Value Chain Selection Report Armenia - World Bank€¦ · commercial and private entities involved in agricultural production, processing, and distribution. The main land users in

Value Chain Selection Report

Armenia

Armenia Gender Project

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2017 International Finance Corporation. All rights reserved.

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without limitation, typographical errors and technical errors) in the content whatsoever or for

reliance thereon.

http://www.ifc.org/

3

ACKNOWLEDGMENT

The value chain selection report was prepared by Anzhela Mesropyan, Consultant, World Bank

Group, with the support of Gayane Mkrtchyan, Project Lead of the World Bank Group’s Armenia

Gender Project, which is implemented by IFC.

The authors would like to thank their World Bank Group colleagues for reviewing this value chain

selection report and offering their valuable comments and suggestions, particularly Heinz-

Wilhelm Strubenhoff, Senior Operations Officer, and Selma Rasavac Avdagic, Senior Operations

Officer.

The project team would also like to thank Lilit Asatryan, President of Armenian Young Women’s

Association, Artur Gomktsyan, Economic Justice Programme Officer of Oxfam in Armenia, and

Karen Gevorgyan, Deputy Director of Small and Medium Entrepreneurship Development

National Center.

4

Table of Contents

ACKNOWLEDGMENT ............................................................................................................. 3

EXECUTIVE SUMMARY ......................................................................................................... 5

INTRODUCTION, METHODOLOGY, AND COUNTRY CONTEXT ................................................ 5

KEY FINDINGS .......................................................................................................................... 9

OVERARCHING GENDER FRAMEWORK ................................................................................... 9

FISH PRODUCTION ................................................................................................................... 10

GREENHOUSE ........................................................................................................................... 11

WILD HARVEST ........................................................................................................................ 12

CHAPTER 1: FISH PRODUCTION ...................................................................................... 13

COUNTRY CONTEXT ................................................................................................................ 13

MAIN FINDINGS ....................................................................................................................... 14

CHAPTER 2: GREENHOUSE ................................................................................................ 23

COUNTRY CONTEXT ................................................................................................................ 23

MAIN FINDINGS ....................................................................................................................... 25

Growth Potential ................................................................................................................................. 25

CHAPTER 3: WILD HARVEST ............................................................................................ 33

COUNTRY CONTEXT ................................................................................................................ 33

MAIN FINDINGS ....................................................................................................................... 35

Growth Potential ................................................................................................................................. 35

CHAPTER 4: RECOMMENDATIONS ................................................................................. 43

COMPARISON ........................................................................................................................... 43

RECOMMENDATIONS ............................................................................................................... 46

ANNEXES ................................................................................................................................... 49

ANNEX 1. VALUE CHAIN SELECTION CRITERIA ................................................................... 49

ANNEX 2. VALUE CHAIN SELECTION QUESTIONNAIRE ....................................................... 51

ANNEX 3. LIST OF RESPONDENTS .......................................................................................... 55

ANNEX 4. BIBLIOGRAPHY ....................................................................................................... 57

5

EXECUTIVE SUMMARY

INTRODUCTION, METHODOLOGY, AND COUNTRY CONTEXT

Armenia is an industrial-agrarian country situated in the South Caucasus, at an intersection of

contradicting geopolitical interests. In 2015, Armenia joined the Eurasian Economic Union

(EAEU) with the Russian Federation, Belarus, Kazakhstan, and the Kyrgyz Republic. The political

decision to change the country’s course was made back in September 2013 thus temporarily

suspending long-running negotiations with the European Union (EU) on signing the Association

Agreement (AA), including a Deep and Comprehensive Free Trade Area (DCFTA). Despite this

development, Armenia and the EU continue their political and trade dialogue in areas where it is

compatible with Armenia’s new obligations to the EAEU. The EU launched negotiations on a new,

legally binding, and overarching agreement with Armenia in October 2015. Future legal

agreements will replace the current EU-Armenia Partnership and Cooperation Agreement effective

from 1999.

Agriculture has historically been one of the leading sectors of Armenia’s economy, having a

crucial role in maintaining the country’s macroeconomic stability and ensuring food security. The

share of value added in agriculture in the total gross domestic product in 2015 has amounted to

about 20 percent, growing from 17 percent in 2009. In particular, the share of plant production is

about 60 percent, and that of animal husbandry is 40 percent. As the figures demonstrate,

agriculture in Armenia is largely dependent on plant production. The importance of agriculture

development is highlighted in the Strategic Program of Prospective Development of the Republic

of Armenia for 2014–2025. Considering agriculture as a priority sector has two fundamental

reasons. First, agriculture is considered as one of the key parts of the food industry value chain,

the latter having a huge unlocked export potential. Second, the development of agriculture is

essential in terms of ensuring higher productivity in the sector, creating opportunities for

nonagricultural employment and contributing to the balanced regional development.

The Republic of Armenia (RA) Rural and Agriculture Sustainable Development Strategy for

2010–2020 underlined the main directions of agriculture sector development and measures

ensuring proper implementation. Commercialization and modernization of the agriculture sector

are seen as key directions for enhancement of sector potential, which, among others, means

increased economic efficiency and application of modern technologies and management systems.

Armenia’s agriculture sector should become export-oriented; otherwise, being focused only on a

small domestic market will further limit the sector’s dynamic growth. There are 9151 communities

in Armenia, out of which 866 are rural. About 36.0 percent of the country’s population resides in

1 Strategic Program of Prospective Development of the Republic of Armenia for 2014–2025, adopted by the

Government decree #442-N on March 27, 2014.

http://ec.europa.eu/trade/policy/countries-and-regions/agreements/

6

the rural communities thus entailing that agriculture is of strategic importance for rural areas

development.

According to the RA Rural and Agricultural Sustainable Development Strategy for 2010–2020,

the Armenian agro-food sector encompasses about 340,000 agricultural households and

commercial and private entities involved in agricultural production, processing, and distribution.

The main land users in agriculture are agricultural households, which cultivate more that 82

percent of arable lands, 75 percent of perennial plantations, and 50 percent of hayfields. Each

household owns about 1.3 ha of arable land. As shown in the RA Pilot Agricultural Census 2013,2

agricultural households produce around 90 percent of the gross agricultural product. These

households are characterized by small sizes, low level of specialization, limited amount of

investments and incomes, and low level of marketability, as evidenced in the following figures: 45

percent of the produced agricultural product is intended for own consumption, 20 percent is

intended for in-kind payments and barter, and, on average, only 35 percent is monetized. This

sector accounts for about 37 percent (about 437,000 people) of the country’s total employed

population and about 80 percent of the rural population.

A brief analysis of the given statistics clearly indicates that in such a fragmented situation, it is

virtually impossible to apply advanced production, marketing, and other technologies that will

result in cost reduction, enhanced productivity, and competitiveness. To address these and other

interrelated issues, in various strategy and research papers, a high priority is attached to the

development of commercial agriculture organizations, cooperatives, and family farms integrated

with market infrastructures through the application of intensive technologies. In December 2015,

a new Law on Agricultural Cooperatives was adopted ensuring a sound legal framework for the

development of cooperatives. According to data from the RA State Registry, 3,737 production and

338 consumer cooperatives are presently registered in Armenia, of which 202 are of agricultural

nature. Many high-level officials of the sector connect the development of the agriculture sector

with cooperatives.

There are numerous government- and donor-funded programs designed to gradually solve the

outstanding issues in the agriculture sector, including more effective use of land resources, better

integration of agricultural producers, development of efficient mechanisms for agricultural

insurance, development and introduction of various mechanisms for increased access to credit and

lending, fuller use of the rural human potential (World Bank 2013a), and other issues.

In Armenia, the agriculture sector is less profitable compared to the other sectors. According to

the National Statistical Service of the RA, the average monthly net income in the economy is

almost 28 percent more than in the agriculture sector. Meanwhile, the inequality of net income

among men and women in this sector is deeper than the average rate in the economy. Accordingly,

women earn 41.7 percent less than men do in the agriculture sector, while this rate is 37.1 percent

2 http://www.armstat.am/file/doc/99489943.pdf.

7

in the entire economy (Oxfam Armenia 2013). The main contributor to this phenomenon is the

informal nature of women’s employment in agriculture. Despite having a significant role in

agriculture, women particularly do not participate in the decision-making process for their

communities, thus, being deprived of the opportunity to express their interests. Only 22 rural

communities, out of 866 rural communities in Armenia, are administered by women, and only 8.3

percent of women were included in the Community Council.

This is the right place to provide some historical background of the issue. In Soviet times, women

were playing a great and important role in agriculture and their role was also highly appreciated as

community actors. Now, they perform their working duties just for satisfying the immediate

financial and housing needs of their families. They lack competence, confidence, interest, and

substantial resources for starting their own businesses. The issue is even more complicated when

the context is to be considered. In the agriculture sector, the women workforce consists of mostly

wives of seasonal migrant workers in Russia and other Commonwealth of Independent States

(CIS) countries. The seasonal work starts in spring and lasts till late autumn, the time when the

agricultural works start in Armenia. This forces women and their children to perform agricultural

works either for family consumption or in neighboring households for a daily payment to meet the

needs of the family.

The Concept Paper on Gender Equality and the RA Gender Policy Strategic Action Plan for 2011–

20153 provide the basis for the national gender policy development and refer to the enjoyment of

equal rights and equal opportunities in legal, social, economic, and cultural spheres of life

regardless of sex. Armenia also adopted the Law on Equal Rights and Equal Opportunities for Men

and Women in 2013. In reality, however, it is evident that women share underrepresentation

virtually in all spheres of sociopolitical and socioeconomic life, as well as at all policy-making

levels.

The selection of the value chain that demonstrates the higher potential for growth and has the

necessary preconditions for women’s integration is based on the results of qualitative research

conducted through group discussions and in-depth interviews, comprehensive desk-based reviews

of local and international studies, and comparisons and analogies of official statistics, strategies,

and other analytical materials. Group discussions with 21 participants of the wild harvest value

chain and in-depth interviews with nine greenhouse owners and three fish producers were

organized with the support of Armenian Young Women’s Association (AYWA).4 Meetings with

the wild harvest value chain participants were held in Akhtala urban community of Lori marz with

the participation of representatives from the neighboring communities of Alaverdi, Neghoc, Ozun,

and Small Ayrum, and with fish producers in the city of Spitak and Debed. In-depth interviews

with greenhouse owners were held in six urban and rural communities of Lori marz. Oxfam

3 http://www.un.am/up/file/2011-2015_Gender%20Policy_NAP-Eng.pdf 4 Since May 2013, AYWA has been implementing the Social and Economic Empowerment of Women in Armenia

Project in Lori marz funded by the EU.

8

Armenia facilitated the meeting with 12 women members of the ‘Debed’ consumer cooperative

engaged in greenhouse production in Lchkadzor community of Tavush marz. The cooperative was

established with the support of the Oxfam Economic Development Program.

9

KEY FINDINGS

OVERARCHING GENDER FRAMEWORK

The foremost objective of the Europe and Central Asia Gender Project is to enhance women’s

empowerment and reduce gender gaps in the selected agricultural value chains. The project seeks

to identify the current constraints that hinder women’s access to well-functioning and prospective

value chains and limit their ability to meet market requirements and the better use of their potential.

The project will support women’s efforts toward enhancing their business opportunities and

abilities. Gender equality is a core development objective in its own right, and it is also a smart

development policy and business practice. No society can develop sustainably without

transforming the distribution of opportunities, resources, and choices for males and females so that

both have equal power to shape their own lives and contribute to their families, communities, and

countries (World Bank Group 2015).

Despite Armenian women’s noticeable achievements in various field and the obvious fact that in

many families, men are no longer the only breadwinners, the primarily role of women remains

attached to the family. Gender stereotype and centuries-old traditions hinder women’s equal

participation in virtually all aspects of social life thus contributing to the lower representation of

women in politics, in formal employment, as managers, and so on.

According to the Country Gender Assessment,5 regardless of the introduction of a quota system to

assist women to enter politics, women’s low level of representation in the national government

persists. At present, women represent only over 10 percent of parliamentarians and about 11

percent of high-level government staff. Women are much better represented in supporting and in

non-leadership positions in the public sector. Male and female employment patterns also differ.

