continues to be highly concentrated, specialized, and very inefficient. However, in the past two to three years farners have been able to refuse delivery of machinery, subsidies have been eliminated, and some aspects of a market system are being initiated. There have been generally positive developments in the FSU agricultural machine production system. However, these developments have had only a very marginal impact on Armenia. But the country should be able to benefit from them once the geopolitical situation normalizes and more usual inter-republic trade can be resumed.
8.114 Armagroservis estimates that 65% of Armenia's imports from the Republics of the FSU come from Russia, 20% from the Ukraine, and 5% from each Belarus, Kazakhstan and Kyrgizistan. Armenia has very limited agricultural machinery production capacity. There are only two factories in Armenia. One is the Nairiiskii specialized experimental enterprise, producing soil augers, potato lifters, tipper trailers, and machines for stone collection; and the other is the Indzhevanskii "Leskhozmash", making cultivators and motorized pumps for fire fighting. Armagroservis in its workshops is further producing lifting mechanisms, welding units, water and fuel tanks and various smaller tools and equipment. In addition, a factory under the Ministry of Industry, "Razdanmash", apparently started production of motorblocks in preparation for manufacturing of mototillers.
8.115 AgriculturalMachines for the Private Table 8.11: Machinery Privatized in Armenia Sector. Although privatization of land progressed January 1, 1993 very swiftly in Armenia and about two thirds of Total Number % Privatized agricultural machines were privatized by January 1, Tra 1993 (Table 8.11). This process is expected to be ctors 12,508 64.6 continued with the privatization Armagroservis and Combines 2,245 43.5 Armplodororidie's rayon stations. Trucks 11,464 68.2
8.116 A suitable compositionof the tractor Drills 2,335 50.4 and machinefleet, properly adjusted to the small farm Source: Ministryof Agriculture and plot size, and to the mountainous terrain of the country is as important as private ownership of machines. Under the current situation of farm development in Armenia the types of machines desperately needed are versatile tractors of 25-65 HP, 2x4 and 4x4 drives, with a low center of gravity, with at least the most rudimentary equipment adapted to mountain conditions (reversible ploughs, soil tilling equipment including machines for minimum tillage, seeders, fertilizer spreaders, sprayers, hay and silage making and harvesting machines, and very importantly also trailers of the one to five ton carrying capacity (the kind of equipment very successfully operating, for instance in Austria, Bavaria, or Switzerland). Higher-powered two-wheel tractors and motor-tillers of 10-15 HP with corresponding ancillary equipment are also needed.
8.117 Maior Constraints. Major constraints related to farm mechanization include critically inadequate supplies of spare parts, fuel, and lubricants, and related inadequate maintenance and repair of machines; almost total disregard for designing and producing smaller scale machines and equipment; poor design parameters, particularly in seeding, spraying and harvesting machines, allowing for great imprecisions in work and result in heavy losses; poor quality of materials; insufficient numbers of many of the machines; machinery producers not responsible for after-sale service, nor for providing adequate spare part supply to Armagroservis repair and maintenance stations, and to farms; and inadequate care Agricultural Resources Base and Crop Production 33 of machinesby operators.
8.118 Recommendations. In order to provide a more decisive set of recommendations,much more technical and economic analyticalwill be necessary. Therefore, the following recommendations should under no circumstancesbe considered as comprehensiveor exhaustive.
* Short-term recommendations:
(a) The number one priority is to provide the most necessary spare parts for repairs of machines, and delivery of fuel and lubricants to run these machines. All other inputs (seed, fertilizer, etc.) are useless, if means to deliver of inputs to the fields is not secured. In the absence of more normal supply mechanisms, negotiation, barter, and even administrativeorders, may be justified to make it possible for farmers to carry out their field work. Attention shouldbe given to better training of machineryoperators.
(b) Governmentshould encourage and support privatizationof village repair workshops, and creation of private spare parts and machine sales dealerships, including supply through service cooperatives. Technical advice from agricultural administrations,credit from local banks, and some tax breaks should be provided.
(c) Experienceelsewhere shows that at times of machineryscarcity and high operatingcosts, there is an excellentpotential for farmers' mutual assistance through an organizational form known as "Machinery Rings". The experience of some western European countries, particularly Germany, where these "Rings" are most widespread and very successful, might be relevant to the new private farming sector. The "Rings" could provide effectivecompetition to the tractor and machine hire stations (GShK)which are being establishedin the districts created by Armagroservisand Armplodororidie. For this pilot exercise to succeed, technical assistance from a Western country will be necessary.
* Medium-termrecommendations:
(d) The Governmentand foreign donors should encouragejoint ventures and partnershipsof Armenian agricultural machineproducers with Western companiesthrough appropriate legislationand domestic and foreign financial support. Joint ventures appear to be an efficient way to gradually alleviate the qualitative and quantitativedeficiencies of the current machineryfleet, particularlymachines of appropriatesize and design for private farms.
(e) Priority should be given to providing small and medium-scaletractors and machinesfor the new private farmers. The several hundreds(if not thousandsof tractors) of the 16-40 HP class owned by the state and parastatals operating in Arnenian agriculture should be sold to farmers. However, since there is almost no ancillary equipmentavailable for these tractors (the socialist farms used them mainly for transport), one of the machine building enterprises should be designated to produce the most necessary range of equipment adapted to these tractors including ploughs, harrows, discs, fertilizer 34 Chapter 8
spreaders, pesticide sprayers, drilling machines, ridgers, and trailers.
* Long-term recommendations:
(f) Rationalize, rehabilitate and modernize the agricultural machine and equipment producing factories, including restructuring production in former military industry plants. This measure is likely to require substantial technical assistance input and sizeable domestic and foreign financing. CHAPTER 9
LIVESTOCK SECTOR
9.1 Livestock production accounted for about one-third of the output value of primary agriculturalproduction in 1992, down from 46% in 1991 and 53% in the late 1980s. It used about 80% of agriculturalland, employed an estimated two-thirdsof the agricultural labor force, and represents a major source of nutrition and cash income for about 300,000 private livestock producers. For many years the Government attached great importance to increasing per capita consumption of livestock products. The sub-sectorwas given high developmentpriority in the 1970sand 1980s, receivingbetween 60% and over 70% of total agricultural investmentsand operational subsidies,and profiting from large imports of livestock production related inputs. In the late 1980s, for example, over 400,000 tons of energy feed grains, up to 100,000 tons of protein meals, and substantialamounts of feed additives and veterinarysupplies were importedyearly, representingover 5 % of the total value of food and agricultural imports. As a result, the country's livestock populationsgrew substantially in the past two decades, particularlypig and poultry populations. By the late 1980s, livestockproduction accountedfor 53% of agricultural primary production. Despite this growth, Armenia depended heavily on importationof livestockproducts, namely dairy products (up to one million tons of milk equivalentper year) and meat, accountingfor respectivelyover 40% and 15% of total agricultural imports in the late 1980s.
A. LIVESTOCKPOPULATION AND PRODUCTION
9.2 In 1987-88, when livestock numbers Table 9.1: Livestock Population, peaked, Armenia's livestock population was estimated at Thousand at Beginning of Year, 850,000 cattle (including about 310,000 cows), 340,000 Animal Units' pigs (including35,000 sows), 1.75 million sheep, 30,000 Year Tota Ani Units goats, 7,500 horses, and 12 million poultry. There were also an estimated25,000 rabbits and 120,000bee hives. In 1986 1284 1989, overall livestock numbers began to tumble (Table 1987 1279 9.1). It is estimated that between 1987-88 and the beginningof 1994, overall livestockinventories in terms of 1988 1223 total Animal Units (A.U.) fell by 50%, the worst affected 1989 1087 livestock species being pigs and poultry (down by about 1990 1051 75%, with sows down by over 50%), followed by cattle (down by over 60%, with cows down by 18%) and sheep 1991 949 (downby over 50%, with ewes down by 55%) (Table9.2). 1"2 857 Moreover, the number of rabbits fell by 84%, while those of horses and bee hives remained about stable. 1993 629 Contraction of the livestock sector in Armenia has been 19942 663 larger than anywhereelse in the FSU. Estimates for 1994 'Cowor horse = 1.0 animal unit (A.U.) animal stock indicate some recovery however. Cattle other than cows = 0.6 A.U. Pig = 0.3 A.U. Sheep and goats = 0. 15 A. U. 9.3 Due to heavy livestock inventory culling, Poultry = 0.02 A.U. overall meat production decreased much slower than 2MOA estimate livestock numbers in the past several years. Thus, from Source: Ministry of Agriculture 1988to 1992, total meat productionfell by only about 38 % (with poultry meat production being by far the worst hit, down by over two thirds), whereas livestock 36 Chapter 9 inventories in terms of total A.U.s dropped by 50%. Drops in production varied among categories. During the same period, production of milk decreased by 31 %, eggs by 60% and wool by almost 40%. In 1993, there was a substantial further decline in the production of pork by about 73%; in chicken by about 67%; and eggs by 25% (Table 9.3).
Table 9.2: Livestock Numbers in Armenia 1988-1993 ('000 head)
Type of Animal 1988 1989 1990 1991 1992 1993
All Cattle 742.1 690.1 640.0 566.5 498.9 501.6 Cows 272.4 260.1 250.9 251.1 257.5 269.8 All Pigs 319.4 329.2 310.9 224.4 84.3 81.5 Sows 37.8 41.1 47.8 39.5 17.2 18.5 All Sheep 1,433.3 1,272.1 1,172.1 1,006.4 854.4 710.0 Ewes 923.4 839.9 817.3 716.6 621.6 460.0 All Goats 16.9 14.6 14.1 16.6 18.6 25.9 Nannies 12.3 10.9 10.8 11.8 13.1 15.5 Source:Ministry of Agriculture
9.4 Based on experience gained in Eastern European and other FSU countries, it is to be feared that Armenia's efforts to liberalize prices will lead to faster increases in livestock production costs than in output prices. These prices are expected to be dampened by both a fall in consumer demand due to reduced purchasing power and, possibly, by the suppression of ex-farmgate prices by slaughtering and meat processing plants. Returns to producers thus may fail by a large margin to keep pace with rising costs. Table 9.3: Output of Dairy and Meat Products ('000 tons) 1988-1993 As a consequence, further declines in Item 1988 1989 1990 1991 1992 1993 livestock production may be greater than generally expected. The reduction in Milk 565.9 491.2 431.9 412.0 394.7 397.5 livestock populations over the past two Beef 78.0 71.0 59.9 55.2 56.2 52.4 years can potentially lead to significant Pork 34.3 29.7 22.9 25.7 24.7 6.6 declines in output in the years ahead. However, such trends can be reversed Lanb & 28.7 26.2 20.0 18.6 17.6 18.1 relatively quickly, as the reproductive Goat capacity of the national cattle herd has Chicken 39.5 40.3 42.0 33.2 12.1 4.0 not yet been reduced significantly, and Eg 618.1 561.4 517.9 485.0 252.2 189.0 sheep, pig, and poultry populations can (millions be rebuilt relatively quickly due to their units) short generation intervals. Source: Ministry of Agriculture. LivestockSector 37
B. LIVESTOCK PERFORMANCE AND FEEDING EFFICIENCY
9.5 Overall livestockperformance in Armenia in the 1980s was only about one-third of that achievedin Western countries, but dropped further in recent years to currently no more than about 25 % that of Western standards. Mortality rates on the order of 10% for cattle, over 40% for sheep & goats, and around 30% for pigs and poultry, are unacceptablyhigh. Lack of both heating and lighting has particularlyaffected the country's poultry industrywhich, under Armenia's climatic conditions,requires year-round heating for broiler chicks and young pullets, and six months for all other poultry. Thus, about 80% of all broilers succumbedto cold in early 1992; and the overallmortality for all commercially held poultry was estimated at 47% for 1992. Mortality rates, particularlyfor cattle and sheep however, decreasedsignificantly in 1992 and 1993. This positive development is undoubtedly one of the major benefitsof privatizationof livestockproduction. As regards fertility rates, these are currentlyonly about two-thirdsof those commonin Western countriesfor cattle and sheep, and one-third for pigs. Moreover, between 1987/88 and 1992, annual milk production per cow and ewe dropped by about 16%, fertility rates for cattle, sheep/goats and pigs fell by 10%, 5%, and 27% respectively, while average slaughterweightsfor cattle, pigs, and broilers decreased by 12%, 17%, 40% respectively, and egg productionper hen per year dropped by 75 % during the same period.
9.6 In additionto the abovetechnological shortcomings of the large livestockfarms, livestock productionby both large and small private/individualproducers suffers from constraints, which are not under the control of producers, the three major ones being:
* producer cost increases between 1989 and 1994, which rose to 50% higher than ex- farmgateprices;
* substantialtime-lags in paymentsby State marketing and processingenterprises which, in times of high inflation, have a devastatingimpact on profitability; and
* most importantly,depressed consumer demand and output prices due to low consumer purchasing power.
9.7 Feed conversion ratios, the most important bio-economic parameters in livestock production,are presentlyonly about 40 % of those reached in Western countries. This poor performance is not just associated with private producers. On still functioning Social Sector broiler farms, for example,80 day old birds reach only about 800 grams of liveweightat slaughter, comparedto "Western" broilers, which reach 1.7 to 2.0 kg liveweightat 45 to 52 days of age. Similarly, pig fatteningtypically requires 12 to 15 months to reach about 75 kg slaughterweightswith lean meat carcass contents in the order of no more than 40% to 45 %.
9.8 Improvingfeeding efficiencycould dramaticallyimprove profitability. Under prevailing conditions,feeding one additionalkg of soybeanmeal equivalentcould replace at least two kg of energy feed grains and up to four kg of bran in pig rations. Simultaneously,fertility rates and daily weight gains would increase,and mortalityrates and disease incidencewould drop. Moreover, fatteningperiods could be shortened by about 50% if optimal feed formulas were applied, thereby substantiallyreducing fixed and variable costs per livestockunit. Under the present scenario of deficient feed supply, it would make perfect economic sense to: (a) further reduce livestock numbers in order to optimize the use of 38 Chapter 9 domestically available limited protein feed, energy grain, and forage resources; (b) increase imports of feedstuffs, namely protein meals and essential feed additives; and, (c) substantially expand cultivation of high-protein content grain and forage crops.
C. THE FEED BASE
Forages
9.9 In the past, forage crops were given low priority compared to directly marketable field crops. Forages, including natural grasslands, received low investment priority and were not subsidized, or were subsidized much less than the marketable crops. These made them expensive feedstuffs. As a result: (a) per ha yields of forage crops remained well below those normally found in Western countries under similar agro-ecological conditions; (b) modern forage crop production systems and rational grassland management technology did not develop; (c) large amounts of imported feedgrains and protein meals became a heavy burden on foreign exchange reserves; and (d) heavily subsidized manufactured feedstuffs were overused.
9.10 Forage crops in the 1980s averaged about 260,000 ha--almost 60% of all arable land; but then declined to 156,000 ha in 1992, or 35% of arable land. In 1992, perennial forage crops accounted for about two-thirds of total forage crops, annual forage crops for 28%, silage crops, mainly forage maize, for 5.5%; and fodder roots for the remaining 0.5%. Yields of most forage crops are only about 25% or less, of those reached in Western countries. In addition to forage crops, virtually all the marketable field crops provide either grains and/or agro-industrial by-products for livestock production, such as straws and stovers, brans and pollards, sugarbeet tops and pulp, potatoes, and oilseed meals or cakes. Forage crops produce succulent feedstuffs (green chop, silage, fodder roots, and grazing) and roughages (hay, haylage, and high protein-content green meals), and in Western countries, are used in almost their entirety for ruminant feeding. In Armenia, however, due to chronic shortages and the relatively high cost of feed grains and manufactured feedstuffs, they are traditionally and in recent years increasingly fed to monogastric animals (poultry and pigs). This is one of the major reasons for the poor and declining performance of poultry and pig production in the past several years.
9.11 Perennial Forage Crops. In 1992, perennial forage crops, mainly esparsette and alfalfa grew on about 103,500 ha (down from over 140,000 ha in the 1980s). To save on replacement costs, particularly on costly seeds, replacement rates of perennial forage crops have been significantly delayed in recent years. If these delays are not corrected, the production of these forage crops will decline further in both per ha yields and planted area. In addition, it is important that the area of perennial forage crops be expanded from the currently 96,000 ha to at least 140,000 ha (the area in the late 1980s) and productivity improved. These changes would reduce the country's substantial protein feed gap as well as help sustain soil fertility. Per ha yields of perennial forage crops could be about doubled with improved, imported varieties (particularly for alfalfa with fusarium resistant varieties), more optimal input levels (namely phosphatic fertilizers, herbicides, pesticides, seed inoculum with rhizobium ssp. nitrogen- fixing bacteria), and more appropriate replacement rates.
9.12 Annual Forage Crops. Until 1990, the area planted with annual forage crops remained around 70,000 ha, but then dropped to 62,000 ha in 1991 and 43,000 ha in 1992. With about 45,000 ha per year, cereals (mainly spring barley, some winter barley, wheat, and oats in the higher laying parts of the country) were the most important forage crops, followed by oats/vetches and fodder peas/barley Livestock Sector 39 or oats mixtures (about 15,000 ha). The roughly 10,000 remaining ha are being cultivated with annual grasses and clovers (namely Trifolium rubra and vulgaris in the Ararad plain) and their mixtures.
9.13 Much could be done to increase the contribution of annual forages to the nation's total feed supply. These opportunities include: more cost-effective cultivation techniques such as increased undersowing, and application of no- and minimum tillage; introduction and testing of new higher productive annual forage plant varieties, including sudan grass, sorghum x sudan grass, forage millet, and sweet sorghum; growing of mixtures such as summer rape with sorghum x sudan grass; greater utilization of winterrape to permit early harvests; and greater attention to the growing of soybeans under irrigation, mixtures of fodder peas with other fodder plants and triticale in the higher altitudes.
9.14 In summary, in order to improve soil fertility, reduce application of nitrogen fertilizers, and raise nutritive values, annual forage legume production should be substantially expanded. Mixed planting of legumes, such as vetches and peas with spring oats, barley and annual grasses would serve that purpose. Cultivation of fodder sorghum and sorghum x sudangrass should also be developed and expanded.
Permanent Grassland
9.15 Modernization of forage production and its increase in yields and area is the single most important means to substantially reduce livestock production costs and sustaining soil fertility. This will require appropriate supplies of up-to-date inputs (such as seed materials, herbicides, phosphatic fertilizers, and inocculants), machinery and equipment, and hay, haylage and silage storage facilities. It will also require introduction of, and comprehensive adaptive research with, higher productive legumes (namely alfalfa and esparsette), grasses, forage sorghum/ millet and sorghum x sudangrass, and forage maize (namely short-term vegetation hybrids for the higher altitudes), fodderrape, fodderroots, mustard, topinambur, fodder peas and triticale (an apparently promising crop for higher altitudes).
9.16 Grassland feed- Table 9.4: Supplies of Forage-type Feed ('000 tons) in Armenia has the most important 1988-1993 producing capacity in Armenia (Table 9.4) Over 1988 1989 1990 1991 1992 1993 800,000 ha, representing Grass 796.6 467.6 517.9 961.1 914.3 909.2 almost 60% of Armenia's total agricultural land, is Hay 266.3 109.6 194.5 279.4 272.3 227.4 permanent grassland, of Grass Silage 956.0 531.6 524.0 411.9 107.5 29.3 which over 75 % is above 1,500over75m altitud, w e Maize Silage 455.2 177.3 247.2 160.1 33.9 8.0 1,500 m altitude, where response to grassland Fodder Crops 149.4 74.3 46.6 30.0 5.6 4.7 fertilizationandimprovement Grass Pellets 5.2 3.0 1.5 1.24 0.03 - is limited. About 75% of all Source: Ministry of Agriculture permanent grassland is under communal land ownership; and another 14% is State reserve land, available for communal grazing. Only about 5% of permanent grassland has been improved, an additional 10% is in relatively good condition, while the remaining 85% is unimproved. 40 Chapter9
9.17 Poor grassland management and overgrazing has led in many instances to depletion of herbage species (with consequent low digestibility values) and severe sheet and gully erosion in many parts of the country. About 60% of permanent grassland is currently affected by erosion, and 11 % has already become unsuitable for grazing due to erosion and brush/weed infestation. Grazing management and grassland maintenance, formerly carried out by State and collective farms, have practically ceased; and adherence to grazing control measures prescribed by Rayon and municipal authorities has reportedly significantly decreased. This, together with the likelihood that the number of grazing animals (as in similar countries) is expected to increase substantially in the years ahead as a result of privatization, is a "timebomb". If not corrected in time, overgrazing will lead to ever increasing declines in grassland productivity and to severe soil erosion over large parts of Armenia's grassland resources.
9.18 Measures to arrest overgrazing (and hence, substantially reduce soil erosion), while simultaneously improving grassland productivity, should include: (a) grassland development and maintenance through fertilization, liming, controlled and rotational grazing, reseeding, weed and shrub control, and drainage works; (b) a substantial increase in the presently nominal grazing fee; and most importantly; (c) the granting of clear-cut ownership or long-term (25 to 50 years) grazing rights to individuals. For Armenia, such rights should be given first of all for the communal pastures surrounding rural settlements, covering about 340,000 ha; and thereafter, also for about 260,000 ha of higher-altitude summer pastures (where livestock can graze for three to four months per year). Respective legislation should be initiated immediately and passed as early as possible, and staff required for the implementation of the legal framework appointed.
9.19 Know-how in grassland improvement and more rational management exists in Armenia at the Institute for Livestock Breeding and Forage Production, which has elaborated specific recommendations for grassland improvement in the lower rainfall areas with drought-resistant grasses and a combination of native and exotic legumes, such as alfalfa, and in the northern, higher rainfall pastures with European-type grasses, esparsette and clovers (which can increase yields several times over). In contrast, the economics of grassland intensification are not well researched and understood. For example, optimal economic intensification levels and the relative profitability of grassland development versus forage (particularly forage maize and sorghum) and crop production would need to be determined for the different agro-ecological zones of Armenia.
