GOVERNMENT OF THE REPUBLIC OF ARMENIA

No 369-L of 4 April 2019

ON APPROVING THE SUPPORT PROGRAMME FOR THE CONSTRUCTION OR RE-CONSTRUCTION OF SMALL AND MEDIUM-SIZED “SMART” CATTLE HOUSES AND TECHNOLOGICAL SUPPORT THEREOF

(Title amended by No 107-L of 27 January 2022)

Based on part 2 of Article 146 of the Constitution of the Republic of Armenia and point 2 of the Annex to Decision of the Government of the Republic of Armenia No 667-L of 8 June 2018, the Government of the Republic of Armenia hereby decides:

1. To approve the support programme for the construction or re-construction of small and medium-sized “smart” cattle houses and technological support thereof, according to the Annex.

(Point 1 amended by No 107-L of 27 January 2022)

2. To assign the Minister of Agriculture of the Republic of Armenia to submit, within a time period of one month following the entry into force of this Decision, to the Office of the Prime Minister of the Republic of Armenia proposals on making relevant amendments and supplements to the Law of the Republic of Armenia “On State Budget of the Republic of Armenia for 2019” and Decision of the Government of the Republic of Armenia No 1515-N of 27 December 2018.

3. This Decision shall enter into force on the day following its official promulgation.

Prime Minister of the Republic of Armenia	N. Pashinyan
15 April 2019 Yerevan

Annex to Decision of the Government of the Republic of Armenia No 369-L of 4 April 2019

PROGRAMME

FOR THE SUPPORT TO CONSTRUCTION OR RE-CONSTRUCTION OF SMALL AND MEDIUM-SIZED “SMART” CATTLE HOUSES AND TECHNOLOGICAL SUPPORT THEREOF

(Title amended by No 107-L of 27 January 2022)

CONTENTS

INTRODUCTION

I. DESCRIPTION OF THE CURRENT SITUATION IN ANIMAL HUSBANDRY IN THE REPUBLIC

II. NEED FOR IMPLEMENTATION OF THE PROGRAMME

III. MAIN GOALS AND OBJECTIVES OF THE PROGRAMME

IV. PROGRAMME DESCRIPTION

V. PROGRAMME MONITORING

VI. PROGRAMME RISKS

VII. FINANCIAL EVALUATION OF THE PROGRAMME

VIII. OUTCOMES EXPECTED FROM IMPLEMENTATION OF THE PROGRAMME

INTRODUCTION

One of the key sectors of economy of the Republic of Armenia is agriculture which ensures about 15 per cent of the GDP in the country. In recent years, animal husbandry product makes up more than 50.0 per cent of the gross agriculture product.

The studies show that the production and economic indicators of animal husbandry yet are not sufficient and one of the main reasons for this is that animal husbandry is mainly run with extensive methods. The vast majority of farms engaged in cattle breeding and buffalo breeding are traditional subsistence farms. The number of these farms reaches 170 thousand which dispose on average 3 heads of large horned cattle and the produced milk and meat is used for their own use. In order to establish commodity economy in the current stage of development it is necessary to apply latest technologies which would enable to increase the milk yield of cows and cow buffalo. The indicators mentioned above are mainly affected by the following three factors: feed base, genetic potential and housing of animals. Implementation of the Programme of state support for the construction or re-construction of small and medium-sized “smart” cattle houses and technological support thereof (hereinafter referred to as the “Programme”) will provide the opportunity to create favourable conditions for improving the housing of animals through introduction of latest technologies.

(Introduction supplemented by No 958-L of 10 June 2021)

I. DESCRIPTION OF THE CURRENT SITUATION IN ANIMAL HUSBANDRY IN THE REPUBLIC

1. According to the data of the Statistical Committee of the Republic of Armenia, as of 1 January 2018, there are 590585 heads of large horned animals in the Republic, of which 266815 heads or 45,2 per cent are cows.