Although women, on average, have a higher level of education than men, their labor force

participation rate is lower, in part because of childcare and household obligations.

A significant proportion of women is engaged in informal work, which leaves them without the

protection of the Labor Law, for instance, a lack of maternity or childcare leave. Women also

represent a larger share of the registered unemployed and tend to spend longer time searching for

work. Of those who are in formal employment, women are overly represented in public sector jobs

(for example, health care and education) and earn the lowest salaries, while men predominate in

technical and better-paid fields (for example, construction, manufacturing, and transport). Women

are underrepresented in upper management—about 67.8 percent of managers are estimated to be

male. In business, the number of female senior managers has declined, from 27 percent in 2012 to

23 percent in 2013. One of the most visible consequences of such stratification of the labor market

is a large gender-wage gap. Women’s average monthly wages represented only 64.4 percent of

that of men in 2012, which gives Armenia one of the largest gender pay gaps in Eastern Europe

5 An assessment was done by the Asian Development Bank in 2015.

10

and Central Asia.6 The Assessment of Needs for Business Services among Women Entrepreneurs

of Armenia implemented in 2014 identified that women enterprises constitute about 11–12 percent

of the entire number of small and medium enterprises (SMEs), which is close to 7,400, and they

are particularly active in trade, services, and agribusiness (agro-processing), and to a lesser extent

in manufacturing. Of all active enterprises, women represent about 20.7 percent of business owners

(16,200 of 78,000 enterprises).7

FISH PRODUCTION

Fish production is one of the dynamically developing, export-oriented sectors of Armenia’s

economy with a well-developed value chain. It showed an impressive 40 percent growth over the

last 10 years. Expansion of fish production farms from the most active marzes (Armavir and

Ararat) of Armenia to the submountain and even mountainous areas and in near-border villages

will have a positive impact in poverty reduction and will contribute to the alignment of regional

development.

The value chain possesses huge yet underutilized potential in terms of exporting processed fish

production, in particular smoked and canned fish. Access of Armenian fish product, except for

crustaceans, to European markets is limited due to strict regulations and standards for food

manufacturing and safety. Introduction of manufacturing and food safety standards, such as Good

Manufacturing Practices (GMP), Hazard Analysis and Critical Control Points (HACCP), Best

Aquaculture Practices (BAP), Good Hygiene Practices (GHP), among others, is high priority. The

main market for Armenian fish production remains Russia, which due to severe depreciation of

national currency proves to be economically unprofitable at present.

It is worth noting that one of the main obstacles that hinders the expansion of existing fish farms,

as well as entry of new players, is a steep decline in the underground water resources, particularly

of artesian springs in Ararat and Armavir marzes where 83 percent of existing farms are

concentrated. Therefore, an introduction of water- and eco-saving technologies in fish farming is

of high urgency.

Women are crucial to the fish production sector. The sector is characterized by highly segregated

division of labor, such as men fishing and women processing. Compared to other sectors, women

and gender issues have been missing from key global normative fisheries and aquaculture policies

(BMZ 2013). Factors and processes that inhibit better women’s participation in all segments of the

value chain, other than traditionally attached to women, should be eliminated or improved. This

6 http://www.adb.org/sites/default/files/institutional-document/162152/arm-country-gender-assessment.pdf 7 The assessment was performed within the framework of the Women Entrepreneurship Sector Support

Development Program, funded by the Asian Development Bank and implemented by PEM GmbH,

http://www.smednc.am/files/uploads/2015/05/800-3bd41908f6a3aa0063d5eed195aaae08.pdf

11

will ensure women’s equal access to existing infrastructure, balanced ownership of assets, and

enhanced participation in the decision-making process.

Fish production is one of the well-functioning value chains in Armenia’s agriculture sector and

holds huge potential for further boost. Export opportunities to the markets of the EU still remain

immensely underutilized due to the inability of the sector to meet good manufacturing and safety

standards. The EU is the largest seafood importer in the world, and this prospect should not be

missed. Exports to the markets of the EAEU and the CIS countries can be multiplied by

diversifying final outputs through processing activities, and not only focusing on fresh fish.

GREENHOUSE

Greenhouse production is another promising sector of agriculture, which demonstrated a rapid

growth over the last five years. The total area of greenhouses was expanded by about six times,

while the area of greenhouses equipped with modern technologies was multiplied by 42 times.

Currently, greenhouse production is considered to be one of the most attractive areas for foreign

investments, especially from Russia. One of the decisive factors ensuring the boost of the value

chain productivity and competitiveness is an introduction of advanced technologies and year-round

high-yield varieties. It is assumed that the application of intensive technologies, for example,

hydroponic cultivation, and high-quality seeds and seedlings will allow to increase productivity

on average by 2–3 times. Currently, only 10 percent of existing greenhouses are equipped with

sophisticated technologies.

Greenhouses grow tomatoes, cucumbers, peppers, eggplant, beans, greens, potatoes, and

strawberries that are mainly exported to Russia with a small share to the CIS countries. It is planned

to boost the growth of higher-value products, such as broccoli, asparagus, and capers. Armenian

greenhouses also grow berries and flowers. The introduction of irrigation-saving and heating

systems is important for decreasing the cost of production and thus enhancing the competitiveness

of Armenian greenhouse produce.

Promotion of cooperatives is another stimulating prerequisite for women’s economic success.

According to the survey results conducted in Tavush marz (Oxfam Armenia 2013) of Armenia,

participation in cooperatives is viewed as a major incentive for women’s economic empowerment.

Cooperatives help women take risks and responsibility in economic matters and in decision

making. By donor efforts, a number of women-owned cooperatives were established, particularly

engaged in greenhouse production.

Greenhouses recorded an especially high rate of development and profitability over the past four

years. One of the prospects for success is the mobilization of resources of small and medium

greenhouses for acquisition of input materials, upgrading of old technologies, and organization of

sufficient amount of regular supply, which could be achieved also through operating under one

12

umbrella. Meanwhile, efforts toward ensuring compliance with food safety standards should be

accelerated.

WILD HARVEST

The wild harvest value chain possesses a huge potential for further growth especially for deep-

frozen and processed berries. There is an unmet demand in this value chain. Wild harvest and

cultivation of berries remains chiefly triggered from local food processing companies. Absence of

registered businesses in this value chain obstructs the chances of wild collectors (mainly

represented by physical persons) to have long-term supply contracts with processing companies.

Another supply hindering factor is the high volatility of wild berries’ yields. As an alternative

solution for addressing the current shortage in supply, plantation of wild berries and herbs is

considered. At present, mostly raspberries and blackberries are collected from forests, but along

with the expansion of plantations, it is possible to grow also high-value berries, especially

strawberries and blueberries. Besides berries, a high demand exists for herbs, particularly from the

pharmaceutical and food industries.

The wild harvest value chain is the least developed compared to fish production and greenhouse

with women’s share overrepresented in all segments of the value chain, where practically there are

no entry barriers and start-up costs. Actors of the value chain practically lack managerial and

marketing skills.

Fresh and processed berry demand is growing internationally, and Armenia cannot stand aside

from the global developments. There is a huge unlocked potential for the value chain’s further

enhancement, through offering high-value products, especially oriented to niche markets. The

formation of business entities in this value chain will upsurge chances of the value chain to become

more productive and competitive.

The availability of affordable financial resources reflecting the peculiarities of agricultural

production was reported as a main obstacle hindering the dynamic growth of the three value chains.

According to the World Bank Enterprise Survey, 21.2 percent of the manufacturing firms in

Armenia identify access to money as a major constraint for operating their businesses.8

8 http://www.enterprisesurveys.org

http://www/

13

CHAPTER 1: FISH PRODUCTION

COUNTRY CONTEXT

Fish production is one of the dynamically developing sectors of Armenia’s economy, characterized

with high production and export growth potential. The industry has already demonstrated a high

growth rate and marked profitability. Over the past decade, average annual production growth rate

was 40 percent (Gabriyelyan 2015). Fish production is of strategic importance for Armenia

because fisheries can be set up not only in lowlands but also in submountain and even mountainous

areas and particularly in near-border villages where it can be the only income source for

households. Areas with less access to agricultural resources and more limited in terms of animal

husbandry could benefit immensely from the development of fish production.

Armenia has hundreds of water bodies all over the country, including 10 major natural rivers and

15 major lakes: Lake Sevan is the largest water body of the country. The number of small farms

producing fish increased dramatically since the 1990s. In 1991, there were only 14 fisheries; by

2015, this number increased to 250 (68 percent of these are small farms with less than a hectare of

production area). Most of the fish farms, about 83 percent, are located in Armavir and Ararat

marzes of Armenia where fish grow all year round due to the climatic conditions, unlike Lake

Sevan, where temperature falls low in the winter and makes it unfavorable for fishery.

The total water surface of fish farms in the country is 3,542 ha out of which 2,479 ha or almost 70

percent is located in Ararat marz and 956 ha or about 27 percent in Armavir marz.9 According to

water basin surface, the four biggest fish ponds together occupy 2,000 ha water surface or 56.5

percent of the total water surface. It is worth mentioning that geographic locations of fish farms

are expanding gradually from Ararat valley to submountain and even mountainous regions. The

changes that occurred in recent years evidenced the potential for Armenia’s growth in this field, if

the present resources are used properly and intensively. The introduction of sophisticated

production technologies and eco-friendly water systems is crucial for the further development of

the sector, and hence, a top priority for the Government. Moreover, it is impossible to achieve a

desired outcome without ensuring affordable financial resources for businesses involved in this

sector.

Currently, frozen and processed fish and caviar are exported to the Unites States, Georgia, Russia,

Ukraine, and several Arabic countries. Only 24 out of 250 fish farms have the permission to export

the fish product.10 Over the last years, rapid growth of valuable fish production is noticed, namely

9 http://minagro.am/en/agriculture-in-armenia/fish-breeding/ 10 Includes caught and/or captive-bred fish, crustaceans, and products derived from them, collectively defined as fish

product.

http://minagro.am/en/agriculture-in-armenia/fish-breeding/

14

trout (Salmonidae) and Acipenseridae. Based on updated information, at present, about 14,000

tons of fish are produced in Armenia out of which 65–70 percent are valuable species.

Access of Armenian fish product, except for crustaceans, to European markets is restricted due to

strict regulations and standards for food security and quality. The future development of fish

production should be implemented by taking into consideration the EU market standards.

Essentially, this entails establishing international best practices in tandem with the equivalent

quality and safety systems such as GMP, HACCP, BAP, and GHP, among others.

Today, cooperation trends are observed in the fishing industry, which is an important factor. Very

often, the fish farms are united or cooperate with large companies on a contract basis that facilitates

the various business processes. The fish production value chain is one of the most developed

among the three value chains under analysis with the share of women’s participation noticeably

underrepresented almost in all levels of the value chain, except for fish feeding and handling.

Figure 1. Fish Production Value Chain

MAIN FINDINGS

1. Positive growth trend of the value chain and unmet market demand

Trends of fishing industry development in Armenia of previous years prove that many business

entities obtained wide experience and efficient management skills in fishery that makes this sector

profitable and promising. At present, annually, 14,000 tons of commercial fish are produced in the

country, the greater part of which is the golden trout. Due to good quality, the trout is in high

demand in Russia, while exports to the EU consist mostly of crayfish. The value of fish production

has steadily increased over the last five years, amounting to US$69 million in 2014, compared to

US$27.4 million in 2010. The share of exported fish, in its turn, increased over five times,

amounting to 6,578 tons in 2013, with a value of US$32.5 million. Table 1 illustrates the fish

15

product exports by Foreign Economic Activity Commodity Nomenclature (FEACN)

classification.11

Table 1. Export of Fish Products, in Tons

It is clearly seen from the figures that in 2013, more than 90 percent of exported fish product is

fresh fish and crustaceans. While the volume of exported fresh fish and crustaceans increased on

average 2.5 times, from 2011–2013, the volume of frozen fish fell sharply, more than 10 times,

amounting to about 56 tons in 2013, compared to 567 tons in 2011.

