Armenia Grapples with Runaway Food Prices

YEREVAN (EurasaNet)–Amid skyrocketing food prices and a precipitous drop in agricultural production, the Armenian government is promoting its new agriculture minister, Sergo Karapetian, as a solution to a cost-of-living crisis. But optimism among Yerevan shoppers – and voters – remains in short supply.

Price increases for many basic foodstuffs have far outstripped Armenia’s official 9.7-percent inflation rate. For example, compared with the start of the year, prices for potatoes in Yerevan grocery stores and bazaars by late 2010 had risen by 150 percent (to 250 drams or 68 cents/kilogram), meat by 30 percent (to 2,900 drams or $7.97 per kilogram), and cheese by at least 80 percent (to 2,700 drams or $7.42/kilogram).

The biggest price surge was recorded in late December, on the eve of the New Year holiday, when preparations for festivities were in full swing.

“I have no hope that people’s lives will get better, or prices will go down,” complained 50-something homemaker Manik Galstian, while shopping in downtown Yerevan. “Have you ever seen such prices? It’s only the people who suffer.”

Together with increased prices for meat, nuts, vegetables, dried and fresh fruit, eggs totally disappeared from Yerevan store shelves. They started reappearing after New Year’s Day, but were at least 200-percent more expensive, rising in price to 120 drams, or 33 cents per egg.

Overall, the government estimates that Armenia’s agricultural production plummeted by 14.5 percent last year, a drop caused by inclement weather and the Agriculture Ministry’s alleged slow response to adverse conditions.

Sensing the political need for action, the coalition government laid the blame for the shortages and sky-high food prices on Agriculture Minister Gerasim Alaverdian. Within the coalition government, the agriculture portfolio is held by the the Rule of Law Party. In late December, Rule of Law recalled Alaverdian, proposing in his place the 62-year-old Karapetian, who had served as chairman of the board and general director of the food processing company Artfood since 1996.

Prime Minister Tigran Sargsyan, who earlier alluded to alleged corruption in the Agriculture Ministry, heralded Karapetian on January 10 as an experienced, hands-on manager who “knows the existing problems” in Armenia’s agricultural sector. “He has been in charge of the biggest food processing company in Armenia, which was the first to modernize its technology,” the government’s official website quoted Sargsyan as saying. “Obviously, the company’s success largely depends on the competence and expertise of its management.”

Without specifying, he called for “reforms and the establishment of institutional structures” in the agricultural sector.

In turn, Karapetian pledged to make the Agriculture Ministry “one of the country’s best and model ministries.”

Few outside of official circles seem to be optimistic about the future of food prices. Consumers’ Union of Armenia Chairperson Armen Poghosian says he does not expect much from the new minister. “Frankly speaking, the change of the minister does not interest me much,” Poghosian said. “One went, and another came. What does this change, if the economic policy is damaging?”

Poghosian argues that the government should grant Armenia’s farmers financial “benefits” – lower fees for water usage, prices for land and lower tax rates. “If they give the farmers no chance to survive, they won’t be able to feed people in the cities, and I don’t think anything will change.”

The National Association of Consumers also plans to push for greater state support for farmers. Over the short term, Chairperson Melita Hakobian remains hopeful that the situation will stabilize. “Maybe staff changes will bring change,” Hakobian said.

Like many grocery store shoppers, 30-year-old economist Artak Minasian said that he has no hope for “real changes.” He linked the turnover of agriculture ministers to Armenia’s 2013 presidential elections, rather than to a sincere government effort to implement agricultural reforms. “Everything is a game, and the changes in government as well,” Minasian said.

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