Central Bank of Armenia is studying possibility of deferring payment of main debt of farmers affected by hail

ArmInfo. The Central Bank of  Armenia is currently studying the credit lines of farmers affected by  the hail to determine the grace period for repayment of principal  payments. The possibility of providing the villagers with a grace  period for payments for land and water is considered in the Ministry  of Territorial Administration and Development. The Minister of  Agriculture of Armenia, Ignaty Arakelyan, told journalists on June 29  after the meeting of the government.

Asked whether compensation will be given to the communities affected  by the hail, Arakelyan answered with a question: "Has Armenia ever  had such compensation?" Financial damage in agriculture or lost  profits due to natural and climatic conditions for 2016, according to  Arakelyan, is estimated at 32-36 billion AMD. "Consequently, until  the insurance system is introduced in Armenia, there will be no  opportunity to compensate. There will also be no opportunity to talk  about a more comfortable life for farmers," the minister said.

As previously reported, ArmInfo starts a pilot program of  agricultural insurance and installation of anti-hail networks in  Armenia in 2018. "We hope that within 2-3 years the Armenian economy  will reach the level necessary for the formation on the market of the  corresponding effective demand for the full implementation of  programs, otherwise it will be necessary to find mechanisms for the  implementation of these programs, since without them it will be  impossible to provide the solution of the tasks of the sphere,"  Armenian Minister of Agriculture Ignaty Arakelyan stated after the  government meeting on June 15, commenting on the ways of assisting  the villagers to eliminate the consequences of the damage caused by  the strong wind, rain and hail.

To note, talk about the fact that the introduction of agricultural  insurance has no alternative and can be the only working life-circle  for an Armenian farmer responsible for the sphere has been  exaggerating for more than 10-15 years. The last time the topic was  returned in December 2016, when the German Development Bank KfW  stated that in order to conduct research in the direction of  introducing the institute of agricultural insurance in Armenia will  provide 1 million EUR. Meanwhile, as early as March 2011, former  Prime Minister Tigran Sargsyan stated that the introduction of  agricultural insurance in Armenia is inexpedient, since the  agro-industrial sector of Armenia consists mainly of small peasant  farms, and farmers are not able to pay insurance premiums.  Nevertheless, KfW then allocated 400 thousand EUR for the development  of the concept of agricultural insurance for Armenia and Georgia.  Interestingly, the results of this work, which KfW entrusted to hold  one of the "close" international consulting companies to itself, the  participants of the insurance market of Armenia did not see. The  Ministry of Agriculture then informed ArmInfo that they are also  unfamiliar with the results of these studies. The KfW office in  Yerevan refused to meet with ArmInfo on this issue.

Meanwhile, at the end of 2014, ex-Minister of Agriculture Sergo  Karapetyan stated that in 2015 the Ministry together with the  insurance company "Ingo-Armenia" plans to implement a pilot project  on insurance of cattle in Vayots Dzor region of the country, the  inventory of cattle was completed in this region. But already in  November 2015, the executive director of INGO Armenia insurance  company Levon Altunyan, now the head of the Ministry of Health, told  ArmInfo that the program on agricultural insurance in the company is  closed. "Agriculture, especially Armenian, has a very high loss ratio  and is caused by several factors: first, the concentration of all  risks in a small area, and secondly, the exposure to virtually all  existing risks - floods, frosts, hail, landslides. In this case,  should be of a semi-obligatory nature, so that at least 30-50% of  farms are insured, otherwise it is unreasonable," the insurer  explained. According to him, the company will return to this topic,  "when in this type of activity there will be an element of commerce  and economically sound activity, otherwise it is an occupation that  research institutes should engage in."