PARTICIPATORY APPRAISAL

OF COMPETITIVE ADVANTAGES

April - 2013

LOCAL ECONOMIC DEVELOPMENT

IN AZATAN COMMUNITY

Foreword

In April of 2013, the local economic development process (LED process) based on "Participatory Appraisal of Competitive Advantages" (PACA) methodology was conducted by CARE International Caucasian office, Fund "Small and Medium Entrepreneurship Development National Center of Armenia" and "Business Pareta" LLC in Azatan community of Shirak marz (region). The project was accomplished with participation of the local team from Azatan community and municipality support.

PARTNER ORGANIZATIONS

CARE International in the Caucasus

“Business Pareta” LLC

Small and Medium Entrepreneurship Development National Center of Armenia

Methodology

Local economic development PACA (Participatory Appraisal of Competitive Advantages) program was imported by German technical cooperation company (GTZ), and up to now has been implemented in 30 communities of Armenia.

The project is carried out by "Business Pareta" LLC and Chamber of Commerce and Industry of Gegharqunik marz.

The aim is to analyze the community's current economic situation, identify its competitive advantages and come up with initiatives that will create a competitive economy, as well as income and jobs in the communities.

Azatan Local team at workshop

The process consists of the following stages:

Organization of the process at the community, formation of the local team.

Economic Mapping – identification of the community’s leading economic sectors and main

stakeholders.

Analysis of the value chains, reveal of the development initiatives.

Workshops with the main actors (entrepreneurs) in the region.

Summarization of the results=, identification of the initiatives.

Finalization of the initiatives, elaboration of the brochure.

Presentation of the results and initiatives to the community actors and other involved

persons/organizations.

Development and implementation of an action plan on local economic development

initiatives.

Results of a PACA exercise are as follows:

reveal of community competitive advantages,

diagnosis of the current economic situation, the existing linkages and relationships,

identification of the upcoming plans of the community stakeholders and their interaction,

development of a common vision for community development,

compilation of the community’s priorities for business, agriculture, social sector,

infrastructure development and suggestion of new projects, based on the community’s

competitive advantages on one hand, and on the opportunities to create mutual trust and

cooperation on the other hand.

AZATAN COMMUNITY

Azatan community is located in the Shirak region (marz), 8 km away from the regional center.

It’s located on the right bank of the Mantash River, Shirak valley, 1490 meters above sea level. The climate is a temperate mountain, long winters, cold, steady regular snow. The summer is hot, relatively humid. There are a sand, basalt reserves near the village, which have industrial significance.

The village has catholic and orthodox churches.

According to the community data, the population of the village accounts 5850 as of January 1, 2013. Gender composition is comprised of 44% men, 56% women. Age groups are distributed as follows: pre-bodied - 29%, and bodied - 52%, post-bodied - 19%.

In Azatan people are mainly occupied with agriculture (cereals, vegetables, fodder crops, potato growing) and cattle breeding.

85% of farms are engaged in agriculture (about 900 farms), cultivating mainly potatoes and grain, and 500 farms - in the forage production.

Around 490 farms are involved in cattle breeding, producing milk and meat.

There is a dairy and cheese production in Azatan.

There is "Igit" LLC processing dairy and cheese in the village, and around 200 cattle breeding farms are engaged in the production of home-made butter and cheese.

Potatoes 49%

Financial inflows from abroad

16%

Pensions, beneficiaries

7%

Grain 6%

Village technican. services

4%

Incme from the sale of meat

4%

Income from milk sale 4%

Village technican. services

4%

Forage 2% Public sector wages

2% Trade 1%

Village municipality salary0,5%

Production 0,1%

Incomes of the Community Population by Directions

Sector million AMD

Farming

Potatoes 3 000 Grain 366 Forage (alfalfa, sainfoin..) 150

Cattle breeding Income from the milk sale 231 Income from the sale of meat 250

Trade 50 Village technician. service 250 Production 10 Public sector wages 150 Pensions, benefits 400 Village municipality salary 32 Financial inflows from abroad 1000

Total 5889

Potatoes 66%

Income from the sale of meat

6%

Grain 6%

Cheese making 5%

Village technican. Services

4%

Cheese making 5%

Income from milk sale 3%

Forage 3%

Trade 2%

Production 0,3%

Generation of the community GDP

Sector Million AMD

Farming Potatoes 5400

Grain 504

Alfalfa 252

Cattle breeding

Income from milk sale 250 Cheese making 400 Income from the sale of meat 510

Services 10

Trade 160

Village technician services 350

Production 25

Total 7061

ANALYSIS OF THE MAIN ECONOMIC SECTORS

FARMING

In Azatan 85% of the farms are involved in agriculture (900 farms). Arable area is 2800 hectares, which is fully exploited, and another 700 hectares are leased by Arevik, Aygebats, Akhuryan, Bayandur, Getq vilages. Mainly potatoes is cultivated, 800 hectares and more 700 hectares on leased areas in neighboring villages, 1,400 hectares of grain, vegetables - 100 hectares, 300 hectares of forage. 200 hectares is comprised of house neighboring land where other crops are cultivated.

