bsc_oxfam_dried fruit supply chain report-english-25!01!2013

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ASSESSMENT OF THE ARMENIAN DRIEDFRUIT AND VEGETABLE SUPPLY CHAIN

BSC Business Support Center, 1st Charents St., II floor Yerevan, 0025, RA

Tel: (374 10) 574778, 571753, (374 99/77) 574778 www.bsc.am , www.trainings.am , www.business armenia.com


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Assessment of the Armenian Dried Fruit and Vegetable Supply Chain

BSC Business Support Center LLC, 2012 2

Table of Contents

1. Executive Summary .............................................................................................................. 3

2. Introduction ........................................................................................................................... 42.1 Assessment objective .................................................................................................. 4

2.2 Assessment methodology ............................................................................................ 4

2.3 Area and Site Analysis ................................................................................................ 6

2.4 Socio-Economic analysis ............................................................................................ 8

3. Overview of the Dried Food Value Chain .......................................................................... 10

4. Foreign Trade of the Dried Food of Armenia ..................................................................... 15

4.1 Imports of Dried Food to Armenia ............................................................................ 16

4.2 Exports of Dried Food from Armenia ....................................................................... 17

4.2.1 Export-Related Issues ............................................................................................. 18

5. Key Chain Players and Their Characteristics ..................................................................... 20

5.1 Fresh Fruit Producer Analysis ................................................................................... 20

5.2 Dried Food Producer Analysis .................................................................................. 27

5.3 Retailers ..................................................................................................................... 37

5.4 Confectioneries .......................................................... Error! Bookmark not defined.

5.5 Business Development and Support Analysis ........................................................... 39

5.6 Pricing of different dried products ............................................................................ 55

6. SWOT Analysis of the Dried Food Value Chain ............................................................... 57

7. Conclusion and Recommendations .................................................................................... 58

8. Annexes................................................................................................................................ 61

Annex 1. Questionnaires ..................................................................................................... 62

Annex 2. List of the interviewed supply chain members .................................................... 79

Annex 3. Compliance with EU Buyer-Requirements for Dried Fruit and Vegetables ....... 82


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1. Executive Summary

BSC Business Support Center, in cooperation with OXFAM Armenia, has implemented an

assessment of the dried food supply chain. The overall findings of the carried out assessmenttestify that there is, although informal, but a performing dried food supply chain, though not

export-oriented, that is currently operating with satisfactory efficiency.

Dried food production is a centuries-old tradition on the Armenian territories, and, connected

with that, there are approximately 5,500 producers of dried food all over the country.

Majority are not legal entities, but households, who have inherited the tradition of drying

fruits and vetetables from their ancestors. Therefore, they have more of an individual, rather

than collective approach.The main hindrance to the development of export-oriented dried fruit and vegetable supply

chain is the fact that whilst the foreign markets are quantity-conscious, none of the Armenian

producers can continuously provide the demanded volumes, but, organized under one body,

they will be able to provide the required quantities. Moreover, each player of the chain

greatly welcomes any alternative intervention that will improve their position in both

international and local markets and contribute towards sustainability, and is ready for any

pre-requirements to that intervention.

The report presents a comprehensive analysis of all the players of the supply chain, including,

the producers of dried fruits and vetables, the suppliers of fresh produce as raw materials, the

retail part of the chain, also, the international or local organizations providing support to the

development of the chain.


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2. Introduction

2.1 Assessment objective

The principle objective of the assessment has been to evaluate the potential of setting up

and/or enhancing a dried fruit and vetetable supply chain (including, apricots, figs,

peaches, cherries, plums, tomatoes, etc.) in Armenia, to find out whether this value chain is

feasible from the financial and organizational perspective.

In the frameworks of the assessment BSC Business Support Center has identified key

players in the chain as dried fruit and vegetable producers, producer organizations,

processors, export companies and business support organizations and assessed the extent

of their linkage, and the potential of linking them in a financial and institutionalsustainable chain in Armenia. The assessment has also evaluated the capacity and the

competence of the chain players, to see whether they are capable to generate quality dried

fruits and vegetables and the required quantity for export purposes.

2.2 Assessment methodology

The methodology of the assessment included collection and analysis of primary and

secondary information. The primary information was collected through face-to-face

interviews with the key role players of the Armenian dried fruit supply chain that includedfarmers/producers of fresh fruits, producers, processors and business support &

international organizations. The complete list with comprehensive contacts of the

interviewed individual companies and persons is presented in Annex 2.

The methodology of the assessment included specific activities, such as:

- Developing questionnaires for the interviews with key chain players (separatequestionnaires for different members of the chain).

- Compiling and reviewing available secondary data (studies, researches, articles,etc. regarding Armenian dried fruit supply chain and reports provided bygovernmental institutions and international organizations).

- Arranging preliminary correspondence and arrangements with the organizationsand companies to be interviewed via face-to-face interviews, phone calls, e-mailsand Skype conversations.

- Conducting interviews with key chain players in Armenia:o Sun-dried fruit and vegetables Producers and producer organizationso Sun-dried fruit and vegetables Processors and/or export companieso Relevant Business Support Organizations and/or NGOs


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- Conducting final report on the findings of the assessment of the sun-dried fruits andvegetables supply chain in Armenia

SOURCES:

Interviews with farmers/villagers Interviews with 26 processors/producers

of sun dried food and vegetables (such as CHEER CJSC, Tsiatsan Ani, Nor Aygi, Armenian Dried Fruits, Astghounk, and other driers owners)

Interviews with 4 supermarkets, grocery stores, 5 confectionaries

Interviews and information from 16 other retailers, wholesalers

Interviews with invited expert on the field

The Association of Dried Food Producers Federation of Agricultural Associations

(FAA) Agricultural Support Regional Centers

(ASRC) Interviews with 10 Business Support

Organizations (such as EBRD BAS, CARD, etc.)

PRIMARY INFORMATION

COLLECTION SECONDARY INFORMATION

COLLECTION

SOURCES:

Armenian Statistical Service Customs services United Nations Commodity Trade

website TACIS and AET publications

UNDP, ADA, DAI ASME, CARD , SHEN NGO reports Ministries of Agriculture, Trade and

Industry, SME DNC BSC previous researches Periodicals, Internet, news agencies Agricultural support regional center

websites, reports Fruit/vegetable processing companies Departments of agriculture and

environment protection (regional administration)

Acquired Info

Information on the availability of raw materials for the sun dried production, planned quantity and cost (by regions)

Information on raw materials export (volumes, problems)

Information on new orchards and expected harvest Information on expected organic certification Information on Market Size (variety, packaging,

quality, preferences) Seasonality and state of production/drying

technology Information on consumers segments

Information on market structure Export potential

General statistical information Export Import data Distributors general data Buyers general data Domestic and imported products general data Supply chain quantitative data

Acquired Info


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2.3 Area and Site Analysis

It is widely known that the fruits grown in Armenia as well as the processed produced (dried

fruits, jam, compotes etc.) considerably differ in a positive side to its taste, aroma and an

external commercial interface.

According to scientific researches, such good characteristics of fruits are caused first of all by

the geographical position of Armenia, its natural-climate conditions, abundance of sunlight,

presence of qualitative fresh mountain waters and other important factors which create almost

perfect conditions for cultivation of apricots, pears, peaches, apples, black and red plums,

grapes and other kinds of fruits.