2. The cattle breeding is the leading branch of animal husbandry in the Republic of Armenia. 95 per cent of milk produced in the Republic is received from cattle breeding. The cattle breeding is mainly centralised in the marzes of Gegharkunk (18 per cent), Shirak (15 per cent), Aragatsotn (12 per cent) and Lori (12 per cent). This breakdown is conditioned with natural and climate conditions and geographical positioning of the mentioned marzes. All year round housing in stalls is largely used in low-lying areas of the Republic, and pasture stall housing — in piedmont and mountain areas. Tavush, Armavir, Ararat and Lori marzes are engaged in buffalo breeding. Currently, according to updated data, there are around 700 heads of buffalo in the Republic of Armenia.

(Point 2 supplemented by No 958-L of 10 June 2021)

3. More than 90 per cent of the reared cattle are Caucasian grey-brown breeds and mostly half-breds оf different breeds well-adapted to the nature and climate conditions of the area of milk and meat type, the average annual milk yield whereof ranges to the extent of around 2200 kg. Animals of Holstein, Friesian, Simmental and Jersey breeds are also reared in some farms of the Republic, the milk yield whereof exceeds the milk yield level of the local cows twice or thrice. Buffalo breeding is practiced in Armenia from old times. The average annual milk yield ranges to the extent of around 600-800 kg. High quality and high value diary product is received from high fat content buffalo milk which has high demand in the foreign market.

(Point 3 supplemented by No 958-L of 10 June 2021)

4. About 170 thousand farms are engaged in cattle breeding and buffalo breeding, the overwhelming part whereof are small farms. The necessary zoohygienic standards for animals are not observed and traditional technology of housing and feeding is used. Whereas animals having high genetic features are unable to show their full potential in unfavourable conditions.

(Point 4 supplemented by No 958-L of 10 June 2021)

5. Taking into consideration the limited land areas of the Republic of Armenia, relatively low indicators of yield of agricultural crops and high risk of farming, the animal husbandry may become a decisive lever for increasing the gross agricultural product of the country due to full deployment of available resources having lower risks. However, the current volume of the gross product received from cattle breeding and buffalo breeding are still far from being sufficient. Despite the fact that the level of self-sufficiency in milk is rather high (91.2 per cent) in the Republic, the level of milk yield of cows is still low (about 2260 kg).

(Point 5 supplemented by No 958-L of 10 June 2021)

6. The studies of international practice show that milk yield of cows is rather high in different countries, which results in reduction of the cost price. In these conditions, the domestic product may not be competitive in the international market.

Table No 1

LEVEL OF MILK YIELD OF COWS IN DEVELOPED COUNTRIES

7. Due to the lack of production equipment and few number of model or specialised cattle houses, problems with respect to the quality and the security of the produced milk occur with the total volume of production of raw material. The Government of the Republic of Armenia tries to introduce new standards of quality and security of milk and diary product, but the small farms are not capable to use technologies obtained on their own funds, which would allow to produce product meeting the temporary requirements.

8. 60 per cent of milk production falls to pasture region, therefore the purchase prices in pasture and stall regions are different. The stocking price of milk in the companies producing dairy products in pasture regions makes up AMD 120-140, and in winter it makes up AMD 140-160. Despite the seasonal nature, some intensive farms producing stable amount of milk conclude long-term contracts with processing companies and sell raw milk all the year around at stable price (200-250 dram/kg). Today, also new companies are being established that express willingness to conclude a contract with economic operators for stocking high quality milk and to stock it all the year around at a price of AMD 200. This proves the fact that in the Armenian market there is a demand for high quality raw material and sustainable supply thereof. Apart from that, it should be noted that in winter the processing companies mainly use dry milk imported at a lower price as the volume of milk production is not sufficient and the purchase price for raw milk of local production is rather high.

II. NEED FOR IMPLEMENTATION OF THE PROGRAMME

9. The analysis of the structure of gross agriculture product of the Republic of Armenia revealed that the product received from cattle breeding in the Republic makes up more than 75 per cent of gross animal husbandry product produced annually and is considered as the branch having the highest share in the sector of animal husbandry. The need for development of animal husbandry, in particular cattle breeding is conditioned with strategic significance of the branch. Large amount of dry milk and dairy product is still being imported to the Republic, therefore with the purpose of increasing the level of self-sufficiency of cattle breeding product, it is necessary to develop new approaches in agrarian policy run in the Republic. It is necessary to establish favourable environment also for development of milk buffalo breeding which will enable promoting organisation of production of milk and matsoun, as well as high-value agricultural product received from buffalo milk, i.e. mozzarella cheese.

