Reconstruction and Development Agency of Armenia

Saturday 20 January, 2018
A bright example of how a government can condemn hundreds of thousands of its people to a lifelong misery through its ill-considered policy is the reckless and absurd agricultural reforms of the 90ies.



Agriculture - an exit from disaster

Agriculture - a way out of crisis


In the result of privatization 430 000 agricultural economies were established in Armenia, a simply ridiculous figure (to compare: in Finland, a huge country versus ours, there are only 67 000 agricultural economies).
Meanwhile, according to data provided by the Ministry of Agriculture, the area under crops in Armenia comprises 470 000 ha, i.e. an average of only 1.1 ha falls on each economy! How can one talk about a farmer's income from such a miserable plot of land?! What is there to be said about 'the level of welfare' and 'quality of life' for the farmer and his family?! How can a farmer possibly provide for his family's decent life, education and development with that beggarly income?! How is it ever possible to speak of 'agricultural development'?! 
 In fact, the government under Levon Ter-Petrosyan consciously drove hundreds of thousands of peasants into extreme poverty, degrading the agriculture to abysmally backward Middle Ages with its classical patchwork farming, only succeeding in making it completely malfunctioning and uncompetitive. It is no wonder that in the height of the season our market is flooded with potatoes from Iran, and onions and tomatoes from Turkey, all this happening in a country that used to cultivate the tastiest tomatoes with a thinnest skin back in Soviet times.
 In the result of these 'reforms',  Armenia was actually converted from a country, producing agricultural products of 'premium' quality to one, importing virtually all kinds of low-quality supplies under a literally farcified food security system.
 Meanwhile, according to calculations by German economists, the optimal size of a farm should comprise around 100 ha, which enables continuous alternation of crops, efficient exploitation of farming machines, solution to issues of irrigation and fertilizers, etc.
 Last but not least, another sad evidence to crown the picture: the number of people engaged in agriculture in Armenia comprises 46% versus 2-6% in developed countries. Hence, the labor efficiency similar to Middle Ages and the corresponding cost price of the production. To compare: an employee, engaged in agriculture in the US, provides 140 people with food supplies, whereas his Armenian counterpart lives from hand to mouth.
All these are the 'results' achieved throughout 20 years' market 'reforms' and 'development'. These figures  alone constitute indisputable evidence that all reforms in the sphere of agriculture, from first to last, and primarily the privatization, were implemented in a highly incompetent and outrageous manner, despite all the objections that the authors of these reforms might have. The reforms were administered so incompetently that if they hadn't implemented any, preserving the collective farms of Soviet pattern, the result would definitely have been better (the example of Belarus may assert this), otherwise one might need to acknowledge that the Armenian farmer is a pathological sponger. Since that's not the case, it signifies that there are considerable structural issues that have been totally hindering the Armenian peasantry from gaining its feet. It would be no exaggeration to call the situation in the sphere of agriculture disastrous.
It is clear, that to have well-off farmers and to enjoy an efficient agricultural economy, we need to establish a viable and modern system that would enable to constantly upgrade the agricultural technologies. 
 The fact of the matter is that, owing to its climate and geographic location, the products raised in Armenia have excellent taste and wholesome health qualities. Due to the fact that in 60-80ies Europe and the US gave preferences to good keepers, kinds of product that sustained high crop capacity and didn't spoil in transportation, all these varieties lost their main asset - taste and nutrients, in contrast to Armenia, which has preserved the traditional production of fruits and vegetables, distinguished by their taste and wholesome qualities. Armenia is virtually able to produce agricultural products of premium category, yet, to achieve this, it is necessary to establish vertically integrated agricultural companies that would provide agricultural economies with the required modern production and storage technologies that lack in Armenia nowadays, as well as assist in the sales of that production. These technologies would ensure the raise of the crop yield, preserving its quality on the one hand, and would reduce harvesting losses on the other. 

Click to enlarge

Besides, a company of such vertical integration might assume crediting rural economies with reasonable interests, as well as counseling farmers that cooperate with the company on how to efficiently dispose of the loans issued. In other words, the company can efficiently sell modern farming equipment and fertilizers to farmers on these loans. This scheme envisages the simultaneous solution of the following three issues:

  1. The farmers will have the chance to apply for a loan on the guaranteed basis that the company will purchase their production, which may considerably reduce the credit cost. 
  2. It may be challenging for a farmer to inform about modern technologies, equipment, fertilizers and their application. The Company will assist the farmer to choose what best suits his needs, thus helping him spend his credit resources most efficiently, importing modern technologies and equipment to Armenia.
  3. The company may also want to sell the modern equipment and fertilizers to farmers, negotiating for optimal prices with the producers. Apart from regulating the expenditures of credit resources, the company will thus become one of the major distributors of modern agricultural machinery and technologies, which counts up to being a profitable business.

 It is also possible to successfully implement a cross-disciplinary project between agriculture and energetics. E.g., there are many fertile lands in Armenia, located high above the sea level. Like nearly everywhere else, there is much sun but very little warmth throughout the most time of the year. To contribute to agricultural development in those regions, it is necessary to build greenhouses. The latter requires a lot of heat, so the cost price of the production is overly high. Yet there has recently emerged an opportunity to procure for heat at practically no cost. The currently produced mini power plants equaling a forty- feet container in size have a considerable coefficient of efficiency, that amounts to 45% (to compare:  the coefficient of efficiency for the big heat power plants, constructed in Armenia during Soviet times doesn't exceed 30%). Following the energy output, these mini power plants emit the remaining heat (i.e. 55% of gas energy) into the air. The installation of such mini power plants near the greenhouses will enable to use this energy to heat the conservatories.  In this way we're getting the heat for the greenhouses (which would in either event be dispersed into the atmosphere) practically free of charge. Noticeably lowering the cost price for the greenhouse produce that shall be available all year round, we're also gaining electricity, thus doubling the efficiency of these power plants up to 80-90%.
There are many such projects in the sphere of agriculture in Armenia. With skillful management and organization Armenia may become one of the world's leading exporters of premium agricultural products. Competent sales of agricultural products will thereby assist the farmers, who are currently in extremely harsh conditions, to recover their feet, boost the national agriculture and ensure the food security of the state, supplying the population of Armenia with high-quality home produce. It is no secret that the food quality is one of the key factors determining people's health and therefore contributing to the quality of life. 


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