During the Soviet era, Armenia was designated to be the fruit capital of the empire. Fruit was

processed into preserves, compote, puree, and canned and jarred in massive factories. The

volume of output was almost unimagineable. Todays output is a far cry from those heady

days when factories ran at full capacity, people were fully employed, and markets were

guaranteed. Those who lived and worked on the collective farms and were employed in the

State-owned factories strive for a return to those days. Their embracement of the free market

was short-lived. Almost all of their former markets have evaporated or cannot be counted on,

and trying to find new, reliable markets in Europe, the U.S. or Middle East has not been easy.

Free world markets are volatile, demanding, quality conscious and, which is the most

important, require huge steady volumes.

Although the number of fruit trees that produced the abundance during the Soviet era still

remain in the ground, their production has diminished and their quality has fallen off. For the

fruit that is produced, the farmers claim that there are no markets, so why one should care for

the trees and take care of the harvest. Fruit often rot on the trees or on the ground, particularly

in the further regions. The question arises, then, as to how can this industry be revitalized and

rehabilitated, so that it can play the major role in Armenias economy that it once performed.

The key to solving this dilemma is to find new markets for the fruit that is currently being

produced, and to place that fruit in those markets in a form that meets the tastes of the

consumers.

Production of fresh fruit in Armenia stretches from one end of the country to the other. In

the far southern reaches of the country, on the border with Iran, one finds the concentrations

of fig, persimmon, pomegranate, cherries production in the city of Meghri and its surrounding

communities. The grapes, apricots, peaches, plums and pears are found throughout the Ararat


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Valley (Armavir, Ararat regions), and plums, pears, peaches, apples, even, figs, are also

grown more to the North (such as Tavush region). Peaches are well known in the

Noyemberian valley near the border with Georgia.

The geographic location of dried fruit producers correlates with the location of input supply.Producers operate in locations near the input supply, or are growers of fruit and vegetables

themselves (i.e. that have their own supply). This is mainly the reason why the majority of

dried food producers are located in Ararat Valley Armavir and Ararat regions. In all those

regions where the cultivation of fruit and vegetable is not dominating, producers of dried fruit

operate in the lowlands or pre-mountainous areas (Ashtarak region of Aragatsotn Marz,

Meghri region of Syunik Marz, Ijevan and Noyemberyan regions of Tavush Marz). There are

producers who operate or are accounted in Yerevan, but their production sites are located inthe Marzes (Armavir, Ararat or Aragatsotn). Another important factor in determining the

locations appropriate for dried food production is the number of sunny days in a geographic

location. As for the volume of production by Marzes, Armavir and Ararat Marzes have bigger

shares in this regard. It is estimated that 70-75% of the dried food in Armenia are produced in

the Marzes of Armavir and Ararat.

Armavir (more than 50% of the country-wide production)

Ararat (especially Artashat district, Yervandashat) Aragatsotn (especially Ashtarak district)

Syunik (especially Meghri district)

Lori (Alaverdi district)

Tavush (Berd ditrict)


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Image 1. Production of Sun-dried Fruits and Vegetables in Armenia by regions

2.4 Socio-Economic analysis

The Development of drying fruit industry has significant advantages:

Adding Value: Raw fruits often have little economic value, especially during harvest

time when the prices are very low (on average, 1 kg of dried fruit can be worth 10

times more than a kg of raw fruit). By drying and processing their fruit, producers

may add value to the product, allowing it to be sold at a higher price and greater

profit.

Long Lasting: The fruit harvesting is still based on seasons. As a result during

harvesting time a particular fruit floods the market, but is then often unavailable

outside of season. Dried fruit can last for years if sealed and stored correctly, meaning

producers can store it and sell it out of season.


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Lower weight: Comparing with their fresh counterparts, the dried fruit are 2-5 times

lighter in weight and dimensions/volume.

Transferable and lifelong skills: Drying fruits is a cheap, simple and universal

process. Involving students gives them clear identifiable skills that they can carry withthem throughout life - even if the products are only used to feed the family (rather

than for generating income). After all drying fruit can be used for personal

consumption as well as a means of income generation through sales to both domestic

and especially to export market.

There are two major market segments for dried fruits: the food processing market and the

retail market . The food processing market so far is the largest segment accounting for an

estimated 80% of the worlds dried fruit imports. Major consumers are the breakfast cereal

(muesli) and the confectionery industries. Dried fruit products for the retail market are mainly

sold as ready-to-eat snacks. The demand for high quality dried fruit continues to expand.

Armenia has millennia-old tradition of making dried fruits. The written testimonials about it

date back to the 5 th century BC. The Greek philosopher Herodotus, when describing the

social-political life of Armenia in his The Histories, notes that Armenian merchants used to

transport dried apricot, peach, raisins, wine, and other products along the rivers of Tigris and

Euphrates. Noticeable are also other testimonials, such as the one of Xeneon Athenian, who

lists the food reserved by Armenian rural people for winter, including dried fruits. Also,

Rollov notes that at the end of the 19 th century Armenian fruits and grape were exported

mainly dried.

The weather-climatic conditions, as well as the availability of necessary fresh fruits, the non-

availability of cold-storage transportation means, also, the imperfection of other types of

processing of fresh fruits before the 1920s have supported to the production of the dried fruits

and raisins with exceptionally open-space sun-drying technology. However, starting from the

1950s, the development of preservation technologies began, in parallel to which the

production of dried fruits dropped dramatically. Plus, the planning economy of the Soviet

Union provided no space for Armenia in the drying of fruits. Instead, this process was

planned to be implemented by the mid-Asian countries. Nevertheless, the political and

economic changes that happened in Armenia (adoption of market relations, land

privatization, the increase of grape-fruit-vegetable producing orchards), have created

wonderful opportunities for regaining the some-time kind tradition of producing dried fruits


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in Armenia. The privatization also affected the processing factories, which were so powerful

that they processed the main part of the fresh fruits and vegetables produced in the country.

Thus, these were impossible to be exploited on private basis, and most of the fresh fruits

started to be dried in home conditions using simplest facilities (drying right in the sun or in

hand-made solar dry-houses). Also, at the beginning of the 1990s, the first sun-driers were

created in Armenia (in Nor Kesaria (Armavir region), Getap (Vayots Dzor) and Berqaber

(Tavush) communities.

Today in 9 regions of the country more than 240 sun-driers are constructed (approximately

60% are located in Armavir and Ararat regions). The drying of fruits and vegetables is

already considered to be one of the most perspective spheres of processing. However, the

main part of drying is implemented with the traditional sun-drying techniques.Further, small drying productions arouse, followed by even bigger ones, and this branch of

the processing of agricultural production started to develop.

3. Overview of the Dried Food Value Chain

The results of the current assessment have proved that there is an acting supply chain of the

dried fruit and vegetable, however, the supply chain is not formal and regulated. The players

of the chain are strictly connected, nevertheless, these interconnections are neither regulated

by any body, nor are they on a contractual basis. This means, that, for example, in the stage

of the fresh fruit acquirement the dried fruit makers on their own initiative find the

farmers/villagers, who own orchards of fruits appropriate for drying all over the fruit-growing

zones of the country. Depending on the weather conditions of the year, one farmer may once

have required quantities of fruits, or may not have, meaning that no contracts or obligations

are arranged in advance.

In the context of the current assessment the following stages of the dried food products

movement have been identified: collection and transportation, wholesale procurement,

general processing through drying, and retail trade and exports. Values added at each

mentioned stage generate value chains that are the subject of the current assessment. Below

short description of each stage is presented.

In the supply chain there are also other (although, indirect) members (such as business

support, subsector organizations, public institutions), which were also a part of the

assessment.


