DECISION OF THE GOVERNMENT OF THE REPUBLIC OF ARMENIA ON APPROVING THE PROGRAMME FOR SUBSIDISING INTEREST RATES ON LOANS GRANTED FOR THE PURPOSE OF PROCUREMENT (PURCHASE) OF AGRICULTURAL RAW MATERIALS

With changes and additions by No 1506-L of 29 September 2022

GOVERNMENT OF THE REPUBLIC OF ARMENIA

DECISION

No 201-L of 28 February 2019

ON APPROVING THE PROGRAMME FOR SUBSIDISING INTEREST RATES ON LOANS GRANTED FOR THE PURPOSE OF PROCUREMENT (PURCHASE) OF AGRICULTURAL RAW MATERIALS

(title amended by No 1031-L of 24 June 2021)

Based on part 4 of Article 146 of the Constitution of the Republic of Armenia, as well as in accordance with paragraph “a” of sub-point 1 of point 22 of Decision of the Government of the Republic of Armenia No 1515-N of 27 December 2018 and point 44 of Decision of the Government of the Republic of Armenia No 667-L of 8 June 2018, the Government of the Republic of Armenia decides:

(preamble amended by No 506-L of 15 April 2022)

1. To approve the Programme for Subsidising Interest Rates on Loans Granted for the Purpose of Procurement (Purchase) of Agricultural Raw Materials, pursuant to the Annex.

(point 1 edited by No 1031-L of 24 June 2021)

1.1. Within the framework of the Programme for Subsidising Interest Rates on Loans Granted for the Purpose of Procurement (Purchase) of Agricultural Raw Materials, the loans granted in the period between 16 April 2022 and 30 December 2022 shall be subsidised by 10 percentage points, and for economic entities carrying out activities in territories of residential areas of border communities and procuring and processing agricultural raw materials in the same areas, receiving social assistance approved by Decision of the Government of the Republic of Armenia No 1444 of 18 December 2014 – by no more than 14 percentage points.

(point 1.1 supplemented by No 506-L of 15 April 2022)

1.2. Within the framework of the Programme for subsidising interest rates on loans granted for the purpose of procurement (purchase) of agricultural raw materials, from 1 September 2022 to 30 December 2022 loans shall be granted to each borrower carrying out processing activities for a repayment period of up to 4 years, and shall be subsidised by 11 percentage points, and the grace period defined for repayment of the principal amount of loans shall be calculated no more than 24 months from the moment of granting the loan.

(point 1.2 supplemented by No 1506-L of 29 September 2022)

2. Where the security measure of economic entities with respect to loans granted for the purpose of procurement (purchase) of agricultural raw materials is not sufficient, the Government of the Republic of Armenia shall, by 30 December 2021, provide a budget guarantee in the amount of up to 50 % but no more than the value of the products exported in 2020.

(point 2 supplemented by No 1031-L of 24 June 2021)

3. To assign to the Minister of Finance of the Republic of Armenia to elaborate, jointly with the Minister of Economy of the Republic of Armenia, and submit by 7 July of this year the procedure for providing a budget guarantee for the loans referred to in point 2 of this Decision.

(point 3 supplemented by No 1031-L of 24 June 2021)

4. Where the security measure of economic operators with respect to loans granted for the purpose of procurement (purchase) of agricultural raw materials is not sufficient, the Government of the Republic of Armenia shall, within the period from 1 June 2022 to 30 December 2022, provide a budget guarantee in the amount of up to 50 % but no more than the value of the products exported in 2021.

(point 4 supplemented by No 506-L of 15 April 2022)

5. To assign to the Minister Economy of the Republic of Armenia to elaborate, jointly with the Minister of Finance of the Republic of Armenia, and make relevant amendments and supplements to Decision of the Government of the Republic of Armenia No 1168-L of 15 July 2021 “On approving the procedure for providing budget guarantees within the framework of loans granted for the purpose of procurement (purchase) of agricultural raw materials” by 15 May 2022.

(point 5 supplemented by No 506-L of 15 April 2022)

Prime Minister

of the Republic of Armenia

N. Pashinyan

14 March 2019

Yerevan

Annex

to Decision of the Government

of the Republic of Armenia

No 201-L of 28 February 2019

PROGRAMME

FOR SUBSIDISING INTEREST RATES ON LOANS GRANTED FOR THE PURPOSE OF PROCUREMENT (PURCHASE) OF AGRICULTURAL RAW MATERIALS (title amended by No 1031-L of 24 June 2021)

INTRODUCTION

1. The industry processing agricultural raw materials is one of the most important sectors for ensuring guaranteed sales and reproduction of agricultural raw materials, and the level of development of this sector of economy greatly conditions the development of agriculture.

2. The industry processing agricultural raw materials is one of the leading branches of industry in the Republic, and according to the 2017 data, its share in the total gross product of the industry made up 34.7 percent and 55.5 percent in the processing industry.

3. Along with the mentioned, there are a number of problems in the sector of processing of agricultural raw materials, which are related to the full use of the existing capacities, organisation of storage, timely payment for the procured raw materials, technical re-equipment, competitiveness, marketing, establishment of contractual relations with manufacturers of agricultural raw materials, etc.

4. One of the effective ways to resolve the said problems is the extension of loans under affordable conditions for the purpose of organising the procurement of agricultural raw materials, which will create conditions for the establishment and development of value chains for fruits and vegetables, grapes, milk and agricultural animals.

(point 4 amended by No 835-L of 21 May 2020)

5. Within the framework of the pilot Programme for Partial Subsidisation of Interest Rates on Loans Granted to the Agro-Processing Field for the Purpose of Procurement of Agricultural Raw Materials, approved by Protocol Decision No 33 of the session of the Government of the Republic of Armenia of 3 August 2017, the process of partial subsidisation of interest rates on loans granted for the purpose of procurement of fruits and vegetables and grapes has launched.