Distribution of farmers according to farm size

Classification Number of farms Cultivated land

Large farms about 20 20-100 hectares

Above medium 80 10-20 hectares

Medium 200 2-10 hectares

Small 600 1 hectares

Potato sector

Distribution of potatoes farms by size (1,500 hectares) is presented below:

Classification Farms number Cultivated land (hectares)

Large farms 20 20-100

Medium 30 10-20

Small 200 1-10

In Azatan 25-45 tons of potatoes are received per hectare, sometimes it can reach to 55-60 tons,

depending on the seed, cultivating methods and the quality of soil. This indicator is the most

competitive in the country. For cultivation of 1 hectare potatoes, it is spent 700-900 thousand AMD

without seeds (detailed cost is presented in the calculation of productivity). In average 40 000 tones

of potatoes are produced per year in the community, which composes 6.3% of the Armenia's gross

volume. According to data of the National Statistical Service of the RA in January-November of 2012

data for potato production totaled 630.0 thousand tons, exceeding the previous year's level of 13.0 %.

There is significant competition and cooperation in the sector. Large producers cooperate for import

of potato seeds, village equipment exchange (due to earthworks cycles), sometimes, in a case of large

order - in sales issues. Cooperation between large and medium farmers is also regarding the purchase

of the seeds (large ones imports the seeds for small farms, in case of previously ordered). Overall

development strategy doesn’t exist. Reputation of the Azatan potato in the Armenian market is low

as a result of disease spread several years ago. At present, Azatan harvest is sold under names of well-

known potato cultivating communities (Gavar, Martuni, etc.).

Analysis of potato cultivation sector by Porter diamond tool

Domestic characteristics of leading potato farmers

Strong Weak

The availability of own agricultural machinery Old / worn agricultural equipment, additional costs

Availability of own warehouses Lack of contracts for the sale High quality of seeds used (imported directly) Miss of planning for the potato

production quantity Strong experience in growing technology, use of new technologies

Lack of development strategy

Strong connections in the market Recognition and trust in the seeds market Hard work and dedication, cooperation

Productivity of 1 person/ day in

potato cultivation sector is 24 700 AMD.

Factors Quality • Soil’s chem. structure is week • Worn irrigation system. • Full irrigated lands • Availability of anti-hail stations (for 70% of the coverage) • Availability of credit resources • State subsidized support • Vocational training providers `(CARD, HEIFER, GAMK) • Availability of workforce in the community and neighboring communities

Demand Quality • The potato market is quite saturated in recent years. • Food prices have been steadily declining in the current year amounted to 60-95 drams. This situation happens every two years, and farmers have to close the year with a surplus of product and low-price sale • Seed prices (120-180 AMD) are relatively stable • Consumers are demanding for quality • There is a decrease tendency in potato consumption

Interpretation of the analysis presented below

The quality of supporting branches

• Availability of a whole range of farming machinery in the community, but 90% of them are old and worn • Manufacture of potato sacks • Pesticide Sales • Sale of diesel fuel • Seed is imported directly from the Netherlands with support of Agriko company • Availability of warehouses for rent (1 year -5000 AMD)

Quality of production factors (Infrastructure, vocational training, financial institutions ...) Chemical composition of the soil does not meet the required content. For 20 years the land is fertilized only with nitrogenous fertilizer, which would result in violation of the soil composition, which causes a variety of diseases and affects potato yield, quality and maintenance as well. The irrigation system is worn out and needs partly repair. The water’s fee to irrigate one-time per hectare is 16 thousand AMD. WUC works on a regular basis. Jajur River as a water supply is contaminated, which interferes with the orderly land irrigation. Credit resources are available, but the interest rate is too high for agriculture. Residents take advantage of 8 banks and credit institutions operating in Gyumri, and interest rate is 16-22%, the only exception is the State program with its 14% interest rate (of which 4% subsidized by the state) loans, which is provided by ACBA bank and it does not exceed 1 million AMD. The major part of rural borrowers (about 60% of farms) are used the services of ACBA Bank. There is sufficient availability of labor and opportunity of attracting an additional seasonal labor force from neighboring communities. The workforce from neighboring communities is mainly engaged in the season of harvesting the potato (3-5 thousand AMD per man per day). About 80% of the labor force are women. 100% of the land plot is irrigated, irrigation water is enough, but the price is high. ASC provides seminars on potato cultivation technology through seminars, agricultural animals diseases and their prevention. Availability of anti-hail stations for 70% of land plots. State support programs are available (fertilizer, wheat seeds, diesel fuel) for grain and potatoes cultivating farms.