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Image 2. Dried Food Supply Chain Map

dried fruit and vegetables fresh fruit

Consumers (inArmenia & exporting)

Villagers Shops,

supermarkets, grocery stores

Hotels, Restaurants, Cafes

Processors of fresh fruit and vegetables as dried fruit Villagers

Wholesale Procurers

Local wholesale procurers

Villagers/Farmers

Agricultural Markets & Retailers

Input Suppliers Certification

Agencies Financial Service Business Support

Organizations

Collection of fruits and

vegetables

General

Processing as drying

Retail

Consumption

Wholesale Procurement


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Growing of Fresh Fruits/Vegetables

Growing of fresh fruits/vegetables is usually conducted by mainly the population of rural

communities who have their own orchards (or they live in urban communities, but have

orchards in rural communities).From the assortment of each fruit/vegetable unique types are appropriate for drying. For

example, in the case of apricot, Yerevan (90%) and Sateni (5%) sorts are the most widely

cultivated sorts in Armenia. Of these two types, Sateni is the one appropriate for drying.

And for the later stages of the supply chain these assortments must be used. However, as it

was found out during the assessment, very often the suppliers of fresh food collect and sell

the wrong types of fresh fruits, thus, creating hindrances for the further drying process. That

is why some wholesale procurers and processors prefer to participate in collection process

with their own resources (employees, transport units, etc.). Nevertheless, as is mainly the

case, the growers of fresh products usually act as collectors and provide transportation of

products to facilities of processors, or wholesale procurers.

Very often the growers of fresh fruits/vegetables are the later producers of dried food, who

usually do not possess any driers, but they just manage it in an open air.

Wholesale Procurement

Two types of wholesale procurers have been identified in the dried food supply chain.The first group, later referred as Local Wholesale Procurers (LWPs), mainly operates on/next

to the collection sites. These entities and individual entrepreneurs usually operate on behalf of

processing enterprises and cooperate with them for quite a long time. Sometimes the role of

an LWP is undertaken by active collectors, who succeed in their activity through the years

and grow up. The LWPs procure fresh fruit/vegetable products from the growers and supply

to processing entities.

The second group, later referred as Wholesale Procurers at agricultural Markets (WPM),

operates at various agricultural markets (bazaars) of the capital Yerevan and other towns.WPMs procure the products from the farmers/villagers at same conditions as their competitor

LWPs do. Once being supplied, WPMs either sell their products to smaller retailers, or sell

those products at markets to final consumers.

WPMs have also very active roles in the later sales of the dried products. They acquire these

products from their producers and get it to the final consumer. Very often at this stage the

WPMs make packaging of the dried products. Also, as it turned out during the interviews

with the WPMs, most of them have their own driers or, at least, implement drying without

driers, on the open air.


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General Processing and Distribution

From the point of view of the current assessment the processing of fresh fruits via drying was

of interest. Different types of processors/producers of dried food were identified during thesurvey, depending on their production volumes, on the quantity/area of sun-driers.

Processors procure their inputs (i.e. fresh fruits) both from villagers and wholesale procurers

(mainly from LWPs). However, a very usual practice is the case when processors of dried

fruit and vegetable have their own orchards and process the harvest of their own orchards.

Procurements are organized and conducted at certain periods that are different for various

products (e.g., apricot June-July (starting from the production of Ararat valley, ending with

the production of Ashtarak district of Aragatsotn region), peach August-September, fig

September-October, etc.). Processors participate in the value chains of selected products; they

usually completely transform procured inputs processing.

Although some processors succeeded to export their products, they usually distribute their

products via retail networks. For this purpose, almost all processors have developed their

distribution facilities and networks. Besides, processors developed schemes of payments both

with suppliers and procurers of their products.

Retail Networks and Exports

Retail networks are assigned to bring final products to ultimate consumers. Actually, this

function is conducted by almost all participants of value chains. Some quantity of products is

sold at agricultural markets directly to consumers. WPMs practice such trade, too. Processors

sell their final products via firm shops, or often take the production to markets or the end user

themselves, etc. Meantime, major participants of retail trade are retailers at agricultural

markets, shops and supermarkets, and hotels and restaurants, or the confectionaries, which

use the dried food in their production of cereals or other sweets.

Shops and supermarkets usually trade with packaged products, though, as it happens veryoften, they perform the packaging themselves. Another important participant of the retail

market is the Duty Free shop at the Zvartnots airport, which is tourist-oriented and sells

mainly packages production. Hotels and restaurants serve/sell only processed dried food

products uncovered from packaging or prepared from fresh (they mainly use these for

preparation of some dishes with dried food, which are mainly traditional dishes).

Some of local processors succeeded to penetrate export markets. Major foreign markets are

the USA, Russia, Ukraine, some CIS countries. Actually, exports are the most desirable sales

for producers, since sustainable volumes of sales are secured at hard currency. Meantime,


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producers have to meet many requirements and standards, such as organic, HACCP, ISO, etc.

Currently, only few local companies are eligible from that point of view. Anyhow, quality

and management standards are not completely new to local producers, and many of them are

ready and willing to pass through certification processes.


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4. Foreign Trade of the Dried Food of Armenia

The official statistics prove that from the point of view of the foreign trade of dried food,

Armenia is a country with negative balance, meaning that it imports more dried food than it

exports.

Graph 1 shows the data of exports-imports of dried food for Armenia for the recent 10 years

(2002-2012). It can be clearly seen that exports are just a little part of the total foreign trade,

with the major share given to the imports. The foreign trade of dried food has no clear trend,

it is very volatile, growing one year, and decreasing in the next one. However, one thing that

can be stated is that most often the imports are approximately 1,000 tones, and the exports are

very different numbers, but always lower than 100 tones.

Graph 1. Foreign Trade of Dried Food of Armenia

Source: State Customs Committee of RA and United States Commodity Trade Statistics Database

43 27.271.9 80.7

21.6 16 23.8 41 90

42

691.9

1226.5

919.5

1044.9

1203.8

585.1 601.6

1100.8

954.6

1078

0

200

400

600

800

1000

1200

1400

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Foreign Trade of Dried Food for Armenia

Exports

Imports


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4.1 Imports of Dried Food to Armenia

As stated above, the foreign trade (but, mainly, the imports) has a big share in the Armenian

dried food sector. The imported dried food is dominating in the Armenian market. The

volume of raisins is the largest in the total volume of imported dried food (73.6%), followed by dried fruits (16.8%) and vegetables (9.6%). Raisins have the major share among the

imported dried food products. Raisins are primarily imported from Iran. This country

accounts for 67.6% of the imported dried food. As a matter of fact, the shares of imported

dried food from Iran are stable, since every year 650-700 tons of raisins are imported from

Iran to Armenia. The distribution of this and other dried products by countries of import is

presented below:

Table 1 Imports of dried fruit into Armenia, by different countries, in kg, 2011

Apples Apricots Figs Prunes Raisins Other 1 Total

Argentina 200 56,200 56,400Chile 38,400 94,330 132,730China 1,000 3,045 1,425 5,470Georgia 400 3,708 4,108Greece 44,765 44,765

India 1,000 1,000Iran 74,095 691,272 1,435 766,802Italy 153 171 160 484Russia 45 45Syria 510 510UAE 300 200 500Ukraine 414 414USA 40,012 48 231 40,291Uzbekistan 3,001 9,004 12,005Vietnam 12,003 12,003

Total 1,077,527

Source: State Customs Committee of RA, United Nations Commodity Trade Statistics Database

As it can be seen from the table, approximately 1,078 tones of dried food was imported to

Armenia from different countries. This is huge quantity, taking into consideration that this

quantity could be potentially produced by Armenian entities, since most of them produce

with not their full capacity.

