RURAL DEVELOPMENT OF KARABAKH UNDERWAY
Revitalizing villages in key aspects of socio-economic activity
AGRICULTURAL INITIATIVE UNDERWAY
With the Rebirth of Artsakh
Regional Development Program underway, Armenia Fund USA with its
international affiliates focuses on the revitalization of Karabakh’s
villages through a series of capacity building initiatives that
include social infrastructure (schools, clinics, access roads,
water systems) and economic development projects (Agricultural
Initiative) in the villages of three key region of Nagorno-Karabakh.
The Agricultural Initiative, designed to upgrade the agricultural
sector of Karabakh’s economy, is a crucial factor in the overall
socio-economic development plan for the region. It is a three-year
agricultural development project that will improve the standard
of living of the villages of Nagorno-Karabakh by targeting poverty
reduction. The project started in the war-torn region of Mardakert
and its cluster of villages and is to be continuously carried
onto other regions. Hadrut in Nagorno-Karabakh will follow Mardakert’s
agricultural development project.
Over 18 villages with a population of 9,371 in 3,125 households
will be direct beneficiaries of this initiative. The newly established
Mardakert Agricultural Development Association will start accepting
membership application from local farmers in the fall.
The ADA will serve private lands first, then service small rented
fields near the villages, and if resources are available, larger
leased lands will be serviced last.
The MADA will be “an agent of change” for a
region and its people who are just beginning to adapt to both
a new economic model and a new organizational structure.
Currently, the Fund is in the process of purchasing the necessary
equipment for the first ADA. Tractors, share plows, wheat seed
drills, trucks, mowers, and combines are being purchased and shipped
from Russia and China to Armenia and then Nagorno-Karabakh. The
total cost for farm equipment needs for Mardakert ADA for fall
2006 is about $700,000. At present, agricultural equipment,
among them tractors, combines, tracks, plows and harrows, have
been ordered at a total cost of approximately $300,000.
Nerqin Horatagh is one of
the villages in Mardakert region where Agricultural Initiative
will be implemented
Apart from providing upgraded technical assistance to farmers,
Agricultural Initiative involves significant efforts to
emphasize the social factor of change in agricultural production
in Karabakh. The idea of
Agricultural Development Associations, the agricultural trainings
for farmers designed by experts, etc. are specific steps to engage
rural communities to become entrepreneurs.
In spring of 2006, Armenia Fund USA and all affiliates of All-Armenian
Fund designed and launched the Rebirth
of Artsakh Regional Development Program. The three-year, three-phase
initiative focuses on developing the regions of Nagorno-Karabakh
through a series of projects that include construction of new
schools, healthcare facilities, drinking and irrigation water
systems, access roads and an agricultural development project.
The Rebirth of Artsakh Regional Development is shared by
all affiliates of the Fund, with Armenia Fund USA, Eastern U.S.
affiliate, spearheading the agricultural development component,
known as the Agricultural Initiative.
LAUNCHING THE AGRO INITIATIVE:
The Agricultural Initiative, designed by Armenia Fund
USA (the Fund) is a three-year agricultural development project
that aims at upgrading the standard of living of the rural communities
of Nagorno-Karabakh by targeting poverty reduction in the region.
The Fund, with its worldwide affiliates, has been addressing
these core needs areas since 1996. The Rebirth of Artsakh
Regional Development Program with its various components will
build upon past successful projects and further develop the above
mentioned basic infrastructure components.
Addressing the issue of functional agricultural infrastructure,
given the region’s historical potential as a major agricultural
area, however, appeared to be the logical place to start in revitalizing
the agricultural sector of Karabakh’s economy. After conducting
a field study of Nagorno-Karabakh villages and assessment of the
situation of rural farming communities there, a team of leading
experts in agricultural production from Turnaround Associates,
Inc., a New York based corporate consulting firm, structured a
strategic plan to expand Karabakh’s food production capabilities
by careful balancing of the import/export ration, thereby reducing
the region’s dependency on imported products essential to basic
The first steps were to support rural farmers in nearly all aspects
of agricultural activity. However, without access to fundamental
farm equipment, this was simply impossible. The experts’ team
therefore focused on strategies that would support purchase and
maintenance of new agricultural equipment and provide technical
support related services to small farmers at reasonable rates.
An effective way of doing this was through the establishment of
Agricultural Development Associations (ADAs) complemented by Service
Centers to house equipment and serve as a source of technology
transfer through Agricultural Services Corporations (ASCOs).
Mardakert Region of Nagorno-Karabakh was selected as the
initial place to establish the first ADA and ASCO.
Several reasons were behind this choice: the importance of Mardakert
as a historically ripe land for agricultural development, its
strategic location along the north-eastern border of Nagorno-Karabakh,
and the extensive damage it suffered from war in 1992. Additionally,
the Nagorno-Karabakh government selected the region to be the
first to focus on to upgrade basic infrastructure. Also, the priority
was given to Mardakert because of its larger population and land
base, its potential for better irrigation options, and its proximity
to more productive lowlands.