9.20 At this stage, it is quite doubtful whether the farming community will invest in grassland improvement in the near future, given the prevalence of communal ownership and unclear ownership rights, the limited interest and practical experience in grassland improvement and management, the prevailing uncertainty as regards actual production costs and marketing scenarios for livestock products, as well as the comparatively high cost and lack of inputs, fencing materials, stockhandling facilities and meliorative works. The generation of high yielding grassland from damaged arable land, degraded pastures and wetlands requires high investment and, therefore, will be a slow process. Market forces, however, will undoubtedly encourage the conversion of arable land on erosion-prone slopes into permanent grassland. Wherever economically feasible, grassland development should be carried out with vigor to substantially increase the supply of roughages with good protein content, while simultaneously reducing soil degradation and erosion. LivestockSector 41
D. MAJOR PRODUCTION SYSTEMSAND RECOMMENDATIONS
Cattle
9.21 All cattle are double-purpose(milk and meat) breeds. About 46% are CaucasianBrowns, 6.5% Holstein Friesian- and 2.3% Brown-Swiss-typecattle; the remaining45% consist of a variety of breeds, including Kostromskaya,Lebedinskaya, Carpathian Brown, Red Lithuania, Red Estonia, Red Steppe, some Simmenthal,and variouscross-breeds. By Western standards,the overall geneticpotential of the national cattle herd is low, as only negligible amounts of breeding animals, frozen semen and embryos have been imported from the West during the past decade and, except for a small number of imported bulls, none of the other bulls have been appropriatelytested for milk. Even so, drastically improved feeding and managementregimes would quickly increase cattle performance. With expected improvementin feeding and managementpractices as a result of privatization, acceleration of genetic progress will howeverbecome essential in the years ahead. Given the relativelylong generationinterval of cattle, breed improvement programs should thus be intensified immediately by a combination of improvedsemen technologyand importationof breeding bulls, frozen semen and, eventually, embryo transfer. This would be a cost-effectivemeasure to raise the profitabilityof dairying.
9.22 Dairving. Milk is producedmainly by small individualproducers with one to five cattle each. In addition, there are four State breeding farms with a total of about 1,250 Brown Swiss cows, and one collectivefarm with 500 HolsteinFriesians. A relativelysmall, but increasingnumber of former State and collectivefarm specialists,namely livestockspecialists and agronomists,have also bought (on credit) former collective dairy barns with cows and progeny. These average 50 to 100 cows per specialist, whichthey manageindividually or as small StockholdingCompanies. Private milk production thus is playing an increasinglyimportant role, representingan estimated 97% of total milk and 96% of total beef productionin 1992 and 1993. A large majority of dairy cattle are kept in dry lots during most of the year, but have access to grazing areas surroundingvillages, and on summer pastures in the hilly and mountainousareas of the country during four to five months of a year. Averagemilk productionper cow per year dropped to only about 1,500 liters of milk in 1993 (down from over 1,800 in the late 1980s). Few farms reach more than 4,000 liters, and the better farms produce between 2,500 and 3,500 liters. Many of the larger State and collectivefarms had formerly high cow replacementrates of up to 33% per year, mainly due to mastitis and high infertilityrates caused by natritive deficiencies,such as protein, phosphorus, and trace-minerals. With continuing privatization of the dairy industry, the incidenceof mastitis and infertility as well as mortalityrates have come down substantially.
9.23 All of the larger dairy farms have mechanizedbucket or releaser milking plants; and some of the smaller farms have also small stationaryor mobile milking machines. However, design of milking equipment is obsolete by Western standards. The equipment, together with lack of effective detergentsfor cleaningmilking equipment, are the major reasons for high incidenceof clinical and sub- clinical mastitis. On-farmmilk cooling, milk collectionand transport is handicappedby lack of energy and up-to-dateequipment and facilities,resulting in substantialreduction in milk quality andmilk losses.
9.24 Recommendations. Improving animal husbandry practices will require: (a) continued privatizationof profitable livestockproduction assets; (b) appropriate on-farm investments, including provisionof modern, small-scalemachinery and equipmentfor forage production, milking,milk cooling, collection and transportation; and, (c) comprehensivetechnical assistancesupport. 42 Chapter 9
9.25 Of particular importance is the privatization of the remaining large State and former collectivedairy farms, due to their disproportionatelyhigh fixed, input, labor and overheadcosts. These farms should be either subdivided into smaller, self-confinedunits, and be given the required land, machinery, equipment,and storage facilitiesto generate all the roughage they need as well as, ideally, most of the feed grains required for balancing good quality feed rations, or be dissolved, with cows being distributedor sold to individualhousehold producers and private farmers who have the knowledge and facilitiesto becomeviable dairy farmers.
9.26 Increasedmilk production to satisfy strong domestic demand for dairy products and to substitute importationof milk powder and other dairy products is the Government's major livestock developmentgoal. This can be achievedby emphasizingforage reserve production(particularly silage), intensifying breed selection programs, improving milking technology and milk collection services, creating milk producer associations/cooperativesand private cattle breeding associations, and by calf rearing with milk replacers. The latter measure alone would increase domestic milk supply by 10% to 15% and, in addition, improve calf rearing performancesubstantially. Low milk quality would need to be improved by replacementof outdated milking equipment and milk handling facilities, provision of required spare parts and detergents, training of milkers, and combat of tuberculosis which, reportedly, is a major human health hazard. Being labor intensive,dairying is well suited to profit from available cheap labor, and to combat present and expected future high under- and unemploymentlevels in the country.
9.27 Beef Production. There are no beef breeds in Armenia. Beef production is thus a by- product of the dairy herd. In the past, male calves, including those of individualcattle owners, were moved to large State and collective farm feedlots, initially fed with milk powder/milk replacers, if available, and/or whole milk and concentrate feed; and then stall-fed on relatively large amounts of manufacturedconcentrate feed and low quantitiesof usually poor silage and hay. Due to lack of feed, young bulls were slaughteredat low slaughter weightsof around 350 kg only, which they reachedduring 18 to 24 month-longfattening periods, instead at more optimal slaughter weightsof 450 to 500 kg after about 15 months of fattening. Similarly, due to lack of feed, cull heifers and cull cows are often not finished. This is a wasteful use of precious fatteningpotential. However, the feedlots have been shut down due to lack of profitability.
9.28 Recommendations. The intensive beef production systems of the past need to be abandoned. Lean stock shouldbe exported or, if low cost feedstuffsare available,finished on-farm or in existingprivatized feedlot facilities. The latter should howeverbe encouragedonly if sufficientland, machineryand equipment,and the technical/managerialknowledge is availableto produce all the required roughages,namely forage maize, on site. The efficiencyof beef productionshould be improved by: (a) maximizingthe feeding of good quality roughages; (b) reachingoptimal slaughter weightsof both young bulls and cull cows/heifers; (c) expandingsingle calvingsystems for heifers; (d) inseminatingsome 10% to 15% of dairy cows with semen from specializedbeef breeds, includingthe Simmenthal; and, (e) diversifying beef production, whereby raising of young stock is done extensively in the higher altitude/rainfallareas, and off-take is finishedduring a four to six months fatteningperiod in the lower- lying, more fertile agriculturalareas of the country. Raising of replacementheifers should also follow this productionpattern. LivestockSector 43
Pigs
9.29 Private producers (raising one to five pigs per year) and the new cooperatives with currentlyrelatively smallpig herds accountedfor productionof 81 % of all pork in 1992. Production in the private sector declined dramaticallyin 1993, to about 20% of the 1992 levels, thus rendering private productionat only 60% of total Armenian pig production. Only three State pig breeding farms with a 1,200 sow breeding capacity remain. Due to low profitability,shortages, high cost of feed, and lack of consumerdemand, all the large pig farms are producingwell below installedcapacities or have been shut down. Pigs on large pig complexes are kept on fully mechanized production systems, including mechanizedfeeding (or labor-savingmanual feeding devices), automatic watering facilities, and slurry removal systems. Smaller, private pig raisers operate without any significant investment in mechanization,except for watering devices in some cases. They generally have few sows and often obtain their piglets from the large pig breeding farms.
9.30 Due to attractive prices for lard, consumer preference of fatter pigs, the prevalenceof low protein-/lowenergy contentfeedstuffs, and "outdated"pig populations,Armenia produces much fatter pigs (with lean carcass contents of 40% to 45%) than Western countries (52% to 59%). With expected future consumerpreference for leaner meat and an improvementof the feed basis, breeding farms could switch relatively quickly to leaner pigs with better growth performanceand feed conversion ratios by importing relevant boars, expanding artificial insemination,and engaging in appropriatecrossbreeding programs.
9.31 Recommendations.The poor performanceof today's pig industry is associatedwith low quality feedstuffs,insufficient veterinary supplies, and outdatedpig breeds in the Western sense, and low profitability. The remaining large pig farms shouldbe closeddown. Most of the slurry disposalsystems of the larger pig raising farms and large pig breeding/fatteningcomplexes are not environmentallysound. Being a net importer of feed grains, Armenia's potential for pig fattening is low. Vertical integration should be developed in the years ahead, whereby private feed mills and pig processingplants provide feed, piglets, and veterinary/technicalassistance to private producers, and market/processtheir finished pigs under contractualarrangements attractive to producers. However, no direct Governmentintervention is recommendedbecause, as in other countries, private pig producers are expected to react quickly to market signals, if the price for pork is "right".
Sheep
9.32 Almost all sheep are raised today by individualsunder extensivegrazing systemsaround rural settlements and on mountain summer pastures, which require however substantial amounts of expensive feedstuffsduring the long winter period. Due to privatization, virtually all ewes are now milked, comparedto only about 60%, when over 50% of all sheepbelonged to State and collectivefarms. Milk yields, averaging no more than 10 to 12 liters per ewe per year in recent years, are low by internationalcomparison, and droppedto only eight liters per ewe in 1993. Sheep raising suffers in many areas from increasingshortages of feed, as large communaland cooperativefarm grazing areas have been reportedlyseverely degraded by overgrazing. This is exacerbatedby inadequatesupplies of winterfeed. Parasitic skin diseases and hoof rot are widespread. 44 Chapter 9
9.33 Armenia has a long tradition in sheep raising, which is now almostexclusively done by the private sector. Only one State sheep breeding farm with about 1,500 sheep is left. Sheep breeding has concentrated on improving native sheep (mostly Balbas-Fattail, representing 25% to 30% of Armenia's sheep population, and North Caucasianand their crosses, accountingfor the remaining70% to 75%) with imported Merino-typesheep (such as the Corriedale and Lincoln). The primary breeding goals have been the refinementof wool quality and adaptabilityto environmentalconditions. Meat, milk and fertility performancehave received less attention. Despite efforts to improve wool quality, semi- coarse and coarsewool-type sheep still have a 26 % share, semi-finewool-type sheep 53 %, and fine wool- type sheep only about 21% of the country's sheep population. Because of low internationalprices for wool and the shutting down of the country's major wool processing facility, marketing of wool at attractiveproducer prices meets increasingbuyer resistance.
9.34 Recommendations.Armenia has a comparativeadvantage for production of sheep milk products, for which it has centuries-longtradition, and for which a ready domestic market and good export prospects exist. However, it has not exploited this advantage. In addition, the country is strategicallywell located for exports of live animals to the Near and Middle East. Switching to more prolific sheep with better milk and meat merits than those of the country's present sheep populationsis thus of utmost importance. This can be done relatively quickly by importing rams with desired characteristics. Such importationshowever should only benefit areas and farms with good feeding and managementconditions. "Modernization"of the country's sheep industry would be one of the major means for incomegeneration in the country's backward, hilly and mountainousareas.
9.35 Avoiding the overstocking of pastures is the most important way to increase the productivityof the sheep industryin the long run. This can only be done efficientlyby granting clear-cut ownershiprights or long-termgrazing rights to individuals. In addition,parasitic skin diseaseswill need to be controlledby regular dipping or sprayingwith insecticides,and foot rot needsto be treated on time. The use of more prolific, meat- and milk-typesheep than those dominatingat present (which emphasize wool production)should be encouragedin more temperateareas of the country. Switchingto such sheep can be done relativelyquickly by importingrams with the appropriate characteristics.
9.36 Goat Breeds and Production. All goats are in private hands, and are kept in small numbers on individual household plots and, usually together with sheep, on grazing on communal pastures. Most dams are milked. Opportunitiesto increase the goat population should be examined. However, larger herds could lead to overgrazing,a well-knowncharacteristic attached to goat keeping. This characteristicargues against expanding their numbers, particularly in the lower rainfall, erosion- prone, hilly areas.
Poultry
9.37 Large-scalepoultry production, with capacitiesto produce 30 million broilers and 450 million eggs per year, has been discontinued. The dependence of the industry on importation of feedstuffs(about 90% of total poultry feed consumption)and on heavilysubsidized feed and energy made it extremelyvulnerable to decreasedavailability and higher prices for energy and feeds. With a combined capacityof only about 500,000 broilers and layers, collectivefarms were never major players in poultry production. Due to low profitability,collective farms almost completelyleft poultry production in the late 1980's, leaving commercial poultry production exclusively to PTITSEPROM. State broiler production virtually ceased in 1992 due to lack of feed and energy (reportedly 80% of all broilers LivestockSector 45 succumbed to cold). Only about 275,000 layers and 69,000 pullets were left as of mid-1993. All grandparent stock was culled in 1990 and all parent stock in 1992.
9.38 Private poultry producers were expected to produce virtually all poultry meat and over 80% of eggs consumed in Armenia in 1993. With the exception of a few laying farms, all the other former 27 large State (PTITSEPROM) poultry farms (composed of 13 broiler farms, six laying farms with about two million layers, four breeding farms, four mixed broiler/layer farms, and six hatcheries) are closed down.
9.39 Importation of ingredients for the manufacturing of poultry feed has been stopped in 1991; and the keeping of grandparent and parent stock was phased out in 1990 and 1992 respectively so that the country is now completely dependent on the importation of hybrid hatching eggs and/or day-old chicks of relatively low genetic value from Russia, Belarus and the Baltic republics. In addition, many of the large complexes need comprehensive rehabilitation and modernization at unjustifiably high costs.
9.40 Private poultry producers raise their chicken with backyard technology, primarily for egg production, averaging no more than 80 to 100 eggs per year per hen. They also raise virtually all of the relatively few ducks, geese, turkeys, and other fowl using the same technology. In 1993 they purchased slightly less than one million day-old chicks from State hatcheries, down from about three million per year up to 1991, and one million in 1992. Private poultry operations, hatching their own eggs, also shrank substantially in 1993, due to the precarious overall feed supply situation of the country.
9.41 Recommendations. There is little that can be done at present to stop further contraction of poultry production. As with pork production, vertical integration between input supply, marketing and processing enterprises and private broiler and egg producers should be encouraged once poultry production again becomes profitable. For the time being, hybrid hatching eggs and day-old-chicks will need to be imported. With increasing profitability, private poultry producers are expected, like in other countries, to take up intensive, modern poultry production, including importation of grandparent and parent stock as well as hatching eggs and day-old chicks, high quality feedstuffs, and modern, energy- efficient equipment.
Other Livestock and Fisheries
9.42 Although on an aggregate level not very important, other livestock production systems, such as rabbits and bees are an important source of income and nutrition for a large number of individual producers. Their increased production should therefore be supported.
9.43 Armenia has considerable natural resources for inland fishery; lake Sevan and about 3,000 ha of fishponds, including one breed selection unit of 170 ha. Carp, whitefish and trout are the main fish species, the latter representing traditionally about 10% of the yearly catch (or about 25% of total trout production of the former FSU). Fish production peaked in the late 1980s and early 1990s at about 7,500 tons per year, but tumbled to about 4,250 tons in 1992, mainly due to the high cost and lack of both high protein content feed (ideally at least 23 % of crude protein), low energy (over half of fish feed consists currently of wheat bran) and pelletized feedstuffs. Trout production is particularly affected by the drop in high quality feed supplies, down by 75% in 1992 compared to 1990/91. Fish production is under ARMRYBA, an independent stockholding company, employing a total staff of about 1,300 persons. 46 Chapter 9
9.44 Animal Traction. The substantialincrease in the number of horses in 1992 (+33%) is a good indicatorfor the importantrole draft horses and other draft animals(such as mules, donkeys,oxen and cows) will need to play in the future, under a scenario of relativelysmall farm sizes and the relative high cost of fuel. It will thus be important for the country to improve the present status of draft power technologyvia relevantbreed selectionand breeding programsas well as by developmentand importation of more efficientdraft implementsand harnesses than the ones commonlyused at present.
E. LIVESTOCK SUPPORT SERVICES
Veterinary Services and Veterinary Input Supply Services
9.45 Veterinary Services. These services are managed and executed by the public sector through the Veterinary Department of the Ministry of Agriculture, 41 Rayon-levelstations (typically staffed with about eight veterinarians, two veterinary technicians, one pharmacist, and three to five support staff) and 321 veterinary posts (staffed typically by one veterinarian,one veterinary technician and one to two support staff). There is also a central veterinary diagnostic laboratory in Yerevan, diagnostic laboratories in each Rayon, as well as 12 quarantine stations. The number of veterinary personnel is declining. In June 1993 there an estimated 2,067 veterinarians. As of June 1, 1994, the state VeterinaryDepartment employed 805 veterinarians,864 veterinarytechnicians, and 386 veterinary assistants. An estimated850 veterinarians,mostly former State and collectivefarm employees,lost their job in the past year as a result of privatization.
9.46 Veterinaryservices are responsiblefor carrying out national disease control programs, veterinaryand diagnosticservices, sanitarycontrol of meat and milkprocessing plants, relateddistribution channels, and quarantinecontrol. In the past, major emphasis was given to the eradicationand control of a number of pre-defined, mainly epizootic diseases. This effort has been quite successful. The combinedimpact of privatizationof the large State and collectivefarms, increasingmalnutrition of farm animals, and the severe decline in availability and applicationof veterinary supplies (due to farmers' reluctance to purchase drugs since they are accustomed of obtaining these free of charge), has substantiallyincreased mortality rates in the past years and the risk of insufficientvaccination cover. Farmers are reportedly only ready to pay for antibiotics, if at all. This situation, to a large extent, is aggravatedby the poor quality of drugs, medicamentsand vaccines all being procured by the Russian ZOOVETSNAB. As a result, increasedoutbreaks of tuberculosis, brucellosis, foot and mouth disease and hog cholera are being reported; and the occurrence of gastro-intestinaldiseases, respiratory tract infectionsand damagecaused by internal and external parasites as well as by rodents are becomingmore and more widespread.
9.47 Privatizationof veterinary services would be highly desirable. Experience from other countries has demonstratedthat this can lead to increasedveterinary coverage while making veterinary interventionsmore cost-effectiveand affordableto livestockowners. Ideally, private veterinarians(and veterinariantechnicians working underthe supervisionof veterinarians),supported by privatepharmacies, should carry out all clinical veterinary treatments, vaccinations and drug distribution, while public veterinary services would continue to be responsible for diagnostic support, research, quarantine measures, meat, milk and hygienic inspection,and policy and monitoringtasks related to animal health. Such a concept is well understood by Armenian veterinarians. Necessary legislation to permit the Livestock Sector 47 opening up of veterinary offices would need to be passed in due course. This is the more important, as many additional veterinarians are expected to loose their job due to budgetary constraints, thus being forced to eventually become private practitioners. The opening up of private veterinary offices in large numbers is, however, quite unlikely at this stage, as private veterinarians could hardly earn a living due to the expected limited willingness of private farmers, the new cooperatives, and household livestock producers to spend on veterinary services.
9.48 Because veterinary interventions, except for drugs and medicaments, are free to farmers, veterinary services (financed at Central level by the Government and at Rayon level by local Government budgets) have extremely severe budgetary constraints. As a consequence, monthly veterinary salaries are no higher than the equivalent of about three liters of gasoline; transport facilities and laboratory equipment have not been replaced for three years; and diagnostic laboratories are functioning only to a limited extent due to lack of reagents, chemicals and spare parts for laboratory installations.
9.49 Veterinary Input Supply Services. This is the responsibility of the Armenian ZOOVETSNAB, an autonomous stockholding company with a staff of 104 persons and branches in 34 of the 39 Rayons. Private pharmacies do not exist.
Livestock Breeding and Artificial Insemination
9.50 The Department for Livestock Breeding and Artificial Insemination (A.I.) under the Ministry of Agriculture is responsible for operation of the national breeding program for all livestock species, except for poultry, which comes under the Ministry of Agriculture's Poultry Production Division. For that purpose, the Department had in the past 41 cattle breeding farms with about 41,000 cattle (of which 11,000 cows), 18 sheep breeding farms with 77,000 sheep (of which 45,000 ewes), and five pig breeding farms with 16,000 pigs (of which 1,300 sows) as well as 6 Artificial Insemination (A.I.) Centers and one A.I. post in each of the 39 Rayons. The national breeding program includes milk and meat recording, testing, data processing, selection and mating, and A.I. Private breeding associations do not exist.
9.51 In the past two to three years, breed selection and A.I. have virtually collapsed. The total number of inseminations has fallen from 97,700 in 1991 to 9,500 in 1993. Only four breeding farms are left. All testing for milk and meat has ceased as the majority of test bull daughters were slaughtered or are no longer traceable. Semen collection has ceased completely as the Departments number of breeding bulls dropped from 120 to 16 by mid-1993. A.I. for cattle fell to almost zero in the first six months of 1993 (compared to almost 200,000 or an A.I. coverage of over 95% in the late 1980s), and to zero for pigs (most sows of the large pig farms were formerly inseminated) and sheep (about 500,000 sheep were inseminated in the late 1980s).
9.52 Because of the large herd sizes, breeding facilities were excellent in Armenia, as genotype/environment interactions were minor. But this potential has never been fully used due to lower bull selection intensity, and less strict dam/sire selection and progeny testing than in Western countries. Except for a donation by the USA of 10,000 doses of frozen semen (60% Holstein Friesian and 40% Brown Swiss) in 1990, and of 1,000 dairy animals (400 Brown Swiss, 400 Simmenthal and 200 Holstein Friesians) as well as 1,000 Merino-Landrace sheep from Germany in 1988, Armenia has imported in the past only very limited numbers of Western-type breeding stock and frozen semen. The last boars, for 48 Chapter9 example, were imported in 1986. The genetic potential of the country's livestock population is thus quite low; and rapid, cost-effective genetic progress can only be made by importation of frozen semen and a limited number of breeding bulls (combined with the introduction of modern semen technology) for cattle, boars for pigs, rams for sheep and goats, and eventually some parent and grandparent stock for poultry.
9.53 Armenia has to start from scratch in redefining and implementing least cost breed improvement schemes for all livestock species. For this purpose, international consultants, specialized in breed improvement and A.I., would need to:
* advise on how to substantially increase semen production per imported bull from well below 10,000 doses to at least 25,000 doses;
* advise on most cost-effective data recording systems; and
* advise on reorganization and most cost-effective implementation of breed improvement programs and provision of A.I. by the Department of Livestock Breeding and A.I. and, possibly, by private breeding associations, dairy cooperatives or dairy plants, as well as by private inseminators, and importers/distributors of frozen semen.