1 mainly mixture of dried fruit


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The dried food is imported to the country by entities of Armenian origin. The major part of

imported dried food is intended for the retail market (public consumption). As a matter of

fact, the majority of importers are entities engaged in wholesale and retail trade.

Some importers cooperate with Armenian confectioneries supplying them with raisins and

various types of dried fruits (usually, for the production of dried fruit with any type of nut,

covered with chocolate). Several confectioneries (such as Grand Candy LTD) import dried

food themselves, almost entirely for their own industrial consumption.

Some part of the dried food is imported by such entities, which cannot be considered

importers. These are drivers (mainly working on Armenia-Iran cargo transportation), who

among other goods, transport a certain quantity of dried food (primarily raisins). It is

generally difficult to identify them or their Armenian partners (who are likely to be the real

importers) and give their exact number. The Armenian partners carry out the sales of these

products.

4.2 Exports of Dried Food from Armenia

As for the exports of the dried products, there are only several companies (4-5 producers)

which have organized exports of the dried food. Among them are, firstly, Cheer CJSC

(mainly to EU countries), S/E Armen Manukyan, Levon LLC (mainly to Russia).

Cheer CJSC exports not only its own products, but also the products of several other

producers. In this regard, Cheer has become a wholesale buyer in the market. The company

exports mainly dried tomatoes, dried apricots, dried prunes, dried herbs.

The main business of Levon LLC is preserving of fruits/vegetables, and it is mainly export-

oriented to Russian market. In parallel with the exports of its main production, the company

also exports dried fruit it produces if the year is appropriate for drying of food.

Most of the interviewed producers said to have tried to make exports, however, the main

thing with the dissuccess of this endeavor is that the foreign markets require continuous

supply of big quantities, which no sole producer can provide on his own.

Another important factor with the exports of dried food is that a lot of Armenians, visiting

their relatives abroad, together with other Armenian production such as cognac, take the dried

food for them, and this, though not presenting significant quantities for one case, in total,

makes a rather big part of the exports. As opposed to the imports of dried food, the volume

and assortment of the exports of dried food is significantly smaller. Only dried tomatoes,


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spices, dried apricots and prunes, as well as some quantity of dried fruit mixtures are usually

exported.

The main export destinations of Armenian dried food are the Russian Federation, USA,

France and Switzerland. Very often businessmen of Armenian origin living in the diaspora

try to play a big role in the export of the dried fruit, however, seeing that the necessary

quantities can not be supplied by the Armenian market, they find other partners.

Table 2 - Export destinations of dried food, in kg 2011

Apricots Prunes Mixture ofdried fruits

Tomatoes Dried spices Total

Lebanon 5 5 10

Switzerland 100 50 89 1,030 1,269

Russia 136 68 15,876 16,080

Ukraine 13,486 604 14,090

France 20 5 10 35

Iran 10,000 10,000

Iraq 13 13 38 64

Georgia 12 12 36 60

Total 41,608Source: State Customs Committee of RA and United States Commodity Trade Statistics Database

4.2.1 Export-Related Issues

Connected with the fact that countries of the European Union are the future target export

destinations for the Armenian dried food, a series of requirements (both legal and non-legal)

for exporting dried fruits and vegetables to EU has been identified. One such document,

presenting the requirements has been developed by the Center for Promotion of Exports from

Developing Countries (CBI) 2 of the Ministry of the Foreign Affairs of the Netherlands. The

document is presented in more detail in Annex 33.

The main legal requirements include the food safety, maximum residue levels of pesticides

and additives.

Maximum Residue Level of Additives

The dried food products exported to the EU and should meet all legislative requirements set

for additives, enzymes and flavourings in food. EU consumers are very conscious about the

2 http://www.cbi.eu/5/about_cbi3 http://www.icci.com.pk/data/downloads/1/131919889_1.pdf


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ingredients of the food they buy, and so are EU food safety authorities. Food containing

substances that are not explicitly approved by the EU or inadequately labelled is prohibited

and will be taken from the market.

Regulation (EC) 1333/2008 lays down the additives that are allowed to be used in food sold

on the EU market.

The additives should be mentioned in the list of ingredients on the label of the dried fruits in

the consumer packs. Also, it is important to notice that the legislation concerning food is

continuously changing and it is therefore strongly advised to check with the Food

Administration bodies before any import process is commenced.

Hygiene of Foodstuffs (HACCP)

The Hazard Analysis and the Critical Control Point (HACCP) deals with the handling and

treatment of foodstuff in order to ensure that foodstuff do not pose a risk to human health

under normal use. In addition, the HACCP certification is also important outside EU,

indicating that the responsibility of the production has passed all the way throughout the

supply chain.

Maximum residue levels (MRLs) / pesticides

Import of dried fruits to EU countries must comply with the regulations for maximum

permissible levels for the content of residuals of a large number of pesticides.

Regulation (EC) 396/2005 establishes the MRLs of pesticides permitted in products of animal

and plant origin that are intended for human or animal consumption. The Regulation is fully

harmonised which means that the MRL requirements are the same in all EU Member States.

Moreover, different countries have additional regulations for a number of pesticides, which

need to be taken into account in case of export intentions to those countries.


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5. Key Chain Players and Their Characteristics

5.1 Fresh Fruit Producer Analysis

A notable fact connected with the Armenian dried food production is that it is entirely based

on the local input supply. In other words, no dried food is produced from imported inputs,

i.e., what is imported, is ready-made dried food. As a result of this, if a year is productive for

the fruit harvest (as in the case of 2012), the production of dried food also grows respectively,

and vice versa, the frosts or hails bring to the lack of fresh fruit and, followingly, little

volumes of dried food production

Today fruit and vegetable-growing is wide-spread all over the country, in more than 482

communities of all the regions of Armenia. The types of fruits that are appropriate for drying

are cultivated in those communities, such as apricot, peach, prune, fig, persimmon, apple,

pear, cherry, grape, etc. The supply of fresh fruits as inputs directly depends on Armenias

climatic conditions. During unfavorable years, up to 90% of the yield can be lost due to early

spring frosts or heavy late spring hails. Climatic fluctuations first of all reflect on the prices

of inputs, thus making the final products less cost-attractive and competitive against the

production of competitors. The situation is better in the case of vegetables, and sufficient

quantity of inputs is available almost each year.

According to the information provided by the Armenian Statistical Service and the Armenian

Ministery of Agriculture, as of January, 2012 the total area cultivated under different types of

fruit orchards throughout Armenia was 37,149 ha (of which, 32,421 ha was prolific) and the

area under grape was 16,288 (of which, 14,478 is of prolific state). Thus, the total areas of

orchards and vineyards sum up to 53,437 ha (70% are orchards, 30% are vineyards).

Anyway, there is a tendency of founding more and more new orchards, in which the types of

fruits appropriate for drying are also included.

The following graph illustrates the distribution of the total orchards by different types of trees

(i.e., stone, seminal, subtrocial, grape, nuts, berries). According to it, the stone fruits

(including, apricot, peach, cherry (sour and sweet)) are the most-widely cultivated (36%),

followed by grape (31%), and seminal fruits (including, apple, pear, quince).