(Point 9 supplemented by No 958-L of 10 June 2021)

10. Majority of farms in the Republic runs traditional animal husbandry, whereas application of modern forms and technologies of farming may be a decisive economic lever.

11. With the purpose of developing agriculture, including animal husbandry, the Ministry of Economy of the Republic of Armenia (hereinafter referred to as the “Ministry”) shall implement the following:

(1) programme for subsidisation of interest rates of loans provided to the sector of agriculture, within the framework of which the economic operators are provided loans of AMD 3-15 million with a repayment period of up to 5 years (taking into consideration the investments trends) with subsidised annual interest rate of 0-5 per cent (instead of actual 12 per cent). It should be stated that in 2018 around 60 per cent of loans with subsidised interest rates were directed to funding of animal husbandry programmes;

(2) in 2019, cattle breeding development programme of the Republic of Armenia for 2019-2024 will launch, within the framework of which subsidised loans with low interests rates will be provided for acquisition of large horned pedigree cattle, or purchase price will be partially compensated.

(Point 11 amended by No 363-L of 18 March 2021)

12. Improper organisation of housing of and care for animals, lack of rationed feeding, as well as insufficient sanitary and hygienic conditions have currently created a situation which renders impossible to satisfy the demand for milk based on the local production. In other words, the main reason for low productivity is the extensive approach to the production, as well as lack of modern technologies, management, information and knowledge. And even for intensive farms the solution of the above-mentioned issues related to housing of animals today remains a priority issue.

13. The issues existing in all the stages of value chain of cattle breeding and buffalo breeding product impede the development of the branch and the created situation results in:

(1) impossibility of introducing advanced technologies or non wide-scale application;

(2) low level of milk yield;

(3) low quality of the product and reduction of competitiveness;

(4) raise in cost price.

(Point 13 supplemented by No 958-L of 10 June 2021)

14. In the created situation there is need for implementation of Programme of state support for the construction or re-construction of small and medium-sized “smart” cattle houses and technological support thereof with state support aimed at modernising animal farms contributing both to improvement of housing conditions and raise in the level of milk yield, which will result in the raise of productivity, increase of income of the economic entities and increase of the level of profitability of the branch.

15. The modern approaches proposed by the Programme will contribute to full expression of genetic potential of animals by providing these farms the opportunity to receive at least annually 3500-4000 kg milk from cows and 1500-2000 kg milk from buffaloes in the upcoming years. Both the international and local experience prove the effectiveness of the proposed approach; similar farms are established and effectively operational in the USA, Europe, Russia, Israel, Armenia (cattle houses with light constructions were created within the framework of programmes of the Centre for Agribusiness and Rural Development Foundation) and in a number of other countries.

(Point 15 supplemented by No 958-L of 10 June 2021)

16. Taking into consideration the importance of deploying the full potential of cattle breeding and buffalo breeding in the process of development of animal husbandry, it is necessary to focus the tactics on modernisation of farms, by contributing to the improvement of economic performance of farms.

(Point 16 supplemented by No 958-L of 10 June 2021)

III. MAIN GOALS AND OBJECTIVES OF THE PROGRAMME

17. The main goal of the programme is to improve the conditions for housing of animals through the state support for the construction or re-construction of small and medium-sized “smart” cattle houses and technological support thereof, by increasing in the result the indicators of productivity of animals.

18. In order to achieve the mentioned goal, the following issues must be resolved:

(1) proposing affordable options for ensuring small and medium-sized “smart” cattle houses and technological support thereof;

(2) availability of investments necessary for construction of cattle houses and compensation of expenses;

(3) assessing potential risks of implementation of the Programme and developing measures aimed at mitigation thereof.

IV. PROGRAMME DESCRIPTION

19. Small and medium-sized “smart” cattle houses are one of the complex solutions for increasing the effectiveness of milk production chain.

20. With the view to resolve the issues related to the housing, feeding and full expression of genetic potential of animals, the construction or re-construction of cattle houses with loose box housing and technological support thereof is promoted. To this end, 2 options of cattle houses with loose box housing and technological support thereof are proposed, the technical standards whereof and the list of devices necessary for technological support are presented in Tables No 4 and 5.