Quality of related branches (Suppliers, resellers, processors...) Availability of motor pool There are 130 units of agricultural machinery and 100 trucks in the community. The agricultural machinery is included sowing, cultivation, harvest, reaping and 5 combines (service prices are presented in productivity calculation). The whole agricultural techniques belong to 80 owners. Approximately 20 people from the village having trucks are providing transportation services. 90% of machinery is old (22-30 years) and worn, which reduces the efficiency and increases the cost of service (for example, fuel surcharge, spare parts frequently refresh, 20-40% grain yield loss during harvest time). Prices for 1 ha of motoring services are as follows:

A small production of potato sacks and sales stores are available in the community. Diesel fuel and spare parts are also available for sale in the community. Diesel fuel is purchased from the village and Gyumri city sale points. The assortment of spare parts for agricultural machinery is poor in the community, it is mainly acquired from Gyumri and Yerevan spare parts markets. New spare parts are not qualitative and wear out quickly, so they prefer to obtain used spare parts (old production). Pesticide sales Most of the pesticides are bought by large farmers from Agroinput company and warehouse of Masis city, and small ones - from stores in Gyumri.

ploughing 35 000 AMD Bedding (stem covering) 18 000 AMD

sowing 40 000 AMD harvesting 40 000 AMD cultivating 20 000 AMD grain harvesting 25 000 AMD spraying 6 000 AMD Transporting (at the

community area) 6 000 AMD

grooving 6 000 AMD haying 15 000 AMD

Seeds importers Large potato farms import seeds directly from Holland, with mediation/support of Agriko company, and small farms order in advance from large ones. The price for seeds per kg is 450-500 AMD (first-class or elite sort). Potato resellers About 20 reseller groups are formed in different regions (Armavir, Lori, Aragatsotn ...), who buy up the potato started from harvest time and resell it in their own regions and Malatya (Yerevan) market. Potato warehouses availability The average potato producers in the community have their own warehouses, and large manufacturers are renting storage space from the large warehouse available in the region, paying 5 000 AMD per 1 ton. Demand for quality Sales of goods are divided into two groups, used as a food and seed potatoes. In recent years, food potato was sold at 60-95 AMD, and seeds - at 120-180 AMD. About 5% of harvest is sold to Gyumri residents in the village and approximately the same is sold in the Gyumri market. About 3% of harvest was exported to Georgia, 2% was changed to other goods, and 80% was purchased by resellers. The price in the market is very volatile and dictated by the market. The seeds prices are relatively stable. Seeds producers generally have permanent market. In 2013 sowing will begin, and there are about 7000 tons of unsold potatoes in Azatavan, which makes 15% of the total harvest. The farmers have to sell their harvest by 25 AMD per kg as forage.

Potato cultivating costs per 1 hectare Raw materials and actions Description Price

Seeds 4 tons 1 800 000 AMD

Seeds sorting 5000 AMD per ton 20 000 AMD Seeds disinfection 4t 30 000 AMD Land plot leasing 100 000 AMD Ploughing Diesel fuel included 35 000 AMD Smoothing 25 000 AMD

Sowing 40 000 AMD Potatoes bushes drug substance

20 000 AMD

Shrubs injection 6000 AMD once, it’s required 3 times 18 000 AMD

Weeding once` about 5 persons/4000AMD 20 000 AMD

Rutting 6 000 AMD

Cultivating 18 000 AMD

Molding up 18 000 AMD

Irrigating Water՝ 16 thousand once, irrigator՝ 17000 դրամ /1-5 times/, calculated for 3 times

100 000 AMD

Fertilizing 12x9 000 108 000 AMD

Еarthing up 15 000 AMD

Harvesting 160 thousand AMD workforce (collectors and loaders), 40000 AMD equipment leasing

200 000 AMD

Transporting 1 transportation 6 thousand AMD, /4-5 times/ 25 000 AMD

Sorting, storing

1day 4 thousand AMD /one person 1t sorting/ 30 persons

120 000 AMD

Other costs 30 000 AMD

Total` without seeds 948 000 AMD

Total 2 748 000 AMD

Potato productivity per man/day Potato

1 Average harvest per 1 hectare 40 000kg

2 Average wholesale price per 1 kg (ration + seeds) 120 AMD

3 Income from 1 hectare 4 800 000

4 Material costs for 1 hectare 2 330 000

5 Labor expenditures for 1 hectare 418 000

6 Profit for 1 hectare (3-4-5)

2 052 000

7 Value added per 1 hectare (3- 4) 2 470 000

8 Number of workers/days for 1 hectare 100 Productivity of 1 person per day = (3-4): 8 24 700 AMD

Grain processing sector Distribution of 1400 hectare grain farms according to farms sizes is presented below:

Clasification Number of farms Cultivated land plot (ha)

Large farms 6-10 10-20

Medium 100 5-10

Small 600 1-5

Grain yield (wheat and barley) for 1 hectare is 3-5 tones in Azatavan. This indicator is more competitive in comparison with other communities in the country. Average yield of wheat in Armenia is 3.5 tons for 1 hectare. Handling, collection and transportation costs are 320-380 thousand AMD. In the last year, in average 45 000 tons of grain was cultivated in the village (wheat - 70% and barley - 30%), which is constituted around 10% of grain crop production in the Republic of Armenia (total volume in 2012 amounted to 455.0 thousand tons). A small part of the wheat reserve is turned by farms into the flour and cereal as a winter food, while the rest is sold to the community for 120-200 AMD to 3-4 stores operating in the community. 50% of barley is grinded as fodder additive, and the other part (large granular) is sold to Gyumri beer plants. The part of wheat seeds is purchased with support of the government and the other part is stored from the previous year's harvest.

Analysis of wheat cultivation sector by

Porter diamond tool

Productivity of 1 person/ day in

wheat cultivation sector is 15 650

AMD .

Domestic characteristics of leading wheat farmers

Strong Weak

Realizing chemical weeding Ground homogeneous fertilization

Implementation of infection activities Lack of tradition for ground chemical infection

Usage of additional stimulants during vegetation

Usage of old combines

Own agricultural machinery Usage of new cultivation technologies

Demand Quality

From quantity and price standpoint the demand for grain has stable character in the market. In recent years, 1 kg is sold at 120-200 AMD. Red and white wheat are being collected in the village. White wheat is of high demand for groats processing companies, and the red wheat - for flour.

Factors Quality

• Partially worn irrigation system • Fully irrigated lands • Availability of anti-hail stations for 70% of

the cultivated land • Availability of credit resources (high

interest rate). • measures for rodents with state support,

provision of seeds, fertilizers and fuel with subsidization

• Professional training courses with the initiative of ASC

The quality of supporting branches

• Sufficient quantity of tractor park, but worn (combines leave at least 20% of the crop at the field).

• Flour mill in the neighboring village. • Wheat pestling workshop (grain) • Seed suppliers. • Seed filtering plant availability • Pesticide sales • Brewery in Gyumri • 3 stores in the village

Costs for wheat processing for 1 ha

Raw materials/work Price

Seed 330 kg 1kg-160 AMD 52800 Disinfection 5 000 AMD Ploughing 35 000 AMD (diesel fuel included) Cultivation 22 000 AMD Milling 10 000 AMD Grooving 5 000 AMD Sowing 40 000 AMD Plants drug substances 20 000 AMD Spraying 3 x 6000 AMD Irrigation Water 16 thousand, irrigator 17000 AMD, 3 x 33

000 Fertilization (6 sacks) 40 000 AMD Harvesting 25 000 AMD Transportation 7000 AMD Total 378 800 AMD

Calculation of grain productivity

Wheat

1 Average harvest for 1 ha 4000 kg

2 Average wholesale price for 1 ha 160 AMD

3 Income for 1ha 640 000

4 Material costs for 1ha 327 000

5 Labor costs for 1ha 51 000

6 Profit for 1ha (3-4-5)

262 000

7 Value added for 1ha (3-4) 313 000

8 Number of workers/days for 1ha 20 Productivity of 1 person per day = (3-4): 8 15 650 AMD

In the communities of Vardenis and Martuni regions, which are known as major centers of grain production, grain handling sector productivity per man per day is up to 10 000 AMD. In Azatan, due to high productivity of wheat, the average yield rate of productivity is 1.5 times higher than in the above-mentioned communities. A small quantity of cabbage is cultivated in the community, which yield is 50-60 tons per hectare, and the precocious cabbage, that is stored and used until December, even up to 80t. Although this figure is the highest in the country, but cabbage is cultivated in a small quantities in the community, because the market is saturated and demand is low.

Forage production Clover productivity is 8 tons from 1 ha in Azatan. There are alfalfa cultivators in the community who receive 13 t due to the cultivation quality, land quality and low position. Although there are not many soils in the community with the same quality and moisture-containing and, primarily, 8 t is the average rate in the community. There is cultivated alfalfa on 100 hectares and cockshead on 200 hectares. Cockshead yield is 7 tons. The costs for 1 ha of clover cultivation and collection is about 300 000 USD (excluding leased land prices), in case of three times harvesting.