21/85

Assess

BSC

Source

Graph

Accord

followe

ent of the

usiness Sup

Ministry o

3 illustrate

ing to it, a

d by peach

Dist

rmenian D

port Center

Agricultu

the distri

ricot is the

(4,870 ha),

36%

ributio

ied Fruit an

LLC, 2012

Graph

e of Arme

ution of t

most wide

and plum

% 1%

5%

of orc

Vegetable

. Distribu

ia

e total or

ly cultivate

2,160 ha).

24

hards a

Supply Chai

ion of Orc

hards by

d stone fru

31%

nd vine

ards and

ifferent ty

it over the

yards b

ineyards

es of ston

country (9,

y types

y Types

e fruits.

30 ha),

Grape

Seminal

Stone

Nuts

Subtropical

Berries

21


22/85

Assess

BSC

Source

Graph

Accord

(2,658

100

200

300

400

500

600

700

800

900

1000

ent of the

usiness Sup

Ministry o

illustrates

ing to it, a

a), and qu

0

0

0

0

0

0

0

0

0

0

0

Apricot

9429.1

rmenian D

port Center

Agricultu

the distrib

ple is the

nce (262 h

Peach

4872.87

7539.5

4

Dis

ied Fruit an

LLC, 2012

Graph

e of Arme

ution of th

most wide

).

Sweet Cherry

1271.22

2

110.25

1065

tributi

Vegetable

. Distribut

ia

e total orc

y cultivate

Plum

62.24

7.59

1745.

n of st

Supply Chai

on of Orc

ards by di

d seminal

Sour Cherry

7.672

2743.6

ne frui

ards by Ty

ferent type

10,308 ha

ornel

1.85 233.1

ts (ha)

es of Ston

s of semin

, followed

Total ar

Prolific (

e Fruits

l fruits.

by pear

a

f the total)

22


23/85

Assess

BSC

Source

Graph

fruits.

followe

200

400

600

800

1000

1200

ent of the

usiness Sup

Ministry o

5 illustrate

According

d by fig (2

0

0

0

0

0

0

0

Ap

10308.

rmenian D

port Center

Agricultu

s the distri

to it, per

6 ha) and

le

766

9548.946

D

ied Fruit an

LLC, 2012

Graph 4.

e of Arme

bution of

immon is

omegranat

Pear

658.63 248

istribut

Vegetable

istributio

ia

he total o

the most

e (which, h

Quinc

268.28

.48

ion of s

Supply Chai

of Orchar

chards by

widely cul

owever, is

27231.74

eminal

ds by Type

different t

tivated su

ot a fruit

ther

.21 24.41

(ha)

of Semin

pes of su

tropical (

sed for dry

Tot

Prol

l Fruits

tropical

45 ha),

ing).

l area

ific (of total)

23


24/85

Assess

BSC

Source

As it c

the frui

cherrie

(see Ta

than 7

specia

persim

0.0

50.0

100.0

150.0

200.0

250.0

ent of the

usiness Sup

Ministry o

n be seen

ts. 69.3%

orchards

ble 3). This

% of all

lized in th

ons orcha

23

rmenian D

port Center

Gr

Agricultu

rom Table

f all apric

nd 72%

is one of t

dried food

e producti

ds are loca

Fig

.3220.4

Distri

ied Fruit an

LLC, 2012

ph 5. Dist

e of Arme

3, Ararat v

ts, 72.6%

of vineyar

he determi

over the

n of subtro

ted in these

Pomeg

202.

ution

Vegetable

ibution of

ia

alley is the

of all peac

s are loca

ants for th

ountry.

pical fruits

regions.

anate

194.1

f subtr

Supply Chai

Orchards

fruit centr

es, 49.3%

ed in the r

Ararat va

hereas, Ta

i.e., 71.4

Persimm

245.7

opical f

y Types o

of Armen

of all plu

egions of

ley to be t

ush and

% of all fi

on

182.1

ruits (h

Subtropic

a for most

s, 48.4%

rmavir an

e provider

yunik reg

s and 97.5

a)

Total

Proli

l Fruits

types of

f sweet

Ararat

of more

ons are

% of all

Area

ic (of total)

24


25/85



Table 3. Distribution of Orchards and Vineyards by Regions

Y e r e v a n

A r a g a t s o

t n

A r a r a

t

A r m a v

i r

G e g

h a r

k u n

i k

L o r i

K o t a y

k

S h i r a

k

S y u n

i k

V a y o

t s D z o r

T a v u s

h

T o t a

l

Apple ha 157 2556 993 863 814 975 2078 248 979 640 513 10816

% 1.5 23.6 9.2 8.0 7.5 9.0 19.2 2.3 9.1 5.9 4.7 100.0%

Pear ha 121 92 309 178 431 338 585 90 258 175 201 2778

% 4.4 3.3 11.1 6.4 15.5 12.2 21.1 3.2 9.3 6.3 7.2 100.0%

Apricot ha 469 1061 3092 3764 18 51 841 2 62 520 15 9895

% 4.7 10.7 31.2 38.0 0.2 0.5 8.5 - 0.6 5.3 0.2 100.0%

Peach ha 201 220 2176 1507 - 148 98 - 78 215 429 5072

% 4.0 4.3 42.9 29.7 - 2.9 1.9 0.0% 1.5 4.2 8.5 100.0%

Plum ha 53 81 191 897 44 298 143 33 77 45 345 2207

% 2.4 3.7 8.7 40.6 2.0 13.5 6.5 1.5 3.5 2.0 15.6 100.0%

Cherry ha 60 53 100 149 56 101 122 44 85 34 44 848

% 7.1 6.3 11.8 17.6 6.6 11.9 14.4 5.2 10.0 4.0 5.2 100.0%

Sweetcherry

ha 61 196 104 541 14 54 213 3 74 30 43 1333

% 4.6 14.7 7.8 40.6 1.1 4.1 16.0 0.2 5.6 2.3 3.2 100.0%

Persi-mmon

ha - - - - - 6 - - 100 - 138 244

% - - - - - 2.5 - - 41.0 - 56.6 100.0%

Fig ha 3 3 5 15 - 42 - - 96 - 74 238

%1.3 1.3 2.1 6.3 - 17.6 - - 40.3 - 31 100.0%

Grape ha 637 1148 4881 6863 - 64 290 - 185 889 1356 16313

% 3.9 7.0 29.9 42.1 - 0.4 1.8 - 1.1 5.4 8.3 100.0%

Source: Ministry of Agriculture of Armenia


26/85



Table 4. Pricing of the Fresh Input

Fresh Fruit Pricing

Apricot Prune Peach Pear Apple Fig Grape Tomato

2011 200-250250 200-250

2012 100-150

250-300 200

150-600

160

120-170 200 200 250

120

2011 300250 250-300

2012 250-200

120-200 150 100-150 50-70 300

150 250

2011 300

200-300 250-300 250 4002012 100-200

300 250

2011 300200-250 200-250

2012 150

180 100

200-250 200-250 200-250


27/85



5.2 Dried Food Producer Analysis

Dried food production may be considered as one of the perspective industries of the

Armenian agriculture: it has the characteristics of tradition and is implemented in almost all

regions of Armenia. Homemade dried food production is very common in many Armenianfamilies, and the homemade product is often sold along with dried food produced in plants.

The producers of the dried food supply chain are individual farmers, cooperatives/farmer

groups, as well as legal entities. Depending on the volumes of their annual production, the

producers are classified as small, medium-sized, and large.

According to the information of the Association of Dried Food Producers of Armenia, small

producers are approximately 5400. There are 100 medium-sized producers with annual

production volumes of 1 5 tones, and 21 large producers with annual production of above 5

tones.