(1) cattle house with light construction (model plan is presented in the Chart);

(2) other types of cattle house.

21. 3 models for construction and re-construction are proposed (the calculations of cost estimates are made for formulation of the Programmes budget. The indicative, consolidated calculations of the necessary financial investments are presented in Tables No 6, 7 and 8):

(1) 1st model — with production area of 130-280 square meters designed for loose housing of at least 10-15 heads of animals. The construction and technological support expenses are estimated to about AMD 11 million;

(2) 2nd model — with production area of 281-450 square meters designed for loose housing of at least 20-25 heads of animals. The construction and technological support expenses are estimated to about AMD 23 million;

(3) 3rd model — with production area of 451 and more square meters designed for loose housing of at least 40-45 heads of animals. The construction and technological support expenses are estimated to about AMD 35 million;

21.1. The Programme will be implemented in two components — by partial compensation of expenses and partial subsidisation of the loan interest rates.

(Point 21.1 supplemented by No 107-L of 27 January 2022)

21.2. For construction or re-construction of the same cattle house and technological support thereof, each beneficiary may be involved only in one component of the support referred to in point 21.1.

(Point 21.2 supplemented by No 107-L of 27 January 2022)

22. Participants of the Programme shall be:

(1) natural and legal persons, individual entrepreneurs (hereinafter referred to as “the beneficiary”);

(2) commercial banks or credit organisations (hereinafter referred to as “the financial institutions”), meeting the requirements of the programme and providing loans to the beneficiaries in accordance with the conditions of this Programme;

(3) organisations providing services for construction and re-construction of small and medium-sized “smart” cattle houses and technological support thereof (hereinafter referred to as “the contractor”) which will meet the requirements established by the Programme;

(4) the Ministry of Economy of the Republic of Armenia (hereinafter referred to as the “the Ministry”);

(5) rural financial institution of the “Rural Areas Economic Development Programmes Implementation Unit” state institution of the Ministry (hereinafter referred to as “the RFI”).

(Point 22 edited by No 107-L of 27 January 2022)

22.1. Loans will be provided for construction and re-construction of cattle houses referred to in points 20 and 21 of the Programme and technological support thereof. The maximum amount of the loan must comply with the expenses estimated for models referred to in sub-points 1, 2 and 3 of point 21 of the Programme.

(Point 22.1 supplemented by No 107-L of 27 January 2022)

22.2. Loans within the framework of the Programme will be provided in Armenian Dram with maximum 14% actual interest rate.

(Point 22.2 supplemented by No 107-L of 27 January 2022)

22.3. Subsidisation of the loan interest rates will be carried out in the amount so that the loan is provided to the beneficiaries with 2 per cent interest rate, and to the citizens having become disabled as a result of combat duty or operations during the performance of military service duties and for economic entities carrying out activities in bordering settlements receiving social assistance approved by Decision of the Government of the Republic of Armenia No 1444-N of 18 December 2014 — with 0 per cent interest rate.

(Point 22.3 supplemented by No 107-L of 27 January 2022)

22.4. Loan repayment period — up to 5 years, principal amount grace period — up to 1 year.

(Point 22.4 supplemented by No 107-L of 27 January 2022)

23. Compensation shall be provided for construction and re-construction of the cattle houses presented in point 20 of the Programme and technological support thereof in the following amounts:

(1) AMD 5.5 million for the model defined in sub-point 1 of point 21, and AMD 7.7 million for citizens having become disabled as a result of combat duty or operations during the performance of military service duties and for economic entities carrying out activities in bordering settlements receiving social assistance approved by Decision of the Government of the Republic of Armenia No 1444-N of 18 December 2014 and higher and secondary vocational educational institutions in agrarian field;

(2) AMD 11.5 million for the model defined in sub-point 2 of point 21, and AMD 16.1 million for citizens having become disabled as a result of combat duty or operations during the performance of military service duties and for economic entities carrying out activities in the bordering settlements receiving social assistance approved by Decision of the Government of the Republic of Armenia No 1444-N of 18 December 2014 and higher and secondary vocational educational institutions in agrarian field;

(3) AMD 17.5 million for the model defined in sub-point 3 of point 21, and AMD 24.5 million for citizens having become disabled as a result of combat duty or operations during the performance of military service duties and for economic entities carrying out activities in bordering settlements receiving social assistance approved by Decision of the Government of the Republic of Armenia No 1444-N of 18 December 2014 and higher and secondary vocational educational institutions in agrarian field;

(Point 23 supplemented by No 473-L of 18 April 2019)

24. (Sentence removed by No 363-L of 18 March 2021) The construction will be carried out in accordance with the requirements of the legislation of the Republic of Armenia regulating the given sector.

