Wednesday, October 23 2019 18:23

ArmInfo.As a result of structural changes, the Ministry of Agriculture of Armenia was disbanded and became part of the Ministry of Economy. Artak Kamalyan, the Deputy Minister of Agriculture of the Republic of Armenia, was appointed to the post of Deputy Minister of the merged Ministry of Economy of Armenia in May 2019 and was entrusted with overseeing the agricultural sector. In a previous interview to ArmInfo IC Kamalyan, summing up the results of his six-month work as deputy minister, complained about the lack of a systematic approach, teamwork and a lack of qualified personnel.

 

During the second meeting with ArmInfo correspondent, Artak Kamalyan talked about the difficulties that he faced while being responsible for the agricultural sector in the country, outlined the priorities the Armenian agricultural sector has set itself today, presented the work done during this period and the issues still on the agenda.

- Mr. Kamalyan, first of all I would like to talk with you about the specifics of work within the structure of the Ministry of Economy. How much merger has increased efficiency, or on the contrary, has complicated the work of the department?

I find it difficult to say what has been simplified or became more complicated. However, bureaucracy seems to increase, and the whole transformation required a certain amount of time, resources, nerves, etc. I always try to notice positive moments in any changes. And from this point of view, I should note that we were able to reform our internal structure of the agricultural part of the ministry (some departments closed, new ones opened). It seems to us that the current structure of the ministry in terms of the agricultural sector meets modern requirements. But the main thing that we managed to do during this time is to formulate our thoughts and state them in the “Strategy for the Development of Agriculture’’ and a concrete Plan for the implementation of this Strategy.

 

- In a previous interview you talked about the lack of a systematic approach:

We are working in this direction, and now we are at the stage of finalizing a specific plan of action arising from our strategy, which we will begin to implement starting this month.

- Let's talk about the branches of agriculture, in particular livestock. Since last year, much has been said about the construction program for SMART farms, which, as noted, will help increase milk and meat productivity. I would like to know how demanded and efficient the program is.

We will be able to assess the efficiency of the program only when these farms are built, and this may take a year or more. But I must say that in terms of demand, we expected a worse situation than we have. As of today approximately 100 people have passed certification. A little more than 10 people have signed agreements and are at different stages of farm construction. I think that this month 1-2 farms will already be put into operation. We are constantly monitoring this process. It is noteworthy that the beneficiaries of the program are from almost all the regions of Armenia.

- What about the land reform? If I am not mistaken, a working group was set up to implement this initiative.

Yes, a working group has been established. For example, we have already prepared a bill of the Concept for improving the efficiency of agricultural land use. Currently, the bill is published on the e-draft and anyone can read it, give their estimates, as well as comments and suggestions. Now we are discussing these issues with the population, the expert community, within the government, and collect the opinions of ministries.

 

- Will you submit it to the government this year?

 

 

I think yes. I can’t say for sure whether the Government and subsequently the National Assembly will approve the bill,  but there is no doubt that we will bring the matter to a discussion in the Government.

 

- Since we are talking about government regulation, I cannot but touch upon the issue regarding the relationship between farmers and processors. Quite recently, in the Vayots Dzor region, winegrowers complained about processors who refused to buy grapes from them at a previously announced price. Don't you think that the state should say its own word on this issue and somehow contribute to the settlement of the conflict, which has been repeating for years?

 

If you consider the situation globally, there is a need for a clear pricing mechanism for agricultural products. There should be a clear pricing mechanism known in advance and agreed upon by all parties. These two entities must agree on the price of the goods. The state can do little to help in specific conflict cases. The task of the state, in particular, is to prevent a monopoly price from the processor or, moreover, a monopoly cartel conspiracy. But the specific price in each particular case depends on many factors. We live in a market country, and price formation, respectively, should be market based. We can not take the side of any of the parties in this situation.

 

For example, if we support the processors, then the farmers will suffer, they will just cut the vineyards and will not produce grapes at a low price. If we take the side of the farmers and oblige the processors to buy grapes at the high price requested by farmers, the latter will receive wine at a crazy cost price, which as a result they will not be able to sell and will go bankrupt, which in turn will lead to low demand and a drop in price next year.

- What is the solution then?

 

The solution is that the state establishes the "rules of the game" and clearly monitors through its institutions the observance of these rules. The market determines the price depending on various factors (demand, supply, quality, etc.). The first thing I would advise farmers and processors so that they have a contractual relationship in advance, agree in advance on price, timing, quality. They should agree long before the harvest season. And yet, the state can really help to facilitate the sale of products both domestically and abroad, creating the appropriate infrastructure (wholesale and small wholesale markets, logistics centers, etc.), as well as stimulating export using various instruments (including tax).

