Agriculture stands as a driving force within the Armenian economy, yet the nation's untapped potential remains a compelling opportunity. In a strategic move, the government has introduced a range of subsidy programs aimed at propelling selected agricultural sectors to new heights, highlighting the vast business opportunities in Armenia.
Orchards & Vineyards
Armenia's history of fruit farming and wine cultivation is rich and enduring. Presently, over 60,000 entities are actively involved in these sectors, with grape, apricot, and peach cultivation taking center stage. Orchards have doubled in size between 1998 and 2016, with yield surging by 14.5% from 2008 to 2017, attributed to innovative technological implementations.
To bolster this sector, the government extends two subsidy models: compensation for vineyard/orchard establishment costs and low-interest rate loans.
Loan Structure:
Interest Rate: 2% (0% for border community farmers and cooperatives)
Vineyard/Orchard Size: 0.5-100 hectares
Maximum Loan Amounts:
Vineyards: $2.9 million
Intensive Orchards: $5 million
Berry Farms: $4.7 million
Loan Term: 8 years, with a 5-year grace period
Compensation Approach:
Covers 50% of setup costs for vineyards/orchards
Vineyard/Orchard Size: 0.5-10 hectares
Maximum Allowable Costs:
Vineyards: $24,800 per hectare
Intensive Orchards: $44,800 per hectare
Berry Farms: $36,700 per hectare
Cattle Farming
Cattle farming constitutes over 50% of livestock-generated GDP, with recent years witnessing increased cattle counts and meat/milk prices. Despite these gains, suboptimal technology adoption within small households constrains the sector's full potential.
To bolster cattle farming, the government devised subsidized agricultural loans, slashing financing interest rates from 14% to 2%. Approximately 60% of these subsidies were channeled to cattle breeding projects in 2018. The government also seeks to elevate purebred breeding and has eliminated VAT on imported purebred cattle. This initiative resulted in importing over 2,000 purebred cows between 2013 and 2018, with expectations of surpassing 10,000 imports from 2019 to 2024.
Subsidy Structure:
Lowers interest rate to 2% (0% for border community farmers)
Maximum of 300 heads of purebred cows, not exceeding $600,000
Loan Term: 5 years
Sheep and Goat Breeding
Sheep and goat breeding, a traditional sector, yields around AMD 50 billion (USD 129 million) in annual revenue. With enhanced management, this figure could double. This sector focuses on food, wool, and leather production, offering high profits with relatively low risks. Benefitting from a favorable climate, more than 50 percent of agricultural land in Armenia are pastures.
Armenia holds substantial potential for lamb exports, as evidenced by exporting 20 thousand sheep and over 2,000 tons of lamb in the past four years. The main directions for export are Iran, United Arab Emirates, Qatar, Kuwait, and Georgia. Despite this, the 2019 count of sheep and goats stood at around 640,000, merely half the 1991 count.
The government's $6.2 million subsidy program targets sheep and goat acquisition, with 70% co-financing for agricultural cooperatives and 30% for individuals. The program is projected to facilitate the acquisition of around 30,000 sheep and goats, with a maximum value of approximately $1,000 per purebred animal.
Subsidy Specifications:
Covers 23% of actual acquisition costs (27% for border community farmers), excluding transportation costs
Maximum of 2,000 purebred sheep or goats, with the total expenditure capped at $1.8 million
