Armenian Dried Fruit Is Not Competitive

ARMENIAN DRIED FRUIT IS NOT COMPETITIVE

FreshPlaza, Netherlands
Oct 3 2007

Although the makers of dried fruit in Armenia constantly assure us
that this field is developing here, the volume of imported dried
fruit is increasing every year while the volume of their export is
declining. According to data provided by the Association of Dried
Fruit Producers, 2004 saw the import of 919,542 kg of dried fruit
(mainly raisins, figs, apricots, black plums, peaches and vegetables in
a smaller amount) while 71,884 kg were exported. The volume of imports
was larger in 2005 at 1,044,957 kg, while 80,740 kg were exported.

Exports dropped sharply in 2006; 1,203,800 kg were imported and only
21,625 kg of dried fruits and vegetables – mainly tomatoes, apricots,
plums, peaches, rosehips and cherries – were exported.

The causes behind the decline in export volumes are numerous. The
director of the company Chir, Tigran Tsaturyan, cited the appreciation
of the dram as the main reason.

"We lost around 120,000 dollars over the past 2-3 years, since the
dram’s appreciation began in 2004. Moreover, our investments also
decreased over that period, because our financial circulation dropped
along with our decline in exports," said the company director. Chir
has a drying unit in the village of Sardarapat in Armavir. It
has been operational since 1998. The drying unit mainly prepares
dried tomatoes, which are exported to France and to other European
countries from there. Since 1999, 90 percent of the company’s produce
has been exported (mainly tomatoes) while 10 percent was consumed
in the domestic market. Today the company manager plans to decrease
exports to 70 percent. Exports are usually done for special orders.

"We cannot dictate prices in Europe and are forced to adapt to prices
set by producers from other countries. Obviously, in such conditions
we cease to remain competitive. The price of Armenian dried fruit is
two or three times higher than, for example, Turkish products on the
European market. Turkish dried fruit is sold fro one or two dollars,
whereas the cost of Armenian products is five or six dollars," said
Sandro Abovyan, director of the Association of Dried Fruit Producers.

There are more than 220 solar drying units operating in nine of
Armenia’s marzes. 120 of them are in Armavir. The drying unit of
Tziatzan-Ani is also located in Sardarapat (Armavir). It has been
operating since 2006. The founder of the company, Gagik Sirekanyan,
said that he had not even tried to export his products, because
price-wise they would never be competitive. The Tziatzan-Ani drying
unit produces 8-10 tons of dried fruits and vegetables annually.

"The number of dried fruit producers in Armenia is increasing, but
none of them can secure a market abroad on their own. Our objective
is to unite the dried fruit producers of Armenia. This way we can
create a common standard of quality and packaging as well as secure
the necessary quantity, exporting it under the name "Armenian Dried
Fruit"; otherwise, it is almost impossible to end up on one’s own in
the European market and stay afloat. The demand in the European market
is large volume-wise – they would need a weekly supply of around 15-20
tons of dried fruit from us," said Sandro Abovyan. This idea is still
in the planning stages, but its necessity can be felt even now.

None of the 220 drying units in Armenia export their products
(excluding the orders for dried tomatoes filled by Chir and samples
sent for participation in various expositions abroad).

Turkish Dried Fruits Imported to Armenia "Although the food security
department told me that Turkish dried fruits were not being imported
to Armenia, it is a fact – dried fruits are brought to Armenia mainly
from Turkey and Iran, I don’t know how and through which roads. I
have seen the dried fruits that are produced in Turkey and I have to
say that the products that come here from there are of bad quality,"
said the director of the Association of Dried Fruit Producers.

"There are Turkish dried fruits in Armenia. I have even seen them
being mixed with Armenian dried fruits and then sold," said the
director of Tziatzan-Ani. In this case, naturally, nobody checks
the amount of residual sulfur in Turkish dried fruits (in order to
preserve the tint of material which is light in color, it has to be
processed with anti-oxidants like sulfur dioxide, but in a regulated
amount). These dried fruits are not considered ecologically pure.

Producers of dried fruit said that the imported products, being
cheaper than Armenian dried fruit, cause problems with competition
in the domestic market as well. In 2006, imported dried fruit made up
around 70 percent of all dried fruit consumed in the domestic market.

Therefore, there is a need for imports, because the maximum total
volume of dried fruits and vegetables produced annually of Armenia’s
220 drying units is 500-1200 tons (depending on the amount of raw
material), which is not enough to meet local demand. For this reason,
dried products continue to be imported to Armenia in large volumes.

Sandro Abovyan explained this in the following way, "Imports are
rising because the population is becoming more financially secure
and the dried fruit is being consumed. It is a separate matter that
local producers are unable to keep up with the demand and importers
are taking advantage. There are complex issues in the domestic market.

They are linked to the harvest yielded in a given year as well as
the productivity and material base of the drying units. Dried fruit
production is definitely developing in Armenia – new orchards are
being planted, villagers are very flexible in this regard and are
planting trees which yield fruit fit for drying – but this development
is still sporadic and is not organized."

"It is very difficult to develop a small or medium-sized business
in Armenia. There has been a lot of talk about that, but there is no
action to back up the words. For example, we work at a level that is 70
percent of our maximum productivity. We cannot operate the remaining
30 percent because of cash flow shortages. I put my apartment up
for mortgage every year to get cash and pay the villagers and invest
something in my business. We are using our personal means to do all
this," said Gagik Sirekanyan, founder of the Tziatzan-Ani drying unit.

Dried Fruit Production is, Nonetheless, Developing

Solar drying units started developing in the 1990s. There are now 220
drying units in nine marzes. In those days, it was critical that a
unit use as little gas and energy as possible – solar drying units
were the best solution in those conditions. In the Soviet years
of planned economic development, Armenia was left out of the fruit
drying industry because that area was handed to the Central Asian
republics. But the reforms that occurred in the agriculture sector in
the 1990s independent Armenia, especially the privatization of land,
provided new perspectives for the fruit drying industry.

"Armenia has a centuries-old tradition of producing dried fruits and
grapes. There is documented proof of this from as long ago as the 5th
century B.C., when Herodotus wrote about Armenian social and political
life, noting that Armenian merchants would take wine as well as dried
apricots and peaches across the Tigris and Euphrates Rivers. But this
tradition did not continue through the Soviet period. Only leftover
fruits were dried to preserve them and they were then cooked and
eaten in the winter," said Sandro Abovyan.

More than 60 percent of solar drying units are in the marzes of Armavir
and Ararat – around 35-40 percent of the dried fruits and vegetables
produced in the country are prepared here. The reason for this is
that 66 percent of apricot trees, 74 percent of peach trees and 60
percent of vineyards are located in Ararat and Armavir. The dried
fruits are mainly apricots, peaches, apples, pears, sour cherries,
cherries, rosehips, plums, figs and grapes, and the vegetables include
tomatoes, eggplants, herbs and peppers. Although the area of land
covered with orchards has grown considerably, the harvest over the
past five years has not been stable due to climatic risk zones. This
year was no exception. This means that Armenian dried fruit is set
to become even more expensive.

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