 

Is it possible to introduce a provision in the bill on agriculture, you have mentioned earlier, that would provide mechanisms for regulating contractual relations?

 

I do not think that this should be regulated by law. But, after the New Year, we plan to intensively communicate with farmers, strongly recommending them to conclude agreements with processors in advance.

- During our previous meeting, you spoke about a program to support young farmers. At what stage is the program now? Are there any concrete developments?

First, we are fully aware that without the involvement of young people in the industry, it will be difficult to achieve significant success. Secondly, such involvement will be effective if the approach to solving the problem is systemic. In particular, we plan to begin such an engagement starting from the senior classes of secondary schools, and ending with the provision of state grants, as well as facilitate the provision of grants from international organizations for the development of rural business. According to our concept, we consider young people under the age of 35 as young farmers. I do not exclude that as a result of discussions, something may change.

 

- What areas of the agricultural sector will the support program for young farmers cover?

I think that to a greater extent this will apply to small-scale processing of agricultural products. I believe that they may be involved in such a field as non-food agriculture. This applies to the production of flowers, natural paints, or some kind of medicinal herbs. And of course, everything related to digital and innovative agriculture, as it requires certain skills, special education, appropriate motivation and focus on conquering new peaks.

 

- So, your goal is to stimulate agricultural education among young people and make changes in their thinking regarding the profession of an agrarian, isn’t it? Today, fewer and fewer young people want to be engaged in land work and agriculture in particular.

 

By supporting young farmers, we want to tell them that agriculture does not mean dirt, stink, low profitability. I would like for young people to understand that agriculture can be very beautiful, worthy, useful and socially oriented business. Not all businesses give moral satisfaction. But when you produce something that everyone needs and do it with dignity, delivering quality products, you get pleasure from it. Believe me, those people who produce grain, and those who are involved in the production of some toxic substances, which are also needed, are completely different. The grain producer, in my opinion, is happier because he produces bread. This is a noble and socially significant event. From a certain age, people begin to think about it. Our task is to make young people think about this. In general, education is the key to success. Our young people should be given the opportunity to receive quality education. Everything else is of course important, but, in my opinion, of secondary importance.

 

 

- It turns out that we will abandon subsidy policies..

 

 

Yes, we will. Subsidies will of course remain part of government support, but I think it will not occupy a dominant position. We intend to use various mechanisms, including non-financial support methods, tax and grant mechanisms.

 

 

- In your opinion, in which sectors tax benefits are most needed, given the specifics of our agriculture?

 

 

I believe that, first of all, our exporters need them. Especially those, who export agricultural primary products (fresh foods). I think that tax benefits are also needed in terms of VAT. Because Armenia, unfortunately, is one of the few countries where there is no preferential VAT rate on food. This is both a socially significant issue and the issue of developing agricultural business. Although our colleagues in the government and us don’t have a single opinion on this issue, I am deeply convinced and as far as  I continue to work in the government I will advocate for reducing the VAT rate for a particular food group.

 

- Speaking of exporters, I cannot but ask you about the diversification of export markets, which can be considered the “Achilles heel" of our agriculture. What is the ministry doing in this regard today?

 

Indeed, this is a rather serious problem for us. Of course, the vast majority of our agriculture is export-oriented to the EAEU market, to a greater extent the Russian Federation. Therefore, in our strategy, and in our actual actions, we are doing everything possible to enter the markets of third countries, in particular Singapore, Vietnam, Japan, EU countries, etc. But it is not so easy and not so fast.

 

 

 

- Is logistics the matter?

 

 

Not only logistics. The fact is that in order to enter these markets it is necessary to have a different level of knowledge (again education), products of a different quality that meet the food safety requirements of these countries. You need to know their standards and apply them, you need to have certain commercial skills in order to find new markets and be able to export later. All this is very complicated and requires a lot of effort and money.

 

- Do you think we are not so motivated to enter the markets of third countries? In other words why to make efforts if we can just export and, in fact be satisfied with what we have?

 

A certain part of exporters in fact thinks so, but there are also forward-thinking farmers who want to supply products to third countries, even in smaller amounts, but more expensive. There is already a community of exporters, which has united in a certain group of “Export Armenia”, who help each other in matters of export, and help us in the development of state policy in this area.

 

-Summarizing the conversation, I cannot but recall our previous talk, when you said that you did not consider yourself an official, as such. Has the situation changed somehow during this time?

I do not think that during this time some internal changes have occurred in me. I guess I'm just more used to bureaucratic work. Now I more clearly understand why the issue is being resolved for a very long time, with which I fundamentally disagree. In my position, I try to do my best to expedite the resolution of certain issues. But still, I don’t think that the work of an official is for me. And as far as possible, I try to do something useful.