9.54 The most immediate task for the Government regarding breed improvement is however to stimulate the use of A.I. In September 1994 there were 705,100 doses of frozen cattle semen in the country, farmers use own bulls to avoid the cost of insemination (about 800-1,000 Drums per insemination) which they consider as being excessively high. This trend not only substantially decreases genetic merits of future cattle populations, but also increases the risk of spreading diseases. It is therefore recommended that the cost of A.I. be reduced to a level attractive to farmers and, in addition, to provide the A.I. service with sufficient funds for proper functioning, namely for provision of liquid nitrogen and Table 9.5: Per Capita Consumption transport facilities. of Major Livestock Products
Category Unit 1985 1992 1993 F. LIVESTOCK PRODUCT CONSUMPTION Consumption AND DEMAND Beef kg 22.7 7.4 6.7
9.55 Per capita consumption of livestock Pork kg 10.2 3.6 3.2 products in Armenia peaked in the late 1980's, when it Poultry Meat kg 9.3 7.1 6.4 reached about half of Western European levels for meat and eggs and, due to traditionally high butter consumption, even higher levels of milk equivalents Total Meat' kg 49.0 20.0 18.0 (Table 9.5). Since then, however, consumption has Cow Milk liter 385 107 109 declined significantly from 1985 consumption levels to only 20 kg of meat, 122 liters of milk and 65 eggs per Sheep Milk liter 53 15 15 capita in 1992 - down by about 50% for meat and eggs, Total Milk2 liter 438 122 124 and 70% for milk. An additional drop in per capita consumption of meat products occurred in 1993, while gg no. 148 65 73 the consumption level of other livestock products Fish kg 4.9 3.9 4.2 slightly increased or remained steady. Quality of 'Includes edible offal 2 Milk equivalent Source: Ministry of Agriculture LivestockSector 49
livestockproducts is, however, well below that of Western standards. For example, egg weightsare about one-third below those reached in Western countries). Thus, actual Armenian consumptionlevels must be significantlydiscounted when comparedto Western standards.
9.56 Livestockproducts (namelyprocessed meats), although limited in the number of items offered, are availablein farmers' markets, where demand is determined by purchasingpower. Even in farmers' markets, however, shortages of milk and dairy products are reported.
9.57 Procurementof milk has been particularlyaffected by recent events: in the past, about 740 collectiveand State farms with average herd sizes of about 400 cattle each (the largest complexes having 1,000 cows) supplied milk to State processing plants. By mid-1993, the number of these farms had dropped to only four with a total number of about 2,000 cows. Thus, the State Milk Processing Consortium POGOSJAN, which owns 40 dairy plants and was able to collect between 350,000 and 365,000 tons of milk per year up to the early 1990s, collectedno more than about 30,000 tons in 1993, when it employedabout 2,500 people, comparedto about 7,000 people in the late 1980s.
9.58 Severe shortages of livestock products, particularly for the poorer segments of the population,will occur with increasedfrequency because producers are more hesitantthan ever before to deliver to the State due to: (a) paymentsfor delivered livestockproducts are often delayed; (b) the fact that the State has only "little to offer" in terms of inputs and subsidies; and, most important, (c) State procurementprices for on-farm produced raw materials (such as live animals and milk) are not very attractiveto producers. Producersand smallprivate entrepreneurs are thus increasinglytransforming raw materials into high value-added products, such as yoghurt, sour milk, cheese, butter, sausages and processed meats. These products have the advantage of being storable and hence, can be held by producersas a hedge against inflation. Moreover,they are increasinglyused for barter both domestically and across borders. Consequently,supply of unprocessedlivestock products to State agro-processorwill fall further in the months ahead.
9.59 In sum, state procurementof livestockproducts is falling short of consumptionneed by a large margin. Some of this shortfall will be made up by private producers and small private agro- processors. Severeunsatisfied demand for livestockproducts, particularlyat the lowerend of the market, traditionallysupplied by State channels, is occurring as producersare switchingto producingprocessed, highervalue-added livestock products, and small, privateprocessors are competingfor raw materials with the State agro-processingindustry.
G. ECONOMIC ASPECTS OF LIVESTOCK PRODUCTION
9.60 The most serious problem affectinglivestock production is low profitability,particularly in regard to large-scale,intensive poultry, pig and dairy operationswhich, with few exceptions,have shut down, drastically scaled down operations, are going out of business, or are big money losers. High investment and operational subsidy levels and distorted prices in the past fostered: (a) overuse of feedgrains/manufacturedfeedstuffs and the neglectof cheaperfeed resources,such as pastures/meadows, forage crops, and agro-industrialby-products; (b) capital-intensiveand labor-extensiveoperations; (c) waste of equipment,energy and other inputs, such as veterinary supplies; and, (d) concentrationof large numbersof animals. These large enterpriseshad serious managerial, animal health, and environmental 50 Chapter 9 problems, as well as high internal and external transport costs, and difficulties in operating efficient feeding, milking and manure/slurryremoval technology. These productionsystems cannot be sustained under the emergingrelative price structure.
9.61 In addition, both large and small private/individualproducers suffer from three major constraints:
* increasesof input costs between 1989and 1992 50% greater than increases in ex-farmgateprices;
* substantialtime-lags between delivery livestock and receipt of paymentsfrom State marketingand processing enterprises, (in times of high inflation, these lags have a devastating impact on profitability); and, most importantly,
* depressedconsumer demand and therefore depressedfarm product prices.
Large-scaleOperations
9.62 The level of mid-1993ex-farmgate prices fell far short of prices that would be profitable for large-scalecommnercial livestock operations (Table 9.6). For example, rough calculationssuggest that five units of feed are required to produce one unit of broilers in Armenia. Feed constitutes approximately70% of production costs. Therefore, with 140 R per kilogramof feed, feed valued at 700 R and another 300 R of inputs would be required to produce one kg of poultry. In contrast to this estimated 1,000 R of production costs, the market price was only 800 R. Similarly, the market prices for pork and milk are sharply less than prices that would be profitable for large scale producers.
Table 9.6: Actual and Profitable Farmgate Prices (mid 1993)
Maior Livestock Products (R per kg Liveweight/Milk)
Categorv Feed Price Feed Feed as % FarrnmatePrices (R) Conversion of Cost Profitable Actual Ratio (R) (R)
Broiler 140 1:5 70 1,000 800 Pork 120 1:6.5 65 1,200 900 Milk 120 1:0.7 60 140 110-130
9.63 A useful profitabilityindicator for dairying is the concentratefeed : milk price ratio. In mid-1993it was about 1.0 in Armenia, comparedto about 1.5 to 2.0 in countries with a well-developed, profitabledairy industry. LivestockSector Si
Private Farmers
9.64 Unless profitability of livestock production improves and credit facilities attractive to farmers are made available, the large majority of the emergent private farmers are likely to take up only subsistence livestock production. Most private farmers have only one or two fattening pigs, no more than 10 to 30 poultry, and three to 10 cows; and the few farmers who took over ex-collective dairy barns with about 50 to 100 cows plus progeny are in the process of "going under," due to the high cost of feedstuffs (particularly of bought-in hay) and low relative milk prices. Some may be able to survive if they obtain sufficient land, machinery and equipment, and working capital to produce most of the necessary feedstuffs on site, particularly all the roughages and silage required by their operations. Due to low profitability, there are no large family pig and poultry farms in Armenia, comparable to those found in some of the Eastern European countries, which typically fatten some 10,000 broilers and 50 to 100 pigs per batch, or have 5,000 layers. There are also very few farmers who own more than 15 to 20 cows or 50 to 100 sheep. However, there are quite a few large, migrant sheep herds of several hundred to a thousand head belonging to family groups, often of Kurdish origin.
Households
9.65 Typical household livestock operations may have one to two cows, one female calf/replacement heifer, one to two fattening pigs, and 10 to 20 poultry. In the past, individual households obtained feed virtually free of charge from their respective State and collective farms. They were also quite commonly remunerated with attractively-priced piglets and day-old chicks; and, in addition, had grazing rights on communal pastures and often also on State- and collective farm grass- and stoppel land. Under these conditions, individual household livestock production was highly profitable, generating in many cases the households' major source of income and nutrition. With privatization, most or all these privileges have ceased; but most of these household producers have recently received two ha of additional land. As a consequence, individual household livestock production is expected to grow substantially if output prices are attractive. 52 Chapter 9 CHAPTER 10
AGRO-PROCESSING ENTERPRISES
10.1 The 632 agro-processingenterprises in Armenia consist of flour milling and bakeries; wine and brandy production; preserving fruits, jams, vegetables and dairy products; fish farming and processing; and mineral water, fruit juices, and drinks production. Processing of confectionary,salt, beer, and pasta is also carried out on a smaller scale. All agro-processingis in the hands of the public sector. Only recently, in 1993/94,has the Governmentauthorized private entrepreneurs to establishand operatesmall-scale processing enterprises by issuinglicenses. With the exceptionof some facilitiesunder the control of HICOOP and MOA, most of the agro-processing facilities (estimated at about 600 industries)are under the control of the MOF.
10.2 The industry was developedunder a centrally planned economy during the days of the FSU, and production capacitieswere designedto meet demands in the other Republics. The system did not focus on the efficiencyof use of resources,but concentratedon establishingfacilities to produce food and drink products, the raw material for which, grew successfullythroughout the country, particularly in the Ararat valley under irrigation. Soon after independence,and with the impositionof the blockade, the originalassumptions for cultivating,processing, and marketingof produce were invalidated. Assured markets in the FSU were no longer available and trade routes within the region were blocked. In addition, shortage of power and processinginputs and the lack of subsidizedcredit have accentuatedthe crisis of the industry. Invariably,all the processingplants are sufferingfrom lack of packagingmaterials which were hitherto mainly imported. Followingthe land reform, the linkage with State and collective farms was lost, and with it, the compulsorysale of produce to the State enterprises at fixed prices has also disappeared. In addition, the emergenceof smallholdershas meat that processingplants now have to deal with thousandsof producers, instead of a few State farms, thus requiring costly organizational arrangements. At present, farmers are keen to produce crops which guarantee their food security, and when they sell their surplus, they prefer to negotiate prices on the open market.
10.3 Most of the processing facilities are now in a critical situation and are operating Table 10.1: Design Capacity and Utilization (1993) far belowtheir designed capacities (Table10.1). The figuresbelow provide a picture for 1993,but Industry Design Current the situationis believedto have worsened further Capacity(tons) Utilization in 1994,after the GOA stopped the provision of Meat 88,800 2% subsidized credit. Some processing industries Mixed Feeds 718,000 less than 10%' have completelystopped operations. Dairy Products 354,900 3% 10.4 The agro-processing industry is Canning 156,110 9% also characterized by old and inefficient equipment, some below international sanitary standards. For instance, outmoded equipment Bakery 430,000 55 % results in mild steel contact with products, thus 'estimates reducing their value. The industry also lacks 'the utilization is less because small-scale and home cu c maet.. Little or bakeriesare emergingrapidly commercial management capabilities. Ltlor Source: Ministry of Food and Procurement no progress has been made by the enterprises toward the establishment of market oriented 54 Chapter 10 business linkages, and there appears to be a conviction that everything will be resolved once the blockade is lifted. This misconception will certainly delay the adjustment process and needs to be addressed through a well planned education program. A further problem is that the enterprises are seriously decapitalized. As the value of the Drum plummeted soon after its introduction, so did the deposits of the agro-processing enterprises in the banks and in their clients' accounts. Meanwhile, prices of raw material and inputs have risen dramatically, accentuating the enterprises' difficulty in obtaining sufficient and affordable working capital. Nevertheless, raw material prices and processing costs are internationally competitive. However, the key to successful commercialization of processed products remains quality improvement. This should start from improving the selection of raw material and continue through the processing system up to final packaging. This task will be greatly facilitated by the availability of technical skills and experience in agro-processing.
A. FRUIT AND VEGETABLE CANNING SECTOR
10.5 Armenia has a reputation within the FSU for the production of high quality processed fruit and vegetable products. Observations and a "cutting" of tomato paste at the Artoshat Canning Co. confirm this reputation. The main problems of the sector are:
* obtaining adequate fresh products to operate canneries at higher rates of use. In 1992 the plants operated at 22% of capacity;
* packaging in glass jars with pry-off lids rather than screw on lids;
* obtaining adequate supplies of production materials; and
* the need for consolidations and plant closures to operate the most efficient plants at higher scales to reduce costs.
10.6 The industry is not large by either FSU or western standards. Only 43,526 t of vegetables and 10,593 t of fruits were processed in 1992. However, these figures reflect problems of availability of canning materials including containers, lids, sugar, and salt, resulting from the Azerbaijan blockade, government encouragement of wheat production to ease the bread shortage which is also caused by the blockade, and basic structural problems of plant locations determined in prior years by the government. The vegetable output of the industry is mainly comprised of tomato paste manufacturing. Of the 43, 526 t of vegetables processed, tomatoes represent 42,765 t, or 90% of total industry output. The fruit sector is even smaller, with 10,592 t canned in 1992. Of this amount, apples were 50% of the total, and peaches were 34%.
Number of Factories
10.7 There are 13 fruit and vegetable canning factories in Armenia, of which six account for 90% of capacity, and 84% of capacity used in 1992 (Table 10.2). Five canneries are considered to be "large" by Armenian standards, six are medium to small, and two are very small. All would be considered to be small by standards in other countries. The industry has an engineered capacity of about 370 million conventional cans. The industry averaged 22% of engineered capacity in 1992, but the range Agro-Processing Enterprises 55 in utilization among plants was from a low of 7.3 % Table 10.2: Canning Industry Capacity and for the small cannery at Artek to 61.2% for Airum, Utiliation', 1992 the nation's third largest cannery. The factories are Cannery Annual 1992 state owned and are a part of the Food Ministry, Capacity2 Output except for three small, specialized factories that are private. Of these three, only one factory operated in 4e7e1a8 1992. One of the "private" factories is 80% Hoktemberian 78.28 12,120 privately owned and 20% government owned. Airum 63.50 38.870
10.8 There is a high degree of Masis 54.52 10.410 concentration in the canning industry. Hoktemberian Megri 5.50 0.761 factory accounted for over 43 % of total canned fruit Taush 9.40 output, followed by Airum, with about 20%. Thus, two companies account for nearly two-thirds of the Khapan 2.90 0.305 nation's canned fruit output. Martuni 2.75 0.300
Artashat 70.28 11.250 Fruit Production Gugark 5.10 0.433 Akhtala 57.00 10.9 Armenia produces many types of fruits, but relatively few are canned in significant Artik 10.00 0.734 quantities. In 1992 a total of only 10,593 t of fruit Echmiadzin 3.00 1.475 were produced in the country, of which apples were 50%. Ten canneries produced canned apple Total 409 05 91.700 products, including juice and concentrate. Of these 2 Unit of measurement is one million of conventional ten, the Hoktemberian Cannery produced nearly one- cans half (48%) of total apple products, followed by Source: Ministry of Food and Procurement Masis Cannery with 18%. Five canneries are very small and produce 200 t or less of processed apple products. A total of 3,641 t of peaches were canned by four canneries, with Hoktemberian and Airum being the two largest processors of peaches. In addition, two very small canneries processed 60 t and 3.4 t respectively. Apricots have become a "specialty" canned product in all countries. Because Armenia is reputed to be the historic home of apricots, one would expect to see much more production of this fruit in Armenia than is the case. In 1992 all factories canned only a total of 693 t. Of this volume, nearly one-half was processed by Hoktemberian. In all, eight factories processed apricots in 1991, indicating that the output of the individual factories was very small.
10.10 Armenia's ability to grow a large diversity of fruits indicates the capacity to produce a larger volume of fruits for canning than is presently processed, particularly apricots, peaches, plums, and pears. If Armenia's canning factories are to achieve 50% utilization they will require 150,000 t of fruit, and 300,000 to 400,000 t of vegetables. These volumes are considerably larger than the 54,000 t of fruits and vegetables delivered to canners in 1992. These volumes further declined in 1993 (Figure 10.1) While there are climatic risks, such as freezing weather during blossom time, that affects fruit yields, there are ways to mitigate many of these risks to enable the industry to expand. A part of the problem of the canning industry is that deliveries to canneries are made after the fresh market has been saturated. Thus, canneries are residual receivers of farm output, a situation that is not favorable for a commercial canning industry. Armenia does not produce sufficient volume to export canned products on a 56 Chapter 10 commercial scale and also meet domestic needs. Per capita production canned fruit RawPr Ddvei to MOF Cann.rtes 1991-1993 products is small. There are 2.1 kilos of processed apple products produced per so- ' Tota0Ol-.. capita, 1.45 kilos of canned peaches, 0.27 so -- T-oO ii- kilos of canned apricots and 0.18 kilos of .0 canned pears. Yet, 80% of Armenia's g 3 canned fruits and vegetables output is 20 exported to Russia. Thus, the actual [, amount of these canned items available for 0 j' _ __ - - domestic consumption is much lower than 1991 1992 1993 per capita production figures suggest. Figure 10.1
Vegetable Production
10.11 Even though tomatoes are the main vegetable canned, production is very small from a commercial perspective. The output of other canned vegetables is even smaller. Seven canneries produced vegetables in 1993. Of these, six produced tomato products, which was mainly paste. Four of the tomato canneries account for 99% of the country's processed tomato output. While this appears to be highly concentrated, the largest company processed only 11,586 t in 1992. This constitutes about five day's operations for an efficient tomato paste factory in California. The Armenian tomato factories are small even by comparison to Moldova's, which are also small by western commercial scales.
10.12 Very small quantities of other vegetables are processed. However, the list obtained from the MOF does not seem to be complete. For example, quantities of pickled vegetables including green peppers appear to be missing from the list. The following per capita production of canned vegetables were calculated from MOF data: canned peas (0.21 kilos); canned eggplant (0.08 kilos); and cucumbers (0.003 kilos).
Farm/Processor Coordination
10.13 Armenia's canneries have always been residual receivers of products from farms, even from the former large state and collective farm enterprises. Fruits and vegetables were sold in the fresh market channels to obtain higher prices than the canneries were authorized to offer. When fresh market prices did not justify deliveries to those channels, farms would divert fruit to canneries. This system has prevailed in nearly all other countries that have small processing industries with small firms. However, it is not a satisfactory procedure for companies with high capitalized costs, such as could develop in Armenia with the modernization of plants that should occur with privatization.
10.14 Another problem facing the canning industry is the lack of adjustment to new conditions created by the dismantling of the large farms. Previously, the canneries dealt with a small number of these farm enterprises, but with privatization, they face many hundreds of farm supplies, who are not organized. Thus, the mere process of coordination, information exchange, and assembly of products for delivery to the canneries has become less efficient and less reliable. This situation contributes to lower cannery output, as well as greater variability of raw product quality received. Agro-Processing Enterprises 57
Raw ProductPridng
10.15 The inflationarytrend now prevailing in Armenia has made the pricing of raw products difficult. The main problems for farmers is that they do not share in the inflationarytrends; products delivered to canneries are held in processed form, with inflation ranging between 15 to 20 times the prices prevailing at harvest and delivery time. In mid 1993 some canneries and other processing companieshad not paid growers for deliveries from 1992 because of their shortage of capital and the governmentdoes not have the cash flow to make good on the payment for farmer deliveries. To offset this problem and to cope with the lack of capital, a credit system has been establishedthat pays farmers a sum at delivery, and additional payments over time. This, of itself, does not assure growers of equitable returns, unless the additional payments reflect inflation. A system that ties grower prices to ultimateprices receivedfor the canned products needsto be developedto provide equity to both growers and canners. There may be changes in legislationto engage in such participatorypricing.
10.16 Because some companiesfailed to pay for farm deliveries in 1992 and others delayed payments for as much as five months or longer, a new pricing program will be in effect for 1993 accordingto the manager of Arshdad Canning Enterprise. For each ton of raw product delivered, the cannery will pay 3000 Rubles at the time of contracting. For deliveries up to five t of products, the cannery will pay farmers 700 Rubles per ton, and for deliveries over five t, the delivery payment will be 1000Rubles per ton. Additionalpayments are made at a later date, and are consideredto be "interest" payments if payments are not made on time. The interest rate is said to equal or exceed that paid by savings banks.
10.17 Prices for raw productsfor processingare determinedby the cannery based on products sold on the local fresh market. Growers sign delivery contracts; if after November 1, a farmer has not delivered the quantityof product called for by the contract, he is assessed a penalty which is four times the advanceof 3000 Rubles per ton. Non delivery for "Acts of God" are exempted from this penalty. Quality standardsare written in the grower contracts,with tolerancelevels also specified. When defects exceed tolerance limits, price adjustmentsare made. Grading is done by the cannery laboratory.
CanningSupplies and Ingredients
10.18 Armeniancanning companiesare historically dependentupon suppliesbrought in from Russia. With the blockade,there are shortagesof these supplies,and the limited suppliesnow available are shippedvia Georgia. Althoughthe containersused in Armenia are glass jars with pry-off lids, there is little likelihoodthat these obsolete containerswill be replaced in the near future because Russia lacks the incentiveto retool for such change, and the energy and capital sources in Armenia are too restricted to enable a company to start a new factory making modem containers, includingglass jars with twist-off lids. Perhaps the best strategy for improvingthe containersused in Armenia would be the introduction of fiber cartons, but this may require considerablemarket development work in Russiato gain acceptance, since Russia is the main market for Armenia's canned fruits and vegetables. Further considerationis needed on this matter.
10.19 SinceArmenia's only sugar factory was destroyedby the 1988 earthquake,the nation has no domesticsupply and must rely on imports from Russia via Georgia. Even this routing is unreliable becauseof the domestic politicalunrest in Georgia. An alternativesweetener other than sugar should be 58 Chapter 10 investigated for the canning industry, to enable firms to remain in business and to expand their output if raw product supply is increased.
Factory Operations and Costs
10.20 Any factory operating at less than 50% of engineered capacity is likely to be operating at a financial loss. In the case of Armenian enterprises, as well as in other FSU countries, it is difficult to obtain reliable financial data that accurately reflects profitability. Some costs are not valued, and some costs are valued arbitrarily. Numbers available for the Arshdod Cannery illustrate the problem. It operated at 16% of engineered capacity in 1992, and reported a gross profit of 15 million Rubles on sales of 98 million Rubles, or slightly more than 15%. Taxes are at a rate of 80% of gross profits, thus not leaving much for maintenance and improvements. However, the company received 194 million Rubles in 1992 to finance operating costs.
10.21 This company reported its costs of manufacturing tomato paste to be 203 Rubles per container weighing three kilos and 400 grams. At an exchange rate of 1000 Rubles per U.S. dollar, this amounts to just over one US cent per kilo as a manufacturing cost, which is not possible. In comparison, the cost of production of tomato paste in the most efficient factories in the world in 1992 are estimated to be about 11 cents per kilo.
10.22 The government's requirement that companies share in providing social benefits to their employees compounds the problem of profitability. In addition, most companies believe their social responsibility extends to offering year-around employment to what should be seasonal employment. Thus, it is not uncommon to see companies that have as many as 1000 full-time employees and only 200 seasonal employees in factories where the ratio would be the reverse in market economies.
