HERE AND BEYOND
Armenia has witnessed a rapid growth of construction and operation of high tech greenhouses.
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Boosted by implementation of high tech solutions, greenhouse industry in Armenia is growing and requiring substantial financial investments. What are the development perspectives of this sector, and how do farmers solve financing issues? What general challenges do they face? These and a number of other questions were discussed in the interview of Karen Hakobjanyan, Chief Specialist of Large Enterprise Lending Unit at Ameriabank, to Lragir.am.

Please tell us which are the main attractions of greenhouse industry. Does it demand much financing? 

Over the recent years Armenia has witnessed a rapid growth of construction and operation of high tech greenhouses. We have long since been interested in this particular sector and our research shows that it has quite a potential; there is high demand for locally produced vegetables which attracts farmers.
We have been actively financing this sector since 2011. Our research shows that development here largely depends on new technologies which, certainly, require huge financial investment.
Quite a few farmers today apply to us for a loan. We finance all projects as long as they are feasible and creditworthy. Currently we have the biggest greenhouse loan portfolio in Armenia in the amount of about 40 million USD.

According to your experience, which are the major challenges faced by greenhouse farmers? What support do they need most of all?

Firstly, majority of greenhouses in Armenia are small. They mostly complain about high costs and heavy competition. Our research shows that this is because their productivity and efficiency are low due to absence of advanced technologies, the result being high costs and non-competitive production.
As for high tech greenhouses financed by us: the risks I just mentioned are overcome, and the end-product is quite competitive both locally and on external markets. Cost of production in high tech greenhouses is low, and they get more yield from 1 sq. m than in ordinary greenhouses. Mind you, the yield of greenhouses with Dutch technologies in Armenia is higher even than in Holland, since climate here is more favorable. And thus we can state that the climate in Armenia is a great booster of cheaper production.
Domestic market is too small to accommodate the whole production of these greenhouses, and they export it: due to high quality our products are quite competitive on external markets. The demand for Armenian products is especially high in Russia. I can say for sure that farms having high technologies have no problems with sale of their products. Armenian production is of high quality and competitive in the whole region.
Until recently one of the problems was import of vegetables from other countries, especially Turkey, which posed competitive challenges for local producers, although imported goods were both worse in quality and more expensive.
But once we launched high tech greenhouses this industry began to develop and oust imported goods, local production being both superior in quality and better-selling.

Is financing available for farms in all regions of Armenia? What criteria do they have to fulfill? Generally, what are the terms of financing offered by Ameriabank? 

Our financing is available for any business entity operating in Armenia, which has a clear and creditworthy business plan and all required permits for construction and operation of a greenhouse.
These greenhouses are built by foreign companies and the used technologies are all foreign, mainly from France and Holland. As the first step, potential borrowers establish contacts with foreign partners specializing in greenhouses construction. They come to us with a ready project and business plan. Apart from financing, our specialists also provide consultation throughout the construction stage. We offer different financing tools for different stages of project, each being designed to meet the needs of the client at that particular stage. We can offer loans, purchase order financing, leasing, letter of credit, etc. for a period of up to 10 years. Pledge is very important; it is the main concern for new greenhouses at the construction stage. We are very flexible and accept any assets generated during construction, which can greatly facilitate the borrower’s project.

Is there a required condition that the borrower must contribute a certain amount at their own expense? 

Indeed, yes, the owner should contribute at least 20-30% of the project cost, and interest before commissioning of the greenhouse should be paid at the expense of the borrower’s own income.

In your opinion, how will development of greenhouse industry affect the economy of Armenia? Can we say that Armenia will no longer depend on import, and we’ll finally regain the good old taste of our native production? 

Results are already obvious, especially now in winter, when the majority of vegetables in supermarkets are of Armenian origin and much better in terms of quality than imported goods. The greenhouses financed by us mostly grow cucumbers, tomatoes which are highly demanded given their good quality and taste. There are quite a few flower-growing greenhouses, too. Gradually local producers begin to grow more and more new crops such as pepper, beans, etc.
As I’ve already mentioned, we are constantly in touch with our borrowers, conduct regular monitoring to see how they invite specialists from abroad (Holland, France) to introduce new solutions and enhance product quality.
It is highly important that in case with greenhouses weather contingencies such as hail, frost, etc. are virtually non-existent, which is not the case with other branches of agriculture. This is an essential factor boosting the efficiency of greenhouses.
Of course, development of greenhouses is very important also in terms of creation of jobs. On the average 1 hectare of greenhouse creates 20-30 new jobs, which is especially important to solve employment issues in regions.
I believe that development of high tech greenhouses will solve our population’s demand for quality production, regaining that unique taste which can only be achieved on Armenian soil under Armenian sun.

Updated 26.12.2014, 10:57
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