Calculations of productivity for clover cultivation

Cost article Comments Amount

Ploughing 30 000AMD

Sowing, seed Once in 6 years, 60 000 AMD 10 000AMD

Grooving 10 000 AMD

Cultivation 25 000 AMD

Irrigation Workforce included 100 000 AMD

Spraying, drug substances

10 000 AMD

Harvesting 3x15 000 AMD 45 000 Baling 70 000

Total 300 000 AMD

Calculations Price

1 Average harvest for 1ha 8 000 kg

2 Average wholesale price for 1 ha 70 AMD 3 Income for 1ha 560 000

4 Material costs for 1ha 250 000

5 Labor costs for 1 ha 50 000

6 Profit for 1ha (3-4-5)

260 000

7 Value added for 1ha (3-4) 310 000

8 Number of persons/days for 1 ha 25 Productivity per person per day = (3-4): 8 12 400 AMD

Forage processing industry analysis by Porter diamond tool

Productivity of 1 person/ day in

wheat cultivation

sector is 12 400 AMD

Domestic caracteristics of leading forage producers

Strong Weak

Optimal harvesting Lack of land chemical disinfection tradition

Strong experience and knowledge Usage of worn machinery

Quality of Factors

• Partially worn irrigation system • Full irrigated lands • Availability of anti-hail stations for 70% of

the cultivated land • Available credit resources (high interest

rate). • measures for rodents with state support,

provision of seeds, fertilizers and fuel with subsidizing

• Professional training courses with the initiative of ASC

Demand Quality

Forage production has been steady and growing demand, due to Azatan’s pasture scarcity, low quality, and the tendency of growth of cattle. In drought years, one pack clover price reaches up to 1800 AMD, while the grassy years, 800-1000 AMD. 15% of forage total demand in the Community is imported from other districts.

Related branches

• Developed cattle breeding • Machinery, trucks services

Comparative productivity of agriculture sector

Indicators Potato Wheat Clover

1 Average harvest for 1ha 40 000kg 4000 kg 8 000kg

2 Average wholesale price for 1kg (food + feeds)

120 AMD 160 AMD 70 AMD

3 Income for 1 ha 4 800 000 640 000 560 000

4 Material costs for 1 ha 2 330 000 327 000 250 000

5 Labor costs for 1ha 418 000 51 000 50 000

6 Profit for 1 ha (3-4-5)

2 052 000 262 000 260 000

7 Value added for 1ha (3-4) 2 470 000 273 000 310 000

8 Numbers of workers/days for 1 ha 100 20 25

Productivity per person per day = (3-4) : 8 24 700 AMD 15 650 AMD 12 400 AMD

In fact, it is apparent that the productivity in potato production per person per day is almost two times higher than productivity of clover and wheat production. But the fact is that the potato market is saturated, and regularly, almost two years by the steep fall in prices occurs, which leads to selling it by low cost and actual surplus of potato. Farms provide a normal profit in two years, and the next year the losses are large.

Analysis of cattle breeding sector

Mostly, large cattle are grown. There are 500 farms in community engaged in cattle-breeding. Total number of cattle is 3000, of which 1300 are dairy cattle. Annual average milking is 2-2.5t and pedigree cattle - up to 4-4,5t .

Classification Number of farms Livestock

Large farms 3 30-60 heads

Medium farms 50 10-30 heads

Small farms (5-15 heads) 150 5-10

Households 300 1-5

More than half of the livestock tribes of the community are improved - about 70%, but not all farmers are able to follow the rules or keep a special care, so they do not get the maximum possible effect (milking reaches 2-3 tons, while there are farmers in the community who have 4.5t of milking). The quantity of forage processed in the community is sufficient for the farms. Some farmers have their own pastures share of arable land, where they process forage, while the rest of the community purchases it from the other developers or forage market.

Analysis of cattle breeding sector by

Porter diamond tool

Domestic characteristic of leading farms

Strong Weak

Own pastures for forage production Shepherds, low-wage workforce shortage.

Usage of modern machinery - automat milking unit.

Improved races not always receive an appropriate care.

Usage of far pastures /Amasya administrative territory/

Low indicator of milking.

Pedigree cattle improvement /70 % of livestock/

Provision of forage diversity /clover, potato, barley…/

Provision of high productivity /corresponding care/

Sufficient number of new cattle

Factors Quality

• Availability of veterinary services, state activities on livestock immunization.

• The advanced agronomy/forage production.