B. DAIRY AND MILK INDUSTRIES
10.23 The viability of the dairy processing sector is highly dependent on the dairy farm sector that supplies milk to these plants. Several model (modern) dairy farms were established following the earthquake with European technology and capital. The shortage of feed, concentrates, and mineral nutrients has about decimated these herds. The blockade does not permit the importation of feed grains. In addition, it has led to the diversion of Armenian land from forage production to wheat and grain production for use in manufacturing bread flours. Without adequate wheat flour from Armenia's traditional sources in the Ukraine and Moldova, it is unlikely that the Government will change its policies for mandating wheat production on the available lands once used to produce forage crops. Without adequate feed supplies, it is virtually impossible to develop a milk processing industry within Armenia. Until normal rail traffic is restored into Armenia, the best that can be done is to rationalize the existing industry. This would involve closing plants not needed or that are obsolete, and to use the existing plants at higher levels of capacity based on the importation of dry milk powder by airlift to maintain adequate supplies of fluid milk for children and the aged.
10.24 To reconstruct the dairy industry will require the simultaneous improvement and availability of adequate feeds, concentrates, and minerals to sustain the remaining dairy cows (large numbers of dairy animals were slaughtered as a result of feed shortages). At the same time, efforts will be needed to improve the genetic stock of dairy animals, both by the importation of high producing bred Agro-ProcessingEnterprises 59 heifers and the importationof frozen semen to upgrade the geneticsof the remaining cows. A program of managementand animal disease control needs to be implementedat the same time.
Processing Sector
10.25 According to the MOF, there are 34 milk factories in Armenia, nearly one per region. Their annual capacity is 320,000 t for milk products, with a 1990 utilizationof 210,000 t. Cheese plants have a capacity of 20,000 t, with a 1990 utilizationof 19,000 t. There is a capacity for manufacturing 13,000 t of ice cream, with a utilizationof 10,500 t, but in 1993, only 9,044 t of milk products and 334 t of ice cream were produced. Figures from the Armmilk Association, a consortium of 29 dairy processingcompanies, shows that 1993 utilization of the milk processingcapacity by the factories that comprisethe consortiumaveraged just under 10%. The two largest factories are locatedin the environs of Yerevan. According to MOF figures, the Yerevan Milk Combinat has a capacity of 200 t per eight hour shift, and the Yerevan City Milk Factory has a daily capacity of 100 t. Together the two plants accountfor 42% of the country's milk processing capacity.
10.26 There are 25 butter manufacturingplants in Armenia, all small by modern technology standards. Ten have engineeredcapacity to make 100 t or more annually; only the factoriesat Yerevan and Tashir can produce more than one ton of butter on a daily basis. In 1992, the combinedoutput of the factories was 604 t, which was just under 18% of capacity. Even with adequate supplies of milk, many of the factories are of such small scale that they are undoubtedly high cost producers, with considerablevariation in butter quality. It is doubtful that even the largest butter manufacturingfactory in Yerevan can efficientlyutilize a continuous churn, instead of manufacturingbutter using the batch system.
10.27 In total there are 32 cheese manufacturing plants, of which 23 are members of the Consortium. Total output in 1988 was 28,000 t of cheese while in 1993 the total output was only 1,387 t. The 23 factories that comprise the Consortiumhave an engineeredcapacity to manufacture 17,694 t of cheese, of which 8,007 t were employedin 1992. Several small plants received milk in excess of their capacity, and the surplus was taken to other plants.
10.28 There may be opportunitiesfor the rationalizationof manufacturingcapacities among the dairy manufacturingfactories. The lack of refrigerationat receivingpoints, and absence of refrigerated truck transport work against the conceptof closing some plants and using the remainingplants at higher levels of output. Even so, opportunitiesfor rationalizationas a means of employingbetter technology, as well as to increaseefficiency of facility use as a basis for reducing costs should be investigated.
Potential Equipment Use
10.29 In additionto the plant consolidations,there may be an opportunityfor the Yerevanmilk plant to earn incomeby using its under-utilizedTetrabrick packagingequipment to packagefruit juices and perhapstomato paste for nearby canneries. There is an urgent need for improvedpackaging for the canned juices made by the canneries, but none is able to rationalize the purchase of such packaging equipmentbased on their volume alone. In addition, the Yerevan milk plant has Purepackpackaging capabilities,but because they are unable to importcontainers due to the blockade,this equipmentis not used at all. If the blockade is lifted, or if arrangementsfor transit can be secured through Georgia, this 60 Chapter 10 equipment would find wider use than for the milk plant only.
Raw ProductProcurement and Coordination
10.30 The YerevanMilk Consortiumis involvedin the distributionof dairy productsto several retail shops, which togetheraccount for 20% of the milk productionof the associates of the consortium. The consortiumutilizes contractswith farmers and the factoriesto coordinatemilk deliveries. The milk plants rely on powder milk brought in from Russia, which is reconstitutedin Yerevan and several other locations. However, the supplyof powder milk is irregular due to the blockade,and on several occasions supplieshave been flown into Yerevan. This is expensive, since each plane carries a maximumof 40 t.
10.31 It is unlikelythat Armenia will becomeself sufficientin the productionof milk and dairy products, at least in the near term. Industry officialsbelieve that consolidationof herds will begin in 1993, and continue in 1994 and later years. For this to occur, there will need to be opportunitiesfor consolidationof farms, either through purchase or leasing. Consolidationinto larger herds will also require more farm equipmentand feed supplies.
C. MEAT PROCESSING
10.32 The meat industryand all industries that service it, such as feed milling, are in almost chaoticcondition. Suppliesof animalsare greatly reduced, and what are availableare bypassingthe state slaughter plants and are being sold through private channels. In earlier years (before independence) Armeniansconsumed 130,000t of meat products annually. Of this volume, 54,000 t were produced in Armenia. In comparison, in 1993, there were 1,379 t of meat products sold through the state retail stores. Statistics are unavailableon the t of meat produced and sold by the private sector, but there is no questionthe total volume of meat availableto consumersis very low in comparisonto earlier years.
10.33 The 1,379 t of meat that moved through state slaughter plants in 1993 utilized 1.5% of the engineeredcapacity of the five slaughter plants that are on standbyposition. There is little likelihood that these plants will be able to obtain the live animalsneeded to operate their facilitiesefficiently.
10.34 All of the five state slaughter plants slaughter beef, pigs, and sheepand lambs. The five plants can handle nearly 21,000 head of live cattle, 17,000 head of pigs, and 20,000 head of sheep and lambs. The plant at Kamo is capable of handling 29% of the total number of beef cattle, while the Yerevanplant can handle 25 % of the total beef cattle. The Yerevan plant has two-thirdsof the national capacity to slaughter pigs and 36% of the sheep slaughteredby these state enterprises.
IndustryCapacity Utilization
10.35 Gumri, the plant with the largest capacity operatedat 3.6% of its potential in 1992. The Yerevanplant, about the same size as the Gumri plant, operated at 9% of its capacity. Kamo, where more beef cattle and sheep are available,operated at 11% of its capacity. The geographicdispersion of the plants, and the lack of fuel and trucks for transportationmake it difficult to rationalizethe use of the plants effectively. One private slaughter plant is said to be operating. It has a capacity of 40 t live weight per shift, which is about 130 head, but it is operating at the rate of two or three t per shift and Agro-Processing Enterprises 61 therefore operates one or two days a week. Table 10.3: Sausage Plant Capacity and Utilization', 1992 10.36 The shortage of live animals virtually Plants Annual 1992 precludes the sale of fresh meat from the five Capacity Output factories. A decision was made by the MOF to use most of the meat from the slaughter plants for Yerevan 22.50 2.75 manufacturing sausage in 1992 (Tables 10.3 anld Aumri 3.75 0.30 10.4). A total of 4,100 t of sausage was produced, most of which came from the Yerevan plant. The anadzor 2.25 0.32 production of semi-finished meat products in 1992 K.hapan 1.50 0.19 was only 520 t. Kamo 4.25 0.54
Total 34.25 4.10 Potentials 'thousandtons Source: Ministry of Food and Procurement 10.37 There are insufficient volumes of animals to warrant maintaining the present plants, but Table 10.4: Seni-Finished Meat Products, at the same time, there are insufficient fuel and trucks PlantCapacity and Utilization', 1992 to transport the live cattle across the country if one or Plants Annual 1992 two slaughter plants were maintained, and the others Capacity Output closed. However, this may be the only rational Yerevan 0.41 17.25 solution to the dilemma, especially if it were possible to obtain specialization of animal types slaughtered at Aumri 3.50 each remaining plant. The present plants would have Vanadzor 0.03 1.70 limited value to investors; one reason is that there does not seem to be a good alternative to the use of Khapan 0 the slaughter plants. Thus, privatization is an Kamo 0.04 0.55 unlikely solution and the government feels a Total 0.53 23.00 compulsion to maintain all five plants to avoid 'thousandtons increasing unemployment. Source: Ministry of Food and Procurement
D. THE MIXED FEED INDUSTRY
10.38 Armenia has traditionally relied on the importation of feed grains, concentrates, and minerals from the Ukraine and Moldova, as well as from other countries to sustain much of its livestock and dairy industry. With the blockade, the supply of feed grains has largely been confined to sporadic shipments from the U.S. and the European Community. With much of the wheat grown in Armenia now slated for flour milling for bread baking, there is little likelihood that the milling industry can be maintained in its former structure.
10.39 There are five feed mill enterprises in Armenia, with an engineered capacity of 897,000 t of mixed feed annually, and which in 1992 produced 236,003 t. Output in 1993 was roughly 90,000 t of mixed feed. Three are large operations capable of annual outputs of about 200,000 t of mixed feeds, while the other two are fairly small operations. 62 Chapter 10
10.40 The Yerevan Mixed Feed Factory, one of three large enterprises, has a daily engineered capacity of 650 t. It has two elevator complexes capable of storing 8,000 t of feed or ingredients, a 3,000 t storage unit for ingredients such as hulls, bran, roughage, and yeast, plus the premixing and mixing operations. There is storage for 8,000 t of finished feed or for use for storage of ingredients. The mill uses a magnetic separator to remove metallic particles from the feed, and relies on a fully computerized automated mixing control panel. In earlier years, the mill received 30 rail carloads of grains daily, from Chile, Canada, Argentina, China, and the USSR. Now it is dependent on the lower quality grains available in Armenia that are not of bread flour quality, and the occasional imports from the United States and the EU. It is unable to obtain corn and soybeans, but still has a dwindling inventory of yeast, brans, and premix. Other large mills are at Sevan and Bagramian and are of approximately the same configuration, but are parts of a flour milling enterprise.
10.41 The Yerevan Feed Mill now sells most of its feed in bags instead of bulk. This has increased its packaging costs. However, except for the impact of the blockade which has curtailed its supplies, the company feels privatization of agriculture has had a beneficial impact on its business. There are plans for the privatization of the feed mills through the sale of vouchers to investors, but timing for doing so has been put on hold until the political and economic situation improves.
E. FLOUR MILLING INDUSTRY
10.42 Acquiring wheat to be converted to bread flour is now a dominant problem in Armenia. Previously, wheat was imported from the Ukraine, Moldova, and other smaller supplying regions of the USSR. However, supplies from within the FSU are no longer available due to the blockade. Flour milling and bread baking are considered security activities for the nation; they supply a large part of the calories consumed by the population. Thus, the government gives major attention to availability of grain to meet the flour requirements of the bakeries.
10.43 Armenia requires about one million t of wheat annually. Internal production is about 300,000 t. However, only 60,000 t of national production is sold by farmers to the government. The remainder is held by the farmers and either used on the farm or sold directly.
10.44 There are approximately 39 flour mills in Armenia, of which four have capacities exceeding 500 t of wheat milled into flour daily. The largest mills and their daily wheat capacities are: Yerevan (850 t), Sevan (750 t), Bagramian (500 t), Spitak (500 t - pre-earthquake capacity). The remaining 35 flour mills are small, with a daily capacity of about 20 t of wheat each day. These mills meet local flour needs, and may be very important in the privatization of the flour milling industry. Most of these mills use technology similar to the large mills, but some stone mills in some villages still function.
IndustryCosts
10.45 The large mills operateseven days a weekfor 52 weeks. Typically,the large mills closed for one month annually for renovations. However, with the critical shortage, the mills now shut down one eight-hour shift every ten days for clean-up. Thus, the mills are being stressed and are probably not being maintained adequately. Agro-Processing Enterprises 63
10.46 In July 1993, the Yerevan mill was 20,000 Rubles for each ton of wheat which, at the then prevailing conversionrate, was about $20. Armenian farmers were paid 80,000 Rublesper ton for wheat delivered to the mills, or about $80 per ton. However, the internationalprice for wheat at that time was $120 to 130 per ton, so that the farm price in Armenia was still below the world price. A manufacturingcost of 15 Rubles per kilo of flour is administrativelyset for the mills. However, cost of milling for the small mills is 25 Rubles per kilo of flour, or 10 kilos more than allowed for the large mills.
10.47 The net price of flour for wheat purchasedfrom the governmentcomes to 35 Rubles per kilo of flour, comparedto 95 Rublesper kilo for wheat purchaseddirectly from farmers. The difference of 60 Rubles is a national subsidy to consumers.
Privatization
10.48 Privatization of flour mills is low on the priority list of the government. Given the critical significanceof the flour milling and bread baking industryto the food security of the nation, there is little attention being given to privatization in nearly all sectors of food processing.
10.49 One way to increasecompetition in flour milling is to privatize the 35 small, local flour mills by offering them for sale to workers or investors. Not only are these mills locatednear the wheat producing area, but they may be able to compete with the large mills if the latter operate at low capacities. In addition, they may be able to produce differentiated types of flour that would meet consumer preferencesand thereby obtain a premium for quality and type of flour.
F. WINERIES AND BRANDY PLANTS
10.50 Productionof grapes for wineand Table10.5: Productionof Wine for distillation of wine into brandy is an (tons) importanteconomic activity in Armenia. About 50% of the wines produced are sweet, dessert Year Wine for Wine for Total Wine wines of high quality. Much of the remainder is Wine Brandy made into dry still wines and sparkling wines and 1986-88 36,147 43,250 79,437 used for distillation for brandy or vodka. The brandy made in Armenia has an excellent international reputation, but the wines are not 1990 40,653 21,787 62,440 well known outside the former Soviet republics. 1991 43,260 18,416 60,378 Over 50% of total wine production is utilized via brandy production (Table 10.5). Ninety percent 1992 25,152 14,938 40,040 of the grape varietiesare of Armenian origin, but 1993 25,035 15,009 40,044 there are small areas producing western grape Source: EU TACIS report and MOF varieties, such as Cabernet Sauvignon, Chardonnay,and Merlot.
10.51 Grape productionoccurs in 15 districts, mostly in the Ararat Valley, and also in the sub mountains, November Armenia, and in the southern part of the country. The practice is to bury the 64 Chapter 10 grape canes in the fall to protect the vines from the cold winters. This is a very labor intensive cultural practice, resulting in high farm production costs. About 200,000 t of grapes are produced annually, of which about 15,000 t are used for fresh markets domestically and for export; 5000 t are crushed for juice. Most of the balance is fermented for wine.
10.52 There are 33 wineries and four wine bottling facilities in Armenia. The industry reflects the typical Soviet pattern of associations. The viticultural group is known as the Ararat Association, and is comprised of wineries, brandy factories, and sparkling wine makers. The group includes 17 wineries, three brandy distilleries, a sparkling wine facility, and facilities in Moscow, St. Petersburg, and Saratov. Overall, the Association had just under 24% utilization of all of its facilities, but utilization of independent plants ranged from 47% of capacity to as low as 1 to 2% (Table 10.6).
Table 10.6: Wine and Spirit Production, 1993
Product Engineered Capacity (tons) Production (tons) Percentage of Engineered Capacity
Wine 54,600 13,700 25 Cask-aged brandy 35,200 11,500 33 Brandy (bulk) 8,500 600 7 Vodka 26,200 3,300 13
Beer 79,600 6,700 9 Non-alcoholicdrinks 94,500 1,400 1 Grapescrushed 229,900 25,671 11
Plant Control With exception of wine production (MOA - 38%), beer production (Haicop - 5%), and non- alcoholic drink production (Haicop 12%), all capacity is with MOFP. Source: Ministry of Food and Provisions
Privatization
10.53 Privatization does not have a high priority in the wine industry. However, there is a good opportunity to not only privatize this industry, but also to rationalize it including closing some facilities and consolidating others.
G. RECOMMENDATIONS
10.54 Develop Government Policy.
* Establish criteria for determining which sectors or enterprises are to be sold to private owners and which are to remain as state enterprises.
* Develop and agree on regulations for privatization. For example, decisions are required with Agro-Processing Enterprises 65
respect to when enterprises must be sold to Armenian citizensonly, and when they are available for sale to non-citizens. Other decisions need to relate to how payment for shares should be made. Should a voucher system be employedis an example. Other decisionsneed to relate to special schemes for encouragingor enabling existing enterprise workers to acquire controlling interest in the enterprises.
* Decide on financial settlement policies. Sales to non-Armenian investors, either as sole purchasers or as joint venture participants, when permitted by law, are expectedto be made at the time of transfer of title. Decisions are needed whether Armenian citizens may purchase companies, or become investorsby making an initial payment, with additionalpayments over a period of several years as earnings occur.
10.55 PrivatizationProcess.
* Establishpriorities for privatization. Reach agreement on what enterprises are to be sold first. Sell the most profitablefirst. Decide if privatizationshould occur across sectors simultaneously rather than sector by sector.
* Determine steps to be taken to restructure unprofitable enterprises in order to make them profitable so that they may be sold in the future. Enterprises which are not viable as private firms should be closed.
* Establishrealistic timetablesfor privatization. Ministriesmust have fixed, realistictimetables for privatizationto proceed.
• Rely on the PrivatizationCommittee to monitor achievements. This Committeeestablished by the Parliament and the President should serve as an independent review committee for privatization is carried out as agreed upon.
* Follow a commercialapproach to transfer enterprises to private ownership. Consider selecting a private group to actually prepare the documentationfor each enterpriseto be sold based on the criteria prepared by Parliamentand the Ministriesand approvedby the PrivatizationCommittee, to present the necessary financial portfolios to interested parties, and to receive bids or other offers of purchase. Offers and terms of sale would be submittedto the PrivatizationCommittee for approval, after which implementationwould be carried out by the private asset management group.
* Re-examineany government plans to retain enterprises under state ownership merely because such enterprises may be profitable. While the governmentmay have a strong national desire to retain enterprisesunder state ownership which produce superior products, this tendencyshould be avoided.
10.56 Strategiesfor Non-ProfitableEnterprises.
Attempt to make non-profitableenterprises profitable. Sometimes this will be achieved by reducing worker numbers to realistic levels commensurate with currently reduced levels of output. In some cases managementand financial decisions beyond the experience of present managersthat may be needed. A recommendedstrategy in these cases would be to hire private 66 Chapter 10
entrepreneursexperienced in turning around unprofitableenterprises to managethe firms.
* Address employmentissues with an appropriate national program instead afforcing enterprises to retain workers.
* Until such time as enterprises are sold to private investors, allow them to be operated as independentcompanies with a board of directors selectedfor their ability to provide commercial guidance to the companies. Such an approach will contribute to the development of a professional business approach to decisions related to products to produce, volumes, and distribution systems.
* Use professional asset managementcompanies to carry on the privatization process under the supervisionof the Blue Ribbon Committee.
* Develop an accounting system for a market oriented company that provides timely information on costs, operationalefficiency, product line profitability,prices to be charged, marketingresults, and financial results.
10.57 Short-TermOperational Strategies.
* Prioritizeinvestments for industriescapable of exportingproducts for hard currencies. Examples includeham, fruit preserves, brandy, certain specialtyfruits (i.e., apricots), and dried fruits and dehydratedvegetables.
* Considerestablishing a private leasing companyto bring in foreignjoint-venture partners. Long- term leases may be arranged to obtain improved technologywithout the need for large capital outlays by Armenian firms.
* Encourage some foreign equipment manufacturersto install their equipment in existing plants with only seasonal royalty payment or licensingarrangement based on volume, with payments from current income,in order to minimizedelays in the use of such technologieswhen companies do not have sufficient hard currency.
* Promote small scale enterprises in order to generate competitionwith large state enterprises. Very efficient small scale processing facilitiesare availableto enable the establishmentof such small companies,such as small milk and cheese plants with 10 t of mild requiredper batch (from Latvia) or jam and preserve manufacturing, flour milling, and specialty meat processing. Encourage organizations representing small-scale farmers, like cooperatives, to provide the leadershipfor such investments.
* Transport for perishableproducts is inadequateto meet health and sanitationrequirements. This lack posses serious health problems. There is not sufficientrefrigerated transport availablefor perishables such as dairy products, fish, and meats to reduce spoilage and food loss, as well as to maintain sanitary requirementfor health. Encouragethe developmentof a private system of refrigerated, individuallyowned transport trucks to transport perishableproducts. CHAPTER 11
FORESTRY AND ENVIRONMENT
11.1 The status of Armenian forests is of concern as are environmentalproblems, particularly soil erosion. A rather small proportion of land is forested, and potential for production and exploitation of the existing forests is low. Increased efforts are required to conserve and create forested lands if Armenia is to recover from previous periods of intensive exploitation. In additionto soil erosion, there are several environmentalchallenges related to Lake Sevan, includingagricultural chemicaluse, saline soils, and the need to protect the precursor wheat preserve near Yerevan.
A. FORESTRY
11.2 At the beginning of the 19th century, 25% of Armenia was covered with forests; by the 1950s only 7% of the country was covered with forests. Since the 1950s, the forest cover has been increased to 11.2%. The Armenian Forestry fund, which is administered by Hayantar, the state-run forestry association, contains 465,000 ha, of which 335,000 ha are forested. This is equivalent to about 0.1 ha per person in Armenia. All forests in Armenia are owned by the Republic. The primary forested areas are in the north, north-east, and south; the central part of the Republic is almost woodless, containing only about 2% of the forested area. The center of wood production is in the northeast, which contains perhaps 80% of the forest industry. The northern forests are dominated by beech (> 80%), and the southern forests are dominated by hombeam (50-60%) followed by oak and elm, thus the forests are primarily hardwood. The principal national growing stock consists of Eastern Beech (53 %).
11.3 Under the previous regime, forestry management planning was accomplished by two committeesin Moscow, both with branch offices in Armenia, Georgia, and Azerbaijan. A ten-year planning horizon was used in plans with annual tasking breakdowns. The same basic approach is still being used, with the plans now being prepared in Yerevan by a staff of five people within Hayantar. Plans are reviewed internally; the only required external technical review of the plan concerns cutting and harvesting rates, which are examined by the Ministry of Nature and EnvironmentalProtection. The Ministry of Agricultureprovides budgetary review. The current plan extends to 1999.
11.4 The ten-year plan includes detail for each enterprise on harvesting, plantings, and replantings,nursery output, and road building. Enterprise managers are responsiblefor implementing the plan and meeting the specifiedgoals.