80% of the production capacities are located in rural communities. Most of the producers are

located in Armavir and Ararat regions of the Republic of Armenia, together contributing to

65% of the total countrywide production of the dried fruits. This is connected with the fact

Small (5 tones annually)


28/85



that the supply of some fruits and vegetables is highly concentrated in four main centers of

growing:

Lowlands (Ararat Valley, including Armavir and Ararat regions) where around 66%

(6,400 ha) of apricots, 73% (3,423 ha) of peaches, 40% (423 ha) of sweet cherries,more than 90% (1,600 ha) of the table grapes (which are appropriate for drying) are

grown,

Lowlands (Meghri region of Syunik Marz) where 70% (98 ha) of persimmons and

55% (95 ha) of figs are grown,

Pre-mountainous zone (lowlands of Aragatsotn and Kotayk Marzes) where 45%

(4,282) of apples and apricots are grown,

Pre-mountainous zone (Tavush Marz) where 30% (45 ha) of persimmons, figs,

peaches are grown.

Graph 6 shows the distribution of the food driers, which can be both technical (electricity-

operated, gas-operated, and mechanical (sun driers the main principle of which is the

greenhouse effect) by regions of Armenia. It can be seen that nearly 50% of all the driers are

located in Armavir region (130 driers), followed by Ararat region (36 driers), and Aragatsotn

region (30 driers). There are different providers of driers among business support anddevelopment organizations, such as UMCOR, CARD, UNDP, SME DNC.


29/85



Graph 6. Food Driers Distribution in the Regions

Most of the small producers are farmers, which are not registered as legal entities and operate

as usual physical entities, i.e., they are individuals. The reason for this is the fact that dried

food production as business activity is subject to taxing, and the producers avoid taxing

which would increase the cost of dried food. Besides, it should be noted that the number of

small and medium-sized producers may change year-by-year based on the yield and other

factors of the given year, since for them the production of dried foods is not a primary

business. This means that if a year is harvestful and favourable for the crop yield, and the rawmaterials are of high supply, as it is in the year 2012, more small (i.e., homemade) producers

become engaged in simple sun-drying of fruits, without any additional technical facilities. For

example, on Nalbandyan street of the Armavir city of Armavir region nearly all the

households make drying of fruits, and that is why this street is sometimes called the street of

Sun-driers. The number of the so-called regular producers is estimated to be around 1000

entities.

As for the large producers, there are both legal and physical entities among them, who makeonly the 0.37 % of the total number of producers, but produce 31 37 % of the overall dried

30

36

130

67

12

12

20 7

Distribution of Food Driers by Regions

Aragatsotn

Ararat

Armavir

Lori

Kotayk

SyunikVayots Dzor

Tavush

Yerevan


30/85



food produced in Armenia. These companies, along with purchasing their raw materials from

individual farmers/producers of fresh fruits, have their own orchards of different types of

fruits (such as the Cheer CJSC, which has 45 ha of orchards together with Shen NGO,

Armen Manukyan S/E, who has a recently founded orchard, or the Nor Aygi LLC, which

has more than 6 ha of own orchards of apricot, peach, prune, or the Astghounk LLC, which

has 5 ha of orchards under apricot, prune, peach, pear, apple, grape). This helps these

companies to leverage the risks related to the price, quality, timing issues created by the

individual farmers/suppliers of fresh fruits. Also, these firms employ local farmers on

contractual basis to work in their own plantations on seasonal basis. Most of the producers we

have met in the scope of the project have their own cold storages/refrigerators, where they

keep their production of dried fruits.

In the framework of the current assessment, face-to-face interviews with 26 producers were

conducted from different regions of the country, of which 6 were small producers, 11 were

middle producers, 9 large.

The total dried production of the 26 interviewed producers for the year 2011 was 166 tones,

the distribution by different types of fruit-vegetable is presented in Graph 6. It can be seen

that dried apricot had the major part in the total production (69.9 tones), followed by dried

tomato (33 tones) and prune (28.76 tones).


31/85



Graph 7. Distribution of Different types of dried fruit-vegetable production for the

surveyed producers

Source: Dried Food Supply Chain Assessment, BSC, Yerevan, 2012

The total dried food production for all the above-mentioned 5,500 entities is approximated to be

1,000 tones annually. This number may differ, depending on the concrete year, on theavailability of fresh fruit harvest. Adding up these 1,000 tones to the 1,078 tones of import of

dried food, and subtracting from the total number the 42 tones of export, we get that 2,036 tones

of dried food were consumed in Armenia in 2011.

Taking into account that officially 2,500,000 people live in Armenia, it can be calculated that

the per-capita consumption of dried food is 0.8 kg annually. The same indicator for different

world countries are Italy 25 kg, Czech Republic 16 kg, Sweden 12 kg, USA 1.26 kg.

The detailed information on the biggest producers of the dried food is provided below.

69.6

28.76

13.65.6 7.6

3.3 1.95

33

2.95

0

10

20

30

40

50

60

70

80

Apricot Prunes Peach Pear Apple Fig Grape Tomato Other

Production of Dried Food of Inerviewees in 2011 (tones)

1,000 1,078 42 2,036


32/85



There are 35-40 dried-fruit makers at the busy-season in summer,

also plus 10 packaging workers. The company has sun (400

sq.m.) and electrical driers (3.5 tones of production). In one dayup to 600 kg of fruits can be dried with the sun-driers. The total

area of the company (including, driers, equipment) is 2400 sq.m.

The company has also refrigerators for keeping the dried fruits.

The volume is 1000 m 3, in which 300-350 tones of harvest can be placed.

The company produces dried apricot (100 tones of apricot was purchased in 2012 starting

from Baghramyan community of Armavir to Gndevaz community of Vayots Dzor), plum,

peach (purchased from even Noyemberyan, of which approximately 20 tones of dried apricotwas produced), pear, apple, fig, grapes, melon, also, fruit sticks. One of the main lines of the

company is the chocolate with dried fruits.

The production is sold mainly in SAS, Yerevan City, Star supermarkets, with the highest

share given to Yerevan City.

The quality of fruits convenient for drying is middle (neither the highest quality appropriate

for sale, nor the worst quality appropriate for preservation). The producers of fruits/farmers

sell their fruits, however, it turns out that the quality of the fruits is not totally the same, and

there are also the worst quality fruits among them, which are used to produce fruit sticks.

The Armenian Dried Fruits company, for example, has founded its own orchards of peach

(300 trees), apricot (250 trees), plum (3000 trees of red and white sorts). This supposes that in

2-3 years time the company will be able to produce around 300 tones of dried fruits and will

be independent of sellers of fresh fruits/farmers and the prices they offer to the company. But

currently the 100 % of the inventory fresh fruits are purchased from farmers of different

regions.

The company has packaging machinery and the production is sold packaged. The plastic

packaging is purchased from Iran. In Armenia there is the Ovalplast company, the

production of which is not that good.

The company has exported its production to USA (Chicago, but it was cancelled since the

required quantity was not supplied), to Australia (with company Noyan), to Switzerland.

According to Mr. Manukyan, there are several weak points with the Armenian dried food

sector, which are as follows:

S/E Armen Manukyan, Armenian Dried Fruits, Surenavan, Ararat


33/85



1. The bad thing about the dried fruit production in Armenia is that the producers of dried

fruits need to buy their inventory, i.e., they do not use their own production of fresh fruits,

whereas in, for example, Turkey, the owner of fresh fruit orchards produces also dried fruits.

