In Armenia, the agricultural sector has faced notable price adjustments this year, with vegetables and fruits experiencing substantial increases. The escalation in prices is attributed to several factors, impacting both producers and consumers across the country. Vegetables have seen about a 9% hike in prices compared to the previous year, while the cost of other essential goods and services, including liquefied gas, has also risen, with gas prices surging by more than 50%.
The Central Bank of Armenia, acknowledging the inflationary pressures, has adjusted the refinancing rate to 8%. This move aims to mitigate the rising costs and stabilize the market. The refinancing rate's adjustment directly influences the lending rates of banks, thereby affecting the overall economic activity and consumer prices.
Vachik Aloyan, a farmer with two decades of experience in agriculture, shares insights into the challenges faced by local producers. Operating a 4,000-square-meter farm, Aloyan highlights the increased costs of transportation due to the doubling of liquefied gas prices. This year, adverse weather conditions further compounded the challenges, reducing yields by approximately 30% and delaying market access. These factors have necessitated price adjustments to cover the rising costs of production and distribution.
The agricultural market's dynamics reflect the broader economic trends affecting Armenia, where inflation has not been accompanied by corresponding increases in wages, pensions, and benefits. This discrepancy has exacerbated the impact on the country's residents, particularly affecting their purchasing power. Karen Chilingaryan, head of the NGO "Consumer Advisory Center" and an economist, emphasizes the global nature of inflation but notes the specific challenges faced by Armenia, including its reliance on imports and the subsequent costs associated with transportation and currency fluctuations.
Chilingaryan advocates for a more strategic and scientific approach to agriculture, urging farmers to plan their crops more effectively and focus on enhancing yields and distribution. However, the dissolution of the Ministry of Agriculture and its merger with another ministry is viewed as a setback, potentially hindering the sector's development and support for farmers.
As Armenia navigates these inflationary pressures, the need for comprehensive policy measures and support for the agricultural sector becomes increasingly apparent. Adjusting the refinancing rate, while a step towards addressing inflation, is part of a broader array of tools required to alleviate the economic challenges faced by both producers and consumers in Armenia.
Source: JAM News