Armenia: Enhancing High-Value Crop Diversification

Agriculture, natural resources and rural development / Agricultural policy, institutional and capacity development

Industry and trade / Small and medium enterprise development

The contribution of the agriculture sector to gross domestic product has declined in recent years, from 18% in 2012 to 14% in 2018. However, it continues to provide a significant source of employment. In 2018, agriculture employed 33.3% of the labor force, and around 56% of agricultural labor was provided by women.4 According to Food and Agriculture Organization data, Armenia's agricultural land amounts to 2.04 million hectares (ha) but only 22% (446,000 ha) is arable. Agriculture is predominantly smallholder-based, with an average landholding of 1.5 ha. Crop production accounts for 72% and livestock production accounts for 28% of agricultural value added. In 2017, the distribution of area harvested by crop was cereals (32%), fruit (49%), vegetables roots and pulses (17%), and nuts (1%).5 Growth in agriculture is constrained by low value crops, low productivity, limited connectivity and weak market linkages, inadequate public investment, and sporadic support services. Less than 30% of arable land is equipped with irrigation facilities. Armenia is a net importer of agricultural and food products, with exports of $697 million and imports of $726 million in 2018. In particular, for some key products the level of Armenia's self-sufficiency is low, for instance wheat products only 33%, pork products 58%, and poultry products 23%.

The sector has suffered from limited access to good quality land, specialized agricultural machinery, appropriate inputs, modern technologies, market information, modern distribution methods, commercial finance, and crop insurance. The agricultural value chain is characterized by rudimentary marketing and transportation infrastructure, weak linkages between value chain actors, and limited and technologically poor storage and processing capacity. There is no strategic coordination of wholesale market activity at the national level. All markets nation-wide are managed at the local level, which has given rise to a range of wholesale and retail market outlets of varying capacities and levels of professionalism. Public investment in agricultural research and development, extension services, and agribusiness development, has been negligible, and private sector efforts limited. Linkages with agricultural universities and academic institutions are weak. In the horticulture subsector productivity is low because the industry is highly fragmented. Producers are predominantly individual farmers and small enterprises without access to advanced horticultural techniques, productive seeds, effective plant nutrients and pesticides, efficient logistics, and appropriate financial resources and services. In addition, the industry faces emerging challenges such as shortage of arable land and water resources, greater focus on environmental protection, frequent natural disasters which increase price volatility, insufficient agricultural infrastructure, low incomes for rural farmers, and a growing need for rural reform to ensure the sector's development.

Policies and regulations for high value crop diversification improved

Suitable financing mechanisms for high value crop diversification developed

Team Leader/Agricultural Economist: individual consultant selection (international)

Other Specialists (policy, finance, and capacity development): individual consultant selection (international and national)