11.5 Forestry and forestry product manufacturing in Armenia are monopolies of the Republic. Hayantar is provided with an operational budget allocation from the national government which has increased in nominal amounts but declined in value (Figure 11.1). In addition, Hayantar retains income from its operations. This income is used for Hayantar and enterprise operations (Figure 11.2). 68 Chapter 11
Organization of Forestry Management in Armenia
11.6 A Ministry of Forestry was first GOVERNMENTBUDGET ALMOCATIONS organized under the Armenian Soviet system TO FR1STRYOPERATIONS in 1938; it included 14 forest enterprises located throughout the Republic. This ,0._ Ministry was reorganized as a Department of 50.0 .. ... Forestry within the Ministry of Agriculture in e.0 1950, but in 1958 it was again reorganized as the sovereign State Committee of Forestry. 20.0 0.i The State Committee was reorganized in- D 1988, when it was renamed the "Hayantar" J0 Forestry Association. In 1992, it was again placed within the Ministry of Agriculture, where it resides today. However, Hayantar management has petitioned Parliament to reinstate its independence from the Ministry F 11. of Agriculture, whose mission Hayantar views conflicts with its own.
11.7 Hayantar now consists of the Forest Service, the Forest Protection Agency, the Forest Management Service, and 34 INCOMEFR)M F'OPSIY SECR OPERATIONS Forest Enterprises: 26 regional forestry AUOPERAT2NS (EcES GOVTBJDUMX enterprises, two protected reservations (Khosrov and Dilidjan), one nursery S.0- .S (Yeghvard), one machinery factory (Idjevan), A._ ... . 1. one amelioration station (Yerevan), one forest El5D ...... 12m protection station (Yerevan), one scientific ...... O.Ss research station (Yerevan), and one ...... maintenance shop (Yerevan). The 26 regional .s2 forestry enterprises are still vertically D.0 __ 0 integrated consistent with the Soviet model. Each typically contains several operational o sections: Administration, Regeneration, Silviculture, Technical, Protection, Agriculture, and Industry. Figure11.2 11.8 Forestry planning is centralized in the Hayantar administrative offices in Yerevan, with its staff of 67 people; 19 of these staff have forestry educations, and 48 were educated in other disciplines. This staff is functionally organized into eight divisions: (1) forest protection; (2) forestry (silviculture, regeneration, science, and foreign affairs); (3) forestry policy (harvesting, forest roads, and planning); (4) economics; (5) production; (6) investment and equipment supply; (7) personnel and legal affairs; and (8) administration. Forestryand Environment 69
Harvest of Forest Products
11.9 Approximately60,000 m3 of timber were harvested in Armenia each year prior to the blockade. Of this, about 8,000 m3 were consideredcommercial cuttings; of the remainder, 85% came from thinnings and only about 15% from dimension and selective tree felling, i.e., logs. It is estimatedthat this harvest satisfies only 10-15%of Armenia's internal needs.
11.10 The 1991 and 1992 harvests have been somewhat atypical due to fuel and energy shortages. The total 1991 harvest was only 33,500 m3 , of which 6,033 m3 were commercial, 7,964 m3 were sanitary, and the remainder were from thinning operations. The 1992 harvest was 50,000 m3, of which commercial and sanitary cuttings combined were 20,000 m3 . Logs harvested in the forestry operation are processed in Hayantar's own sawmills (which operated at only 11% capacity in 1992 due to blockade-inducedproblems) and wood products operations, which are managed as parts of the forest enterprises. Primary products include lumber, veneers, moldings, parquet flooring, and numerous small carved objects. Hayantar is capable of producing, for example, up to 1 million2 of beech veneer per year. No paper or paper pulp is produced.
11.11 During the 1992-93winter's blockade-inducedenergy crisis, the people of Armenia were forced to illegally harvest both urban and forest trees to supply heating fuel. In all, about 2,000,000 trees comprising300,000 m3 of wood were cut, which amounts to about 0.77% of Armenia's standing forest volume or 77% of its annual growth increment. The majority of these trees were harvested near populationcenters and along road sides, but others were from the managedforests.
Non-WoodForest Products
11.12 Hayantar land is rich in non-woodresources, includingwild rose hips, several species of berries and fruits, medicinal herbs, several species of mint, mushrooms, and nuts. An accurate inventory is a first step toward realizing this potential, and it is recommendedthat this informationbe collected. Wild fruits such as apples and pears were previously canned for public sale. The canning factory was located on the border with Azerbaijanand has been destroyed in the war.
11.13 Seabuckthorn. One resource with possible exploitation potential is the Seabuckthorn seabuckthorn (Hippophae rhammnoides)(Box 11.1). The seabuckthornyields a yellow berry Seabuckthorn(Hippophae rhammnoides)is a useful that may be used to produce jam, compote, plantwith potential commercial value in Armenia,as juice, or oil for medicinal purposes. discussedin the Forestrysector report. Its berries juice, haveseveral useful attributes and are usedfor food Production potential is said to be greater than andto providemedicinal oils. It is a nitrogen-fixer 1,000 metric tons of berries per year andhas improvedcrops in casesof interplanting, throughout Hayantar if it is developed. suchas onpotato farms In China,where it hasalso beenused for erosioncontrol with excellent success. It is usefulas firewood,having a caloricvalue of >4,000Kcallkg. Its adaptability to Armeniahas Markets and Trade beenamply demonstrated.
11.14 Hayantar forest production Box 11.1 satisfies only 10-15% of Armenia's needs for 70 Chapter 11
wood products including lumber, poles, and fuel wood. All logs are sold to Hayantar enterprise production operations. Products made from these logs are sold publicly within Armenia, and proceeds remain with the production operation. Fuel and pole wood are sold directly to the public. In spite of Armenia's need to import wood products, significant steps can be taken to save and earn foreign exchange with forest-relatedproducts. Armenia produces a very high quality of beech and oak hardwood. Many internal needs for wood could be satisfied with lower quality, less expensive lumber and thus provide opportunities to export finished products, such as furniture, veneers, and parquet. In addition, there may be export opportunitiesfor non-woodspecialty products.
11.15 It is possible to exploit market opportunities for non-wood forest products without damaging the forest. Individuals or organizations could be licensed to harvest the resource, with methods, quantities, seasons, and other limitations being conditions of the license agreement. This process would create stability of supply for individual entrepreneurs entering the business. Prohibition of gathering by non-licensed individuals would protect the resource, and also prevent sporadic entry into the marketplaceby casual opportunists; casual entrants into the business are more likely to deliver a poor quality product and thereby damage the reputation of the product for all participants in the marketplace.
Plantingsand Erosion Control
11.16 Major forestation has been undertaken in several areas. In the suburbs of Yerevan, which is in a semi-arid zone and has no natural trees, 10,000 ha have been planted, and 17,000 ha have been planted around Lake Sevan since 1947. Planting is also currently being conductedin the Gumri and Spitak areas. Erosion control is the impetus for a great many of Hayantar's plantings. Hayantar recognizes the critical nature of Armenia's topsoil erosion problem, and avoids livestock grazing activity on its lands (Table 11.1). All slope plantings are accomplished using terracing techniquesand are done by hand to avoid use of heavy machinery.
11.17 Experimentsconducted by Hayantar concludedthat planting a 25-30 m strip of trees atop eroding slopes are capable of increasing agricultural productivity by 10-15%. The trees provide protection from the wind, stabilize the soil, and add nutrients to the soil. Unfortunately,their success at acquiring land allocations and accessing funding to support widespread application of these conclusions has been limited. Privatization of agricultural lands is also viewed as an impediment, because it is difficult to convince small farm owners to dedicate a portion of their land to tree crops, which are perceived as slow growing and limited in their income potential. If seabuckthorn production proves to be profitable on a smallholder basis, it might be possible to convince them to plant seabuckthornbushes and accomplishthe same goal (Box 11.1).
Privatization and Farm Forestry
11.18 Changes must occur if individual investmentsin tree farming are to be encouraged. Of fundamentalimportance is that prices paid for products from these efforts reflect the actual costs of producing them plus a reasonableprofit. This is unlikely to occur unless Hayantar enterprises begin charging the public unsubsidized prices; the individual farmer who must actually pay such costs cannot compete with subsidizedproducts. His most rational option in such circumstancesis to refrain Forestry and Environment 71
Table 11.1: Land Erodability in Several Regions of Armenia
Region Year Area Examined Erodability (Raion) Examined (1000 ha) (%) Krasnoselsk 1969 33.6 41.5 1986' 32.0 68.5 Taush 1971 18.0 31.1 19781 21.0 71.4 Spitak 1968 38.0 47.9 1986' 38.0 75.7 Artik 1974 27.0 17.2 1986' 28.0 45.2 Abovian 1971 34.0 47.5
1986' 37.0 63.6
Note that in each case, the 51 Erodability increased in subsequent surveys. Source: The National Ecological Report of Armenia, Ministry of Nature and Environmental Protection, 1993.
from entering the business in the first place. Other incentives might be considered including provision of seedlings and land tax credits.
11.19 The same concepts could be applied to tracts of "reserved" lands now held in common if the tracts were assigned to individuals or families on a long term lease basis. This approach would have at least two added benefits. It would:
* Allow dedication of larger tracts to forestry than are now available on single privatized land holdings, increasing their commercial viability; and
* Promote favorable erosion control practices on these lands, many of which are in highlands either susceptible to or already damaged by erosion.
Biodiversity and Protected Areas
11.20 Hayantar manages 18 protected areas, including three major preserves (Khosrov, Dilidjan, and Shikahogh), and 15 smaller reservations designed to protect specific habitat or ecosystem types. A small part of Khosrov has been a designated preserve since 333 A.D., when local ruling royalty declared the land a private hunting preserve. Access to Khosrov is strictly limited to Hayantar staff, official visitors, and scientists conducting approved research programs. Access is controlled by 55 armed guards, and the preserve is managed by a seven person scientific staff. The ecological biodiversity importance of Khosrov Preserve is significant. In addition, this mountainous, 72 Chapter 11
semi-arid region provides ample opportunity for the study of erosion processes and natural plant succession mechanisms. Numerous examples of various stages of the juniper invasion - grass establishment - oak climax succession are available for study in Khosrov Preserve, which is an important natural process in many areas of Armenia.
11.21 The 24,000 ha Dilidjan Preserve was established in 1958 primarily to remove its forests from harvest quota computations imposed by the FSU. Consequently, it has not been as protected as Khosrov from development or industry. For example, it contains a bentonite production facility regarded by the Ministry of Nature and Environmental Protection as environmentally very intrusive because of huge volumes of dust emissions. There appears to be some tension between Hayantar and the Ministry of Nature and Environmental Protection over the ultimate fate of Dilidjan, resulting from the variance in perspective with which each views the area. It would be appropriate for Armenian authorities to review this issue cooperatively and achieve agreement on the area's future management.
11.22 The 10,000 ha Shikahogh Preserve lies in the war zone in the Kapan Region. This preserve was established because it is rich in plant and animal species. Ecological damage to this preserve has not been established, because no inspection visits have been made for reasons of safety.
Forestry Training
11.23 There is no forestry school or forestry institute in Armenia. Forestry education must be accounted for and provided if Armenia's forests are to be wisely managed. Two options worthy of consideration are:
* Provision of a government fund to support the education of foresters outside Armenia; and
* Establishment of a regional higher education forestry institute in cooperation with neighboring nations with similar forest conditions and issues.
11.24 In order to encourage private forestry enterprises, Armenia should also consider development of a forestry extension service. More than 65% of farmers created by the recent agricultural privatization policy have had no farming experience whatever. These people cannot be expected to understand either the opportunities or the practice of forestry without instruction. This extension staff may not have to be large, but it should be assigned these duties on a full time basis, without diluting their efforts with other duties. If their job performnance responsibilities are tied directly to the success rate of small forest endeavors, they will be more effectively focused on problems of the small operator.
11.25 Finally, the importance of forests and forest products should be introduced to the public school system in order to develop a strong constituency for forest interests over the long term. In the competitive market economy that will evolve in Armenia, public support will be of great assistance in acquiring government backing for forestry investments. Forestryand Environment 73
Additional Recommendations
11.26 In addition to suggestions included in the previous discussion, several specific recommendationsare made:
(a) Complete the drafting of the Forest Act to clarify policies and long-term goals of the Hayantar Forest Association.
(b) Conduct a study of the feasibility of seabuckthorn berries as a commercial harvest, including economics and profitability, technology and machinery needs, labor requirements, logistical considerations, market availability, product mix, management systems, potential for privatized seabuckthorn farms and supporting cooperatives, and potential for incorporatingsoil erosion protection schemes into seabuckthorncultivation. Technicalassistance should be sought to encourage this study; implementationof results could be accomplished with a combination of technical assistance, credit funding, or investor funding, dependingupon study conclusions.
(c) Investigate potential joint ventures with major Western forest products companies as mechanisms for obtaining technical assistance, financial investment, and vehicles for forest privatization.
(d) Privatize the Forest Association's machinery manufacturing enterprise; identify farm machinery and tool products that will be required in-country and investigate the feasibility of convertingmanufacturing to these products on a profitable basis.
(e) Encourage entrepreneurial private commercializationof non-forest resources including medicinaland flavoring herbs, specialty food products.
(f) Consider establishing Extractive Forest Reserves to allow small private business developmenton non-woodproducts while encouragingpreservation of forest resources.
(g) Obtain technical assistance to develop modern methods for selection, cloning, and production of quantities of rapidly growing and disease resistant cultivars, including softwoodssuch as pine.
(h) Obtain technical assistance to evaluate the feasibility of computerizingHayantar data and informationmanagement practices, including the use of Geographic InformationSystems (GIS).
(i) Conduct a national inventory of highlands where erosion control would benefit from top or other forestry plantings - in cooperation with other agencies as needed; develop a plan for accomplishingthese plantings; implementthe plan with urgency.
(j) In the medium term, increase the rate of reforestationby not only increasinganti-erosion plantings, but by dedicating an increasedallocation of land to forest plantings; consider long-termcommercial forestry as an impetus.
(k) Develop a program to encouragesmallholder forest production and implementit. 74 Chapter 11
B. ENVIRONMENTAL ISSUES
Soil Erosion
11.27 More than 60% of Armenia's agricultural land is eroded to some degree'. The Agricultural [and Use annual loss of fertile soil to 2ith25-Year Ersion [Dses erosion amounts to 8 million tons2, and the use of more than 25% of agricultural lands have been lost to erosion during the past 25 years (Figure 11.3)3. Writtn Off Postre (1163_) Wrtnnicd Pkn*np (4.6%)
11.28 E r o s i o n i s particularly evident on Aro (26.1%) pasturelands, many of which are Pl sfur. (3S.3X) in highlands with steep slopes. In the 1940s, Armenia inventoried 1.4 million hectares of useful pastureland; now there are only 0.841 million hectares4. Furthermore, in the Figure11.3 1950s these lands typically supported about 30 species of flora/m2; they now support only 6-7 species/m2 . These remaining species are generally of inferior value as pasturage5. The area of land subject to erosion is increasing. The precise meaning of and method of determining "Erodability" as used in Table 11.1 is unclear, the importance of the data lies in the clear upward trend in per cent erodability.
Recommendations
11.29 The following are measures to encourage soil conservation and reduce activities leading to erosion:
'The NationalEnvironmental Report of Armenia,Ministry of Nature and EnvironmentalProtection, 1993.
2Abovian,Iu.l. 1988. The ecologicalsituation of the Armenian SSR and the concept of nature protection.
3Informationsheet provided by Ministryof Agriculture.
4The NationalEcological Report of Armenia,Ministry of Nature and EnvironmentalProtection, 1993.
'Ministry of AgricultureInterview. Forestryand Environment 75
* Pursue the Ministry of Agriculture's proposal for a reseeding and rehabilitation program requiring: (a) prohibition of grazing on lands being reseeded, (b) provision of food for livestock that is prohibited from grazing on these lands, (c) development of seed production plantations, and (d) anti-erosion engineering works. Elements of this proposal could be incorporated into a land leasing program by providing resources such as seeds and livestock food, and by incorporating requirements for reseeding into the lease agreements. The same principles could be used to encourage plantings of trees and other favorable plants, such as seabuckthorn.
* Establish a Soil Conservation Directorate to provide extension services and encourage erosion control practices. At present, soil conservation appears to be everyone's job, but no one's responsibility. The proposed agency should have authoritiesand responsibilitiesthat cut across the vertically oriented roles of other governmentalbodies, such as the Ministry of Agriculture, the Hayantar Forestry Association, the Ministry of Nature and EnvironmentalProtection, the Ministry of Transportation and Connections, the Ministry of Economics, and all others with the potential for impactingthe success of erosion control measures.
* Develop land tax systemswhich favor farmers who demonstrablymanage their land properly.
* Grant long-term exclusive use leases of parcels of what is now common area pastureland to appropriate farm families. Multi-year family dependencyon these parcels will encouragecare of the land. Lease fee levels could be adjusted based upon improvementsmade and practices followed, providing further incentive for proper land stewardship.
* Develop educationaloutreach and public awarenessprograms.
Lake Sevan
11.30 Lake Sevan is a unique resource that has been mismanaged. It is the largest high altitude freshwater reservoir in the Transcaucasus and one of the highest lakes in the world. In the 1930s, the large volume of the lake and its 1,100 m head above its only surface outflow, the Razdan River, were viewed as resources to be used to generate energy and to irrigate farmlands in the Ararat Valley. As a consequence,large volumes of water were withdrawn to supply a cascade of six hydro power plants on the Razdan River, creating more than 500 MW of electricity. The water was also used to irrigate 100,000 ha of farmland. The plan was to use water until the lake surface was lowered by about 50 m over a 50 year period.
11.31 These water withdrawals resulted in a drop of the lake surface by 18.5 m. The first signs of ecological disturbance were noted in 1963 during studies of the lake's phytoplanktonic community. Since then its cultural eutrophicationis resulting in the loss of Lake Sevan as a drinking water source, as a fisheries resource, and as a tourism attraction.6
6Eutrophicationis a natural process. When accelerated by man it is called cultural eutrophication. Eutrophicationis typically a process of nutrientenrichment, vigorous phytoplanktongrowth, oxygen depletion, and sedimentation. 76 Chapter 11
11.32 In addition, the reduction of the lake's volume by 43% has reduced its capacity as a heat sink. Lakes absorb heat in warm weather and release it during cool weather, thereby functioningas an agent for weather moderation. The local growing season is now shorter, and the lake freezes almost every winter, whereas historically it did not. Phytoplanktonblooms (diatoms and blue-green algae) now occur regularly in Lake Sevan, and depressed oxygen levels are often noted. Oxygen concentrationsof zero have been recorded in near-bottom waters with potential adverse effects on the four species of trout endemic to the lake.
11.33 Adding to the problems is a history of contaminationby pesticides and heavy metals, includingcopper, zinc, nickel, and cobalt. Mass mortalities of the local salmonid fish, the "sig," are attributed to this contamination, although these reports have not been confirmed by testing with modem instrumentation.
11.34 Corrective Plans. Armenian authorities recognized the eutrophication problem in the late 1970sand began a program to stabilize the lake level at 1897 m asl. The primary componentsof the program were the reduction of outflow to the Sevan-Razdanhydropower cascade and the addition of approximately250 million3 of water per year from the Arpa River tunnel diversion. These actions resulted in a one meter increasein the water level from 1988 to 1990.
Table 11.2: Physical Characteristes of Lake Sevan
1934 1982-1983
Characteristic Great Small Great Small Sevan Sevan Total Sevan Sevan Total
Water Level (m asl') -- --- 1916.2 ------1897.7
Surface Area (km) 1032.4 383.6 1416 919 329 1248
Maximum Depth (m) 58.7 98.7 --- 40.2 80.2 ---
Average Depth (m) 37.7 50.9 23.6 39.3 --- Volume (km3) 39.0 19.5 58.5 21.7 12.9 34.6
'asl = above sea level Source: Program of the Armenian Republic Water Resources Use, Book 1, Common Explanation, Ministry of Agriculture, 1992.
11.35 The Armenian plan includes the addition of 165 million3 of water per year to Lake Sevan from diversion of part of the Vorotan River's flow. Constructionof the tunnel to accomplish this has begun, but is slowed by effects of the blockade. Also planned is the constructionof several reservoirs designedto either store water that will then not be required from Lake Sevan, or to control river discharges thereby making water availableto Lake Sevan. The expectedcontribution of each of these reservoirs is indicated in Table 11.3. This plan seems superficially reasonable, but there are serious questionsregarding its economicbasis related to pumping costs. Forestry and Environment 77
11.36 From an environmentalperspective, every reasonable means should be pursued to Table 11.3: Reservoirs Designed to Contribute restore the Lake Sevan ecosystem. The lake to the Lake Sevan Solution supports important economic and recreational activities, it provides an important drinking ReservoirName Water Contribution 3 water supply, and it has symbolic social and (Mm /year) historic importance to the Armenian people. Yegvard 228 However, the proposed measures for providing Her-Her 265 additional water to Lake Sevan are somewhat problematic, in that the Ministry of Agriculture Octemberian 120 apparently has plans for increasing the use of Gami 30 irrigation water from the Lake Sevan area. There are only two realistic ways to do this: (a) Vedi 38 build reservoirs in the rivers flowing into Lake Fioletovo 40 Sevan, or (b) pump water from the lake7. Either Armanis 220 approach will forestall using the water to restore Lake Sevan. At the same time the stated Source: Information Sheet from the Ministryof justification for building several other dams and Agriculture river diversions is to restore Lake Sevan. In addition, diverting water from distant rivers imposes environmentalimpacts on areas served by the original watercourses. While impacts on energy and irrigation resources have been analyzed, no examinations of environmentalimpacts on these source watercourseshave been identified.
Other EnvironmnentalIssues
11.37 Public Health. In 1992, 745 cases of Brucellosis in humans were reported; representing a significant increase from previous years. The Ministry of Health and the Ministry of Agriculture have developeda joint program to control this disease.
11.38 AgriculturalChemical Use. There is apparentlya history of misuse and imnproperstorage of agriculturalchemicals resulting in runoff and contaminationof surface waters. For example, large amounts of pesticidesannually ran into Lake Sevan alone prior to promulgationof regulationsagainst their use in the Lake Sevan watershed. The Razdan River, for which Lake Sevan is the source, reportedly contains pesticide concentrations2-7 times greater than ambient standards. It is estimated that 400 tons of nitrogen and 180 tons of phosphorous enter Lake Sevan each year from agricultural runoff. Several pieces of information, although fragmentary and not verified, suggest a need to give attention to the storage and use of agriculturalchemicals. Previous to the blockade, total use included more than 800 tons of pesticides (Table 11.4) and 100,000 tons of mineral fertilizers per year (Ministry of Agriculture officials indicate that it may have been as much as 340,000 tons). In addition, about 5 million tons of manure were applied to farmland. The current amounts of chemicals and manure applications are significantly smaller because of the blockade and, in turn, the use of manure as heating fuel.