(Point 24 amended by No 363-L of 18 March 2021)

25. Within the framework of the Programme, the contractor must perform warranty and post-warranty service after constructing the cattle house.

(Point 25 edited by No 363-L of 18 March 2021)

26. Programme participation process with respect to the component of partial compensation of expenses:

(1) the economic entity must submit to the Ministry the following:

a. application (the from shall be developed by the Ministry and published on the official website of the Ministry),

b. carbon copy of the personal identification document,

c. carbon copy of the certificate of the state registration of the right of ownership or development of immovable property,

d. where the registered right to immovable property is a common joint or common shared ownership, the notary certified consent of co-owner (co-owners) of immovable property shall be submitted,

e. in case of re-construction, also the photos of immovable property to be re-constructed;

(2) the Ministry shall, within 2 working days, check the completeness of the documents and inform the economic entity in an electronic or paper-based form on acceptance of documents, as well as the completeness thereof. Where the documents submitted by the economic entity are not complete, and (or) there are technical errors therein, the economic entity shall be recommended to complete the list of the necessary documents within 5 working days and (or) correct the existing technical errors. The representative of the Ministry shall, within 10 working days following the receipt of the full package of documents, carry out site inspection aimed at examining the information indicated in the application, by drawing up a site inspection protocol;

(3) the applicant shall, within 5 working days following the expiry of the time period of site inspection referred to in sub-point 2 of this point, be informed in writing on conclusion of a contract or rejection to conclude a contract;

(4) the conclusion of a contract shall be rejected where any of the documents referred to in sub-point 1 of this point is missing or the site inspection protocol is negative;

(5) where the conclusion of a contract is rejected as a result of site inspection, the site inspection protocol shall be provided to the applicant;

(6) the economic entity shall, not later than within a period of one year following the receipt of the offer to conclude a contract, submit to the Ministry:

a. a certificate of participation in the training on management of animal husbandry, which is issued by the “Foundation of Armenian National Agrarian University” (hereinafter referred to as the “Foundation”) as a result of participation in the training. The training programme and the size of the fee shall be established by the contract concluded between the Foundation and the Ministry,

b. construction permit,

c. architectural and design documents complying with the standards of the model introduced by the Programme, meeting the requirements of Decision of the Government of the Republic of Armenia No 596-N of 19 March 2015 (hereinafter referred to as “the Decision”) (sample designs shall be published on the official website of the Ministry),

d. statement of information on the bank account number of the applicant;

(7) programme participation contract shall be concluded between the economic entity and the Ministry within 10 working days following the submission of the documents referred to in sub-point 6 of this point, and in case of failure to submit the documents within the indicated time period, the offer to conclude a contract provided for by sub-point 3 of this point and submitted to the economic entity in writing shall be deemed as repealed;

(8) programme participation contract shall mandatorily contain provisions on the following:

a. putting the cattle house into operation within maximum one year upon conclusion of a contract (where martial law or state of emergency is declared during the indicated time period, the time period of putting the cattle house into operation may, upon the consent of the Ministry, be extended for up to five years, and in case of failure to put the cattle house into operation within the indicated time period, the compensation of expenses according to the procedure provided for by sub-points 10-13 of this point may be carried out prior to the completion of Programme duration indicated in point 32 of this Annex, except for the cases where the effect of the Decision is terminated),

b. non-alienation during the validity period of the contract,

c. at least five years of targeted use,

d. submitting a report to the Ministry for five years,

e. investing the financial resources generated due to pledging the cattle house during the period of validity of the contract only for the purpose of development of agriculture (the pledging permit shall be issued by the Ministry),

f. returning to the Ministry the compensation amounts provided within the framework of the Programme, where the provisions of the contract are violated;