Fish producers assure that there is a huge potential for the expansion of processed fish production

and exports. In addition, shifting exports’ focus from fresh fish to the processed one will

significantly eliminate risks inherent to fresh fish export, namely perishability and logistics issues.

Besides, there is also a need for improvements in productivity, output quality, and safety standards

to sharpen the Armenian product’s competitiveness and gain greater access in export markets for

it. Essentially, this entails establishing international best practices in tandem with the equivalent

quality and safety systems (such as GMP, HACCP, BAP, and GHP, among others).

2. Available sales outlet and high interest of buyers in the product

It was anticipated that the recent accession of Armenia to the EAEU will hugely facilitate efforts

of fish producers aimed at penetrating new markets within the economic union. However, as it was

mentioned during the interviews with fish producers, it brings numerous uncertainties in terms of

11 Products in Table 1 are categorized according to their FEACN classification, including their respective four digit

codes. FEACN is a goods classification system applied in the CIS countries. It is similar to the Harmonized System

(HS) classification system applied internationally.

16

policy, resulting in inconsistent application of procedures related to Russian export permits and

clearance procedures. Moreover, the implementation of food safety requirements, such as the use

of HACCP systems, appears to be mandatory.

Businesses fully realize the importance and advantages of being compliant with internationally

recognized quality and safety systems. Yet, these changes require huge financial and human

investments, which most of the businesses operating in this sector are unable to make, currently,

due to noticeable decline in turnover. The main contributors to this drop in export volume are the

abovementioned uncertainties relating to the export permits and clearance procedures, as well as

a swift depreciation of Russia’s national currency, which makes any export to the Russian market

cost-ineffective.

The only fish product for which the European markets are open is crayfish from Armenian natural

waters: the only fish product that has an EU number. Its main export markets are France (35

percent), Germany (12 percent), Georgia (28 percent), and Russia (20 percent) and 5 percent goes

to other European countries (FAO 2008). Businesses involved in the sector claim that Armenia,

with its current production capacity, could produce around 300,000 tons of fish product annually,

over 20 times more than produced presently, provided European markets are open for Armenian

fresh fish as well. Entry to the EU markets12 is one of the top priorities for the Government.

Numerous preconditions should be met to obtain EU numbers for fish products. This requires a

systematic approach starting from establishing a required certification system and ending with

valid monitoring mechanisms.

3. Scope for expanding production and/or scope for value addition through processing

or product improvement (new products for which there is a market)

Fish producers mentioned that there used to be a few fish-processing facilities with smoking and

canning lines, inherited from the Soviet Union. The running cost of those facilities was very high

due to obsolete equipment, entailing a low level of mechanization. These plants were closed

because they prove to be economically nonviable.

A few of the large fish producers stated that they made some attempts to launch the production of

smoked/dried fish, which is also seen in Table 1, but they failed to make it a successful project. In

2011, about 4.3 tons of smoked fish was produced, while in 2012, it was increased up to 56 tons,

followed by the severe decline to 0.2 tons in 2013.

Producers noted that now, a demand for processed fish products, in particular, for smoked and

canned fish, was augmented in Russia, mainly conditioned with the full embargo imposed by

Russia on imported food from Western countries. Despite this attractive opportunity, establishing

highly efficient fish-processing facilities requires huge financial investments, which most of the

12 To export fish and fishery products to the EU, the requirements set in Regulation (EC) No. 854/2004 of the

European Parliament and of the Council of 29 April 2004 must be fulfilled.

17

fish producers cannot afford at present, unless an attraction of affordable and long-term loans

becomes feasible.

4. Low costs of the value chain in relation to competitors

For fish production, the market prices might be lowered substantively in case of domestic

production and consumption of fish for feeding. For the further development of the field, aiming

to enter international markets makes an additional emphasis to upgrade the operating systems in

an eco-friendly manner. Complicating the issues of low costs even further, the European food

markets present quite strict quality requirements, which in turn brings the necessity to conform to

those rules and procedures for the domestic farmers. All the abovementioned factors add to the

overall costs for an effective and efficient fish industry. Low costs in the fish industry might seem

plausible in case of elaborate and large-scale projects with professional management and by

organizing staff in place. Entering into new markets for the fish industry, specifically for canned

and smoked fish, makes obvious the need to have continuous research on fish markets and

competitive market prices within the EAEU. It can open up new possibilities to specialize on those

types of fish products that can be competitive in new markets.

5. Other competitive advantage of the value chain in relation to competitors (unique

product/local specialty)

Among the factors that give competitive advantage to Armenian aquaculture products, the first

one worth mention is the country’s climate and quality of water that brings a unique taste to

Armenian fish products. During the last decade, the variety of fishes was drastically enlarged.

Thanks to climatic conditions, currently about 40 species and subspecies of fish can be found in

the natural and artificial water resources of Armenia, and many of them are not endemic for

Armenia. More than 15 species are used for commercial purposes and in high demand in Russia.

While in the past, 90 percent of produced fish was carp and common carp—Cyprinus carpio, at

present, this ratio has been considerably changed in favor of valuable fish species, such as

Salmonidae and Acipenseridae.

The second advantage is the wages for the workforce; even a simple and uncomplicated research

can indicate that in fish production, the average wages for the workers is quite low in comparison

with the countries where the demand for these products is high (eastern and western European

countries). For launching new productions and for the enlargement of the existing ones, this factor

might be a good prerequisite to boost the development of the sector. This is not to say that the

competitiveness should be achieved by the compromise of the rights of the workers.

6. Potential for collaboration and coordination between actors for value chain

upgrading

In the fish industry, value chain actors are, as a rule, those business entities that have established

and profitable market positions in other markets. So, it can be stated that because the start-up costs

18

for businesses in the fish industry are high, the owners of the businesses are persons and companies

who possess tangible financial and material resources. The possibilities for cooperation among

them are quite difficult, because those business entities treat the other actors of value chain as

potential competitors. They lack the needed culture of cooperation and awareness about the long-

term benefits that cooperation and collaboration can bring for the actors of the value chain.

In contrast to large fish farms, small fish farms very often are united or cooperate with large

companies on contract basis that facilitates the process of purchasing hatchlings and combined

feed for small companies, as well as the sale of commercial fish.

7. Sufficient technological and managerial level of enterprises in the sector for

upgrading and innovation

The technological and managerial structure is well developed in the fish industry. The current

technological saturation and organizational arrangements seem to be sufficient to cover the

demand side of the local market and, partially, the export volume. However, for accessing new

markets, demand for new investments and financial aid play a crucial role. In the fish industry,

innovations are urgent specifically in water provision systems, fish feeding production on the local

level, and organizational structures with professionals to organize export for the product. The last

conclusion is justified because separate business entities in the fish industry might be of small

sizes, but if there is a professional company enabling to sell the product in international markets

and making agreements abroad, they can play a mediatory role providing the full consumption of

the product. Thus, it can be summarized that technological and managerial assistance in the fish

industry might be carried out in the following three directions:

(a) Alternative and innovative sources for water provision

(b) Fish feeding production on the local level

(c) Large-scale export projects with skilled and specialized staff

8. Access to infrastructure, qualified labor force, raw material, and inputs

One of the key constraints that hinders the expansion of existing fish farms, as well as entry of

new players, is a steep decline in the underground water resources, particularly because of

declining artesian springs and water pollution. The highly disproportionate concentration of fish

farms, about 83 percent of existing 250 fish farms operate in Armavir and Ararat marzes, which

make up 97 percent of the water surface used for fish production, makes even severe the issue of

water shortage. Taking these negative developments into account, competent authorities issue

water use permits only for a short period, which in its turn adversely affects the possibilities of

developing long-term business plans and also has a negative effect on investments in Armenian

aquaculture. Hereby, the introduction of advanced water-saving and environment-friendly systems

19

in fish farming, such as closed or semiclosed water circulation technologies, become vital for the

future growth of the sector.

The Government increased its efforts to ensure an environmentally responsible development of

the fish sector and, back in September 2013, adopted a decision requiring businesses to introduce

water- and eco-saving technologies in fish farming, meaning semiclosed water cycle farming. As

producers pointed out, the introduction of such systems will require from US$700,000 to US$1.5

million, depending on the size of the farm.

The expansion of fish farms from Ararat valley to submountain and even mountainous regions is

another important factor for the development of the fishing industry. One of the interviewed fish

producers, ‘Ocean’ fish farming, was located in the town of Spitak, Lori marz, a still largely

unexplored region for fish producers. As the owner mentioned, setting a fish farm in this region

gave them at least two competitive advantages: first, they use river water, instead of artesian, which

enhances the quality of product, and second this place is closer to the border with Georgia, and

many businesses prefer to buy fresh fish from them.

The main problem pointed out by the fish producers during interviews is the high value of fish

feed, which is mainly imported from more than 10 countries, including the EU states, the United

States, and Chile. Fish feed accounts for over half of the expenses entailed in fish production (on

average, 1.2 kg of fish feed is needed to produce 1 kg of fish). Locally produced fish feed, which

is more than eight times cheaper compared to the imported one, does not meet the necessary

standards for quality fish production and hence does not have the trust of local producers. The

owner of a fish farm located in Spitak said that he is making some attempts to produce fish feed

in-house, which will be economically efficient and will drastically decrease the cost of produced

fish, thus making the product very competitive.

9. Access to financial services

Various financial products, for example, business, group, commercial, or non-collateralized loans,

as well as leasing options are available to farmers and agri-businesses, with up to 12 months’ grace

period for principal repayment and interest, on average at 14–20 percent for Armenian drams or

10–18 percent for U.S. dollars. Yet, the rates of the loans, much shorter grace periods despite the

declared 12 months, and short repayment terms make these financial products unaffordable for

most farmers. Fish farms compared to greenhouses and wild harvest value chains require

considerable financing and longer repayment period. Provision of such loans is impossible without

pledged collateral, which means that only large businesses can afford it.

20

10. Access to business development services for quality improvement of the production

process

As evidenced by the answers of the owners of fish farms, development services exist, but the main

shortcoming is associated with the high degree of fragmentation of the consultancy provided. A

number of trainings and other events of cognitive nature, such as conferences, are organized by

the state or international organizations. However, as underlined by the participants, sometimes, the

topics of trainings cover the topics that were already covered by the other institutions. As a result,

many crucial topics, such as advanced technologies for fish feeding production, remain open or

partly covered. To address the issue, areas of competences that inhibit the sector’s dynamic growth

should be identified and all subsequent educational activities should be tailored to build capacity

in those areas.

11. High number of women entrepreneurs in the value chain

Unlike other value chains, which are being examined within the framework of this assessment, in

the fish production value chain, virtually, there are no women entrepreneurs. All fish farms are

owned and managed by males. There used to be one large fish farm that was owned by a woman,

but recently, business was moved to one of the CIS countries. This situation can be explained

partially by the disinterested and inactive position of women who are generally afraid to step up

to the fields that are historically attached to men.

There is also another peculiarity in the value-chain: there are business entities that are registered

in women’s name, but in some cases, it is only an artificial fact, because the owner is a woman de

jure, but de facto, all decision-making or resource allocation functions are performed by their

husbands, brothers, fathers, or, in some cases , sons.

12. High share of women employed in the value chain as compared to the economy at

large

Women play a critical role in every link of the value chain in small-scale fisheries, although their

best-known roles are in processing and selling of fish and other fishery products. This perception

of the highly gender-segregated division of labor, such as men fishing and women processing, has

shaped the generalized approach in supporting the development initiatives for small-scale fisheries

(FAO 2015). Compared to the other sectors, women and gender issues have been missing from

key global normative fisheries and aquaculture policies (BMZ 2013).

13. Women control equipment/assets (for example, land)

The responses of interviewees provide a sound basis to conclude that, as it was for the ownership

issue in the value chain, correspondingly all equipment belong by property rights to men. Despite

that, women do not encounter any obvious discrimination practices in legal or financial assistance.

Usually, women are very inactive in acquiring equipment for production. In the fish production

21

value chain, the situation with the control of assets is even worse, mainly conditioned with the

necessity to make huge initial financial investments in assets compared to greenhouses and wild

harvest.