• Poor quality pastures are scarce. • Availability of sufficient quantities of

fodder base. • Availability of professional advice. • Availability of sufficient quantity of water • Difficulty for access to far pastures

/cottages distance/

Quality of Demand

Consumers are demanding meat and milk quality. 30% of milk is consumed in the community, including domestic consumption. For the remaining 70%, one part is collected by the company IGIT at the price of 130 drams per litre, and the rest of the milk is processed by the household for production of cheese and butter. 1 kg of meat is sold at 2200 AMD, and the mature cows meat is sold at 1000-1200 AMD. There is a big demand both for meat and milk, but, however, meat prices are more stable than for the milk.

Quality of related branches

• Forage producers, producing high-quality forage • Availability of private medical services, quality expert/ veterinar. • Availability of milk purveyor. "Igit" company is operating in the

community that is willing to purchase all the milk reserve produced in the community.

• 2-3 stores of meat (the yard). • Availability of 4-5 meat resellers. • Veterinary pharmacy (CARD). • Availability of restaurants near the highway. • Availability of manure buyers (for fertilization of the soil).

Cattle industry leading farmer productivity calculations

Description Milk cow (unit)

Meat calf (unit)

1 Optimal farm 20 30

2 Annual output from 1 animal 3 000l milk 1 calf

240 kg meat (2 years)

3 Total output for 1 year 60 t milk 20 calfs

3600 kg

4 Wholesale price for 1kg/l 130 AMD 70 000 AMD 1calf

2200 AMD

5 Total income from sale 9 200 000 7 920 000

6 Material costs 3 625 000AMD 3 500 000

7 Labor costs 720 000 AMD 0

8 Profit (5-6-7) 4 855 000 4 420 000

9 Value added (5- 6) 5 575 000 4 420 000

10 Number of persons/days 300 250

Productivity per person per day = (5-6) : 10 18 580 AMD 17 650AMD

The calculation clearly shows that milk productvity is about 5% higher than the productivity of meat. And if we’ll take into account the fact that the milk producers produce also butter and cheese creating additional value, it becomes obvious that the production of milk in Azatavan is more effective.

Difference of productivities between leading farms, particularly in potato farming sector and animal husbandry sector, is very small. Although if we take into account potato market fluctuations and that dairy and meat market is relatively stable (the volume of demand), it is indisputable that development and expansion of cattle breeding is the best perspective for the community development. And the forage reserve supplement can be made using a part of potato cultivation lands, as some part of potato is not sold and lead to loses (f.e. if we cultivate 50 hectares, we can easily distribute the production, but in case of 100, we will lose the output from the extra50 hectares). Therefore, having their own production of forage, costs of cattle breeding are decreased, consequently price cost of meat and milk is also decreased and therefore, productivity is increased.

The cattle breeding sector is acceded to the leading communities (Gavar, Martuni) where there is a large reserve of pasture and grass forage, but the gap is filled by advanced agriculture, forage production factor.

In case of provision of all norms for care of improved tribes, meat preparing can reach up to 250-300 kg and milking - up to 5.5 tons. Through artificial insemination improving the tribes, there is a real progress in the community, it has to provide the best care to achieve scale, and branch productivity will increase significantly.

Other branches of the economy

Food Trade

The community has about 10 grocery stores and 1 fast-food point. Most of the shops with modern furnishings are in the stone building. Only three are in home conditions. Businesses are mainly family businesses. Mostly family women work in shops and men deal with organizational issues.

Aviculture

There is one incubator for chicken chicks breeding. The entrepreneur is a woman and she works alone on the farm. Annually the farm produces 3500-4000 chicks, but capacity of the incubator for is 16,000. Chicks are sold for 600 AMD in the villages of Shirak region in May-June months. Competitors are chicken sellers from low zones of Armenia (Ararat, Armavir ...) that are entering the market two months earlier because spring is coming earlier in these areas. For increase of activity volumes, it is necessary to expand building conditions.

Stone-processing

Two small stone manufacturers are operating in the village. The major product is construction stone/porous basalt/basalt chippings. The price of basalt construction stone for 1 linear meter is 5000 AMD, price of 1 cube meter for chippings is 4000 AMD. It is planned also to start tiles producing. They are not competitive in the market because of the old equipment, and the prices are matched with the leading companies in the market.

Bread production

Three bread manufacturers operate in Azatan. They produce bread and lavash. The realization takes place in Azatan and in a few shops in the neighboring village. The competitors are the bread producers in Gyumri city, although bread consumption is dominated in the village market. All in all, approximately 15 women work in this sector.

COMPETITIVE ADVANTAGES OF AZATAN COMMUNITY

Natural

• Valley lands • Exceptional quality of Azatan basalt • Geographical position: close to the regional center, located in Gyumri-Yerevan part of the

interstate highway • Availability of Shirak Airport

Anthropogenic

• The financial inflow from abroad (about $ 2 million per year)that can be directed to investments in agriculture.

