Silver Lining?: Armenia keen on increasing agricultural exports amid Russian sanctions against EU

While Armenia is trying to promote its exports to Russia to benefit from the new economic conditions in this country, economists still remain skeptical about the efficiency and eventual success of the measures that are being taken.

Armenia has indicated that it wants to take advantage of the Russian sanctions against European Union countries exporting agricultural products that were imposed as retaliation to Western economic sanctions against Moscow over the crisis in Ukraine.

In particular, the Government of Armenia, represented by the Ministry of Agriculture, last month conducted a series of measures to increase export volumes.

President Serzh Sargsyan also addressed the new opportunities for the Armenian economy that arose in early August.

“Great opportunities for our agricultural producers have opened up on the Russian market. We encourage people to produce more foodstuffs. We will create all opportunities for those products to be sold in the Russian Federation,” the Armenian leader said in an interview with ArmNews TV last month.

For the purpose of organizing the work outlined by the president, the Ministry of Agriculture has set up a working group to support exporters. Minister Sergo Karapetyan said that the products of small and medium-sized enterprises in Armenia, including meat and meat products, dairy products, dried fruits and canned food, are as good as those of large enterprises and will have great demand in the Russian market.

“We will have our exports doubled this year. We have real opportunities for that,” the minister emphasized.

Karapetyan’s optimism is shared by Armenia’s trade representative to Russia Karen Asoyan, according to whom at present Armenian agricultural products sell well in Russia where there seems to be unlimited demand for them.

Nevertheless, some experts are skeptical about the government’s plans as they point out a few circumstances and factors to shore up their opinion.

Economist and member of the opposition Armenian National Congress Vahagn Khachatryan believes that by its activities and statements the government is misleading Armenian citizens and businesses.

“Armenia and Russia have always had close economic ties, which are regulated by the Free Trade Agreement and due to which we could always benefit from the demand on the Russian market. But the volumes of our agricultural produce are not that significant, Armenia’s economy is not that advanced that we are able to have long-term contracts with Russian importing companies,” Khachatryan told ArmeniaNow.

According to the economist, it is entrepreneurs that will be in the greatest confusion, as they may “borrow loans for increasing their production and then face the consequences.”

Russia is one of Armenia’s main economic partners. In the first six months of this year, Armenia’s trade with Russia reached nearly $600 million, according to the National Statistical Service. However, Armenia still imports more from Russia than it exports, with exports making less than a quarter of the trade.

In the first half of 2014, as compared with the same period of last year, Armenian exports to Russia fell by nearly $10 million, standing at $133 million. During 2013, however, this figure increased by about $55 million to more than $334 million.

Economist, head of the Alternative research center Tatul Manaseryan estimates that Armenia as a country and Armenians as a nation have a great potential to occupy an important place in the Russian market.

“But at this moment our economy is not ready to take that place. A lot of work has to be done for that,” Manaseryan told ArmeniaNow.