14. Women have or can acquire skills needed for profitable value addition opportunities

through processing product and diversification

All women respondents were open to acquiring new skills and knowledge in their job duties. The

only issue that they were wondering about is what would be the benefits for them personally of

trainings and knowledge acquiring efforts and whether it will increase their income. They were

interested to be trained on the up-to-date technologies for smoked and canned fish production,

because the production of processed fish is considered as one of the main directions for the sector’s

further growth.

15. Women control the sales income and the enterprise

In fish production, the share of women having impact and decision rights over sales incomes equals

to the distribution of ownership rights for these legal entities. The rate is about 7.5 percent for

women and 92.5 percent for men. Other sources of aggregate statistics are still lacking. Despite

the described general picture, one of the interviewees stated that although ‘Ocean’ fish farm

belongs to her son, most technological processes are directed by her husband; she is supervising

sales process and, hence, controls the sales income. She is actively participating in all processes

that determine spending directions.

16. Close to household community area (geographic)

Most fish farms are located near the household, because the proper operation of fish farms requires

direct involvement of the owners in various technological processes on an ongoing basis. In most

cases, fellow villagers are hired as employees.

17. Low entry barriers for women entrepreneurs (time and mobility, access to

technology and assets, and cultural constraints)

The access of women to technology and assets in the fish production value chain remains less than

limited. This requires substantial investments and resources that are not feasible to possess given

the current socioeconomic situation. The dramatic decrease of water resources, which urges the

government to enforce policies that will ensure the introduction of eco-friendly systems for fish

production, makes women’s access to this value chain even harder.

18. Offering new opportunities for women

Equal access to technical services, balanced ownership of assets, and an increased women’s role

in marketing activities will overall enhance female participation in fish farms resource

22

management and decision making. In addition, diversification of fish final outputs, such as smoked

or canned fish, will open up numerous opportunities for women’s engagement.

19. New activities are in line with livelihood conditions (year-round income, using family

labor, rapid returns, contributing to food security, keeping the environment intact,

and not reducing availability of clean water).

A relatively unappreciated, yet promising, fact is that fish can play a major role in satisfying the

palates of the world’s growing middle-income group while also meeting the food security needs

of the poorest and already represent 16 percent of all animal protein consumed globally (World

Bank 2013b).

Fish production provides year-round incomes. Provided actors of the value chain are ready to make

investments to increase the production of processed fish product, employment opportunities will

escalate accordingly.

20. Commitment of chain actors and their readiness for change

In the case of the fish industry, the needed investments for development and innovation are higher

compared to that of wild harvest. However, this value chain is already characterized by some

degree of development and stability, due to which, investments in this field may yield the most

benefits. The value chain is mainly represented by large businesses, which are very open to learn

new things and introduce advanced technologies.

21. Existence of some level of organization of value chain actors (cooperatives, and so on)

Cooperation and collaboration can be simply achieved among the value chain actors if their profits

seem to increase as the outcome of cooperation and coordination. There are a few fish producer

associations and unions13 registered in Armenia. However, they are either non-operational or have

very limited capacities and so are unable to address the major challenges of the sector.

13 For instance, the Union of Armenian Fish Farmers, Union of Fish Producers of Armenia, and Union of Armenian

Fish Producers and Exporters.

23

CHAPTER 2: GREENHOUSE

COUNTRY CONTEXT

Greenhouse production has a special role and importance for the agricultural sector of Armenia. It

creates an economic opportunity for farmers and businesses to get stable and guaranteed high

yields from a unit of land area with minimal risks associated with climatic conditions throughout

the year. This competitive feature is of strategic importance, particularly for a country with scarce

land resources, such as Armenia. Greenhouses had especially high rate of development and

profitability over the past four years, when in 2011, the total area of the greenhouse economies

increased nearly six times, reaching from 135 ha to more than 764 ha in 2014. The investments14

in this sector are increasing tremendously. Greenhouses were established and continue to be

established equipped with modern and advanced technologies (particularly with Dutch

technologies), which brings also high productivity and quality. The total area of greenhouses with

new technologies was 80.16 ha in the middle of 2015 compared to 1.9 ha in 2011.15

Greenhouses grow tomatoes, cucumbers, peppers, eggplant, beans, greens, potatoes, strawberries,

and more. However, exports mainly constitute tomatoes, cabbage, cucumber, and peppers to the

fresh retail markets, mainly to Russia and other markets of the CIS countries. The full embargo

declared by Russia for most imported vegetables multiplies Armenian businesses’ opportunities

for export. Armenia is also relatively well positioned for the supply of nontraditional high-value

vegetables, such as broccoli, asparagus, and capers. Armenian greenhouses also grow berries and

flowers.

The Government plays a significant role in the sector’s promotion and growth, which is structured

to help increase Armenia’s competitiveness at the international level. To ensure this, the following

activities are stipulated in the RA Rural and Agricultural Sustainable Development Strategy for

2010–2020, in particular: provision of tax privileges for the import of the main equipment and

construction materials needed for the creation of greenhouses and provision of affordable targeted

loans for the creation of greenhouses for farmers.

However, like any growing field, greenhouses also face some difficulties and challenges,

comprising the following:

• There is a lack of knowledge on the best quality seeds to be used for growing plants.

14 In 2014, the Ministry of Agriculture of the RA received nine business proposals for the establishment of

greenhouses: in total, US$79.63 million credit funds for 50 ha, which were presented to the Central Bank of

Armenia, expecting credits from Russian banks (VTB). In 2015, in Kotayk region, the construction of modern

technology greenhouses around 51 ha will be finished, of which 46 ha will be polycarbonate and 5 ha will be glazed.

Besides 30 ha of the greenhouses constructed in Shahumyan community of Ararat region in 2014–2015, expansion

for another 40–50 ha is planned. Source: http://minagro.am/en/agriculture-in-armenia/horticulture/ 15 http://minagro.am/2015/06/

http://minagro.am/en/agriculture-in-armenia/horticulture/

24

• Because greenhouse economies do not have a clearly defined categorization yet,

sometimes, they undergo inconvenient taxation conditions.

• It is extremely difficult to get loans, credits, leases, and any other kind of financial

assistance from banks in Armenia. This is a major threat to the growth of the sector, because

it requires huge financial investments to develop and work efficiently. An easier access to

financial resources is needed.

• A number of greenhouses in Armenia are gradually closing because of the high prices of

natural gas.

• European countries have very strict regulations and standards for importation concerning

safety and security of the products (GAP, GMP, and HACCP). So, the quality level of the

products produced in Armenian greenhouses should be increased to access the European

markets.

• High quality and good price should be provided by increasing productivity. This can be

reached with the use of modern technologies with qualified professionals in the field.

Education is essential for the workforce.

• Transportation infrastructure needs to be improved for the exportation of the goods to be

easier.

Greenhouse production has a well-functioning value chain. Women are significantly represented

at the production level of the value chain, including harvesting, sorting, and packing, and have a

low participation in the distribution phase.

Figure 2 . Greenhouse Value Chain

Greenhouses have a great potential for further expansion and may perform an essential part in the

growth of the country’s agriculture overall. It is constantly advancing worldwide and has a big role

in the international platform. To open new opportunities for better involvement in European and

other western markets, sufficient attention should be paid to greenhouse economies.

25

MAIN FINDINGS

Growth Potential


Greenhouse production shows a swift in growth over the last five years by expanding its total area

about 6 times and area of greenhouses with modern technologies about 42 times.16 The sector

continues to attract investments, particularly from Russia, for the establishment of large

greenhouses. The greater part of greenhouses operating in Armenia are located in Ararat and

Armavir marzes. More than 200 ha of greenhouses are available in Ararat marz, and around 280

ha greenhouse farms in Armavir marz, around half of which have less than 700 m2 area (3R

Strategy LLC/FREDA 2012). A high priority is attached to the development of greenhouses with

the total area of 1,000 m2 area. In the Concept Note for Promotion of Establishment of Greenhouses

in Agricultural Farms, 17 the Government commitment to support the enhancement of small

greenhouses’ capacity is underlined.

One of the decisive factors ensuring the boost of value chain productivity and competitiveness is

an introduction of advanced technologies and year-round high-yield varieties. It is assumed that

the application of intensive technologies, for example, hydroponic cultivation, and high-quality

seeds and seedlings will allow to increase productivity on average 2–3 times thus reaching 35–45

kg yield from 1 m2 instead of 8–20 kg. As shown earlier, only 10 percent of existing greenhouses

are equipped with modern technologies, and thus, upgrading of the old greenhouses is of strategic

importance.

According to the RA customs statistics on foreign trade, export of fresh cucumber jumped nearly

10 times in 2015, constituting 3,400 tons, compared to 383 tons in 2014, and exports of tomato

ascended about 6 times, and amounted to 1,254.4 tons compared with 218 tons for the

corresponding periods. Despite not having separate statistics on the exports of fresh vegetables

grown in greenhouses, it is widely accepted that a fair share of this growth is due to the expansion

of greenhouse production.

In greenhouses, especially of small and medium size, there is still lack of internationally accepted

practices of production and hygiene, such as Global Good Agriculture Practice (GAP), particularly

for greenhouse agricultural production, GMP , GHP, and HACCP. Along with the introduction of

the required standards, export opportunities, especially for the medium-size greenhouses, will be

augmented.

16 http://minagro.am/2015/06/ 17 Adopted by the Government protocol decree #53 on December 26, 2013

26


Armenian vegetables are in high demand in the markets of the CIS countries, mainly in Russia,

due to the fairly earned good reputation over the years. Despite this, exports do not stand at the

desired level, again because of the difficult and unstable economic situation in Russia due to

stunning fall in oil prices and imposed sanctions by various states. The chances of businesses to

penetrate the European markets are open but underutilized. The introduction of the required

manufacturing, food safety, and hygiene standards will heighten the chances of entry to the

European market. Belarus and Georgia are also considered as potential markets for the Armenian

greenhouse produce, but still compose a small share. Berries, particularly strawberries and

raspberries, and flowers are the other greenhouse products that are exported to the mentioned

countries. A big share of exports is strawberry.

Interviewed members of ‘Debed’ cooperative 18 mentioned that due to the small size of the

greenhouse and lack of efficient heating system, they do not even think about export and operate

just for the domestic market and hardly meet the existing demand. Provided reasonable financial

resources are available, they plan to grow high value added varieties for export and finally take

advantage of the location’s proximity to the state border of Armenia with Georgia.

Figure 3. Focus group discussions in regions



The greenhouse value chain exhibits a dynamic growth over the recent years partly owing to the

diversification of final outputs. According to the professional estimates, the greenhouse products

are distributed in the following way: 60 percent vegetables, 35 percent decorative plants and

flowers, and 5 percent berries.

18 The cooperative was established with the support of Oxfam Armenia. All of its 12 members are women.

27

The export of higher-value vegetables, berries, and flowers has a clear potential for future growth

and has proved to be very profitable. Armenia is quite well positioned for the supply of

nontraditional high-value vegetables, such as broccoli, asparagus, and capers for niche markets, as

well as cut flowers and berries (for example, strawberry and blueberry).


Competitive prices typology in greenhouse production is very specific in Armenia. It should be

noted that in the local market, the domestic agricultural products (vegetables and fruits) are more

expensive than those imported from Iran and/or Turkey. The domestic market is positioned in two

major segments: consumers who prefer high-quality and more expensive domestic products and

the population segment that tends to buy cheaper, but lower in quality and taste, imported

vegetables and fruits. The case is generally explained by the fact that the majority of the domestic

agricultural product is produced by individual households in rural areas, which do not use many

chemicals in the production process. Domestic vegetables and fruits are expensive, but natural and

of high quality. For international markets, Armenian agricultural product (vegetables and fruits)

may greatly benefit by positioning it in the market like in the case of domestic market: prices are

high but the quality is guaranteed. In the last months, there was a significant upward shift in export

volumes of Armenian agricultural products to Russia, which is partially explained by the embargo

to Turkish products. Despite that, it is mostly a situational factor and generally with low

predictability, but the experience and business networks created could play a facilitative role in the

future



The climatic specifics of the country bring a unique taste to the Armenian vegetables. Adding to

this is good quality water, which further enhances the quality of the vegetables. The Armenian

vegetables have a good reputation in the CIS markets, which is worth considering as precondition

for market expansion. Armenian vegetables will gain a comparative advantage in international

markets if the focus of greenhouse production shifts to higher-value products produced and

exported with modern know-how and technology.


upgrading

The promotion of greenhouse production and export is one of the most important directions of the

Government agenda, as reflected in several strategic documents and projects of the Government,

and aimed to increase international competitiveness and sustainable development of the sector.