7Source: Program of the Armenian Republic Water Resources Use, Book 1, Common Explanation. Ministry of Agriculture, 1992. 78 Chapter11
11.39 The Ministry of Agriculture has an administrative structure and monitoring laboratory system Table 11.4: Annual Pesticide Use concerned with chemical use and contamination, but it is in Armenia by Region 1980 - 1988 sorely underfunded. The laboratory system consists of a central laboratory in Yerevan and twelve branch laboratories distributed around the nation; their 1993 budget is R 13 Region Quantityin Tons million (approximately $10,500 - $13,000 at current Abovian 69.4 fluctuating exchange rates). Sampling and analytical Ararat 85.6 equipment are inadequate, and the analytical work for the most part relies on basic wet chemistry methods. Artashat 79.2 Akhourian 39.0 11.40 It is recommended that the Ministry of Agriculture seek Western technical assistance, to assist in Ashtarak 67.6 upgrading analytical capabilities and provide advice Baghramian 34.2 regarding the structure of a national monitoring system, Vardenis 17.5 analytical techniques, and development of advisory services regarding chemical use. Goris 26.5 Eghegnadzor 25.3 11.41 Reclamation of Saline Soils. There are 24,000 Nairi 49.5 ha of saline soils in the Ararat Valley; 9,000 of which are slightly saline, and 15,000 are considered heavily saline. The Noyemberian 93.0 salinity problems are mainly the result of inadequate Oktemberian 71.7 irrigation facilities and improper methods of irrigation. 62.3 Salinity of soils is caused by a high water table (-0.5 to -1.5 Toumanian m) of slightly saline water (1-3 gm/l, rarely 6-7 gm/l salts, Shamshadin 66.8 or ppt). Atmospheric evaporation of the water leaves Echmiadzin 58.3 sodium salts behind in the soil. Treatments of these soils include: improving drainage to lower tihe water table and TOTAL 845.9 water running through the soils to carry away dissolved salts; Source: The National Ecological Report of diking the land and maintaining a layer of water over the Armnenia,Ministry of Nature and land to allow continuous drainage and leaching through the Environmental Protection, 1993 soil; and adding acid to the water, in the more severe cases, to degrade the salts and enhance leaching. These lands have to be reclaimed by chemical amelioration and drainage. Some 5,000 ha have been reclaimed in the past and became fertile irrigated land.
11.42 The reclamation of sodium affected soils is of high priority for the MOA but a very costly undertaking. Main cost items include; (a) construction of the drainage and irrigation system; (b) land levelling; (c) application of chemicals, and (d) agricultural recultivation. The last consists of the cultivation of winter wheat followed by a three to four year alfalfa crop. The irrigation system must allow water delivery also for leaching. Actual cost for the reclamation needs to be calculated. It is strongly advisable to make an economic evaluation of current approaches to land reclamation, in comparison with methods used in other countries, to make sure that it is economically justified. Forestryand Environment 79
Recommendations- Short to MediumTern Priorities
11.43 Economic Policy Changes and Reform Efforts. As Armenia evolves from a directed economic system to a market economy, competition and economic incentives can benefit the environment. To realize these potential environmental benefits it will be important to do the following:
* Phase in economic costs for energy and water resources to encourage efficient use, thereby reducing environmentalimpacts of producing these resources;
* Charge market prices for fertilizers, herbicides, and pesticides, again to encourageefficient use and discourageover applicationand consequentrunoff into surface waters;
* Permit purchase and sale of privatized farmlands and allow consolidation of land holdings under qualified entrepreneurialfarmers to occur so that economiesof scale and dedicated long- term land stewardshipcan occur; and
* When a land tax structure is developed, provide land tax credits favoring farmers who demonstrablymanage their land well, e.g. using proper erosion control measures.
11.44 Strengthening Regulatory Policy and Related Infrastructure. Although the blockade increases the costs associated with environmental protection, several steps should be pursued immediatelyincluding the following:
* Establish a regulatory or legislativebasis for storage and use of agricultural chemicals;and an agriculturalchemicals inspectoratewithin the Ministry of Nature and EnvironmentalProtection;
* Establish a Soil Conservation Directorate with responsibility for reducing erosion throughout Armenia and with powers that traverse the vertically oriented organizationspotentially affecting soil conservationeffectiveness.
11.45 Ministry of Aericulture Actions. The followingshould be implementedin the short term and should continueindefinitely:
* Grant long-term exclusiveuse leases of present common area pasture land that needs erosion- control, to provide incentive for proper land stewardship;
* Urgently implementa program of educationaloutreach to instruct the numerousnew farmers in erosion control practices, agricultural chemical use, proper irrigation procedures, and efficient energy use;
* Upgradeand maintain irrigation facilitiesto minimize system losses; and
* Cooperate with the study recommended to the Hayantar Forestry Association to examine if seabuckthorn berries could be a commercial crop while also serving as a significant erosion control weapon. 80 Chapter 11
11.46 Actions Related to Lake Sevan. The following should be acted upon in the short and medium term:
* Develop a management plan for conservation and replenishment of waters in Lake Sevan to include, inter alia, consideration of the other actions and recommendations.
* Review the feasibility of constructing a proposed sewage collection and treatment system to protect Lake Sevan from further inputs of hydrocarbons and nutrients.
* As soon as possible in the medium term (i.e. after the blockade ends and other energy sources become viable), minimize withdrawals of water from Lake Sevan for power generation, preferably to a system maintenance level, said to be 150-200 million' per year. Tributaries to the Razdan River occurring downstream of Lake Sevan supply sufficient water for irrigation, so this should not be an issue. Also, all but one of the six hydropower plants of the Razdan Cascade, based on the runoff of the Razdan and its tributaries, can be supplied by the tributaries rather than Lake Sevan.
* Abandon plans for irrigating the Lake Sevan area by building reservoirs on tributaries flowing into Lake Sevan or pumping water from Lake Sevan.
11.47 Protected Areas. Immediate efforts should be made to prevent destruction of the precursor wheat preserve in the reserve and park complex near Yerevan. TABLE 1: Value of Gross Agricultural Output in 1993 and 1994 (in 1994 prices)
1993 19941 1994 as % of 1993
State Private State Private State Private Unit and and nd and and and of Republic, Collective Cooperative Republic, Collective Cooperative Republic, Collective Cooperative Measure in all Farms Farms in all Farms Farms in all Farms Farms
Agricultural Gross million 129,851 8,800 121,051 139,928 9,709 130,219 107.8 110.3 107.6 Output, of which: drams Plant-Growing million 72,895 6,700 66,195 83,400 7,662 75,738 114.4 114.4 114.4 drams Livestock Farming million 56,956 2,100 54,856 56,528 2,047 54,481 99.2 97.5 99.3 drams
'PrelimtnaryEstimates Source: Ministryof Agriculture
TABLE 2: Acreage Sown to the Main Types of Agricultural Crops, 1992-1994
1992 1993 1994' 1994 as Percenta e of 1993 UCe and CppStatePrivate and State and Privateand State and Privateand State and Privateand at lic e CoFpertive Republic Collective e Republic Collective Co.u=v T frop Measureau iF all Farms C rmarms in all FarmsFrm mall Farms Cereal Crops 000 178.7 32.3 146.4 206.0 37.0 169.0 182.0 35.5 146.5 88.3 95.9 86.7 hectares Tobacco 000 0.7 0.1 0.6 0.7 0.1 0.6 0.2 0.05 0.2 28.6 50.0 33.3 hectares Geranium 000 0.1 0.07 0.03 0.08 0.06 0.02 0.02 0.02 NA 25.0 33.3 NA hectares Potato 000 27.6 1.9 25.7 20.8 2.9 27.9 32.1 2.6 29.5 104.2 89.7 105.7 hectares Vegetables 000 26.2 1.6 24.6 19.2 1.4 17.8 20.8 1.5 19.3 108.3 107.1 108.4 hectares Melons 000 3.6 0.3 3.3 2.3 0.2 2.1 2.8 0.4 2.4 121.7 200.0 114.3 hectares Grapes. tOta; 000 26.3 4.0 22.3 26.3 1.8 24.5 24.3 1.3 23.0 92.4 72.2 93.9 fruit-bearing hectars 23.8 3.6 20.2 24.8 1.6 23.2 24.1 1.3 22.8 97.2 81.3 98.3 only Otber Frits, 000 46.0 6.9 39.1 46.8 4.7 42.1 30.6 2.4 28.2 65.4 51.1 67.0 total; fruit- e 35.0 5.2 29.8 35.2 3.5 31.7 28.2 2.4 25.8 80.1 68.6 81.4 bearin only 'Prctary Estinau Source: Mmiusyof Agriulture TABLE 3: Production of Main Types of AgriculturalProducts, 1992-1993
1992 1993 1993 as Percentage of 1992 % State % Private % State % Private State Private TM. eof and and and and and and Agncultural Republic, Collective Cooperative Republic, Collective Cooperative Republic. Collective Cooerative Plroduct m all Farrns Parms m all Fanms rparms m all Farmis arms
Cereal Crops 100 18.1 81.9 100 14.7 85.3 102.0 83.0 106.2 Tobacco 100 20.0 80.0 100 12.5 87.5 80.0 S0.0 87.5 Geranium 100 73.1 26.9 100 5.0 95.0 15.4 1.1 57.1 Potato 100 6.3 93.7 100 8.7 91.3 127.5 177.3 124.2 Vegetables 100 6.0 94.0 100 5.0 95.0 85.2 71.0 86.1 Melom 100 8.1 91.9 100 10.7 89.3 78.0 102.9 75.8 Grapes 100 16.2 83.8 100 10.3 89.7 96.8 61.5 103.7 Fruits 100 14.2 85.8 100 9.0 91.0 38.8 24.4 41.2 Cattle and poultry, 100 10.6 89.4 100 3.0 97.0 75.7 21.2 82.2 live-weight Milk 100 2.4 97.6 100 1.3 98.7 106.1 58.9 107.3 Eggs, Total 100 30.6 69.4 100 5.1 94.9 77.7 13.0 106.2 Wool 100 1.3 98.7 100 0.7 99.3 102.1 52.8 102.8
Source: Ministryof Agricultureand State Departmentof Statistcs TABLE 4: Crop Production
1985 1990 1991 1992 1993 Area Production Yield Area I Production Yield Area I Production I Yield Area Production I Yield Area Production I Yield (ha) If (t) | (q/ha) (ha) I (t) (q/ha) (ha) I (t) | (q/ha) (ha) (t) (q/ha) (ha) (t) I (q/ha) Grains 135523 283243 20.9 138164 270801 19.6 152509 303493 19.9 180582 308795 17.3 205974 315696 15.3 Vegetables-of which 17968 609115 339.0 17909 377880 211.0 22246 425344 191.2 25696 480515 187.0 19170 409641 213.7 Tomatoes 7870 388463 493.6 7987 219004 274.2 7370 175111 237.6 9345 232410 248.7 5376 142351 264.8 Melons 3348 59929 179.0 4802 26507 55.2 4433 355088 80.1 3448 42135 122.2 2334 32754 140.3 Potatoes 19963 305434 153.0 22413 212924 95.0 22274 267288 120.0 28969 325322 112.3 30805 414103 134.4 Tobacco 4768 13493 28.3 739 1655 22.4 604 1032.84 17.1 632 2067 32.7 677 1637 24.2 Geanium 1018 22854 224.5 576 6445 111.9 319 7502.88 235.2 108 2891 267.7 87 398 45.7 Forage - of which 257600 1671824 64.9 251200 1358992 54.1 212957 919974 43.2 156009 636517 40.8 126588 - -
Perennial Grasses 85500 323190 37.8 98800 254300 27.7 106336 357600 33.6 95186 360755 37.9 NA - - Maize 19000 409260 215.4 2100 28224 134.4 15227 198408 130.3 5825 94074 161.5 1552 20918 131.6 Fodder Beet 5600 128016 228.6 2600 52780 203.0 1015 21691 213.7 785 12788 162.9 490 9967 203.4
Annual Gasses (hay) 41700 120513 28.9 51700 93060 18.0 51145 130420 25.5 41051 116174 28.3 - - -
Other Silage Cmps' 22500 235800 104.8 19200 162240 84.5 10908 82246 75.4 2884 22293 77.3 - - -
Annual Grasses 19600 201096 102.6 17500 179025 102.3 7691 61220 79.6 875 6361 72.7 - (green) Perennial Grasses 34700 382741 110.3 28700 274800 104.9 8764 68096 77.7 2694 24812 92.1 2374 7998 57.4 (green) Alfalfa 9000 0 8800 0 3630 0 3804 0
Meadowsand 171026 292454 17.1 131462 184047 14.0 106522 156587 14.7 99719 210407 21.1 - - Pastures (ha) Grapes 32900 315182 95.8 29100 169653 58.3 26989 210784 78.1 24470 138990 56.8 24800 135034 54.4 Ftuits - of which 53500 246100 46.0 50000 214000 42.8 46000 217120 47.2 33072 152792 46.2 29029 49106 16.8 Stone Fruits 21300 112038 52.6 21900 86067 39.3 19400 85554 44.1 15935 85571 53.7 13238 18652 14.0 Seed Fruits 29900 123786 41.4 26000 120380 46.3 24600 124230 50.5 16663 66819 40.1 15347 29942 19.4 Nuts 1600 3232 20.2 1500 2100 14.0 1530 2356.2 15.4 334 478 14.3 205 102.4 5 2 Subtropical Crops 500 3045 60.9 400 708 17.7 337 751.51 22.3 104 517 49.7 178 362 20.3 Berries 200 3442 172.1 200 1824 91.2 133 1449.7 109.0 31 57 18.5 57 473 8.3 'rape seed. veiches 2figs. pomegranates, olives Source: Mtnistry of Agriculture TABLE 5: Privatization of Agricultural Land
Distnbution as of 1.1.91 Privatized as of 7.1.94 Left to be Privatzed Total Lands to be Made Retained in Reserve To be Distributed Private Fund
Land Category diou. ha. thou. ha. % of total thou. ha. % of lands thou. ha. % of lands to peasnt to new thou. ha. % of to be made to be made fanns collec- Wids to private private tives be distri- buted
Total Without 1333.0 598.0 44.9 107.4 18.0 490.6 82.0 383.2 47.3 60.1 12.3 Personal Pos Arabe Land 445.3 397.3 89.2 86.1 21.7 311.0 78.3 272.7 34.9 3.4 1.1
Perennia 74.2 67.7 91.2 6.5 9.6 61.0 90.1 47.5 0.9 12.6 20.7 Pbnmtioas Meadows 144.5 133.0 92.0 14.8 11.1 118.6 89.2 63.0 11.5 44.1 37.2 Pasure 669.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Pre-eform 43.6 NA NA NA NA NA NA NA __ PersonalPuots of _M__
Source:Ministry of Agficultume TABLE 6: The Changing Structure of Livestock Inventories, 1993-1994
A. Livestock Population as of January 1, 1993
Type of Total In Private Individual In New In Remaining State In Personal Plots Livestock Inventory Farms Cooperatives and Collective Farms and Other Farming Units
Cattle 498.9 166.7 177.8 15.3 139.1 Of Which, 257.5 58.2 61.5 6.0 131.8 Cows: Sheep and 873.1 460.3 202.7 22.4 187.7 Goats Pigs 84.3 18.1 22.9 39.2 4.1
B. Livestock Privatization as of July 1, 1994
Type of Livestock Total Inventory' In Private Individual In New Farms Cooperatives Cattle N/A 196.5 152.9 Of Which, N/A 66.6 53.2 Cows: Sheep and Goats N/A 500.1 163.4 Pigs N/A 24.0 20.3
'January 1, 1994 Source: Ministry of Agriculture TABLE 7: Total Private Livestock Production and Share of Private Producers, 1985-1993
Category Unit 1985 1986 1987 1988 1989 1990 1991 1992 1993 Beef and Veal km 21300 22700 23900 26600 17600 15700 32400 53200 49900 % of Total BeefNeal % 30 31 31 34 25 26 59 95 96 Pork O 14900 15900 14300 13400 11100 9000 17400 20100 4100 % of Total Pork % 46 46 42 39 37 39 68 81 59 Mutton, Lamb, Goat Meat ,, 16700 15400 10900 12600 10000 7400 13900 17200 17500 % of Total MtL/G Meat % 51 49 40 44 38 37 74 98 97 PoultryMeat ,b 11100 13200 10700 10600 11400 10000 9400 7900 4000 % of Total Poultry Meat % 33 36 29 27 28 24 28 65 100 Other Meat 300 600 100 400 100 300 300 300 100 % of Total Other Meat % 75 86 33 67 50 100 100 100 100 Total Meat t 64300 67800 59900 63600 50200 42400 73400 98700 75600 % of Total Meat % 38 38 34 35 30 29 55 89 93 Cow Milk m 159700 174800 186800 183400 161300 152600 289300 372600 NA % of Total Cow Milk % 30 32 33 33 34 36 72 97 Sheep Milk 7800 10700 8400 7300 7300 5800 8200 8900 NA % of Total Sheep Milk % 43 52 47 47 60 63 95 98 Total Milk 167500 185500 195200 190700 168600 158400 297500 381700 392200 % Total Milk % 31 32 34 34 34 37 72 97 99 Eggs 172 177 182 178 179 173 176 176 179 % Total Eggs % 30 29 29 29 32 33 36 70 95 Raw wool 1720 1620 1430 1270 1060 1070 1980 2040 2040 % Total Wool % 39 29 35 47 32 38 83 97 97 Honey 342 342 452 553 653 849 1082 1000 NA % Total Honey % 43 41 42 44 50 60 63 83 Source: Ministry of Agriculture TABLE 8: Machinery Inventories and Privatization as of January 1, 1994
Total Privatized to New Machinery Inventories as of Individual and Cooperative January 1, 1994 Agricultural Farms Including
New Individual New Cooperative Type or Farms, Fanns, Agricultural Quantity Book Value Quantity Book Value Quantity Quantity Machinery (units) (000 Rb) (units) % (000 Rb) (units) % (units) %
Tractors 12,508 64,615 8,077 64.6 39,197 4,679 57.9 3,398 42.1
Combines 2,245 18,679 976 43.5 8,341 520 53.3 456 46.7 Lorries 11,464 47,949 7,823 68.2 28,655 5,466 69.9 2,357 30.1
Seeding-machines 2,335 2,754 1,176 50.4 1,368 642 54.6 534 45.4
Source: Ministry of Agriculture
TABLE 9: Buildings and Construction, and Total Privatization
Including Privatized to New Individual Stock as of January 1, 1991 and Cooperative Farms New Individual Farms New Cooperative Farms
Type of Building or Total Amount Share of % of % of Construction Book Value Structure by of Sales Book Value, Cost Privatized Cost Privatized (000 Rb) % (000 Rb) % (000 Rb) Stock (000 Rb) Stock
Total buildings & 2727544.0 100.0 676655.0 24.8 364767.0 53.9 311888.0 46.1 constructions including:
Industrial 2014298.0 73.8 584313.0 29.0 302411.0 51.7 281902.0 48.3 use
Non-industrial 549872.8 20.2 87284.2 15.9 61872.2 70.9 25412.0 29.1 use
Incomplete 163373.2 6.0 5057.8 3.1 483.8 9.6 4574.0 90.4 building & constuction
Source: Ministry of Agriculture TABLE 10: Feed Production, 1985-1993
Category Unit 1985 1986 1987 1988 1989 1990 1991 1992 1993 Hay m 741,700 874,700 565,900 853,300 467,600 517,900 961,100 914,300 910,000 Straw W' 205,900 295,000 198,800 266,300 109,600 194,600 279,400 272,300 300,000
Haylage 'W 473,100 508,000 322,500 455,200 177,300 247,200 160,100 33,900 50,000 Silage mm 711,400 844,900 680,500 956,000 531,600 524,000 411,900 107,500 250,000 Green Meal ao 9,700 9,000 6,900 5,200 3,000 1,600 1,200 30 0 On-Farm Produced Grains 57,600 72,700 62,400 74,700 44,100 54,800 65,000 63,000 65,000
ManufacturedFeed s w 570,000 590,600 642,000 604,000 671,000 664,000 375,000 240,000 100,000 Milk Fed to Calves = 51,700 52,200 51,400 44,900 38,600 35,200 39,300 38,900 39,200
