Position Papers Regarding the July 8, 2010 Announcement made by the Armenian Government*

DRAFT Press Release

For immediate Release:  July 12, 2010

Consequences of allocating AMD 558mln from RA state budget for purchase of elite wheat seeds*

The Government of Armenia on July 8, 2010 announced that it is allocating 558,000,000 AMD to import and distribute wheat seed to the grain growers in their country to address the wheat seed shortage in the Republic. The announcement calls for importing 1,000 MT of wheat seed (possibly from Russia); purchasing an additional 500 MT of seed produced by the farmers in Armenia; and providing subsidies to the wheat-growing farmers.  The estimated expenses for the three components are as follows:

The government forecasts to receive twice the amount of commodities in return for the seed that will be supplied to the farmers.  (It was not clear whether the government is expecting the return in wheat seed quality for replanting or wheat for consumption).

As the leading Diaspora based organization involved in creating a sustainable private sector seed industry in Armenia the Armenian Technology Group, Inc. (ATG) feels that it is our fiduciary responsibility to express our position regarding this announcement. During the past 18 years ATG has worked with and introduced more than 220 seed varieties from respected international organizations, such as CIMMYT, ICARDA and US based research institutions, and testing them annually on trial plots in almost all regions of the country; established and conducted routine field inspections and set up the monitoring of farm activities and a seed quality control inspection system. In the process, ATG technical advisors and agronomist have conducted over 360 extension educational seminars and field demonstrations in farming communities, with the ultimate goal of establishing a sustainable private sector seed production industry in the Republic.

Providing a temporary subsidy to the seed growers in the Republic to help market their products to local grain growers at a reduced price is helpful to the domestic market.   However, ATG expresses its concern about the above-mentioned announcement. We would like to bring to the attention of the decision makers and our supporters the following economic comparison between ATG-Farmers in Armenia generated wheat seeds and the others seeds that are being considered for import to Armenia:

If the government will make disease susceptible wheat available to the growers, then the farmers will likely have to purchase very costly fungicides, which in addition to being costly, are also difficult to obtain. If farmers do not have a healthy competitive crop, then weeds have the competitive advantage and begin to take over the field. The end result is a poor crop this year, but even worse is that a weed seed bank is created for future years, as well a diseased foliage that survives to infect the following year’s crop. If farmers plant inferior wheat one year, they may end up paying for the mistake for years.

Farmers in Armenia working with ATG would no longer be responsible for the quality of wheat produced by Armenia’s farmers if the fields are contaminated by poor quality imports. This might further compromise our ability to provide continuous extension education to the farmers in the future. After all, we did not work to modernize farming methods and improve the quality and quantity of Armenia’s wheat production and agricultural economy, in order to have it all undone.

Furthermore, we have witnessed that importing wheat seed has undermined the self-sustainability of the domestic seed industry that we have been advocating.

Since 1992 ATG has taken the initiative, the financial responsibility and the risk to set up trial plots in various growing zones in Armenia to select the best and highest yielding seed varieties prior to making any seed available to wheat growers to plant. Normally, such initiatives are the responsibility of host governments and their research institutions. The Armenian-American communities and the USDA Foreign Agricultural Services provided financial contributions for these activities.  This year, ATG associate farmers are projecting to harvest no less then 1400 MT of seed.

It is worth mentioning that it takes up to seven growing seasons to convert high quality seed from its original R&D to consumable flour or bread.  Years of collaboration and the forces of the free market have laid the foundation of a sustainable industry. From the 5,024 grain growers associated with ATG,  three major farming groups have emerged: a) Seed bank suppliers: headed by ATGF focusing on R&D, Breeder and Foundation seeds, b) The Seed Producers Association, involved in Registered and Certified seed multiplication, and c) General wheat growers who plant Common seed for consumption. These core groups of farmers have mastered the production knowledge of high quality seed and have created a fully integrated seed production chain.

We cannot, and have not, passed the risk of unknown seed quality with the possibility of lower yielding rates to the farmers.  It is too costly for the farmers, who have to provide to their families to carry the burden of year’s labor with unknown economic return in their investment, particularly when the seed varieties have not been tested at various grain-growing zones in the republic to ensure their adaptability to the local growing conditions.  Interfering in the market with imported and non-tested seed will have a profound negative impact on the wheat seed-growing farmers and the private sector wheat and seed industry in the Republic.

With the cost of irrigation water and other farm input expenses rising, importing seed of unknown and unverifiable quality will threaten the viability of many farm operations, forcing many more farmers to abandon their fields. (Note: due to high irrigation cost, even with subsidies offered by the government, today, only about 82,000 ha of farm were sown under wheat, compared to 130,000 in previous years).