(9) the report provided for by paragraph “d” of sub-point 8 of this point must be submitted on annual basis before 1 March of the year following the reporting year. The requirements to the content and the form of the report shall be stipulated in the programme participation contact;

(10) compensation of expenses shall be carried out by the Ministry;

(11) compensation amount shall be transferred by the Ministry to the applicant’s account by two stages; the compensation of the first stage shall be paid within 10 working days following the completion of all construction-assembly works (including those of re-construction) requiring construction permit envisaged by the approved plan of the cattle house and the delivery of a positive monitoring opinion on the first stage in the amount of 50 % of the compensation amount, and the remaining 50 % (compensation of the second stage) shall be paid within 10 working days following the equipment of cattle house with technological devices, putting it into operation and delivering positive monitoring opinion on the second stage;

(12) monitoring for the component of partial compensation of expenses shall be carried out by the Ministry based on the visits to farms and examination of documents not later than within 10 working days following the submission of the application based on the beneficiary’s application on completion of the planned works prior to each compensation;

(13) the following shall be attached to the application:

a. for the 1st stage — construction completion certificate (operation permit) according to Form No 3-1 of Annex No 5 to the Decision,

b. for the 2nd stage — relevant documents for the devices acquired and installed for technological support of the cattle house, including technical specifications and (or) certificates of origin (where applicable).

(Point 26 edited by No 363-L of 18 March 2021, supplemented by No 107-L of 27 January 2022, edited, amended and supplemented by No 1163-L of 28 July 2022)

27. The process of participation in the Programme with respect to the component of partial compensation of loan interest rates:

(1) for the purpose of participation in the Programme, the economic entity shall apply to financial institutions participating in the Programme to check the sufficient level of creditworthiness;

(2) where the requirements of creditworthiness of the financial institution are met, the economic entity shall submit to the Ministry:

a. an application (the form of the application shall be published on the official website of the Ministry),

b. carbon copy of the personal identification document,

c. carbon copy of the certificate of the state registration of the right of ownership over or development of immovable property,

d. where the registered right to immovable property is a common joint or common shared ownership, the notary certified consent of co-owner (co-owners) of immovable property shall be also submitted,

e. in case of re-construction — also the photos of immovable property to be re-constructed;

(3) the Ministry shall, within 2 working days, check the completeness of documents and inform the economic entity, in electronic or paper-based form, on acceptance of documents, as well as the completeness thereof. Where the documents submitted by the economic entity are not complete, and (or) there are technical errors therein, the economic entity shall be recommended to complete the list of the necessary documents within 5 working days and (or) correct the existing technical errors. The representative of the Ministry shall, within 10 working days following the receipt of the full package of documents, carry out site inspection aimed at analysing the information indicated in the application, by drawing up a site inspection protocol;

(4) the applicant shall, within 5 working days following the expiry of the time period of the site inspection referred to in sub-point 3 of this point, be informed in writing on conclusion of a contract or rejection to conclude a contract;

(5) the conclusion of a contract shall be rejected where any of the documents referred to in sub-point 2 of this point is missing or the site inspection protocol is negative;

(6) where the conclusion of a contract is rejected as a result of site inspection, the site inspection protocol shall be provided to the applicant;

(7) the economic entity shall, not later than within a period of one year following the receipt of the offer to conclude a contract, submit to the Ministry:

a. a certificate of participation in the training referred to in paragraph “a” of sub-point 6 of point 26 of the Programme,

b. construction permit,

c. architectural and design documents complying with the standards of the model submitted by the Programme, meeting the requirements of Decision;

(8) programme participation contract and loan agreement concluded with the financial institution shall mandatorily contain provisions on putting the cattle house into operation within maximum one year upon conclusion of the loan agreement;

(9) the economic entity shall, within 10 working days following the conclusion of a contract, apply to the financial institution, by submitting the following documents to receive a loan:

a. carbon copy of the contract concluded with the Ministry,

b. documents referred to in paragraphs “b”, “c”, “d”, “e” of sub-point 2 and sub-point 7 of this point;

(10) loan repayment process shall be carried out by means of monthly payment of the principal amount, the loan interest rate shall be calculated for the balance of the principal amount. In case of early payment of the loan, no fines or penalties shall be defined;