Total Feed Units F.U.' illion 2,005 2,685 1,657 2,922 1,261 1,671 1,374 1,071 936 Total Animal Units VW 1,364 1,535 1,305 1,530 1,146 1,177 1,018 811 743 Total Feed Units per Animal Unit Per Year F.U.' 1,470 1,750 1,270 1,910 1,100 1,420 1,350 1,320 1,260
I Equivalentto One Oat Unit = 600 grams of starch Source: Ministry of Agriculture TABLE 11: Area, Yields, and Total Production of Major Forage Crops, 1985-1993
Category 1985 1986 1987 1988 1989 1990 1991 1992 1993 A. TotalArea (ha) 257,600 267,400 268,400 264,700 257,600 251,200 212,900 156,000 125,746 PerennialForage Crops 145,100 144,300 145,500 142,600 141,600 138,100 123,400 103,500 86,799 Anual ForageCrops 65,400 73,000 74,900 70,400 69,000 70,100 62,400 43,000 33,607 ForageMaize 19,000 19,900 20,800 21,800 22,000 21,200 15,200 5,800 1,552 OtherSilage Crops 22,500 24,100 21,400 24,400 21,200 19,200 10,900 2,900 957 FodderBeets 5,600 6,100 5,800 5,500 3,800 2,600 1,000 800 48 B. Yields(tons per ha)
Parenial ForageCrops - green 11.0 13.6 9.5 13.6 9.8 10.5 7.8 9.2 5.8 PerennialForage Crops - Hay 3.8 4.2 3.0 4.4 2.6 2.8 3.4 3.8 3.9 AnnualForage Crps - green 10.3 12.5 9.8 12.2 7.5 10.2 8.0 7.3 2.9 AnnualForage Crops - Hay 2.9 3.5 1.9 3.4 2.0 1.8 2.6 2.8 2.7 ForageMaize 21.5 22.2 19.5 21.6 14.2 13.4 13.0 16.2 13.1 OtherSilage Crops 10.5 12.6 8.0 13.1 8.0 8.4 7.5 7.7 7.3 FodderBeets 22.8 28.4 26.8 27.8 21.3 20.3 21.4 16.3 20.4 C. Total Production('000 tons) PerennialForage Crops- gren 382,700 460,700 338,400 617,900 360,600 274,800 68,100 24,800 7,998 PerennialForage Crops - Hay 323,000 415,100 293,300 380,600 230,000 254,300 357,600 360,800 330,536 AnnualForage Crops - green 210,100 250,600 204,700 250,700 109,400 154,500 61,200 6,400 2,107 AnnualForage Crops - Hay 120,600 178,300 101,900 170,800 101,800 92,400 130,800 116,200 89,275 ForageMaize 408,000 442,200 406,000 469,800 312,700 284,800 198,400 94,100 20,337 OtherSilage Crops 236,000 304,400 172,500 319,200 169,900 162,200 82,200 22,300 6,981 FodderBeets 127,800 173,800 155,700 142,900 79,800 51,800 21,400 12,800 9,788 Source: Ministryof Agriculture TABLE 12: Natural Grassland and its Total Hay Production, Composition and Distribution by Altitude
A. Total Area (as of January 1, 1993)
Total Area '000 ha % of Total Area Pastures 688,438 83.3 Meadows 138,260 16.7 Total 826,698 100.0
B. Distribution by Altitude (as of January 1, 1993)
'000 ha % of Total ha Below 1,000 m 56,300 6.8 1,000 to 1,500 m 138,500 16.8 1,500 to 2,000 m 343,500 41.6 Above 2,000 m 286,700 34.8 Total 825,000 100.0
C. Total Hay Production
Total Hay Production Unit 1985 1986 1987 1988 1989 1990 1991 1992 1993 Meadows/PasturesUsed for ha 171,000 173,100 150,700 160,000 118,800 131,500 106,500 99,700 113,458 Hay Production Yield tons/ha 1.71 1.91 1.33 2.01 1.26 1.40 1.47 2.11 2.2 Total Production tons 292,400 330,600 200,400 321,600 149,700 183,100 156,600 210,400 250,020
Source: Ministry of Agriculture TABLE 13: Uvestock Populaton, 1986-1994 ('000 at begfinningof year)
Category 1986 1987 1988 1989 1990 1991 1992 1993 1994' Cattle 861 860 834 742 690 640 567 499 500 - of which Cows 319 317 312 272 260 251 251 258 255 Pigs 344 340 344 319 329 311 224 84 160 - of which Sows 35 34 39 38 41 48 40 17 39 Sheep 1872 1788 1703 1433 1277 1172 1006 854 1060 - of which Ewes 1204 1167 1114 923 840 817 717 622 760 Goats 30 31 27 17 15 14 17 19 19 - of which Dams 21 22 20 12 11 11 12 13 14 Horses 7.7 7.9 7.5 5.7 6.3 6.6 6.5 8.6 9.0 Poultry 12131 12629 11395 10629 11714 9352 9334 2955 2000 2 Total AnimalUnits 1284 1279 1223 1087 1051 949 857 629 663 Rabbits 22 25 24 17 15 18 14 4 5 Bee Hives 100 104 141 132 136 131 127 130 130 1 Ministry of Agricultureestimate 2 Cow or horse = 1.0 animal unit (A.U.) Cattle other than cows = 0.6 A.U. Pig = 0.3 A.U. Sheep and goats = 0.15 A.U. Poultryc= 0.02 A.gU. Source: Munistryof Agriculture TABLE 14: Production of Prindple LAvestock Products, 1985-1993
Category Unit 1985 1986 1987 1988 1989 1990 1991 1992 1993 Beef and Veal 70,200 73,900 76,300 78,000 71,000 59,900 55,200 56,200 52,000
% of Total Meat % 42 41 44 43 42 41 42 51 64 Pork 32,700 34.900 33,800 34,300 29,700 22,900 25,700 24,700 7,000
% of Total Meat X 19 20 19 19 18 16 19 22 9 Mutton, Lamb & Goat Meat 32,500 31,300 27,200 28,700 26,200 20,000 18,600 17,600 18,000
% of TotalMeat % 19 18 16 16 16 14 14 16 22 Poultry 33,700 37,000 36,800 39,500 40,300 42,000 33,200 12,100 4,000
%ofTotalMeat % 20 21 21 22 24 29 25 11 5 Odier Meat 400 700 300 600 200 300 300 300 100
Total Meat 169,500 177,800 174,400 181,100 167,400 145,100 133,000 110,900 81,100
Cow Milk 527,500 552,300 558,300 550,300 479,100 422,700 403,400 385,800 NA Sheep Milk 18,200 20,400 18,000 15,600 12,100 9,200 8,600 9,100 NA Total Milk 545,700 572,700 576,300 565,900 491,200 431,900 412,000 394,900 397,500 Eggs 573 609 637 618 561 518 485 253 189 Raw Wool 4,400 4,600 4,100 2,700 3,300 2,800 2,400 2,100 2,100 Honey 795 837 1,077 1,254 1,303 1,413 1,310 1,200 NA
Source: Ministryof Agriculture TABLE 15: State Sector Poultry Production, 1990-1993
Category Unit 1990 1991 1992 1993' A. Population Grandparent Stock '000 4,000 0 0 0 Parent Stock '000 276,000 372,000 8,600 0 Layers '000 1,826,000 1,900,000 327,000 275,000 Broilers '000 3,080,000 3,510,000 57,000 Pullets '000 1,384,000 695,000 37,000 69,000 B. Production Poultry Meat '000 tons/year 31,500 23,600 5,800 400 Eggs million/year 336.6 304.8 75.0 4.6 C. Performance Slaughterweight kg/broiler 1.23 1.07 0.81 n.a. Age at Slaughter days 63 70 80 Feed ConversionRatio kg feed per kg 4.0-5.0 5.0-6.0 6.0-7.0 n.a. Egg Production eggs/hen/year 181 157 57 n.a. Mortality Rates
- Broilers % 22 29 27 n.a. - Layers % 22 28 24 n.a. Layer CullingRate % 25 35 40 n.a. I Ministry of AgricultureEstimate Source: Ministry of Agriculture TABLE 16: Livestock Performance, 1985-1993
Cateogry Unit 1985 1986 1987 1988 1989 1990 1991 1992 1993' A. FertilityRates
Cattle b~p-.- ~y Social Sector Farms 63 62 64 61 59 54 60 59 60
Private Producers cWn b= paww/y 55 57 56 62 47 50 49 46 48
Average bp wt 60 61 61 61 55 52 58 56 57
Pigs p*Em bto pa wlym Social Sector Farms 10.8 11.0 10.0 10.0 9.5 7.2 7.4 7.0 7.2
Private Producers pm b p 8.9 8.8 8.7 6.8 6.6 6.0 6.0 6.1 6.5
Average p b - -ty- 9.3 9.5 9.4 8.5 8.1 6.7 6.7 6.5 7.0
Sheep and Goats b.Wskft bcx paf 3W Social Sector Farms e P )VW 82 83 84 83 81 72 72 70 76 Private Producers , b psa° 68 72 71 69 94 99 90 86 84
Average i ,,, b pa 77 78 78 77 86 82 76 74 78 B. Milk Production Cows '' 1633 1816 1809 1876 1760 1625 1607 1536 1405 Ewes '' 15 18 16 17 14 11 12 14 8 C. SlaughterWeights
Cattle k 259 279 260 274 271 248 250 235 240
Pigs kgb--*V"- 97 89 93 92 90 75 78 76 77 Sheep & Goats 4 h 35 34 29 27 30 28 30 29 30 D. Egg Production ' 167 174 181 187 186 176 156 83 130 E. WoolProduction 4' 2.1 2.4 2.3 2.4 2.3 2.2 2.1 2.1 2.2 F. Honey Production k t 8.0 8.1 7.7 9.5 9.6 10.8 10.3 10.8 10.5 I Ministryof AgricultureEstimnates Source: Ministry of Agriculture TABLE 17: Livestock Performance Compared to Western Standards in 1993
Armn.as % of Western Westem Category Unit Armenia Standards Standards A. Milk Production Milk/Cow/Lactation Liter 1400 5500 25 Milk Quality: - Butterfat % 4.0 3.6 1.1 times - Bacterial Count No. 4-20 million 100,000 max. 40-200 times - Somatic Cell Count No. 1 million 400,000 max. 2.5 times - Calving Rate % 55-60 85-90 66 B. Beef Production Average Slaughterweight Kg 235 550 43 Dressing Weight % 50-52 56-58 89 Daily Liveweight Gain Kg 0.4 1.0 40 C. Pork Production Pigs Born Sow/Year No. 7-8 22 34 Pigs Weaned Sow/Year No. 6-7 21 31 S3aughterweight Kg 50-60 85-90 63 Daily Liveweight Gain Kg 0.2 0.80 25 Overall Feed Conversion 7-8:1 3.2:1 2.3 times Ratio Lean Meat Share % 45-50 55 86 D. Sheep Production Lambs Born per 100 Ewes No. 70 110 64 Milk Ewe/Lactation Kg 10-12 50-300 4 to 20 Wool per Sheep Kg 2.4 4.0-5.0 53 E. Broiler Production Age at Slaughter Days 80 45-52 1.6 times Weight at Slaughter Kg 0.8 1.7-2.0 43 Feed Conversion Ration 5-6:1 2:1 2.8 times F. Egg Production Eggs/Hen/Year No. 80-100 285 32 G. Honey Production Honey/Beehive/Year Kg 10 40-50 22 Source: Ministry of Agriculture TABLE 18: Livestock and Poultry Slaughter Weights and Yields, 1985-1993 (in kilograms)
1985 1988 1989 1990 1991 1992 1993 Cattle: Average Weight of Animals 320.0 320.0 310.0 306.0 271.0 250.0 222.0 Sold to the State Pigs: Average Weight of Animals 107.0 106.0 110.0 103.0 103.0 90.0 102.0 sold to the State Average annual milk yield per cow 2010.0 2089.0 1951.0 1786.0 1632.0 1650.0 1514.0 Average annual wool yield per sheep 2.3 2.5 2.5 2.1 1.8 2.0 2.4 Average annual egg yield per layer 167.0 187.0 187.0 176.0 156.0 150.0 100.0 Source: Ministry of Agriculture
TABLE 19: Production of Manufactured Feed, 1985-1994 (tons)
Category 1985 1987 1988 1990 1991 1992 1993 1994' Cattle Feed 250000 269600 221600 238100 153700 82500 42200 73000 Pig Feed 160000 176400 155000 139000 121400 48600 38300 18700 Poultry Feed 255000 255100 279300 203000 83800 91500 12000 4500 Sheep Feed 18000 18200 17500 13000 13600 1000 0 0 Horse Feed 1000 1000 1000 100 500 0 0 0 Fish Feed 23800 19600 20100 23000 23500 10100 13000 3800 Rabbit Feed 2000 2000 2000 1600 1840 440 0 0 Total 709800 741900 696500 617800 398340 236140 105500 100000 'Ministry of Food and Procurementestimates Source: Ministry of Food and Procurement TABLE 20: Performance of Artifical Insemination (A.I.)
Category Unit 1985 1988 1989 1990 1991 1992 1993' A. Total Cows No. 319.3 272.4 260.1 250.9 251.1 257.5 255.0 B. Total Cows/Heifers No. 210.0 201.0 185.2 173.2 288.7 296.1 299.0 to be Inseminated C. Total Cows/Heifers No. 191.5 193.0 180.3 165.8 97.7 20.0 1.343 Actually Inseminated B:C % 91.2 96.0 97.4 95.7 33.8 6.8 0.45 Conception Rate % 94.2 94.9 92.8 93.7 94.1 93.2 NA Repeat A.I.s2 9 21 25 24 22 21 21 NA As of June 1, 1993 2 2 or 3 A.I.s. Source: Ministry of Agriculture TABLE 21: Major Livestock Production Costs, 1994 (Drarns per 100 Kg)
Category Beef' Pork' Mutton' Milk Concentrate Feed 5920 21800 992 10080 Roughages 36900 5400 28800 77850 Labor 4380 4380 3500 4380 Social Security 1621 1621 1295 1621 Fuel 1200 1200 1000 1200 Electricity 2720 2720 1360 Gasoline 2700 2700 2160 2700 Water 144 138 48 144 Amortization 2500 2500 2000 2500 Repairs 1500 1500 1500 1500 Other Costs 3000 3000 2500 1000 Total Cost 62585 46959 45155 102975 Liveweight Source: Ministry of Agriculture TABLE 22: Basic Staple Foods, per Capita Production and Consumption Norms, 1985-1993 (kilograms)
Per Capita Production Physiological Percentage Consumption of Norm Attained, Products 1985 1988 1989 1990 1991 1992 1993 Norms 1993
Bread wheat 36.6 46.2 23.8 33.0 36.4 37.0 --- 133.0 --- Vegetables 205.1 181.5 155.4 119.8 116.6 129.2 109.5 135.0 81.1 Potato 92.2 59.9 77.2 60.5 73.3 87.3 110.7 57.0 194.2 Fruits 49.9 69.7 49.1 44.2 59.5 41.1 13.1 56.0 23.4 Grapes 59.4 52.6 26.7 36.0 57.8 37.3 36.1 30.0 120.3 Meat and Meat products 31.9 32.7 30.3 25.8 36.4 29.8 21.7 67.0 32.4 Milk and Milk Products 164.5 163.7 142.4 122.9 112.9 106.1 106.2 371.0 28.6 Eggs 173.0 179.0 163.0 147.0 133.0 68.0 50.5 240.0 21.0
Source: Ministry of Agriculture TABLE 23: Balance of Supply and Use of Major Agricultural Products, 1993 (000 Tons)
Disappearance by Type of Use
~ ~ Product Type ProductSupplyType Seed Human~ ~ Consumption ~ ~ ILossesIndustrial Use Feed Other Usesand Export
Total Cereals 1310 71 7701 0 465 4 0 From Domestic 370 56 150 0 160 4 0 Production
From Import 940 15 620' 0 305 0 0 Potatoes 373 85 239 0 11 0 38 From Domestic 350 62 239 0 11 0 38 Production
From Imports 23 23 0 0 0 0 0 Vegetables - All Domestic 560 0.3 455 90 7 4.7 3 Production
Grapes - All Domestic 170 78 90 0 0 2 Production
Fruits - All Domestic 150 85 55 0 0 10 Production
80 thousand tons of which are to be placed in the State Reserve
Source: Ministry of Agriculture TABLE 24: State Purchase of Agricultural Products, 1993 (000 tons)
Average in Actual in Average in Actual in 1986-88 1988 1990-92 1993 Grain 72.7 31.2 53.9 31.9 Tobacco 10.3 7.0 1.3 0.2 Sugar beet 114.9 114.7 Geranium 24.2 19.3 5.7 0.4 Potato 101.8 73.3 27.0 5.1 Vegetables 320.5 320.7 101.3 5.6 Vegetable crops 45.6 35.1 3.8 Grapes 184.9 182.6 73.7 48.7 Fruit 110.6 125.4 45.2 18.4 Poultry 140.5 141.0 54.5 19.3 Milk & milk products 347.9 346.6 127.5 11.3 (recalculated to milk) Eggs, mln. 430.2 434.0 123.7 4.7 Wool (tons) 2066.0 2128.0 861.0 241.0
Source: Ministry of Agriculture TABLE 25: Sources of Total Marketed Agricultural Products and Raw Materials
1992 1993 1993As Percent of 1992 Type of State and Privateand State and Privateand State and Privateand Agricultural Unit of Republic. Collective Cooperative Republic Collective Cooperative Reulc olcie Cooperative Output Measure in all Farms aFrms in all Farms Fams n allF Farms Cereal Crops thous. tons 63.4 12.4 51.0 31.9 0.9 31.0 50.3 7.3 60.8 Tobacco thous. tons 2.0 0.1 1.6 0.201 - 0.201 10.0 - 12.6
Geranium thous. tons 2.0 1.5 0.5 0.398 0.143 0.255 19.9 51.0 120.0
Potato thous.tons 82.0 2.0 80.0 5.1 0.3 4.8 6.2 15.0 6.0
Vegetables',of thous. tons 94.7 1.3 93.4 NA NA NA NA NA NA which boughtby processingplants 52.6 1.0 51.6 _ - _- Grapes, of which thous. tons 39.5 - 39.5 48.7 - 48.7 123.3 - 123.3 bought by processing plants 39.5 - 39.5 - - - - -
Fruits, of which thous. tons 22.5 0.1 22.5 18.4 0.08 18.3 81.8 80.0 81.3 bought by processingplants 22.5 0.1 22.5 - - - - -
Livestock-poultry, tious. tons 16.0 10.7 5.3 2.4 1.2 1.2 15.0 11.2 22.6 carcass weight:of which boughtby 7.7 2.4 30.2 - - - - - _ processing plants Milk, boughtby thous.tons 37.6 7.4 30.2 11.3 3.2 8.1 30.1 43.2 26.8 processingplants Eggs, Total min. pieces 77.9 74.6 3.3 4.7 4.7 - 6.0 6.3
Wool (clean) thous.tons 381.0 16.0 365.0 240.9 2.9 238.0 63.2 18.1 65.2
Excludesmelons Source:Ministry of Agriculture Page 1 of 3
TABLE 26: State and Cooperative Marketing Channels for Agricultural Output, 1990 1990
Marketed total Including
Agro-Industrial State Consumer Unions Other Organizations Committeel Quantity ValueI (tons)2 (th rubles) Quantity Value Quantity Value Quantity Value (tons) (th rubles) (tons) (th rubles) (tons) (di rubles)
Grain 43915 15050 43915 15050
Potatoes 77600 31785 52900 22483 23600 8815 1100 487
Vegetables' 172200 38713 116700 26257 47800 10724 7700 1732
Melons 12200 2242 6800 1251 4000 736 1400 255
Fruit 92600 47689 63100 32496 25300 13029 4200 2164
Grapes 126100 140475 114100 127298 11200 12297 800 880 Geranium Seed 6445 2369 6445 2369
Livestock and Poultry 89115 322283 56222 203298 1368 4436 31525 114549 (live weight)
Milk 225547 133064 225547 133064
Eggs (thou. pieces) 311933 37432 1237 84 310696 37348
Wool 2073 17626 245 1668 1828 15958
Formerly encompassed what are now the Ministry of Agriculture and the Ministry of Food and Procurement 2 Tons, unless otherwise specified 3 Includes melons Source: Armenian State Committee for Statistics, Ministry of Food and Procurement, Hai -Coop Consumer Union Page 2 of 3
TABLE 26: State and Cooperative Marketing Channels for Agricultural Output, 1991 1991 Marketed total Including Ministry of Food and Procurement ConsumerUnions Other Organizations
Quantity Value Quantity Value Quantity | Value Quantity Value (tons) 2 (th rubles) (tons) (di rubles) (tons) (th rubles) (tons) (di rubles)
Grain 59082 99131 59082 99131 Potatoes 20981 43187 14777 31992 5960 9502 244 1693 Vegetables3 92896 106043 63169 72109 26011 29692 3716 4242 Melons 904 1434 506 803 298 473 100 i58 Fruits 17380 52874 17380 52874 Grapes 39450 62021 26826 42174 6509 10233 6115 9614 GeraniumSeed 8234 12351 8234 12351 Livestockand Poultry 64755 497782 40796 313603 971 7467 22988 176712 (live weight) Milk 133247 163992 133247 163992 Eggs (min pieces) 301899 95225 1208 381 300691 94844 Wool 1264 71395 149 8425 1115 62970
1 Formerlyencompassed what are now the Ministryof Agricultureand the Ministry of Food and Procurement 2 Tons, unless otherwisespecified I Includes melons Source: Armenian State Committeefor Statistics,Ministry of Food and Procurement,Hai -Coop ConsumerUnion Page 3 of 3
TABLE 26: State and Cooperative Marketing Channels for Agricultural Output, 1992
Marketedtotal Including Ministryof Food and Procurement ConsumerUnions Other Organizations
2 V(trubles) (tons) (tons) (h2 rubles)(tons) Quantity (thValue rubles) Quantity(tons) (th Valuerubles) Quantity(tons) (thValue rubles) Grain 63406 827472 63406 827472 Potatoes 5051 115665 4059 92948 956 21892 36 825 Vegetables3 80557 283801 54778 192982 22556 79465 3223 11354 Melons 18700 177000 10572 99000 6171 58000 1957 20000 Fruit 274 10631 274 10631 Grapes 29443 234282 20021 159312 4858 38656 4564 36314 GeraniumSeed 2887 43303 2887 43303 Livestockand Poultry 30479 1420432 10159 473464 1643 76220 18677 870748 (live weight) Milk 77896 724873 77896 724873 Eggs (min pieces) 75359 248325 301 993 75058 247332 Wool 390 100813 46 11896 344 88917
Formerlyencompassed what are now the Ministryof Agricultureand the Ministryof Food and Procurement 2 Tons, unless otherwisespecified Includes melons Source: Armenian State Committeefor Statistics,Ministry of Food and Procurement,Hai -Coop ConsumerUnion TABLE 27: Armenian Consumer Union Purchases of Agricultural Products and Raw Materials 1988 -1994