In these challenging economic times, when resources are scare, the suggested proposal requires careful evaluation.  It will be much wiser to invest such funds in long-term agro-infrastructure and produce the needed commodities locally, rather than import second-rate seed or seed of unknown quality.

Our objective during the next few years continues to be to introduce farmers to the benefit of conservation agriculture and the no-till farming systems methodology. The system could reduce farm-operating costs (primarily labor, equipment use, irrigation and fuel) by up to 65%! Some farmers in Armenia are already reaping the rewards of this system. The system will also improve natural and organic nutrients in the soil, and reduce soil erosion by up to 95%. These new approaches to efficiency are necessary to create sustainable seed production in the country that will not be dependent on importing unknown varieties to address national emergency food shortages. ATG is pleased that some departments in the Armenian Government, particularly the Ministry of Economy, do appreciate the efforts being invested in this area that could benefit the agricultural industry and the people of Armenia.

* Copy of the Press Release by the Government

* “AMD 558mln to be allocated from RA state budget for purchase of elite wheat seeds”

 July 8, 2010 – 16:54 AMT 11:54 GMT

PanARMENIAN.Net – During the July 8 sitting, the RA government decided to allocate AMD 558mln from the RA state budget for purchase of elite wheat seeds from foreign and local producers.

The program will provide with the opportunity to expand cultivation areas until 2014, bringing them to 115,000-120,000 ha. Meanwhile, the country’s provision with own wheat will increase from 37% to 55%.

Armenian Prime Minister Tigran Sargsyan said that high-quality wheat seeds have not been imported to Armenia for several years. “Now the government has allocated a significant sum for the development of seed farming for the first time, expecting that it will be possible to produce 3,000t of seeds in Armenia in the near future. It will secure the demand for cereal seeds in 3-4 years,” noted Sargsyan.”

 NOTE:  the outcome and consequences of this policy:

• Inferior quality wheat seed were imported instead of “elite” seed as announced.
• More than 5000 wheat growers obtained low quality seed from the government.
• The seed was provided to the grain growers with no up-front cost.
• The seed loan purchases were collateralized by property deed leans payable upon completion of harvest.
• Poor production and low-quality grains resulted in farmers being unable to repay their loans.
• Many lost their lands; many others are in court trying to save their farms, whereas others abandoned their farms and migrated abroad.

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2000 Winter Wheat Drought Relief Emergency Program

Supporting Farmers Suffering from Drought

In early August, 2000, the Ministry of Agriculture in Armenia announced that due to the drought, the country is suffering a major shortage of winter wheat seed available for fall 2000 planting season to provide the grain growers.  The Ministry appealed to the international community for help.

The planting season being only few weeks away, it was literally impossible for any potential international agencies or donor countries to respond, and have the needed wheat seed delivered in time for planting, let alone follow the acceptable norm of issuing tender for transparent transactions, and inviting interested seed producing company and transportation agencies to submit their bids.

Within days, the US Embassy in Armenia invited all the Non-Government Organizations (NGO) for emergency meeting.  Some 25 NGOs that have been active in the country since independence attended the meeting.

Then U.S. Ambassador to Armenia, Michael C. Lemmon was ready to allocate emergency funds to help the Armenian Farmers.   Jerry Oberndorfer of the US Department of States Humanitarian Assistance programs in Armenia being the point person. The US Embassy wanted to know from the NGO community active in Armenia, many of whom have been the recipient of US Government financial support, how would they perceive assisting the country in that very short time.  We had very limited time to present a strategy and a plan of action.

Within couple of days, ATG Executive Director Varoujan Der Simonian, Country Director Roger Benton, and Project Coordinator Gagik Mkrchyan drafted a plan of action and submitted to the US Embassy.   The US Embassy allocated $600,000 for this Winter Wheat Drought Relief emergency proposal.  Gary Pigg, ATG Comptroller flue from Fresno to Armenia to supervise the program – (as Roger Benton had to return to US to attend his wife’s funeral).

Within 45 day, Gagik coordinated the purchasing, processing (cleaning, treating, bagging), and distributing over 1700 MT of locally generated wheat seed from the ATG affiliated seed growers located at various growing zones in Armenia and distributed them to over 12,000 grain growers in time for fall 2000 planting!  The funds were allocated to purchase the wheat seeds directly from the seed growers.  Gary Pigg, supervised all the transactions and prepared a final accounting and progress report to the Embassy, that were confirmed and signed by Mr. Oberndorfer.

Click here to read former US Ambassador Lemmon’s letter in this regards.