(11) the process of subsidisation of loan interest rates shall be initiated by financial institutions that perform transactions in line with the conditions of this Programme;

(12) subsidisation of loan interest rates shall be carried out based on the actual repayments of non-subsidised part of the principal amount and the interest rate of the loan; fines and penalties shall not be subject to subsidisation;

(13) the amount of subsidisation of the loan interest rate shall be transferred by the RFI to relevant account of the financial institution based on requests of given financial institution. The content of the request, as well as the requirements to documents and information to be submitted by the financial institution to the RFI shall be defined by the contract signed between the RFI and the given financial institution. The model from of the contract shall be developed by the RFI, by coordinating it with the Ministry;

(14) the financial institution shall submit to the RFI the request for subsidisation of the interest rate of loan for the previous month not later than the fifth working day of the following month. The RFI shall, jointly with the financial institution, within 5 working days following the receipt of the request, revise the requests, check the compliance with Programme requirements and in case of a positive opinion shall submit it to the Ministry which shall, within 5 workings days, record-register the requests and the positive opinions thereon received from the RFI, as well as shall transfer the amount of subsidisation of loan interest rate to the RFI which shall, within 5 working days, transfer the amount to the account of relevant financial institution;

(15) the financial institution shall submit a report to RFI in the format established by the contract concluded with the RFI;

(16) as a result of summing up the requests for subsidisation of loan interests within the framework of the Programme, the RFI shall set up a statistical database which shall include the information related to programme implementation, the problems identified and implementation challenges;

(17) the RFI shall submit monthly reports to the Ministry. The format of the report to be submitted shall be established by the contract concluded between the RFI and the Ministry;

(18) subsidisation of loan interest rate shall terminate in the following cases:

a. where the requirements prescribed by the programme are not met, the loan was not used for the intended purpose, violation of Programme requirements were identified as a result of monitoring,

b. where the beneficiary provided obviously false information,

c. where the borrower has overdue obligations in respect of given loan, for more than 60 days, in aggregate, during one year (previous 12 months), or as a result of overdue obligations against the financial institution the loan is not classified by objective criteria under standard class in accordance with the procedure for classification of loans and receivables of the banks operating in the territory of the Republic Armenia and that for formation of reserve fund for potential losses, established by the Central Bank of the Republic of Armenia,

d. where the contract concluded between the beneficiary and the financial institutions is early terminated,

e. in other cases provided for by the contract concluded between the borrower and the financial institutions,

f. where the cattle house was not put into operation within the time period established by sub-point 8 of this point;

(19) in case of non-targeted use of the loan by the borrower or appearance of obviously false information submitted, as well as negative opinion on monitoring carried out by the financial institution, the financial institution shall be obliged to withdraw the current loan of the borrower from subsidisation and to change the interest rate of the loan unilaterally, by applying a higher interest rate established for current agricultural or business loans of given financial institution, as well as to return, within 3 months, the subsidisation amount provided until that moment;

(20) monitoring with respect to the component of subsidisation of loan interest rates shall be carried out by the financial institution based on visits to the farms and examination of documents. The beneficiary shall, following the construction of the cattle house and ensuring the technological support, submit construction completion certificate (operation permit) to the financial institution in accordance with Form No 3-1 of Annex No 5 to the Decision, and relevant documents on the devices acquired and installed for ensuring technological support of the cattle house, including technical specifications and (or) certificate of origin (if available).

(Point 27 amended by No 363-L of 18 March 2021, edited by No 107-L of 27 January 2022, edited, amended and supplemented by No 1163-L of 28 July 2022)

V. PROGRAMME MONITORING

(Section repealed by No 107-L of 27 January 2022)

VI. PROGRAMME RISKS

31. Potential risks of the Programme shall include:

(1) delays in development works due to nature and climate conditions;

(2) insufficient number of economic entities (beneficiaries);

(3) improper organisation of housing of animals by the economic entities;

(4) not full operation of the structure by the economic entities.

VII. FINANCIAL EVALUATION OF THE PROGRAMME

32. Duration of the Programme: 2019 -2023.

(Point 32 amended by No 363-L of 18 March 2021)

33. Within the framework of the Programme it is envisaged to construct or re-construct 230 cattle houses — presented by years in Table No 2.