They have 8 types of dried fruits, and the processors of dried fruits, who purchase from the

producers, can easily sort the production. In Armenia, the thing that can be done, is to make

the stages of production of dried fruits sorted i.e., the owner of orchards should produce

also dried fruits.

2. Also, another weakness is that the image of Armenian agriculture is rather negative abroad

in foreign markets, thus, it is very difficult to find a customer.

3. The contribution of the country or a for-profit company must be very big in support to the

sector. Foreign customers want large quantities, which can be produced in practice. However,

currently there is no such coordinated supply, but the whole supply offered by different

producers can reach to the demanded quantities. And this coordination had better be

implemented by a for-profit company.

4. Also, Armenia offers not a large variety of dried fruits.

The company has 2 admin workers, 6-8 permanent, 12-15seasonal workers.

If weather condition is favorable, the production can be up to

15 tones out of its driers. It has 3 sun-driers, 1 electrical

drier (with production of up to 1.5 tones). It has 2 driers of 75 sq.m. and 1 sun-drier of 100

sq.m.

The cooperative produces organic dried apricot (1.5 tones), plum (1.5 tones), peach (500-700

kg), apple (200 kg), sour-cherry (200 kg), melon (200 kg), tomato (50 kg). The company has

also gift-collections which are a collection of different types of dried fruits and are very well

consumed.

The production of the company is massively consumed in the Zvartnots airport duty-free

shop (50%), (up to 8-10 milion AMD), in the Star and SAS supermarkets chain, in

markets of Gum, Petak (10%), by wholesalers from Sevan, Vanadzor, and other regions (15-

20%). The wholesalers purchase the most low-quality production without packaging, but

there is also packaged production. The production is packaged in Doy-packs (a sealed

plastic bag that is designed to stand upright). This packaging is provided by Card Agro-

S/E Vladimir Khachikyan, Sateni brand, Yervandashat, Armavir


34/85



Service (it has so far provided 1.500 packages). Also, the company Arcolad purchases the

production of the company. The cooperative had a contract with Grand Candy for 2 years to

consume 1 tone of dried fruit monthly, however, since 1998, the company is switched to

using the dried fruits of Turkey or France, since they are cheaper.

The Armenian dried fruits are not competitive in either the international or the local market in

only pricing, since the quality and taste of Armenian dried fruits (this reasoned by the natural

tastiness of Armenian fresh fruits) are even higher than those of the competing.

In Yervandashat around 80% of the population goes in for making of dried fruits, and

ecological dried fruits are produced in the community. In Yervandashat village this year 60

tones of dried fruits have been produced by the members of the cooperative, of which 15% is

high-quality. Quality dried fruits are produced in sun-driers. The season of drying is short,

and if there are more driers, much more quality dried fruits can be produced. The 2

neighboring communities have produced 80 tones of dried fruits this year, but most of it is

not the highest quality, since there are not many driers. This production is mostly purchased

by the colonies of Sevan, Hrazdan, by the national armies of the Republic of Armenia,

Russian Federation which is mostly used to make compotes.

There is no warehouse place in the district, which is necessary for both having a reserve of

dried fruits for the coming years, since there might be force major situations (such as

frostbite, hail, drought), which can bring to lack of production, and the warehouse can insure

some quantity of supply. There is also a problem of refrigerators; a lot of non-finished goods

are spoiled because of absence of a cold-storage. If these two obstacles are to be overocome

(warehouse and refrigerating facilities), the quality and quantity of the production can be

increased by 40-50%.

The members of the cooperative have their own orchards, and the problem with fresh fruits as

a resource is solved. This year, for example, there were 80 tones of fresh apricot produced, of

which 20% is exported and 80% is used for dried-apricot. However, from other regions of

Armenia, such as Surenavan, Arteni, Aragats, also, from organic gardens of Shen (in 2012,

12 tones of fresh apricot was obtained) fresh fruits are purchased.


35/85

Assess

BSC

produc

operate

produc

The co

tones i

The coin 2012

sold to

quality

fruits a

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35


36/85



healthiness

The company has a refrigerator with capacity of 60 tones.

The company has sent the samples of its production to Netherlands and several other

countries; however, in the future it plans to export to the Russian Federation.

According to Mr. Zaqaryan, the main problems connected with the Armenian dried food

sector are:

1. The problem connected with the Armenian dried fruits is the foreign markets as national

level support is required for this sub-sector development. For example, in Turkey, the

government has subsidies for the fruit-drying sector, the production is exported at its Cost of

Goods Sold.

2. A specialized exporting body needs to be created, to facilitate exporting.

The permanent workers of Cheer CJSC are 6 persons, and at the

busy summer season this number becomes 40.

The total area occupied by the company is 3 ha, of which 3,500

sq.m. is the area of the driers, which are 7.5 conditional modules.

Each of the modules can produce 5-10 tones of dried fruits annually. The total annual productivity of the company is 100 tones.

The company produces dried apricot (10 tones in 2012), plum and peach (5 tones totally in

2011), cherry and sour-cherry (totally 1 tone in 2012), tomato (29 tones in 2011), eggplant,

grasses.

Most of the companys production is exported (40-45 tones of gross production annually,

thus, only 45% of the capacity of the company is used) abroad, mainly, to France,

Switzerland. The preliminary orders are received from abroad in February-March, and then

the production is made. The company also used to sell its production to Star supermarket

chain, however, it had a slow sales.

The production of Cheer CJSC is sold packaged and not packaged. The partners from

Switzerland send the packaging themselves (200-500 gram packs). Also, the cardboard boxes

of Grand Candy JV are used.

The fresh fruits for the production are purchased from farmers of different regions, i.e., the

cherry is purchased from Baghramyan community of Armavir region. The apricot (Sateni

type), peach (Orange, Belaya dama, Uspekh types), plum (Viktorya, Black Plum)

Cheer CJSC, Tigran Tsaturyan, Sardarapat, Armavir


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are purchased from Tsirani aygi (Apricot Garden, Artur Mkhitaryan, 091 403328). For

the tomato the seeds of the appropriate sort for drying are given to the farmers, from whom

later the production is purchased.

According to Mr. Tsaturyan, in the local markets there are imported Turkish or Iranian dried

fruits, which are of lower price than those of the Armenians production (dried apricot, for

example Armenian is 3,000 AMD, whereas Turkish is 2,000 AMD). The same condition is

abroad (Turkish is 2$, Armenian 10$). But the quality and naturalness of Turkish dried

fruits is doubtable, since it can be kept for 5 years without losing its market appearance and

taste.

5.3 Retailers

In case of the dried fruit supply chain the retailers are nearly as important players as the

producers of the dried food. Very relevant information on the retailers stated unanimously by

nearly all the interviewees is that they are the strongest player of the supply chain. Retailers

sell different types of dried food, of different origin, including apricot, peach, prunes, apple,

pear, fig, raisin, persimmon, both imported from Iran, Turkey, Argentine, USA, and the local

production, both packaged and not packaged. Most often, the retailers implement the

packaging of the purchased dried food themselves manually.

The retailers act as middlemen between the producers of the dried fruits and the consumers in

all the markets of the country, however, in the scope of the current assessment interviews

with retailers of only Yerevan markets have been held. Interviews with retailers located in

Petak, Gum, Surmalu, Sebastia, Komitas markets have been conducted (in total, 16 retailers

were interviewed).

As stated by most of the retailers, the sales of the dried food are on their peak in the New

Year season. According to them, a significant niche market for the dried food is comprised of

the tourists and Armenians going abroad to their relatives of Diaspora.