As mentioned earlier, a majority of the existing greenhouses are of either small or medium size.

They practically do not cooperate with each other because they initially perceive each other as

competitors. One of the prospects for success is the mobilization of resources of small and medium

28

greenhouses for acquisition of input materials, upgrading of old technologies, organization of

sufficient amount of regular supply preferably under one umbrella, and most importantly ensuring

compliance with hygiene and food safety standards. In this framework, the establishment of

agricultural cooperatives is of high importance.



As observed during the interviews, there is a huge gap between existing technological and

managerial capacities of large and small- or medium-size greenhouses. Most of the large

greenhouses were established a few years ago and mostly saturated with advanced water and

heating systems, and grow high-yield varieties by using innovative technological processes.

Admittedly, they entail huge financial investments in capital and human resources. It was assured

by the owners of large greenhouses that they possess the necessary technological and managerial

capacity to become competitive in international markets provided external obstacles are overcome.

On the contrary, small- or medium-size greenhouses mostly lack the required technological and

managerial capacity. In recent years, a number of greenhouses were formed by the support of

international organizations, especially women-owned; yet, for further productive operation, they

lack essential managerial and technological knowledge. For example, cooperative members, due

to the limited knowledge and skills in marketing, do not even think about selling their produce

outside the local community.

This is also because they similarly lack the technical expertise and financial resources to grow

vegetables or plants such as aloe, for which there is a high demand. Moreover, they need

investments and assistance in alternative heating systems, irrigation system, quality assurance

procedures and rules, product calibrating, sorting, and packaging especially for export.


Cooperative members and businesses stressed the need for the introduction of advanced irrigation

systems, particularly drip irrigation system. Currently, more than 50 percent of greenhouses are

irrigated by way of ordinary furrows. The expenses for the introduction of drip irrigation system

for 1 m2 may fluctuate from US$2 to US$4, depending on the necessity of a pump, the distance of

reaching the water to the hothouse, country of production, quality of pipes, and other factors.

Water-saving usage is crucial for the further success of the greenhouses.

Another major constraint emphasized by all the members of ‘Debed’ cooperative is the lack of a

heating system that will allow year-round growth and will considerably increase profitability due

to higher sales prices. Participants do not want to introduce gas heating system, because it will

greatly decrease the price competitiveness of the product due to high cost. They are looking for

alternative sources of energy, such as solar panels. To invest in these facilities, producers will also

29

need access to some form of collateralized financing to bridge their financing gap. At the same

time, it is also necessary to strengthen the human capacities to be able to produce high-value

products and apply required manufacturing and food safety standards and practices.


The lack of accessibility of financial resources, as well as the small variety of financial instruments,

seriously limits the development of greenhouse production. As obstacles to loan provision, women

noted high interest rates, short grace period for principal amount and interest payment, the need

for pledging, and so on. At the same time, women emphasized that there is no discrimination in

terms of providing loans to women and men. The only issue is inaccessibility of long-term credits,

which will enable to operate a greenhouse equipped with advanced technologies, or reasonable

short-term credits, for buying high-quality seedlings, nutrients, and pesticides.


process

There are numerous trainings available in this field initiated mainly by international organizations.

Usually, after supporting the formation of cooperatives engaged in greenhouse production, a series

of trainings are organized to help the members at an initial stage of operation. Yet, participants

mentioned that these events are sometimes very specific and do not reflect their needs for further

development. For instance, they want to grow Aloe but they do not have enough knowledge and

skills how to make it happen. A review of research papers in this field underlined the lack of

qualified specialists in the following areas:

• Agronomy

• Agro-chemistry

• Hydroponics

• Plant protection

This fact points out the necessity to have a coordinative, prospective, and overall project with an

institutional structure with the corresponding responsibilities for the development of this value

chain. Such an institutional structure can play a coordinative role in all initiatives and projects,

bringing them unto one umbrella of development objectives.


There is a lot of evidence to suggest that a great number of women are employed in various stages

of production in the greenhouse value chain, starting from sowing, processing, harvesting, and

packaging of the product. However, the main decision-making and resource allocation functions

are concentrated in the hands of male entrepreneurs, especially in the case of large greenhouses.

30

However, nowadays, a growing pattern of cases is seen where the greenhouses, particularly of

small and medium size, are entirely managed by female-owned cooperatives. According to the

statistics, the share of women employers amounted to 16.2 percent in 2013 and 19.5 percent in

2014 (National Statistical Service of the Republic of Armenia 2015).


large

Women are well represented in the production and harvesting segments of the value chain

regardless of the size of the greenhouse. Only in some small- and medium-size greenhouses,

women are represented also in the marketing and management levels.


The interviewed members of ‘Debed’ cooperative mentioned that all the equipment belong to

them; however, this is not the case for most greenhouses. Large greenhouses are chiefly owned

and managed by men, which entail that equipment and other assets used in the greenhouse

production are also controlled by them.

Land is mainly owned by men, and this phenomenon could be partly explained by the social and

economic unequal start-up conditions between men and women. Women appear to be the owners

of land in rare cases due to the specifics of the privatization processes in 1991–1995. Only those

women who were single became the owners of the land. In all other cases, they have been

registered as co-owners of family land, which were managed only by male members of the family

having the agreement of women co-owners for all issues.



At present, woman engaged in this value chain mostly do not possess sufficient skills and

knowledge to run a successful business. Nevertheless, all female participants were keen to enhance

their technical and managerial capacity, which will enable them to grow higher-value vegetables,

berries, and plants by using advanced technologies and facilities. They want to grow broccoli,

asparagus, and capers and anticipate that selling of such products will meet their expectations for

more profit. As they pointed out: “We are working on the basis of daily income, so if after the

trainings nothing will be changed for us and our living conditions, what is the motivation for us.”

This question poses a great challenge to think over the efficient ways of transforming market

mechanisms and personnel management systems in the value chain according to the best known

practices and experience for which a higher demand exists.

31


In all female-owned greenhouses, women control the sales income and overall business. As was

reported by virtually all them, they are free to use the received income as they want.


Small- and medium-size greenhouses are usually located very close to houses. In the case of the

‘Debed’ cooperative, almost all members reach the greenhouse in maximum 10 minutes. Only a

few members were from other villages and spent more than an hour daily on commuting.

Conversely, large greenhouses are located in distant areas, quite far from residential districts, and

require considerable time for employees to get there.



Because women shape the majority of the workforce in greenhouse production, they are

characterized by high mobility and cooperation among each other. Furthermore, the husbands of

the majority of women are seasonal migrant workers, and the role and participation of women in

the agriculture sector are even rising. Unfortunately, even now, they produce agricultural outputs

primarily for family consumption. The return seems quite low, and it does not seem to solve the

issues of economic and financial stability and empowerment of women. The participative role of

women remains low and non-decisive in the overall context.


Interviewees appreciate the opportunity of acquiring technical, managerial, and marketing skills

while operating a greenhouse through cooperatives. It is worth noting that most of the members of

the cooperatives are working as teachers in community schools, but having an additional source

of income to increase their financial independence and chances to acquire assets for upgrading of

production. Another motivating factor for them is a positive attitude toward active women in the

community.



and not reducing availability of clean water)

Many greenhouses do not operate in the winter due to the absence of efficient heating system and

hence do not provide year-round income. Family labor is mostly used for facilitating transportation

services. The expansion of greenhouses contributes to the more productive use of vacant land.

Mitigation of the seasonality of vegetable production, possibility of the prevention of severe

variations in prices, and promotion of the cultivation of heat-loving plants in the northern and

32

mountainous regions of Armenia are the other benefits that will bring an expansion of greenhouse

production.


Cooperation and collaboration can be simply achieved among the value chain actors if their profits

seem to increase as the outcome of cooperation and coordination. Promotion of greenhouse

production and export is one of the most important directions of the Government’s agenda. This

intention is reflected in policy decisions that provide tax privileges for the import of main

equipment and construction materials needed for the construction of greenhouses. Provided

affordable financial resources are available, the value chain actors are ready to introduce

internationally accepted standards for manufacturing and food safety to be able to increase export

to the EU countries.

21. Existence of some level of organization of value chain actors (cooperatives, and so

on)

Of the greenhouses located in Ararat and Armavir marzes, 98 percent are not incorporated

businesses and operate as rural farms—only 1 percent are registered as sole proprietors and another

1 percent as legal entities. This is considered as one of the major obstacles for further growth of

small greenhouses because not being registered as business entities hinders their chances to

become eligible for government support or get affordable financial resources from international or

donor organizations. Numerous international and donor organizations have focused their efforts

on promoting the development of cooperatives in Armenia.19

Greenhouse Association of Armenia is one of the main working structures in the field. The rapid

development of greenhouse agriculture industry has brought some challenges with it, and to resist

these challenges, the Greenhouse Association of Armenia needs further strengthening of its

capabilities. The current capabilities of the association are not enough to properly carry out its

tasks.

19 In the framework of Economic Justice and Food Security Program, Oxfam Armenia has established 17

agricultural consumer cooperatives that are operating actively in remote rural communities, 5 of which have been

established by women—under the EU ENPARD Armenia 2013 (United Nations Industrial Development

Organization [UNIDO]-United Nations Development Programme [UNDP] in Armenia).

33

CHAPTER 3: WILD HARVEST

COUNTRY CONTEXT

Armenia has always been very well known for its wild fruits and berries. This is one of the main

sectors of Armenia’s agriculture that has a big potential of export and brings attention to it from

outer markets. One of the major consumers is the Russian market. Traditionally, Armenian fruits

and berries have been subject to high demand, especially from agricultural households in rural

areas. Most people prefer to make their own juices, syrups, jams, and other processed products out

of fresh fruits. Therefore, fruits and berries of Armenia are of great value for the local market.

Wild harvest has very high seasonality due to the climatic conditions of Armenia. Year after year,

a lot of fruits and berries, which are not frost-resistant, do not make it till the season. Heavy rains

can also cause damage to the harvest. So, the natural climatic conditions of the area can be both

beneficial and damaging to the productivity of the sector. Fruit processors in Armenia, in

comparison to international ones, have higher costs. Fresh fruits are purchased at relatively lower

costs in international markets, where supply exceeds demand, in contrast to Armenia.

Berries production and export are a lot likely to grow in the future, because the demand for both

fresh and processed and frozen berries is increasing worldwide. The highest demands are claimed

by strawberries and raspberries. Berries should be deep-frozen to be exported and not go bad in

the process. Unfortunately, the level at which berry export stands in Armenia today is not very

high, mainly because of insufficient supply.

The EU market formally remains open for Armenian frozen and processed berries, but is still

hugely unused. As in the case of the other products to be exported to EU countries, the issue of

compliance with the required food safety standards mainly remains unresolved. Both the EU and

EAEU strongly prefer the application of HACCP for fresh agricultural production, as well as for

processing. Yet, for small farmers, the issue of compliance with the required standards is not

feasible soon.

Statistics show that berry orchards have grown at least 12 percent between 2005 and 2012 (Avenue

Consulting Group 2014). Although the demand for berries is very big, the supply does not meet

the needs of the consumers. With that being said, the production level is still low.

According to the National Statistical Service of the RA, the amount of wild fruit and berries

comprised 616 tons. Aragatsotn holds the first place in berry cultivation and production growth,

which is 37 percent. Ararat and Armavir come second and third, having 7.4 percent and 8.3 percent

average growth per year, respectively.

Another product of the wild harvest is herbs. They need no human interference or investments

because they grow in the woods. They are gathered mostly by small households, where women

take more part in the process. The final product is usually sold either to tourists or to big production

34

companies/pharmacy. To improve the product, a more specialized method of collecting the harvest

should be developed and implemented, also taking into account the needs of the consumers.