Units 1988 1989 1990 1991 1992 1993 1994' 1. Potatoes tons 19842 30607 25386 5960 956 696 560 2. Grapes tons 6906 11803 11442 6542 1444 4442 2100 3. Fruits tons 25270 22526 32973 17178 17748 6988 7010 4. Melons and squash tons 11123 9753 9030 3070 494 215 154 5. Vegetables tons 60171 55368 55324 36837 15567 2234 3950 6. Wild fruits tons 1796 2582 3292 2687 320 19 34 7. Medicinal herbs/plants tons 928 396 279 268 214 76 --- 8. Wool tons 1647 1699 1046 1000 347 268 60 9. Leather from heavy livestock thous 110 104 106 62 21 4.7 7.5 (cattle) pieces 10. Leather from small livestock thous 538 413 413 202 79 31.3 10.7 (goats, sheep) pieces 11. Pig leather thous 39 37 34 27 13 2.4 0.6 pieces 12. Fluffy fur products thous 345 316 241 194 186 96.0 720 rubles 13. Meat tons 3773 5798 4045 2964 1643 ------14. Dairy products tons 548 468 588 752 463 356 295 15. Eggs thous 3330 2987 3767 2118 1049 424 520 pieces 16. Grain products tons 1658 1386 1245 918 420 346 130 17. Driedfruits tons 1658 131 505 145 115 40 34.4 I Ministry of Agriculture Estimates Source: Hai-Coop, Armenian Consumer Union TABLE 28: Sales of Food Products by the Armenian Consumer Union
1992 First Quarter 1993 1993 First Quarter 1994 Dram) Product (000 Rubles) (000 Rubles) (000 Rubles) (000 Through Retail Network Total Throu Retail Through Public Total Through Retail | Through Public Through Retail Network Netnvork Catering Network Catering 8,315 295.308 5,118 I. Meat and Poultry 104,439 77,604 26,835 23,006 14,691 631 49,044 590 2- Sausageproducts 33,215 20,856 12.359 3,306 2,675 148 86,684 1.764 3. Fish 7,552 6,120 1,432 2,608 2.460 10,157 875.972 90.044 4. Butter 201.604 180,159 21.445 86.109 75,952 947 136,975 12.539 5. Vegetable Oil 6,889 5,369 1,520 17,584 16,637 1,008 21.800 148 6. Lard 1,936 53 1.883 3,929 2,921 123 57,597 1,079 7. Margarine 10,361 8,572 1,789 1,427 1,304 6,114 71 49.309 1,199 8. Milk and Milk products 12.384 11.271 1.113 6,185 985 101,531 2.902 9. Cheese 33.826 24,830 8.996 6,285 5.300 9 61.828 1.656 10.Canned meats 15,369 13,886 1,483 18,294 18,285 102 49.151 428 lI.Cannedfish 7,761 7.015 746 1.184 1.082 1,200 162.978 9,047 12.Canned vegetables 14,517 13.282 1,235 11,324 10.124 408 98,274 2.207 13.Canned fruits and berres 9,298 8,082 1,216 5,776 5,368 9,398 222 36.332 1,263 14. Eggs 7.686 5,998 1,688 9.620 4.348 498.210 12,360 15. Sugar 156,082 144.732 11.350 25,097 20,749 2,719 573,185 14,211 16. Confectionarygoods 96,078 83,977 12,101 67,053 64.334 8,160 1,035 274,226 8.115 17, Jams,jellies and honey 34,973 30,895 4.078 9.195 2,047 301 68.186 1,349 18. Tea 11,226 10,537 689 2,348 44 144,279 15,651 19. Salt 8,383 8,247 136 1.531 1.487 391 1,001,148 14,187 20. Flour 29,360 27,788 1,572 168,205 167.814 9,078 4,704,063 68,793 21. Bread and bread products 900.716 881,075 19,641 739,582 730,504 15.574 1,974 628,535 29,445 22. Groats and legumes 16.995 13,326 3.669 17,548 2.569 367,069 17,211 23. Macaroni products 50,344 42,627 7,717 37.616 35,047 1,097 136,619 636 24. Potatoes 9,577 6,918 2,659 2.962 1,865 1,050 150,129 502 25. Vegetables 9,063 4,928 4,135 2,466 1,416 344 210.,94 831 26. Fruits, Berries and Melons 7,258 5,842 1,416 2.730 2,386 4,382 537,527 20,079 27. Vodka 126,291 104,539 21,752 40,498 36,116 586 183.843 9,981 28. Wine 32,099 28,223 3,876 10,881 10.295 831 294,607 3,906 29. Cognac 49,234 45,138 4,096 9,170 8,339 164 41,536 4,365 30. Champagne 5,095 4,856 239 1,054 890 357 19.696 2,005 31. Beer 24,532 13,018 11,514 457 100 914 105,075 4,208 32. Nornalcoholicdrinks 13,969 9,377 4.592 2,896 1.982 - -- 54 33. Ice Cream 695 - 695 0 1.676 287,763 20,052 34. Other food products 41,963 31,162 10.801 33,236 31.560 58,186 12.309,127 377,861 35. Total foodproducts 2.092,762 1,882,294 212.460 1,371.162 1,312,976
Source: ArmnenianConsumer Union TABLE 29: Retail Prices for AgriculturalGoods in State and CooperativeTrade, IncludingPublic Catering,December 1991 throughMay 1994
Prices in Rubles per Kilo (unless otherwise specified) Products Dec Jan March June Sept Dec March April May May 1991 1992 1992 1992 1992 1992 1993 1993 1993 1994 (inDrans) Meat 20 44 69 85 III 385 650 850 1300 750 Fish 6 12 22.7 25 25 65 255 300 400 220 Animal Fat 8 120 264.5 190 250 510 950 1600 1925 --- Vegetable Oil 3.3 30 40 75.5 80 220 512 675 780 600 Milk 0.55 17 1.8 21 23 45 113 123 102 120 Cheese 18 84 105 140 158 430 1159 1233 1275 600 Eggs 3 19 30.2 35 53 156 296 293 325 20 Sugar 3.5 N/A 12.6 75 56 142 280 455 550 350 Salt 0.3 11 1.5 5.6 8 9 30 40 60 15 Bread 1 2.7 2.9 5.5 5 33 45 45 60 4 Macaroni 1.6 9.8 24 25 47.5 193 269 268 305 110 Potatoes 4 4.6 9 15 13 51 85 105 130 70 Vegetables 4.13 7.83 10 21.4 28.3 32.5 71 70 440 210 Fruits 9 10 17 30 35 130 150 150 450 500 Alcoholic Drinks 18.9 160 220 190 220 540 600 600 650 325
Source: Armenian State Committee for Statistics TABLE 30: Prce Indices in City Produce Markets', 1988-1992
Price Index in %
Product 1989 as a % 1990 as a % 1991 as a % 1992 as a of 1988 of 1989 of 1990 % of 1991 % of 1988
Total including: 111.8 144.2 271.5 550.3 2,408.67 Bread products 103.0 143.8 315.2 488.9 2,282.46 Potatoes 116.0 108.5 327.5 527.8 2,175.55 Vegetables 113.4 153.7 173.0 574.7 1,732.90 Fruits 111.5 142.7 178.5 686.5 1,949.74 Melons, Watermelons 123.6 115.9 232.2 671.6 2,233.96 Meat-Poultry 101.3 149.9 292.6 456.1 2,026.49 Dairy Products 106.2 159.7 280.2 580.9 2,760.57 Eggs 99.3 157.1 293.0 574.7 2,626.84 Honey 95.2 115.8 399.8 855.4 3,770.14
' Formerly known as the Collective Farm Markets Source: Armenian State Committee for Statistics TABLE 31: Monthly Average Market Prices, 1992-1993 (Rubles) Page 1 of 2
Units Jan-92 Feb-92 Mar-92 Apr-92 May-92 Jun-92 Jul-92 Aug-92 Sep-92 Oct-92 Nov-92 Dec-92 Apr-93 May-93 Dec-93 Beef kg 63 63 100 100 101 101 102 110 117 134 182 362 930 1200 4400 Pork kg 55 60 80 80 94 100 101 110 120 133 200 431 tIlO 1575 8100 Mutton kg 55 80 90 100 100 100 110 110 118 163 335 916 1225 4600 Poultry kg 67 78 86 95 106 90 102 103 133 163 286 669 896 1200 7000 Turkey meat kg 77 85 100 100 750 Canned meat cans 55 55 55 55 88 170 565 900 1300 Smoked sausage kg 150 160 160 180 190 200 195 195 200 242 343 860 2290 2150 8400 Milk kg 112 210 280 Butter kg 195 200 240 230 180 210 212 220 249 354 378 847 1740 1725 7900 Cheese kg 77 90 100 100 114 132 144 144 166 198 390 700 1440 1400 6400 Eggs eggs 2.12 2.28 4 3.87 3.31 3.66 3.996 4.18 5.3 6.6 14.17 16 30.79 36 275 Sugar kg 60 100 200 470 - Vegetableoil liters 68 75 85 650 840 6400 Fresh fish kg 25 29 33 35 38 45 37 41 55 98 141 231 820 1460 1400 Smoked fish kg 25 50 50 60 42 40 69 III 128 470 900 2450 Canned ftish cans 28 20 20 25 25 28 41 60 100 100 250 400 800 Bread kg 150 200 330
Wheat kg 10 15 25 21 20 30 38 30 110 Groats kg 15 20 23 22 21 20 28 30 35 63 128 150 250 275 1100 Late-grown potato kg 13 15 14 14 14 15 24 38 50 58 80 110 650 Early potato kg 27 15 15 1600 890 Green-house tomato kg 53 60 110 95 79 45 151 163 2170 1510 4800 Tomato grown in kg 21 7 10 26 56 860 open soil Greenhouse kg 48 60 60 48 41 26 68 188 245 1465 900 7200 cucumbers Cucumbers in open kg 27 18 27 47 128 970 990 soil Source: Armenian State Committee for Statistics TABLE 31: Monthily Average Market Prices, 1992-1993 (Rubles) Page 2 of 2
Units Jan-92 Feb-92 Mar-92 Apr.92 May-92 Jun-92 Jul-92 Aug-92 Sep-92 Oct-92 Nov-92 Dec-92 Apr-93 May-93 Dec-93
Eggplant kg 200 162 31 7 13 20 36 920 Pepper kg 80 41 13 24 27 134 830
Cabbage kg 7 10 to 9 12 18 6 5 10 17 34 60 95 130 670
Red beet kg 9 10 10 11 18 24 21 19 20 22 29 65 92 170 640 Carrots kg 9 10 10 12 20 30 28 22 24 224 32 68 95 2200 670 Greens kg 100 110 145 92 70 50 35 30 32 40 98 500 590 385 1540 Onion kg 22 20 22 22 28 34 23 21 24 29 39 66 151 510 1200
Garlic kg 130 143 140 170 180 95 87 97 108 171 212 300 400 750 1360 Beans kg 40 40 50 53 63 80 90 100 100 127 185 200 310 300 2270 Green beans kg 150 163 175 63 21 20 22 34 2000 850 Chick peas kg 20 23 47 46 39 32 31 25 200 300 312 350 2700
Lentil kg 30 30 47 46 39 32 31 25 25 150 200 250 2700
Macaroni kg 30 34 25 27 35 40 37 47 115 158 220 240 290 790 Vermicelli kg 20 34 25 27 35 40 37 63 124 158 220 250 290 790
Rice kg 18 20 23 50 55 58 68 95 148 270 288 425 1040
Mushrooms kg 83 117 120 118 121 102 74 60 141 249 318 633 1750 1650 6700
Apples kg 30 30 35 45 30 72 32 26 30 37 60 115 205 580 1560
Pears kg 25 25 29 44 76 78 52 27 36 46 71 150 200 685 1960
Strawberries kg 65 69 85 101 147 250 3175 3000
Grapes kg 50 41 65 102 120 151 50 39 39 103 200 386 1100 2040 Nuts kg 245 243 253 290 274 290 500 540 850 1000 540 850 14000 Tangerines kg 60 61 60 85 148 300 153 235 375 11250
Oranges kg 77 99 73 93 165 300 367 440 627 1210 12000
Pickles kg 40 50 79 100 180 250 -
Vodka 0.5 97 140 110 70 95 95 270 300 300 2700 lit lloney kg 201 290 300 304 453 500 515 570 300 2000 2000 4900 Source: Armenian State Committee for Statistics Page 1 of 2
TABLE 32: 1994 Budget Receipts and Expenditures,with Focus on Agriculture (million Drams)
Total Receipts 20,355.5 Value-Added Taxes 6,055.6 Excise Taxes 1,246.4 Profits Taxes from Ministries and Departments, Of Which: 5,599.1 From Ministry of Agriculture 55.6 From Ministry of Food and Procurement 340.4 From Armenian State Agricultural Bank Other Taxes from Ministries and Departments, Of Which: From Ministry of Food and Procurement From Ministry of Food and Procurement Cooperative and Public Organizations Profits Taxes, Of Which: 408.8 From Consumer Cooperatives From Peasant Cooperative Farms Taxes from the Population, Of Which: 1,023.3 Income Tax from Peasant Farms Income Tax from Private Enterprises 18.1 Income Tax on Salaries 1,004.5 Income from the Sale of Processed Grain Products (which were made from grain purchased by State with foreign credits) Rental Payments for Pastures, Forest, and Other Land, and Water Payments 292.1 Incomes from Prior Credit Emission Invested in Enterprises Credit Emission Other Receipts
Source: Armenian Ministry of Finance, Department of Taxation Page 2 of 2
TABLE 32: 1994 Budget Receipts and Expenditures, with Focus on Agriculture (million Drams)
Total Expenditures 27,767.9 Financing of Ministries and Departments, Of Which: 5318.4 To Ministry of Agriculture 544.9 To Ministry of Food and Procurement 45.4 Financingof Socialand Cultural Affairs, Of Which: 7,414.0 Health 2,554.4 Education Child Support 951.7 Financingof Science 541.9 Expensesof Legislative,Executive, and Judicial Bodies (includesexpenditures 1,675.9 for police, fire, etc.) DefenseExpenditures Paymentto Agrobank for Interest on ProcurementLoans Expenseson Accountof Credit Emission 105.0 GovernmentReserve Fund 677.9 Other ExpendituresEnterprises Deficit of ExpendituresOver Receipts 7,412.4 Deficit FinancedBy: Credit from the Bank of Armenia 47,000.0 Salesof Bonds
Source:Armenian Ministry of Finance, Departmentof Taxation TABLE 33: Prices of Basic Agricultural Products Relative to Grain Prices in Arnenia and at World Prices (converted at the Auction Exchange Rate)
1990 1991 1992 Exchange Rate $/Ruble 0.05 0.02 0.0045 Product Armenia World Armenia World Armenia World Grain Rubles 342.7 3,400.0 1677.9 7,750.0 13050.4 28,222.2 Fruit Rubles 515.0 12,800.0 3042.2 32,000.0 38799.3 142,222.2 Compared to Grain 1.5 3.8 1.8 4.1 3.0 5.0 Potatoes Rubles 409.6 5,220.0 2058.4 13,000.0 22899.4 57,777.8 Compared to Grain 1.2 1.5 1.2 1.7 1.8 2.0 Vegetables Rubles 224.8 6,760.0 1141.5 16,900.0 3523.0 75,111.1 Compared to Grain 0.7 2.0 0.7 2.2 0.3 2.7 Milk Rubles 590.0 9,360.0 1230.7 22,500.0 9305.7 102,444.4 Compared to Grain 1.7 2.8 0.7 2.9 0.7 3.6 Livestock & Poultry Rubles 3616.5 38,544.0 7687.2 90,000.0 46603.6 400,000.0 Compared to Grain 10.6 11.3 4.6 11.6 3.6 14.2 Grapes Rubles 1114.0 12,000.0 1572.7 30,000.0 7957.1 133,333.3 Compared to Grain 3.3 3.5 0.9 3.9 0.6 4.7
Source: Ministryof Agriculture, FAO Trade Yearbooks TABLE 34: Estimated Armenian Imports and Exports, 1990-92 (million constant 1990 Rubles)
Year 1990 1991 1992 Share of Agreements 0.540 0.640 0.693 0.829 0.659 0.748 Fulfilled 1990 Rubles Per Current Year 1.0 0.394 0.0249 Ruble Ag. & Ag. & Ag. & Ag. & Ag. & Ag. & Total Food Total Food Total Food Total Food Total Food Total Food Partner Imports Imports Exports Exports Imports Imports Exports Exports Imnports Imports Exports Exports Total 3,509.9 743.1 3,425.9 362.2 2,406.9 674.6 1,834.1 154.9 1,063.6 143.2 1,123.9 255.7 Russia 1,855.5 256.0 1,709.1 289.9 1,274.8 249.1 938.7 116.4 636.1 41.3 673.5 208.4 Ukraine 666.9 369.7 635.5 6.7 417.8 222.6 310.0 3.3 147.3 76.9 183.8 22.7 Belarus 210.4 32.1 89.3 9.7 106.5 16.2 45.6 5.0 27.7 2.1 37.1 0.6 Moldova 104.8 36.2 37.8 0.0 53.8 18.3 19.3 0.0 20.4 4.6 9.1 0.0 Lithuania 43.2 0.1 30.1 5.4 56.0 33.7 16.2 3.3 22.8 10.7 30.7 3.3 Latvia 52.3 0.0 37.7 3.6 31.9 0.0 19.7 1.8 16.3 0.0 20.0 1.7 Estonia 29.4 0.0 26.4 4.4 19.6 0.0 16.9 2.3 6.8 0.0 9.6 2.1 Tajikistan 31.5 0.1 53.4 2.0 28.2 0.1 27.5 0.9 15.4 0.0 10.7 0.8 Kirghistan 31.1 0.0 63.7 1.9 15.7 0.0 32.5 0.9 7.1 0.0 12.3 0.9 Uzbekistan 111.7 1.5 169.5 2.2 81.0 1.1 92.7 1.2 51.0 1.0 41.6 1.1 Kazakhstan 84.7 36.2 335.6 8.7 160.1 126.8 192.3 4.4 15.1 0.0 29.7 0.0 Turkmenistan 188.0 0.1 126.8 22.6 106.2 0.0 64.7 11.5 69.5 0.0 29.8 10.6 Georgia 100.4 11.1 111.0 5.1 55.3 6.7 58.0 3.9 28.1 6.6 36.0 3.5 Azerbaijan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Source: Ministry of Economy, InternationalDepartment TABLE 35: Inter-Republic Negotiated Delivery Levels - Armenian Imports and Exports with Other FSU Countries, 1990-1992 (million constant 1990 Rubles)
Year 1990 1991 1992 1990Rubles Per Current Year 1.0 0.394 0.0249 Ruble
Ag.g& g& Ag. & Ag. & Ag. & Ag. & Total Food Total Food Total Food Total Food Total Food Total Food Partner Imports Imports Exports Exports Imports Imports Exports Exports Imports Imports Exports Exports Total 6,500.0 1,375.6 5,353.0 565.9 3,473.1 973.5 2,212.3 186.8 1,614.1 217.5 1,502.6 341.7 Russia 3,436.2 474.0 2,670.4 452.9 1,839.6 359.4 1,132.3 140.4 965.3 62.6 900.4 278.6 Ukraine 1,235.0 684.6 993.0 10.4 602.9 321.2 373.9 3.9 223.5 116.7 245.8 30.4 Belarus 389.6 59.5 139.6 15.2 153.7 23.4 55.0 6.0 42.1 3.2 49.6 0.8 Moldova 194.0 67.0 59.0 0.0 77.6 26.5 23.2 0.0 31.0 7.0 12.1 0.0 Lithuania 80.0 0.1 47.1 8.5 80.8 48.7 19.5 3.9 34.6 16.3 41.1 4.4 Latvia 96.9 0.0 58.9 5.6 46.1 0.0 23.8 2.2 24.7 0.0 26.7 2.2 Estonia 54.5 0.0 41.2 6.9 28.2 0.0 20.3 2.8 10.3 0.0 12.9 2.8 Tajikistan 58.3 0.1 83.4 3.2 40.7 0.1 33.2 1.1 23.3 0.1 14.3 1.1 Kirghistan 57.6 0.0 99.6 2.9 22.7 0.0 39.2 1.1 10.8 0.0 16.4 1.1 Uzbekistan 206.9 2.7 264.8 3.5 116.8 1.5 111.9 1.5 77.4 1.6 55.6 1.5 Kazakhstan 156.9 67.0 524.4 13.6 231.0 183.0 231.9 5.4 22.9 0.0 39.8 0.0 Turkmenistan 348.1 0.1 198.2 35.3 153.2 0.0 78.1 13.9 105.5 0.0 39.8 14.1 Georgia 186.0 20.5 173.4 7.9 79.8 9.7 70.0 4.6 42.7 10.0 48.1 4.7 Azerbaijan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Source: Ministry of Economy, InternationalDepartment TABLE 36: Agricultural Import Quantities from FSU Countries in 1992
Milk & Meat & Citrus Champa$ne Milk Meat Eggs Fruits Mineral aw Prods. Butter Vegetable Prods. mn Sugar Molasses th. Alcohol Tea Water Materials Partner th.Tons th.Tons Oil th.Tons th.Tons pieces th.Tons th. Tons Tons th.Dekal Tons th.Botl th.Dekal Total 64.0 1.5 7.7 2.6 17.0 72.5 8.2 200.0 800.0 556.0 510.0 50.0 Russia 4.8 55.5 Ukraine 64.0 2.6 15.0 17.0 800.0 Belarus 1.0 Moldova 1.9 8.2 50.0 Georgia 200.0 556.0 510.0 Lithuania 0.5 2.0 Turkmenistan 1.0 Source: Ministryof Economy, InternationalDepartment
TABLE 37: Agricultural Export Quantities to FSU Countries in 1993 (projected level)
Canned Fruits and Wine Raw Tobacco Mineral Cigarette Fruits and Vegetables Materials Wine Products Water Filters Salt Vegetables Cognac GeraniumOil Partner mil.Jars th.Dekal th.Dekal mln.Pieces mln.Botl mln.Pieces th.Tons th.Tons th.Dekal kgs Total 189.0 400.0 2200.0 1125.0 3.0 1095.0 38.0 9.0 135.0 75.0 Russia 184.0 100.0 2200.0 9.0 100.0 Ukraine 265.0 Belarus 5.0 300.0 200.0 5.0 Moldova 300.0 75.0 Georgia 28.0 Turkmenistan 1000 7.0 20.0 Kirghistan 80.0 Uzbekistan 250.0 3.0 Kazakhstan 125 3.0 10.0 Source: Ministryof Economy, InternationalDepartment TABLE 38: Production of Foodstuffs, 1986-1994
Measure Products Units 1986 1988 1990 1991 1992 1993 1994 Bread and bread products thousand tons 218.5 193.7 221.0 285.8 320.0 N/A 302.0 Flour (total) thousandtons 440.0 436.8 354.3 361.6 315.0 296.0 304.0 Pulses thousand tons 14.3 14.3 7.8 1.8 8.0 N/A 2.6 Concentratedfeed thousandtons 773.9 741.4 641.2 396.6 280.0 N/A 100.0 Vegetableoil tons 7760.0 7233.0 6433.0 4370.0 4450.0 N/A NA Margarine tons 5713.0 6061.0 6030.0 5770.0 3600.0 N/A NA Pasta tons 16532.0 17832.0 17539.0 15441.0 13700.0 8250.0 9600.0 Confectionery tons 41573.0 43519.0 42843.0 23763.0 12780.0 4990.0 5100.0 Source: Ministry of Food and Procurement
TABLE 39: Production of Processed Livestock Products, 1986-1994
Category Unit 1986 1988 1990 1991 1992 1993 1994 Fresh Meat & Edible Offal tons 54900 52300 26478 19723 4000 800 700 Sausages tons 26400 27400 20694 11847 3700 460 260 Semi-finishedMeat Products tons 21500 20700 14243 3377 500 N/A 30 Cheese tons 27100 28000 13555 9221 3300 1370 1500 Milk & Fresh Milk Products tons 192100 201600 209249 124611 26000 9042 10000 Ice Cream tons 10200 10100 10450 3355 700 N/A 260 Butter Oil tons 1050 760 472 93 200 N/A 60 Fish tons 6034 7017 7555 4540 5500 3100 2900 Source: Ministryof Agriculture: Facts and Figures TABLE 40: Arnenian Food Industry Assets and Liabilities on January 1, 1994 (million Rubles)
Assets Liabilities Type of Firm Under the Ministry of Food Receivables and Nc. Worth Payables and and Procurement Total Fixed Stocks Other Total Loans Other
Baking 12,206.5 7,556.4 1,497.6 3,152.4 12,205.5 4,463.7 101.3 5,564.6 Other Production 138,535.9 34,633.4 33,220.8 20,476.3 133,535.9 70,395.1 15,967.8 25,420.6 Procurement 3,750.5 2,100.9 1,669.5 4,980.0 3,750.5 5,424.8 25.5 2,633.0 Transport 818.4 702.1 30.3 86.0 313.4 493.9 --- 102.2 Trade 8,166.3 5,256.4 1,530.3 1,379.6 8,166.3 4,374.8 576.5 1,397.2 Construction 5,136.8 4,257.3 275.9 603.6 5,136.8 3,320.9 127.8 703.2 Other 5,862.8 2,012.9 255.3 3,594.6 5,862.8 1,820.3 3,432.5 201.7 Total 174,477.2 56,519.4 38,479.7 34,272.5 168,971.2 90,293.6 20,231.4 36,022.5
Source: Ministry of Food and Procurement