Economics and Rural Development, Volume 7, Number 1

IMPACTS OF THE GLOBAL FINANCIAL AND ECONOMIC CRISIS ON THE AGRO-FOOD SECTOR: EVIDENCE FROM ARMENIA

Vardan Urutyan, Tatevik Zohrabyan
International Center for Agribusiness Research and Education Foundation

Abstract

In mid-2009 the FAO commissioned some research aimed at assessing the impacts of the global financial and economic crisis on the agro-food sector in Central and Eastern Europe and Central Asia. This paper assesses the impacts on three supply chains within the Armenian agro-food sector, wheat, grapes and milk, based on the results of interviews and selected official data sets. The entire agro-food supply chain was affected, though the magnitudes of the impacts differed for each product. Overall, the milk supply chain was hit the hardest, and the least affected was the wheat supply chain. The situation was the worst at the upper level of the chains (farmers). Input prices increased which translated into higher production costs for farm products. Hence, output prices ought to have increased to account for the higher production costs but that did not happen. Farmers even had to lower the product price to be able to sell. The reasons for this were threefold. Firstly, the level of remittances to Armenia decreased greatly which weakened the purchas-ing power of consumers (i.e. there was a decrease in local demand for goods). Secondly, the export markets dried up and the pro-cessing firms were unable to sell the products. Therefore, the demand for products from farmers also declined. Thirdly, the Armenian government lagged behind in supporting farmers: the support programmes were very limited and not well-tailored. The paper con-cludes by proposing some policy measures which could mitigate the impacts of any future crises.

Keyword(s): global crisis, agrarian sector, Armenia


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