• Availability of infrastructure • Young people advantage in gender and age scale • Availability of anti-hail systems • High level of agriculture development • Full usage of arable land • Large number of residents with higher

education • Availability of qualified

specialists/mechanization expert, farmers, cattle breeders/ and availability of large machine- tractor base

• Large population and a large village • Hard work • Positive human relationships • Preserved original fresco “Spinner girls” by Minas Avetisyan

Large farms 6

Medium farms 480

Cattle breeding 500 .

Agricultural machinery services 70

Agricultural equipment service 1

Veterinary puarmacy 1

Transportation 20

Irrigation

IGIT LLC

Farms 200

Yerevan supermarkets

Stores in Gyumri

Supermarkets in Gyumri

Stores in Azatan

Stores in Yerevan

Yards, destricts in Gyumri

VALUE CHAIN OF DАIRY IN AZATAN COMMUNITY

Micro level

Support Organizations

Macro level

Delivery Milk production Processing SALE MARKET

Resellers from community (4)

Mediators from Yerevan

LLC's dispatchers

CARD Financial organizations Armenian Caritas HEIFER

Government Custom Service Ministry of Agriculture

Local self – governance

bodies

ASC

Supporting organizations

ASC – provides training and consulting to forage producers (suppliers) and milk-producing farms. Conducts seminars on potato cultivation technology, animal diseases and their prevention.

Banks and microfinance institutions - provides credit resources in all segments of the value chain.

Heifer International Armenia – in 2012 provided milking cows to 18 milk producing small businesses, which have subsequently passed the calves to the other families.

Armenian Caritas - repaired 300 meters of irrigation water line.

"Agribusiness and Rural Development» (CARD) - High quality professional advice to producers of milk and cheese producing farms.

There were implemented experimental studies on growing herbs' seeds in Azatan (4 hectares), Meghrashat (4 hectares) and Haykavan (4 hectares) communities farmlands which aims to improve pastures in the future.

Milk powders of “starter" and "premix" types were imported from Holland, for planned calves and "dried up" (prenatal period) cows as a forage supplement.

Macro Environment

Government –provides a subsidization for diesel fuel, seed and fertilizer to the grain and forage producers and carriers. Also, provides means for combating rodents. In the spring of 2012 allocated nitrogenous fertilizers at a price much lower than the market place ( 1 sack for 6000 AMD, including transportation costs), , as well as diesel fuel – 1l for 350 AMD.

Local self-governance bodies – Provision of local pastures, state control measures (vaccination of animals, etc.), land rental to farmers and tillers.

Ministry of agriculture – free provision of vaccines for cattle, breeding livestock improvement, organization of cheese exhibition/fair for milk and cheese producing farms.

Involvement of women in the dairy value chain

20% of women are involved in forage production process. They mainly deal with organizational issues and decision making but do not participate in the production process.

About 95% of women in the community are involved in cattle farm milk production, including:

Maintenance and management of the farm (as well as milking and care) - 44%, driven in large part due to lack of family men who leave to the other countries for work (about 800 men from the village, of whom about 200's families are engaged in cattle-breeding farm).

Co-management, care and milking - 50%. Work together with men in their farms, participate in decision-making.

Cattleman - 4%. Women whose husbands are out of the community, take their cattle to the pastures.

Farms owners - 2% (involved in all activities).

5% of these women have higher education, 10% - the average professional.

About 200 farms are involved in milk processing, producing cheese (and threads) and butter, and some quantity of yogurt. "Igit" LLC is also involved in the dairy production of the community.

In the factory 75% of 35 employees are women who are involved in the manufacturing process.

Women are fully involved in the processing of 200 farms. Men participate in the manufacturing process that requires physical abilities.

Sales - Market

Goods produced by household farms are sold in local stores, shops and districts of Gyumri city. Sale is realized by women producers. Only 4 women of the community are involved in the trade, selling also the cheese of other producers. If a farm owns a private car, men organize the transportation, and in case of vehicle absence, women are engaged in trading, using public transport and taxi. There are also cases, when resellers come from Yerevan to the village to take the cheese.

Dairy products of factory are sold in the shops, stores and supermarkets in Gyumri and Yerevan. Delivery is organized by the producer, women do not participate in this part.

CONCLUSION

Apart from all the above analyzes and results Azatan is distinguished by the fact that there are people who are working together, cooperating, exchanging their experience, the industry is moving towards better solutions and innovation. People in Azatan are ready for positive changes.

The economy of the community is mainly built on the basis of its competitive advantages. Community’s perspective branches are as follows:

• Farming (agriculture)

This sector is competitive and productive, but the needs diversification in accordance with market demand. Another imperative is to increase the competitiveness of the manufacturing processes through increasing efficiency in all production processes, soil analysis, selection of appropriate fertilizers, corresponding seeds selection, technology updates, and so on.