34. The calculation of compensation necessary for construction or re-construction of one cattle house is based on the average amount envisaged for construction or re-construction of Model 3 — AMD 23 million. The compensation amount will make up about AMD 13.8 million. The required funds by years will make up:

Table No 2

FINANCIAL INDICATORS OF THE PROGRAMME

The Programme is envisaged to be implemented at the expense of the funds allocated to the Ministry from the State Budget of the Republic of Armenia.

VIII. OUTCOMES EXPECTED FROM THE IMPLEMENTATION OF THE PROGRAMME

35. The following outcomes are expected from the implementation of the Programme:

(1) developing small and medium sized cattle breeding and buffalo breeding farms in the Republic: construction or re-construction of about 230 cattle houses;

(2) introducing modern technologies for the management of cattle breeding and buffalo breeding, intensifying the branch;

(3) creating favourable conditions for housing of animals (ensuring zoohygenic conditions, effective use of the genetic potential);

(4) increasing the level of milk yield per one head of a cow up to 3500-4000 kg, and per one head of a buffalo — up to 1500-2000kg;

(5) increasing the stock of the cattle;

(6) reducing the cost price for milk, increasing the volume of production;

(7) improving the quality features of milk;

(8) increasing the income of economic entities, increasing the level of competitiveness;

(9) developing professional capacities of economic entities;

(10) the farms being established may be good examples for a wider scope of economic entities in terms of making them familiarised with modern approaches of cattle breeding and buffalo breeding, as well as an educational base for students.

(Point 35 supplemented by No 958-L of 10 June 2021)

36. The calculation of economic efficiency of the Programme is presented in Table No 3.

37. Non-financial indicator of the Programme — 230 cattle houses (2019-2021).

Table No 3

Calculation of economic efficiency of the Programme*

* The following indicators served as a basis for making calculations:

Average stock of cows: 25 heads

Birth rate: 80%

The probability of heifer calves and bull calves to be born: 50%

Average milk yield of cows: 3000 kg

Milk yield of generation: 3500 kg

Comparable price per 1 kg of milk: AMD 145

Comparable price per 1 kg of beef: AMD 2500

Fall rate: 5%

Table No 4

STANDARDS FOR CATTLE HOUSES WITH LOOSE BOX HOUSING

(Title edited by No 363-L of 18 March 2021)

* When designing and preparing the external appearance and standards of metal separation structures, it is recommended to use the designs posted on the official website of the Ministry (www.mineconomy.am)

** When designing and preparing the standards for barriers it is recommended to use the designs posted on the official website of the Ministry (www.mineconomy.am)

(Table edited by No 363-L of 18 Match 2021)

Table No 5

DEVICES NECESSARY FOR ENSURING TECHNOLGICAL SUPPORT TO CATTLE HOUSES WITH LOOSE BOX HOUSING

(Title edited by No 363-L of 18 March 2021)

* 2 air-blast per every 100 square meters

** There may also be a stationary milking system.

*** With possibility to milk at least 4 animals simultaneously.

(Table edited by No 363-L of 18 March 2021)

Form No 1

REQUEST

FOR PARTICIPATION IN WORKS ON CONSTRUCTION OR RE-CONSTRUCTION OF SMALL AND MEDIUM-SIZED “SMART” CATTLE HOUSES AND TECHNOLOGICAL SUPPORT THEREOF

(Form repealed by No 363-L of 18 March 2021)

Form No 2

To: the Minister of Agriculture of the Republic of Armenia

From:__________________________________________________________

(Title of the person/name, surname of the person)

APPLICATION

FOR PARTICIPATION IN THE PROGRAMME OF STATE SUPPORT FOR CONSTRUCTION OR RE-CONSTRUCTION OF SMALL AND MEDIUM-SIZED “SMART” CATTLE HOUSES AND TECHNOLOGICAL SUPPORT THEREOF

(Form repealed by No 363-L of 18 March 2021)

(Annex supplemented by No 473-L of 18 April 2019, amended and edited by No 363-L of 18 March 2021, supplemented by No 958-L of 10 June 2021, amended, supplemented and edited by No 107-L of 27 January 2022, No 1163-L of 28 July 2022)

Published on a joint site 06.06.2024.