Grapes at half-price
Grapes – a sacred fruit for the winemaking Armenia. However, the recent years have proved that this branch has become less profitable, incurring more and more losses each year. The crisis is so deep that there is a risk of losing Armenia’s centuries- old culture of vineyard cultivation.
Explain them in simple terms
Ararat Movsisyan from Alashkert has his own farm machinery and a 4-hectare land plot. He and his family members have been working on that land for already 25 years. There seem to be all conditions to earn well. However, despite the fact that Ararat knows all ins and outs of his business, he has been sustaining continuous losses in the recent years and every spring, before starting the works, he has to take a new bank loan. It has been so for already 3 years.
The winegrower Movsisyan family is just one from those many families, who have been affected by the crisis: 8500 grape farms in Armavir region are in the same situation.
Increase in prices for fertilizers, chemicals and fuel for farm machinery is one of the causes of crisis. Not so long ago, when all the aforesaid cost 2-3 times less, an Armenian winegrower could make 1 million drams per hectare in a crop year. According to the current exchange rate, that is about US$2 thousand.
Ararat Movsisyan is angry: there is no competent and knowledgeable agronomist, who could communicate to the authorities the information on the real prime cost of grapes. ‘Let someone explain them that everything costs money: be it vine planting; its processing; diesel fuel, as well as land tax and loan interest!’
Discrepancy in Figures
The government, farmers and huge wine companies have different ideas about how much should grapes cost, how much it shall be produced and how to lead that brunch out of the crisis. It has been calculated that technical grape varieties are sold at a price that is 1.5 times lower than the market price, while grape varieties for table use are even 3-4 times cheaper. This happens because the prices are prompted by grape procuring companies and the government does not interfere in the process.
Half the market price makes about 150 drams per kilo, i.e. US$0.30
In particular, that’s the price that famous ‘Ararat’ brandy factory procures grapes at.
– Farmers should be satisfied – seriously commented on this price Igor Arakelyan, the factory CEO – because the harvest was bountiful. The factory could have reduced the tariff because of that. However, we decided to do a favor to the winegrowers.
The factory did ‘a favor’ to Norik Avetisyan, a farmer from Ushakert, by purchasing 10 tons of grapes. Norik got 1.5 million drams (a little bit more than US$ 3,000) from that deal with “Ararat.
If we subtract from this amount the cost of water used for irrigation of grapes, chemicals that they were sprayed and fertilized with, as well as the interest rate of a loan, taken in spring for procurement of all the aforesaid, it will turn out that each family member working in the vineyard earns about 15 thousand drams (i.e. US$ 30) per month.
Slender Hope for Export
Drop in export is one of the reasons for sharp reduction of winegrowers’ incomes. It has dropped almost twice over the past few years.
However, Sergo Karapetyan, the Agriculture Minister, still believes that grapes, that have not been purchased by the wine companies (that’s up to 90 thousand tons) can be exported.
Or, at least, can be sold on the ground.
Both of these tasks are difficult to be accomplished. It is not that easy to sell that volume of grapes in tiny Armenia and it is far more difficult to claim that it would be possible to sell it in Russia. Farmers are not the ministers: they see the ruble continuously falling and they realize that many importers will refrain from making procurements.
It’s not easy to distract the Minister – he argues that there is still time left, though not so much.