David Stepanyan, Yerevan. Exclusively to Vestnik Kavkaza
According to official statistics, the share of agriculture in the GDP structure has been growing in the last few years. In 2010 agriculture accounted for 17% of GDP, in 2011 it grew to 20.2% and in 2012 it was 21%. At the same time, the authorities don’t want to stop. The minister of agriculture, Sergo Karapetyan, stated that his ministry has big goals this year – “hard work” on providing the necessary development of agriculture. The Ministry of Agriculture is sure that it is impossible to develop agriculture without an effective system of loans. In theory, everything is simple.
But the reality is far from the commercials broadcast on TV. The question is about what conditions an Armenian farmer receives a loan for. The state takes the sums from an international credit organization at the tiny interest of 1-1.5% per year, giving these sums to the Central Bank at fixed interest of 4% in dollars annually. At the same time, the interest rate in drams is not fixed. After this, the process of interest churning on “benefit” loans continues and the interest grows. Banks and credit organizations fix an interest rate and pay-off terms by themselves, considering their credit business-program. They explain this is due to the fact that the whole risk of the deal is put on them. Therefore, a farmer cannot pay off a loan, but the financial organization has to compensate the resources for the office. In most cases it pumps out the last property from the farmer. As a result, the interest rate of “benefit” loans is flowing in limits of 15-24% per year.
Thus, the nonsense which is voiced by the government and the Ministry of Agriculture on beneficial financing of agriculture comes down to pumping out money through the smashup of farmers. Considering the fact that for any Armenian oligarch-bureaucrat it is an affair of honor to have a bank or a huge share in a bank, the government’s desire to give “benefit” credits to the citizens is understandable, considering the general logic of “development” of the Armenian economy.
The Ministry of Agriculture is working in the same way. For funding the program of purchasing diesel fuel and fertilizers the government of Armenia decided to allocate 3.16 billion drams to the Ministry of Agriculture. About 27 thousand tons of fertilizers will be imported on these resources in 2013; each bag of them will be sold to farmers for 6000 drams. As for diesel fuel which will cost 350 drams, 17 million liters will be imported into the country. The marketable value of a bag of fertilizer is about 8-8.5 thousand drams; and the wholesale price of a liter of diesel fuel is 410 drams in Armenia. Thus, the difference between “benefit” and marketable fertilizers is not significant, so it cannot influence the development of the sphere. Only price equity which appears as the result of buying fertilizers and diesel in Russia for really beneficial prices by the Ministry of Agriculture and selling them for “mythical” benefit prices to farmers is significant. Of course, society is not aware of these prices.
Farmers have to feed down results of their year's work to pigs and cows. For example, potatoes are the only source of revenue for farmers of the Gegerkunik Region. All other revenues are coming from their relatives who have to work in Ukraine and Russia. That is why the residents of the mountain areas demand that Sergo Karapetyan should be the minister of agriculture of not only valley regions, for example, the prosperous Ararat or Armavir regions, but also mountain regions, including Gegarkunik. If Karapetyan is unable to work for the whole country, farmers ask the government to appoint one more minister who would agree to pay attention to mountain regions. According to the farmers, President Serge Sargsyan ordered Karapetyan to keep prices of potatoes down in the pre-election and post-election period to prevent a riot in Yerevan.