The main regions of producers for purchasing dried food stated by the retailers were Armavir,

Ararat and Meghri regions (mostly, dried fig and persimmon). They also stated to have

imported foreign production, such as Iranian, Argentinian, Turkish, USA, etc. The total

annual sales of the 16 surveyed retailers was 12,5 tones of different dried food, of which the

most sold products are the dried apricots.


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There also happened retailers, who sell their own production of dried food. I., e, these

retailers live in, for example, Ararat or Armavir regions of the country, have their own driers

and implement the drying of food themselves, after which they also sell their own production.

5.4 Confectioneries

As stated earlier, the consumption market for the dried food is divided to two different

segments:

1. Confectionaries (producers of breakfast cereals, cookies, and the one most important niche

for the dried food, the dried food covered with chocolate glaze, etc.).

2. And the retail market.

As for the confectionaries, in the frameworks of the current assessment interviews with the

representatives of different confectionaries, such as Arcolad CJSC, Daroink LLC, Asa

LLC, Elit Shant LLC were held. Of those, Arcolad CJSC was the quantity-providing

niche for the dried fruits.

Arcolad CJSC is a boutique producer of different chocolate

products, such as plain chocolate, filled chocolate, coated

chocolate 4. The company policy of the Arcolad CJSC supposes

the use of only local, Armenian raw materials, including the dried

food in the production.

The coated chocolate is the type for the production of which dried fruits are used. The

product range for this category is chocolate coated dried apricot with marzipan, dried apricot

with milk qianduja, dried apricot with walnut, dried peach with walnut, dried plum with

walnut.

As the representative of the company said, there are different quality producers of dried fruitsin the local market, however, they do not provide with the necessary quantities (the maximum

quantity provided by one producer is 6 tones). According to the company, there is one

quantity-providing producer, which, however, does not provide with the necessary quality.

The widely noted fact for the company is that the producers approach them only in February,

when the peak of the sales of the dried fruits has passed, and there is no demand in the retail

market.

4 www.arcolad.am

Arcolad CJSC


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Also, according to the company, this market segment is not regulated anyhow, which creates

hindrances to operate.

5.5 Business Development and Support Analysis

Dried food production is considered as one of the most perspective industries of the

Armenian agriculture: it has the characteristics of tradition and is implemented in the vast

majority of the regions of Armenia. A very important factor is that homemade dried food

production is very common in many Armenian families, and the homemade product is often

sold along with dried food produced in plants. However, the production is of rather low

volumes, since diseconomies of scales take place. Large investments are required for

organizing large-scale production to achieve economies of scales. At present, the Armenian

producers do not have sufficient resources for that purpose.

The dried food sector of Armenia is in its initial steps towards becoming an industry of

strategic importance. This is the main reason why many organizations continuously provide

the players of the supply chain with different types of support and assistance.

The primary issues in the dried food sector in Armenia are connected with the lack of mass

production, further market, new techniques and access to information for the growers of trees

appropriate for drying, which is a high priority to increase their production and quality. At the

same time there is a need for international consultants specialized in the dried food sphere to

assist farmers to increase their production, make trainings on international standards and

systems (Global GAP, HACCP, ISO), as well as support them in their marketing efforts to

capture a larger share of the international dried food market or enter new market segments.

Meantime specific trainings should be delivered to the growers on fertilization, pest

management, irrigation, drainage, pruning and orchard management and postharvest

processing to increase yield, quality and size of the fruits or vegetables appropriate for

drying.

With this respect, the numerous business advisory initiatives so far have been, which

included specialized trainings for both farmers and producers, founding of new orchards,

provision of different types of driers (starting back from the 1990s), etc.:

Association of Dried Food Producers NGO ( http://www.driedfood.info.am/ )


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Small and Medium Entrepreneurship Development National Centre of Armenia

(SME DNC) ( www.smednc.am )

United Nations Development Program (UNDP) in Armenia ( http://www.undp.am )

United Methodist Committee on Relief (UMCOR) Armenia ( www.umcor.am )

Centre of Agribusiness and Rural Development ( www.card.am )

Water to Market Armenia Activity ( www.wma.am )

EBRD BAS Program in Armenia,

Federation of Agricultural Associations Union of Legal Entities (http://www.faa-

ule.am/ ),

International Fund for Agricultural Development in Armenia

( http://www.ifad.org/operations/pipeline/pn/armenia.htm )

The Word Bank in Armenia

( http://www.worldbank.org.am/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/AR

MENIAEXTN/0,,menuPK:301584~pagePK:141159~piPK:141110~theSitePK:3015

79,00.html )

Agricultural Support Republican (and Regional) Centres - www.asrc.am

Ecoglobe ( www.ecoglobe.am )

These institutions have been assisting the sector in various ways.

The Association of Dried Food Producers (ADFP) NGO was established in 2003. The

mission of the NGO is to expand dried food production in Armenia and facilitate export.

The frames of organizations activities are:

To support the development of dried food production in Armenia, the investment of

modern technologies, the protection of producers and consumers interests in the

local and export markets.

To further promote networking of dried food producers of Armenia, foster exchange

of information and knowledge between them.

Association of Dried Food Producers NGO


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Liaise between dried food producers and research centers, international organizations,

commercial institutions.

To implement training programs, to carry out marketing studies and provide

marketing services.

To stimulate the production of organic products.

To provide material support to the organization members for participation in fair,

conferences and other events.

To protect members rights and interests through consultancy service of appropriate

specialists.

ADFP NGO is a reliable partner for dried food production, especially in the spheres of

processing agricultural raw material and realizing the ready product.

The organization has implemented a lot of programs for the support to the development of the

sphere. Among them are :

Training programs

Investment of modern technologies

Database creation

Consultancy services

Training programmes - ADFP implemented training programmes in 9 regions of the

Republic of Armenia: Armavir, Ararat, Aragatsotn, Kotayk, Lory, Tavush, Vayots Dzor,

Syunik and Yerevan. In the scopes of this programme a net of dried food producers was

created which includes more than 180 producers /42 major, 138 medium/. Over 450 members

who are occupied with drying food and vegetables, received technological orders and became

aware of the basic technological drying processes. In case of beneficial conditions of raw

material production, more than 1500 tones of high quality dried food can be organized and

produced in the country. The project contributes to the improvement of the quality of dried

food products in Armenia, as well as to the raise of their competitiveness in the export

markets.

Investment of modern technologies - The organization has implemented a project on the

basis of which stands the process of perfecting the means by which humidity is taken out

from agricultural raw material. Also, within the frameworks of the program, a new project of

joint driers has been carried out. The productivity of joint driers is at least 3 times higher in

comparison with solar driers. New kind of driers guarantee ensuring high quality of the ready

product which meets international standards.


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Database creation - ADFP studied the sphere of dried food production and consumption

throughout the country. On the basis of the gathered information an informative mini book of

40 pages was published. This booklet includes the modern state of the dried food production

in the Republic of Armenia, as well as technological instructions for seperate kinds of raw

material.

Consultancy services - ADFP provides consultations in the following directions:

a) Production of input supply appropriate for drying and provision of quality,

b) Drying of agricultural input supply, the technological process from the start to the

end,

c) Production of organic dried food,

d) Design of driers and control during the processes of construction and exploiting,

e) Quality control. 5

Small and Medium Entrepreneurship Development National Center Fund (SME

Development National Center of Armenia) was established by Government of Armenia

bsc_oxfam_dried fruit supply chain report-english-25!01!2013

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