Adding up to this, drying the herbs and wrapping them for sale should also be improved.

Meetings with the wild harvest value chain participants were held in Akhtala community of Lori

marz with the participation of representatives from four neighboring communities. Forest picking,

from about 14,000 ha of forest, is the main sector of agricultural activity in this region. During a

growing season, local population collect more than 2.5 tons of wild berry and fruits daily (AWAY

2014).


with women’s share overrepresented practically in all segments (except for transportation), where

practically there are no entry barriers and start-up costs.

Figure 4. Wild Harvest Value Chain

There is a huge potential for this value chain to become well developed and profitable. One of the

key preconditions for this transformation is the shift of the production/organizational system of

the wild harvest value chain from being purely based on local knowledge to the one that largely

depends on business and technical knowledge. More emphasis and efforts should be made to

diversify the final outputs through processing activities. This will enable participants of this value

chain to meet the full range of buyers’ and consumers’ predilections.

35

MAIN FINDINGS

Growth Potential


Armenia historically has been well known for the high quality of fresh and processed berries and

fruits owing to favorable agroecological conditions and production systems. In the Soviet Union,

only one cannery plant located in the city of Ayrum of Tavush marz produced about 60 million

jars of canned goods (Oxfam Armenia 2016). Rich experience accumulated in this field and the

unique quality of wild berries and fruits growing abundantly in the forests of Armenia are the

strong preconditions for the sector’s dynamic growth.

Nowadays, wild harvest and cultivation of berries still remains chiefly triggered by local food

processing companies. Companies mainly buy strawberry, raspberry, and blackberry paying from

AMD 300–800 per kg, which mostly coincide with the existing market prices. However, wild

pickers and farmers fail to meet the growing demand from the food processing companies. Adding

to this an open opportunity of exporting deep-frozen berries, which currently stands very low in

Armenia, but grows rapidly internationally, the situation with insufficient supply will get even

worse.

Nevertheless, it became evident during the interviews with wild collectors and sector experts that

the issue of sufficient supply of berries can be overcome in a short period, provided all necessary

successive steps are prearranged and implemented properly. The main issue is that collectors have

little concept of what is the market demand for berries in terms of quality and quantity. This leads

to the situation where wild collectors pointed out that they experience problems regarding the sales

of collected produce or do not collect to the maximum of their capacity, while processing

companies are looking for suppliers on a contractual basis, which will ensure timely supplies of

berries and will meet the set standards for quality, marketable condition, and other factors. As

underlined by the experts of the sector during the in-depth-interviews, the issue of balancing supply

and demand of berries is a multi-tiered process and requires a holistic approach to be solved.

To start with, it is probable to solve the issue of timely supplies of wild berries if long-term

contracts are signed with the processing companies. The processing companies prefer to sign

contracts with registered entities, that is legal entities or sole entrepreneur, but it is apparent that

the wild harvest value chain is mainly represented by physical persons. Therefore, establishment

of cooperatives or other forms of business entities is strongly encouraged, because it will not only

unlock opportunities for stable sales, but also open up other prospects for future growth by

mobilizing their own resources and becoming eligible to get Government and donor assistance.

The next issue is a high volatility of wild berries’ yields. The yields from the same area vary widely

from year to year due to weather conditions and plants’ natural yield cycle. In addition to this,

marketable condition of wild berries does not always satisfy the standards of processing

36

companies, which means that even if the issues with full realization of wild berries would be solved

through the well-functioning contractual arrangements, there is an unmet demand for a high-

quality produce.

As a solution to this situation, experts see the plantation of wild berries and herbs, which is also

prioritized in the RA Rural and Agricultural Sustainable Development Strategy for 2010–2020.

This form of berry cultivation is considered to ensure higher profitability from a unit of land area

and an introduction of higher-value crops. Sector experts anticipate that a proper implementation

of this activity will serve at least a dual purpose. First, it will stimulate the efficient use of

agricultural land, and second, to some degree, it will balance supply and demand for certain plants.

In addition, it will accelerate a better cooperation between value chain actors. Armenia has already

seen the results of the so-called win-win cooperation between collectors and processing companies

in brandy production, which could be easily replicated for this sector. To illustrate, Yerevan

Brandy Company works closely with its suppliers by helping them improve the quality of the

produce, providing access to high-quality fertilizers and pesticides, and providing trainings on new

technologies and methods. The benefits of such a sustainable cooperation are shared between

farmers and local communities.

As for the herbs, again, there is a sufficient demand from pharmaceutical and food industry (tea,

syrups, and so on) thus indicating an urgent need for well-organized supplies of high-quality

produce.


The simplified export procedures to the markets of the EAEU heighten the chances for the

enhancement of the sector capacity. According to the existing procedures, the only document

required for the export of fruits/berries and vegetables to the EAEU is a phytosanitary certificate,

which is provided during the customs clearance procedure for free. Yet, export opportunities

remain hugely underutilized by Armenian businesses, mainly due to the severe depreciation of

Russian ruble, which makes any export activity economically unprofitable at present.

Other unexplored markets for Armenian deep-frozen and processed food are the EU countries.

Although the EU was the top trading partner of Armenia as of 2013, only 2.3 percent of Armenia’s

export to the EU was food, and the majority of which, about 1.5 percent, were beverages and

tobacco (Oxfam Armenia 2016). Undoubtedly, the main contributor to this situation is the EU food

safety and quality standards, such as HACCP, the introduction of which requires considerable

financial resources. Despite the temporarily limited capacity for exports, the sector has a

significant unmet demand in the domestic market, mostly from the processing factories.

Establishment of cooperatives with well-established supply mechanisms can significantly reduce

the current shortage in supply.

37



Currently, from 14,000 ha of forests of Akhtala community, participants collect mostly raspberries

and blackberries, but in the forests, there are a plenty of rose-hip, hawthorn, and wild pear that in

the absence of demand are not collected. Due to insufficient business and marketing skills,

participants of the value chain do not seek markets for the new products; rather, they mostly collect

what the resellers preorder or they can sell in the local market or on the roadsides. During a

growing period, an experienced collector can collect up to 20 kg of berries, but on average, each

of them collects from 8 kg to 10 kg. During a growing season, local population are collecting more

than 2.5 tons of wild berry and fruits daily (AWAY 2014). As was underlined by the participants,

these indicators can be drastically increased provided there is demand for the collected crop.

Besides berries, they also collect herbs, such as thyme and mint, to be used in tea production.

Female representatives of Akhtala cluster with the support of AYWA in a process of launching a

tea production, under the trade name ‘Love Tea’, which in Armenian sounds like a good tea. To

ensure that herbs are collected and dried in accordance with the required standards, a number of

trainings were conducted. Participants greatly appreciate trainings on good harvesting practices

conducted by the International Finance Corporation (IFC) Armenia Investment Climate Reform

Project, which enabled them to do collection without damaging the environment. A drying facility

in Akhtala was renovated and equipped, again with the support of AYWA. Provided this initiative

has successful continuation, participants will try to diversify final outputs. In particular, they think

that there will be enough demand for cosmetic oils and syrups to be used in food production.

As participants mentioned, there is a possibility to develop new products through processing,

particularly deep-frozen wild berries, jams, dried fruits, and so on. They also welcome the idea of

having wild berry plantations, which will allow them to grow berries that have high value and not

grow in the forests, for example, blueberry. Unlike many other crops, berries become harvestable

in a shorter period; a smaller unit of land area provides a higher income; adding up to this, high

potential for adaptation and application of modern technologies enable them to grow in regions

with different climatic conditions. Armenian climatic conditions are favorable particularly for

raspberry, strawberry, blackberry, currant, and blueberry. The latter is considered a potential

export product. Armenian Harvest Promotion Center has developed business plans for the

establishment of a 1,000 m2 blueberry orchard, which will provide 7–10 times more income than

traditional crops like potato, tomato, or grape production. It is preliminarily calculated that the

establishment of the blueberry orchard will require an initial investment of about US$7,000.20 To

organize an effective realization of produced berries, it is planned to do it under a united umbrella

brand.

20 http://ahpc.am/wp-content/uploads/2014/09/bluebbery-and-strawberry-project.pdf

38


The price competitiveness issue in wild harvest is first of all connected with the prospects of the

overall development of the field. As of now, the opportunities of the field are mostly underutilized,

the wild harvest product industry and consumption scales are quite low, and the products are sold

in most cases in near-street markets. The prices are low, but difficulties with collection,

transportation, and long-term cooperation agreements for market share make the field

uncompetitive and inefficient in terms of short- and long-term benefits for value chain actors.



Armenia has always been very well known for its wild fruits, berries, and herbs. Armenian climatic

conditions are favorable particularly for raspberry, strawberry, blackberry, currant, and blueberry

growth. The intact environment where berries and herbs grow positively affect the quality of the

crop harvested from forests and distinguish them from the rest.


upgrading

The cooperation possibilities for the wild harvest value chain are largely dependent on the

management and organizational arrangements in the future. As stated in the introductory part, most

of the actors of this value chain are physical persons, mostly women, who collect the harvest and

sell it near their houses. The main characteristics of the value chain are the low organizational

arrangements within the sector and individual efforts of the actors. This certain fact creates tangible

difficulties for future cooperation and field development. The only possibility in this regard seems

to be the cooperation and collaboration within single communities where individual actors may

help each other, giving rise to productivity and creating initial schemes and formats for future

organizational management arrangements, inherent in stable business entities.



The wild harvest industry needs investments for innovating harvest collection methods and

processes creating a sound base to transform disjointed and often inefficient individual efforts into

machinery, collective, highly efficient, and standardized collecting procedures. The other

component for innovation and change might be the establishment and maintenance of community

networks among physical actors in the value chain providing sufficient preconditions for

cooperation, experience exchange, and collaboration.

39


Currently, collection of berries and herbs is done from forests and meadows, mainly without

following good harvesting practices applied for wild collection. This obviously leads to the

disappearance of some valuable plants from some areas, and hence not only having a disastrous

impact on environment, but also hugely hindering the sector’s future growth. A short-term solution

to this problem is to organize trainings on good wild harvest practices for the value chain

participants on a systematic basis, which to a certain extent will mitigate the risks associated with

incorrect harvesting. As mentioned earlier, a plantation of wild berries and herbs is considered as

a long-term solution.

The participants of Akhtala and neighboring communities mentioned an absence of cooling,

drying, and storage facilities as a key hindering factor, because they have no option but to sell all

collected berries at the same day at lower prices. They pointed out that an existence of such

facilities in Akhtala encourages production of tea and greatly reduces the amount of spoiled

berries.


The lack of affordable financial resources was indicated as a main impediment hindering the

diversification of the final output. The participants emphasized a need for low-cost funding with

long grace periods and flexible repayment terms aligned with income from the sales of the produce.

There are a number of agricultural loans available at on average 14–18 percent annually, but it is

still very high considering the low profitability of the sector. Most of them require about

US$4,000–5,000 for starting to conduct some processing activities.


process

The wild harvest value chain has lesser access to development services compared to fish

production and greenhouse. The wild collectors of Akhtala community have undergone regular

trainings on how to collect and dry herbs with the support of AYWA, while participants of

neighboring communities never participate such trainings. The IFC Armenia Investment Climate

Reform Project also conducted training on good harvesting practices; yet, all these trainings are

fragmented both in subject matter and in time line. Most actors of the value chain lack even basic

business skills and knowledge.


In the wild harvest industry, women are involved from the beginning to the very final stages of

economic activity. Because the works are performed individually and there is not a requirement to

register as a business entity, it may not be considered as a promising turnover activity for women

40

actors involved. No solid evidence was found on the existence of successful women entrepreneurs

in this value chain.


large


with women’s share overrepresented in all segments of the value chain, where practically there are

no entry barriers and start-up costs. The only segment where women are underrepresented is

transportation services. Women engaged in this value chain have limited business and marketing

skills.


Actors of value chain do not control any assets such as land or any other assets. Cooling and drying

facilities available to them were funded by international organizations. These facilities are shared

among the value chain participants. The modest income earned during a growing season is

supervised by women and spent mainly for family needs.