MARDAKERT AGRICULTURAL DEVELOPMENT ASSOCIATION AND MARDAKERT
AGRICULTURAL SERVICES ASSOCIATION (MADA AND MASCO)
In October 2005, after extensive deliberation over the clear
definition of functions and structure of the two main administrative
entities to implement the Agro Initiative, the Turnaround
Associates designed an organizational structure and proposed a
draft charter for a model Agricultural Development Association
(ADA), which later on was adjusted to operate under the laws and
regulations of the Nagorno-Karabakh government.
Mardakert farmers gathered
to learn more about the Agricultural Development Association
As a result, Armenia Fund USA, and All-Armenia Fund in Yerevan,
in cooperation with Nagorno-Karabakh’s governments and Ministry
of Agriculture, set the stage for the establishment of Mardakert
Agricultural Development Association (MADA), a voluntary non-profit
association for farmers, and Mardakert Agricultural Services Corporation
(MASCO), a joint stock commercial company to provide technical
and farm equipment services at affordable fees to farmer members
of MADA. The latter, is an independent voluntary union formed
to mutually benefit the participating members in their agricultural
production activities. It will be owed by a cluster of several
hundred subsistence farmers in Mardakert villages.
Initially the MADA’s activities are to be focused on growing
wheat because it is currently the dominant field crop in Karabakh.
As farmers become more independent and affluent in their agro
production, they will increasingly be able to invest in longer
term or higher profit items. These include, but are not limited
to grapes, fruit trees, pedigree livestock and in value-added
processing such as meat packing, canning, wine making and diary
processing. For instance, each dollar invested in grain, will
bring an added value of $5-$8 in livestock. The ultimate purpose
of the Mardakert ADA is to help small rural farmers to transform
from merely subsistence farming to export production.
MADA is presently under formation, and its members will be eligible
to receive agricultural services at discounted prices through
the Operations Center of MASCO by fall 2006.
Meetings in Mardakert between
Armenia Fund USA, Turnaround Associates and Nagorno-Karabakh
Nagorno-Karabakh Trip, May 2006: In May, 2006, the Chairman
of Armenia Fund USA, accompanied by the Executive Director and
experts from Turnaround Associates, traveled to Nagorno-Karabakh
to oversee and provide technical assistance for the establishment
of the first Agricultural Development Association in Mardakert.
Technical support, as reported by the experts, includes: site
visits to 16 of the 18 villages in Mardakert: review of legal
and planning documents related to the formation and operation
of a holding company to control ADA assets, an operating company
to carry out day-to-day activities and a farmers’ organization
that—on a collaborative basis— will own and operate the ADA Service
Center: preparation of computer models to forecast investment
capital needs and cash flows: interviewing of potential staff
to hold the position of a Controller and a General Manager who
will run the activities of MASCO under the direction of an Executive
Committee composed of representatives of all parties involved.
A Director in Residence was appointed by Armenia Fund USA to
oversee the implementation of the project in Nagorno-Karabakh.
A number of agro technical considerations – horticultural crops,
fresh vegetables, field crops, fertilizers, improved seed, livestock
breeding, farm equipment– were identified by the experts to further
diversify the areas of intervention through the ADAs.
To introduce Mardakert farmers to the organizational structure
of the ADA and encourage them to join, Armenia Fund USA held meetings
with Karabakh farmers to explain the benefits of becoming a member
of the ADA. Karabakh’s Minister of Agriculture, the technical
team from the United States, as well as Himnadram representatives
also participated in the meetings.
Particularly noteworthy were farmers’ openness to the idea of
an Agricultural Development Association in Mardakert, their willingness
to cooperate and receive training in areas where current agricultural
methods had proven outmoded and the general interest in improving
agricultural production through collective efforts.
During the May visit, Mardakert Agricultural Services Association
(MASCO) Operations Center was selected (an area of 9,500 square
meters) to house MASCO operations staff offices, secure storage
area for equipment, maintenance facilities, a fuel storage tank,
a fertilizer storage and a storage for agricultural chemicals.
The site, located in the city of Mardakert, has not been in use
for over 10 years. Severely damaged during the war, the building
will be renovated through the funding from donor agencies to store
and maintain new equipment under a long-term lease.
The operational budget for MASCO has been estimated to be about
$110,000 for the first year. There will be purchases of
fertilizers, chemicals and seeds in the first years, but later
these commodities will be acquired as needed with MASCO operation
funds and then sold to the ADA members at a small premium over
cost of purchase, transport and handling.
At this time, funds to procure the initial complement of farm
equipment, hire personnel and assist with the formation and member
sign-up for MADA have been secured through Armenia Fund USA’s