The continuous increase in the volume of animal husbandry can be a prerequisite for the growth of production volumes.

• Breeding

The community has significant favorable conditions for development of cattle breeding and livestock growth. Milk and meat production are effective and have development potential.

• Dairy production

There are professional manufacturers of cheese and butter in the community who produce in home conditions, but are popular in different regions and have their regular customers. In case of some organized interventions (creation of marketing models, branding, technological and quality standards development, education, etc.), the sector can develop its scope and enter into the national market.

Below are the initiatives and proposals for development of perspective sectors of the economy of Azatan that have been shared with the local team of the community.

Initiatives in the field of agriculture

Carriers sector

Directions Strengths Improvement directions Improvement initiatives

Seeds Toxic fertilizer Drug substance Veterinary services Water supply Agricultural technique

Access to high-quality supply. Great variety and quantity of agricultural machinery. Qualified veterinarian. Free water supply.

Some types of pesticides and fertilizers supply. It is used mostly exhausted agric. equipment. Irrigation networks are worn. In spring residents have to pay for the supply of high quality.

Laboratory testing of soil. Potassic and phosphoric fertilizers supply. Acquisition of new agricultural machinery. Irrigation water partial update of 1.8 km. Up to 8% of loans.

Producers sector

Players Strenghts Improvement directions Improvement initiatives

Large and medium farms

The agricultural machinery. Sufficient number of warehouses. Widespread connections with suppliers, ties market. Professional best practices.

Application of the same type of fertilizer Unified crop development, based on market demand. Absence of any agricultural processing in the community. Lack of specific productions (peas, green peas, sunflowers and other crops for collection).

Potassic and phosphoric fertilizers and biohumusi application Cultivation of new crops (peas, peas, emmer wheat ...) instead of the part of the potato which can not be sold New irrigation technologies, cost reduction Wheat for grain processing and packing. Potato cleaning and packing, delivery to fast food points in Yerevan and Gyumri.

Proposals in cattle breeding sector

Players Strenghts Improvement directions Systemic opportunities Improvement initiatives

Large and medium farms

Barn’s sufficient conditions. Family labor, Long term experience. Support organizations availability. Availability of high quality veterinary services.

Own farms forage (alfalfa ...) Lack of forage (alfalfa…) production at own farms (not for all). Various sizes and quality cheese production.

As a result of low wages, there is a serious lack of workforce in the field of animal husbandry.

Meat demand growth tendency.

Collaboration on the introduction of cheese quality standards, manufacturing and packing. Forage production volumes increase: clover and concentrated feed. Increased livestock, use of other communities far pastures. Improvement of pedigree breeds through artificial insemination. Appropriate care for the improved tribes. Raising the salaries for the attraction of missing workforce.

Support organizations

Who/What Strenghts Improvement directions Systemic opportunities Improvement initiatives

SMEDNC CARE CARD HEIFER ARMENIA ASC

Financial resources Readiness of support Cooperation Pedigree livestock improvement

Lack of support tools for agriculture, inaccessibility.

Both international and local support

organizations and the government aim at cooperation, which

creates opportunities for systemic

cooperation and synergy

Partnerships for implementation of initiatives Lobbying, government programs and initiatives presentation. Available in the village. loan guarantees. Leazing and affordable long-term conditions, subsidized modern agric. Machinery provision Support for import of fertilizers Negotiations with the potato export to neighboring countries for paving the difficulties

Government of the RA

Free vaccines for cattle, cheese exhibition / fair Organizing milk and cheese producing farms. With subsidides diz. fuel, seed and fertilizer for forage and grain producers, carriers.

Special thanks to Municipality of Azatan and the Local team for support to the project implementation

Local team contacts

Expert group of the project

Artak Dadoyan, expert

Karen Vardanyan, expert

№ Surname Name

Date of birth Position Phone number

1. IKILIKYAN VARDAN 05.01.1965 Head of community 093 269972 2. POGOSYAN GAGAIK 24.06.1965 Deputy head of community 093 989494 3. MURAZYAN GHUKAS 11.07.1973 Chief of municipality staff 093 087575 4. VOSKANYAN HAMLET 19.01.1974 Director of school 094 121412 5. IKILIKYAN LIANNA 14.02.1975 Teacher 093 020064 6. TONOYAN SIRANUSH 17.07.1988 Teacher 098 833501 7. ABRAHAMYAN GEVORG 28.12.1977 Farmer 093 744664 8. PAPOYAN VARDAN 17.04.1967 Veterinary 093 326832 9. HARUTYUNYAN EDVARD 15.04.1953 Farmer 093 777753