All participants seemed to be open to learn new things and were enthusiastic about the future

prospects. Participants have undergone a series of training but more of technical nature. There is a

need for specialized training toward developing managerial skills and to further enhance the

technical capacity. This will allow them to take every reasonable opportunity that comes their way.

This value chain does not utilize even a small share of its potential. There is a possibility to develop

new products through processing, particularly deep-frozen wild berries, jams, dried fruits, and so

on. The participants also welcome the idea of having wild berry plantations, which will allow them

to grow berries that have high value and not grow in the forests, for example, blueberry.


The modest income earned during a growing season is supervised by women and spent mainly for

family needs.


Forest and meadows in most cases are not so far from household area. On average, it takes from

30 minutes to 40 minutes to reach the destination.

41



Women are already significantly represented in virtually all segments of the wild harvesting value

chain, and as proved by the participants, there are no visible entry barriers. Provided reasonable

financial resources are available allowing access to technology and assets, this value chain may

become the most promising for women’s economic success.


Respondents showed a great interest in trainings and facilitative initiatives in wild harvesting;

because they have sufficient experience in the field, the share of women workforce are very high

in almost all segments of value chain; and they see many underutilized opportunities in this sector.

Specifically, they lack management, organizational, and cooperation skills. Improved skills in

management and organizing added with some financial assistance may be a good start for women

entrepreneurs, because they know where to start and where to go in terms of technical skills. The

interesting thing that was mentioned during the discussions is that in case of financial assistance,

the management roles should be assigned to a collegial body of women because, if the decisions

will be made only by a single woman actor, there remain great risks that a male member of her

family will become the real decision maker.



and not reducing availability of clean water)

The wild harvest value chain is highly seasonal and provides a temporary solution to the family

needs of rural households. Family labor is utilized in cases when there is a temporary high demand

and mainly for transportation. Food security standards are adhered to the degree that is needed for

selling the product in the market.


All chain actors were keen to absorb new skills and knowledge and were open to any positive

transformations.

21. Existence of some level of organization of value chain actors (cooperatives, and so on)

Another decisive precondition for the success of the value chain is a formation of cooperatives,

which is greatly supported by government and various international and donor organizations. This

trend is gaining momentum, and the value chain actors should take this opportunity. Operating as

a cooperative, especially after the adoption of the RA Law on Agricultural Cooperatives, will

enable them to increase their financial stability and will unlock other opportunities. There are

42

successful models of active women participations in agricultural cooperatives especially in

greenhouse production, which could be replicated in the wild harvesting value chain.

43

CHAPTER 4: RECOMMENDATIONS

COMPARISON

The fish production value chain is the most the well-developed among the three value chains under

analysis with female share noticeably underrepresented almost in all levels of the value chain,

except for feeding and processing. The sector demonstrated a high growth rate and marked

profitability over the past decade. The value of fish production has steadily increased over the last

five years, amounting to US$69 million in 2014, compared with US$27.4 million in 2010.

Expansion of fisheries is of strategic importance for Armenia because they can be set up in

submountain and even mountainous areas and particularly in near-border villages, where in most

cases it could be considered as the only income source for households.

Access of Armenian fish product, except for crustaceans, to the European markets are constrained,

due to inability of the sector to meet internationally accepted manufacturing and food safety

practices. The introduction of required standards, such as GMP, HACCP, BAP, and GHP, among

others, is a high priority. Armenia should step up to meet an increased demand for fish products in

the EU countries. Exports to the markets of the EAEU and the CIS countries can be enhanced

through the diversification of final outputs. The value chain possesses huge, yet underutilized

potential in terms of exporting processed fish production, in particular, smoked and canned fish.

Currently, only 24 out of 250 fish farms have the permission to export fish product,21 and about

90 percent of exported fish product is fresh fish and crustaceans. The main market for Armenian

fish export remains Russia, which temporarily appears to be cost-ineffective due to the swift

depreciation of Russia’s national currency.

A steep decline in the underground water resources in regions where most of the fish farms are

located is another obstacle inhibiting the expansion of existing fish farms and establishment of

new ones. Fish production requires tremendous initial investments in facilities, such as eco-

friendly water and production systems. According to the various estimates, building or upgrading

and operating of modern fish farms will require an initial investment of more than US$ 1 million.

One of the main constraints hindering the sector competitiveness is the high cost of fish production

due to the high value of imported fish feeding. For fish production, the market prices might be

lowered substantially in case of domestic production and consumption of fish feeding. For the

further development of the field, aiming to enter international markets, reasonable efforts should

be made to upgrade the operating systems in an eco-friendly manner.

Collaboration and coordination of problems and opportunities vary in the three value chains

substantively. In the fish industry, the value chain actors usually are persons and companies who

possess tangible financial and material resources. The possibilities for cooperation among them in

21 Includes caught and/or captive-bred fish, crustaceans, and products derived from them, collectively defined as fish

product.

44

most cases are quite difficult, because those business entities treat the other actors of the value

chain as potential competitors. Conversely, small fish farms very often are united or cooperate

with large companies on contract basis that facilitates the production and sales processes.

The technological and managerial structures of the three value-chains are mostly developed in the

fish industry and greenhouses. The current technological saturation and organizational

arrangements seem to be sufficient to cover the demand side of the local market and partially the

export volume. In the fish industry, innovations are urgent especially in water provision systems,

fish feeding production on the local level, and organizational structures with professionals to

organize export for the product.

In the fish production and greenhouse value chains, the owners in most cases are male actors of

the value chains. Women play a critical role in every link of the value chain in small-scale fisheries,

although their best-known roles are in processing and selling of fish and other fishery products.

Greenhouse production is another promising sector of Armenia’s agriculture sector demonstrating

a dynamic growth over the last five years. The total area of greenhouses equipped with modern

technologies was enlarged by 42 times. Greenhouse production has a well-functioning value chain

with women’s substantial participation at the production and harvesting stages. At present, the vast

majority of existing greenhouses are operating in less than 700 m2 area with sales mainly focused

on the local markets. Nonetheless, there is an upward trend of establishing large-scale commercial

greenhouses, partly funded by foreign investors.

It is worth noting that in comparison with fish production and wild harvesting, this sector attracts

the most investments from international and donor organizations. There are a number of donor-

funded initiatives supporting the establishment of cooperatives engaged in greenhouse production,

and a few donors specifically focus their efforts on the formation of women-owned cooperatives.

The promotion of cooperatives is another stimulating prerequisite for women’s economic success.

According to the survey results conducted in Tavush marz (Oxfam Armenia 2013) of Armenia,

cooperative participation is viewed as a major incentive for women’s economic empowerment,

because it helps women in risk taking, decision making, and taking responsibility in economic

matters.

At present, mainly tomatoes, cabbage, cucumber, and peppers are exported to the fresh retail

markets of Russia and other markets of the CIS countries. The full embargo declared by Russia

for most imported vegetables is in favor of Armenian businesses and multiplies the chances for

increased export. However, as in the case of fish production, this opportunity remains hugely

unexploited, again due to the depreciation of the Russian ruble, which makes any export activity

economically unprofitable at present. Armenia is also a relatively well positioned for the supply

of nontraditional high-value vegetables, such as broccoli, asparagus, and capers, and the shift to

higher-value vegetables is a priority.

45

As in the case of fish production, greenhouses also require considerable capital investments.

Because the promotion of greenhouse production and export is one of the most important

directions of Government agenda, as reflected in several strategic documents, tax privileges exist

for the import of main equipment and construction materials needed for the creation of

greenhouses. Building an advanced commercial greenhouse will require from a hundred thousand

to millions of U.S. dollars.

Most of the existing greenhouses are small-scale and urgently need to be upgraded. One of the

prospects for success is the mobilization of resources of small and medium greenhouses for the

acquisition of input materials, upgrading of old technologies, organization of sufficient amount of

regular supply under one umbrella, and most importantly ensuring compliance with hygiene and

food safety standards. In this framework, the establishment of agricultural cooperatives is of high

importance.

The greenhouse production value chain experiences a shortage of qualified experts specialized in

agronomy, agro-chemistry, hydroponics, and plant protection. This circumstance hugely inhibits

the sector’s growth and competitiveness in the international market, because it limits the chances

of the businesses to grow higher-value varieties that require advanced technologies and skills. This

fact points out the necessity to have a coordinative, prospective, and overall project with an

institutional structure with the corresponding responsibilities for the development of this value

chain. Such an institutional structure can play a coordinative role in all initiatives and projects,

bringing them unto one umbrella of development objectives.

A great number of women are employed in various segments of the greenhouse value chain,

starting from sowing, processing, harvesting, and packaging of the product. However, the main

decision-making and resource allocation functions remain concentrated in the hands of male

entrepreneurs, especially in the case of large greenhouses. However, nowadays, a growing pattern

of cases is evident where the greenhouses, in particular, of small and medium size, are entirely

managed by female-owned cooperatives.


with women’s share overrepresented in all segments of the value chain, where practically, there

are no entry barriers and start-up costs. The only segment where women are underrepresented is

transportation. Women engaged in this value chain have limited business and technical knowledge.

There is a need to conduct a tailored training toward enhancing their entrepreneurial skills. All

participants seemed to be open to learn new things and were enthusiastic about the future prospects.

Most of interviewees do not control any assets such as land and/or necessary equipment. Cooling

and drying facilities are shared among the value chain participants. The modest income earned

during a growing season is supervised by women and spent mainly for family needs. Nonetheless,

the value chain holds a huge potential for further growth especially through the broadening of final

outputs, such as deep-frozen and processed berries.

46

There is an unmet demand in the wild harvest value chain due to various interrelated factors. The

most important is the absence of registered businesses, which obstructs the chances of wild

collectors (mainly represented by physical persons) to have long-term supply contracts with

processing companies. The formation of agricultural cooperatives is crucial for resolving this

issue. As an alternative solution for addressing the current shortage in supply, experts suggest

considering plantation of berries and herbs, which at the same time to some extent will mitigate

the risks associated with high volatility of wild berries and will have a sustainable impact on

environment.

In the analyzed value chains, women are overrepresented in the segments where practically, there

are no entry barriers and limited technical and business knowledge is not an obstacle. Lack of

combination of education, work experience, and technical skills are common features of women

involved in any of the agricultural value chains. This leads to the situation where women are mostly

represented in supporting and non-leadership positions. The necessity to combine work and family

responsibilities forces women to operate home-based business or be hired informally thus

discouraging any further personal growth.

The access of women to technology and assets in the three value chains remains less than limited.

This requires substantial investments and resources that are not realistic for women to possess

given the current socioeconomic situation. The contradiction in this context that should be given

the most attention to and should be addressed in an appropriate manner is as follows: the role and

duties of women in Armenian rural areas is increasing year by year, but surprisingly, this does not

lead to the mechanical and autonomous solution of the subordinate role of women in the economy.

It means that market mechanisms are not able to solve the issue of discriminatory practices alone;

there should be coordinated and continuing efforts toward the improvement of the situation,

because the quantity increase of women workforce in diverse stages of production and sales does

not guarantee the solution of their socioeconomic problems.

RECOMMENDATIONS

• All three value chains analyzed have demonstrated solid progress over the recent years and

have all necessary preconditions for further growth. Nevertheless, the results of the grading

exercise, used for selecting a gender-sensitive value chain, showed that the wild harvest

value chain possesses the highest potential for enhancing women’s economic

empowerment, followed by greenhouse and fish production value chains (Annex 1). Unlike

fish and greenhouse production, the wild harvest value chain does not require huge capital

investments, has limited entry barriers, and is thus reachable for the most vulnerable

groups. The other weighty factor in favor of the wild harvest value chain is that it offers a

variety of new opportunities for women. Unmet local demand for fresh and deep-frozen

berries and growing international demand for such products are promising preconditions

for the overall growth of the value chain.

47

• The fish production value chain is characterized by highly gender-segregated division of

labor and traditionally considered as a man’s area. In contrast to the other value chains,

being examined within the framework of this assessment, in fish production, virtually, there

are no women entrepreneurs. Besides, fish production requires immense investments in

capital and human resources. Due to environmental issues, in particular, relating to water

shortage, businesses are forced to introduce eco-friendly systems, which cost big money.

This value chain scores the minimum points mainly due to existing barriers to enter the

value chain and scarcity of opportunities available to women.

• Women are mostly represented in various stages of the production segment of the

greenhouse value chain, starting from sowing, processing, harvesting, and packaging of the

product, and not in the marketing or leadership positions. The current perspective for the

further boost of the value chain is the growing of higher-value vegetables for which a great

demand exists internationally and, to some extent, locally. Operating in this value chain

also requires huge financial resources. However, unlike fish production, there are a number

of women-owned cooperatives engaged in greenhouse production. It is worth mentioning

that this value chain is within an eyeshot of different international organizations, and

additional interventions in this direction may result in overlap of efforts.

• A thorough analysis of pros and cons of the three value chains suggests that despite having

the least developed value chain, wild harvest still holds a great potential to become one of

the well-developed and profitable value chains. It seems reasonable to start intervention in

this value chain by following a Strategy of Organizing for Change, which entails

interventions throughout the value chain for identifying structural constraints, supporting

capacity building, opening up access to affordable financial resources, and contributing to

the formation of business entities, for instance cooperatives.

• Operating as a cooperative, especially after the adoption of the RA Law on Agricultural

Cooperatives, will enable the value chain actors to increase their financial stability and

unlock other opportunities. There are successful models of active women’s participations

in agricultural cooperatives especially in greenhouses, which can be successfully replicated

in this value chain. This trend is gaining momentum, and value chain actors should not

miss the opportunity.

• The transformation of the poorly developed wild harvest value chain into the market-based

and productive one will largely depend on business and technical knowledge of the value

chain actors. Significantly, this transformation should be accompanied with the move of

the marketing system from episodic interactions to more predictable relationships with

buyers backed by contractual arrangements. These shifts can provide the women engaged

in this value chain with important advantages through increased incomes and enhanced

gender roles and relations.

48

• The introduction of new technologies that will change labor patterns and income control

combined with the shift to high-value crops oriented to niche markets will upsurge chances

of the value chain to become competitive and profitable. Proactive integration of women

in all segments of the value chain is crucial for enhancing the ability of women to drive

growth. Gender-based stereotypes should be overcome, and women’s economic

empowerment should be seen as a prerequisite for the sustainable development of the

society.

49

ANNEXES

ANNEX 1. VALUE CHAIN SELECTION CRITERIA

Sub-sector or Value Chain

Fish

Production Greenhouse

Wild

Harvest

Scores Weight Total

Growth potential

1.

Positive growth trend of the value chain and unmet market demand 9 9 12

2. Available sales outlet and high interest of buyers in the product 6 6 8

3. Scope for expanding production and/or scope for value addition

through processing or product improvement (new products for

which there is a market)

4 4 4

4. Low costs of the value chain in relation to competitors 2 3 3

5. Other competitive advantage of the value chain in relation to

competitors (unique product/local specialty)

9 9 9

6. Potential for collaboration and coordination between actors for

value chain upgrading

4 4 6

7. Sufficient technological and managerial level of enterprises in the

sector for upgrading and innovation

9 6 6

8. Access to infrastructure, qualified labor force, raw material, and

inputs

6 9 6

9. Access to financial services 2 2 2

10. Access to business development services for quality improvement

of the production process

2 3 3

Women’s empowerment and gender equality

11. High number of women entrepreneurs in the value chain 2 6 8

12. High share of women employed in the value chain as compared to

the economy at large

3 9 9

13. Women control equipment/assets (for example, land) 3 3 3

14. Women have or can acquire skills needed for profitable value

addition opportunities through processing product and

diversification

4 4 8

15. Women control the sales income and the enterprise 3 3 4

16. Close to household community area (geographic) 3 9 12

17. Low entry barriers for women entrepreneurs (time and mobility,

access to technology and assets, and cultural constraints)

4 6 8

18. Offering new opportunities for women 12 12 16

50

Sub-sector or Value Chain

Fish

Production Greenhouse

Wild

Harvest

Scores Weight Total

19. New activities are in line with livelihood conditions (year-round

income, using family labor, rapid returns, contributing to food

security, keeping the environment intact, and not reducing

availability of clean water)

6 6 4

Total 93 113 131

51

ANNEX 2. VALUE CHAIN SELECTION QUESTIONNAIRE

Table 2.1. Fish Production

Scores Weight Total

A. Assess growth potential

• What are the prospects for future demand growth? 3 3 9

• Are traders willing to buy more of the product? 3 2 6

• Can new products be developed through processing or product

improvement for which a market exists?

4 1 4

• Can the product be supplied to the consumer at attractive costs? 2 1 2

• What are the competitive advantages of producers (cost and product

characteristics)?

3 3 9

• Is there potential for increased cooperation in the value chain? 2 2 4

• Do enterprises in the value chain have the management capacity for

upgrading and innovation?

3 3 9

• Are infrastructure, qualified labor force, raw material, and inputs

sufficiently available?

2 3 6

• Are financial services sufficiently available? 2 1 2

• Are business development services for quality improvement of the

production process sufficiently available?

2 1 2

Total 20 53

B. Assess potential for women’s empowerment and gender equality

• Is the share of women employed in the value chain relatively high? 1 2 2

• Do women control equipment and assets? 1 3 3

• Do women have (or can they acquire) the skills needed for interesting value

addition through processing or product diversification?

3 1 3

• Do women control the sales income and the enterprise? 2 2 4

• Can the work take place close to home? 3 1 3

• Is this a value chain with low barriers to enter for poor entrepreneurs (small

scale of production, low start-up costs, not requiring major capital

investment, and using low-tech skills)?

1 3 3

• Is this a value chain with low barriers to enter for women (time and

mobility, access to technology and assets, and cultural constraints)?

2 2 4

• Does this value chain offer new opportunities for women? 3 4 12

• Is the activity in the value chain in line with livelihood conditions (year-

round income, using family labor, rapid returns, contributing to food

security, keeping the environment intact, and not reducing availability of

clean water)?

3 2 6

52

Scores Weight Total

Total 20 40

Grand Total 93

Table 2.2. Greenhouse Value Chain

Scores Weight Total






4 1 4



characteristics)?

3 3 9




2 3 6



3 3 9




3 1 3

Total 20 55






3 1 3






3 3 9



3 2 6

53

Scores Weight Total





clean water)?

3 2 6

Total 20 58

Grand Total 113

Table 2.3. Wild Harvest Value Chain

Scores Weight Total






4 1 4



characteristics)?

3 3 9




2 3 6



2 3 6




3 1 3

Total 20 59






3 1 3



54

Scores Weight Total




4 3 12



4 2 8





clean water)?

2 2 4

Total 20 72

Grand Total 131

55

ANNEX 3. LIST OF RESPONDENTS

# Name Surname Community Occupation Phone

1 Hanisyan Siranush Akhtala Wild harvest 095044086

2 Begjanyan Sona Shamlugh Wild harvest 093432196

3 Khachikyan Gohar Shamlugh Wild harvest 077235875

4 Atanesyan Anush Neghoc Wild harvest 077842419

5 Piruzyan Alvard Akhtala Wild harvest 095323906

6 Begjanyan Marine Ayrum Wild harvest 095296361

7 Vanyan Valya Akhtala Wild harvest

8 Baghramyan Marieta Akhtala Wild harvest

9 Davtyan Mane Odzun Wild harvest

10 Stepanyan Hermine Odzun Wild harvest

11 Asatryan Gayane Odzun Wild harvest

12 Sahakyan Ruzanna Akhtala Wild harvest

13 Siradeghyan Sona Akhtala Wild harvest

14 Begjanyan Arpine Akhtala Wild harvest

15 Matosyan Naira Akhtala Wild harvest

16 Alikhanyan Evgenya Akhtala Wild harvest

17 Bardumyan Bella Akhtala Wild harvest

18 Gevorgyan Anahit Akhtala Wild harvest

19 Gevorgyan Heghine Akhtala Wild harvest

20 Begjanyan Leyli Neghoc Wild harvest

21 Poghosyan Anahit Alaverdi Wild harvest

22 Hayk Harutunyan Gargar Greenhouse 094026403

23 Edik Qalashyan Gargar Greenhouse 094272526

24 Edik Vahanyan Vanadzor Greenhouse 093434907

25 Aram Janjoghuzyan Yaghdan Greenhouse 093891312

26 Artyom Saqanyan Vanadzor Greenhouse 093388672

27 Husik Abajyan Stepanavan Greenhouse 094822580

28 Zina Galstyan Vanadzor Greenhouse 094045526

29 Vachik Ayvazyan Spitak Greenhouse 098562119

56

# Name Surname Community Occupation Phone

30 Sasun Matinyan Alaverdi Greenhouse 091922176

31 Bejanyan Lusine Lchkadzor Greenhouse ‘Debed’

cooperative

32 Martirosyan Astghik Lchkadzor Greenhouse ‘Debed’

cooperative

33 Malinyan Ruzanna Lchkadzor Greenhouse ‘Debed’

cooperative

34 Mirzoyan Manushak Lchkadzor Greenhouse ‘Debed’

cooperative

35 Avagyan Lena Lchkadzor Greenhouse ‘Debed’

cooperative

36 Araqelyan Leyli Lchkadzor Greenhouse ‘Debed’

cooperative

37 Budaghyan Karine Lchkadzor Greenhouse ‘Debed’

cooperative

38 Bejanyan Anichka Lchkadzor Greenhouse ‘Debed’

cooperative

39 Khachikyan Anahit Lchkadzor Greenhouse ‘Debed’

cooperative

40 Esayan Anush Lchkadzor Greenhouse ‘Debed’

cooperative

41 Malinyan Susanna Lchkadzor Greenhouse ‘Debed’

cooperative

42 Malinyan Ani Lchkadzor Greenhouse ‘Debed’

cooperative

43 Garnik Debet Fish farm 093999945

44 Tigran Debet Fish farm 077747770

57

ANNEX 4. BIBLIOGRAPHY

Analytical Materials

3R Strategy LLC and FREDA (Fund for Rural Economic Development in Armenia). 2012. Final

Report on Greenhouses in Armenia.

Asian Development Bank. 2015. Armenia: Country Gender Assessment.

Avenue Consulting Group. 2014. Agriculture in Armenia Snapshot.

AYWA (Armenian Young Women’s Association). 2014. Local Economic Development for

Akhtala Cluster (Akhtala, Shamlugh, Mets Ayrum, Chochkan Communities, February–

March 2014.

BMZ (Federal Ministry of Economic Cooperation and Development). 2013. Gender and

Fisheries & Aquaculture.

FAO (Food and Agriculture Organization of the United Nations). 2015. A Review of Women’s

Access to Fish in Small-scale Fisheries. ISSN 2070-6065.

Gabrielyan, Gagik. 2015. Aquaculture Sector Review: Armenia. World Bank Group,

Washington, DC.

National Statistical Service of the Republic of Armenia. 2015. Women and Men in Armenia.

Oxfam Armenia. 2013. The Role and Potential of Rural Women in Agriculture.

Oxfam Armenia. 2016. Win-Win Cooperation of Smallholder Farmers and Processors in

Armenia, Challenges and Opportunities.

PEM GmbH and Asian Development Bank. 2014. Assessment of Needs for Business Services

among Women Entrepreneurs of Armenia.

World Bank. 2013a. Armenia - Agriculture and Rural Development Policy Note. World Bank,

Washington, DC.

———. 2013b. Fish to 2030: Prospects for Fisheries and Aquaculture. Report Number 83177-

GLB.

———. 2015. World Bank Group Gender Strategy (FY 16–23): Gender Equality, Poverty

Reduction and Inclusive Growth. World Bank Group, Washington, DC.

Official Websites

National Statistical Service of the Republic of Armenia

58

Ministry of Agriculture of the Republic of Armenia

http://www.enterprisesurveys.org

http://www.enterprisesurvey.org/

59

May 2016

Documents

Value Chain Selection Report Armenia - World Bank€¦ · commercial and private entities involved in agricultural production, processing, and distribution. The main land users in