6. It continued in 2018 with extended volumes within the framework of the Programme for Subsidising Interest Rates of Loans Granted to the Agro-Processing Field for the Purpose of Procurement (Purchase) of Agricultural Raw Materials, approved by Protocol Decision of the Government of the Republic of Armenia No 53 of 21 December 2017.

I. DESCRIPTION OF THE CURRENT SITUATION OF LOAN FUNDS ATTRACTED IN THE AGRO-PROCESSING FIELD

7. Due to the scarcity or the lack of free own funds, organisations in the industry processing agricultural raw materials constantly ensure the needs for re-equipment and replenishment of the working capital at the expense of loan funds which are usually medium-term (3-5 years), sometimes long-term, in AMD and in foreign currency, and the interest rates thereon fluctuate within the range of 8.8-14.2 percent.

8. The needs for re-equipment and replenishment of the working capital require large investments, whereas the collateral of organisations is limited, therefore, the entire property of the organisation is often pledged for lending. For activities in further years, in case of necessity to replenish the working capital, the process of accessing new loans becomes impossible due to the lack of collateral. The costs of servicing loans granted for re-equipment of production and purchase of raw materials for a limited time period significantly increase the cost price of products and negatively affect its competitiveness. Competitiveness is also negatively affected by relatively high prices of raw materials paid by the processor, given the fact that peasant households operate in low intensification conditions, are fragmented, the result of which is the high cost price of agricultural raw materials. In these conditions as well, peasant households are constantly dissatisfied with procurement prices, and the possibilities of increasing procurement prices by processors are limited, since there are certain prices for finished products formed in the market.

9. In the created situation, processing companies are often unable to service the borrowed loan funds due to low competitiveness and limited marketing opportunities, which negatively affects the creditworthiness and, hence, the ability to benefit from new loans.

10. One of the main bottlenecks for attracting loan funds by agro-processing companies is the high level of interest rates, which leads to the above-mentioned consequences of the heavy burden of the service thereof.

11. In conditions of the peculiarities of the sector of agriculture and processing of agricultural raw materials of the Republic (high risk of production of agricultural raw material, difficulties in sales, large transportation costs for export, in the case of wine products — long time periods necessary to obtain finished products due to production technology, etc.), maintaining profitable production is possible only by using mechanisms for subsidising interest rates on loans granted and, if necessary, also on a pledge with partial security for the fulfilment of obligation.

II. NEED FOR IMPLEMENTATION OF THE PROGRAMME

12. According to the findings of the assessment conducted:

(1) in 2017-2018, the price of 180.7 and 188.7 thousand tons of fruits and vegetables and grapes purchased by around 35 companies processing fruits and vegetables and 50 companies processing grapes amounted to around AMD 23.3 and 28.0 billion;

(2) there are more than 150 economic entities operating in the field of dairy production, which procure around 250.0 thousand tons of milk per year, the price whereof amounts to more than AMD 35.0 billion.

13. The production and procurement of milk has a strictly seasonal nature; more than 60% of it falls to the pasture season. The milk procured in that period is mainly directed to the production of cheese and milk powder, the sales whereof is carried out during around one year. For this reason, milk processing economic operators have a high demand for working capital from May to September in order to pay for the procured milk.

14. Since the needs for replenishment of working capital of organisations of the industry processing agricultural raw materials are mainly ensured at the expense of loan funds, the demand for working capital necessary for just the procurement of around 235 companies processing fruits and vegetables, grapes and milk amounts to more than AMD 55.0 billion drams.

15. Conditioned by the peculiarities of companies processing fruits and vegetables, grapes and milk, in order to organise storage, it is necessary to provide targeted loans for a period of at least 1 year, and 9 percentage points of subsidy are substantiated by the fact that in case of granting a loan in the amount of around AMD 18.0 billion under the conditions proposed under the Programme, it will be possible to reduce production costs incurred by around 50 borrower companies by around AMD 1.5 billion per year. As a result, the available resources will be directed to procurement in additional volumes or purchasing higher quality raw material, which will contribute to raising the quality indicators and competitiveness of finished products and increasing sales volumes.

16. Within the framework of the Programmes referred to in points 5 and 6 of this Programme, in 2017, 20 companies benefited from the Programme, in the amount of AMD 1341.0 million, 922 crop purchase agreements were concluded with peasant households, the subsidy amount made up AMD 65.19 million, whereas in 2018, 31 companies benefited from the Programme, in the amount of AMD 5975.7 million, 7553 agreements on purchase of crops were concluded with peasant households, and the subsidy amount made up AMD 85.62 million.

17. As a result of implementation of the Programmes referred to in points 5 and 6 of this Programme, competitive conditions for payments for raw materials purchased from peasant households have formed, as a result of which in 2017 the amount due to peasant households for the procured fruits and vegetables and grapes amounted to AMD 1377.8 million (5.9 percent) at the end of the year, in 2018 — AMD 200.4 million (0.7 percent), and in 2016 — AMD 2048.4 million, of which AMD 110.3 million was paid for the raw materials procured in 2015.

17.1. Agricultural raw materials are sold in the following directions: procurement for processing, procurement for export and fresh sale in the local market. Around 18 percent of the produced fruits and vegetables, grapes and potatoes are procured for processing, around 9 percent is exported, and around 77 percent is sold in the local market.

(point 17.1 supplemented by No 1031-L of 24 June 2021)

17.2. The volumes of fruits and vegetables, grapes and potatoes produced in the Republic have a big potential of growth, and in order to promote it, a need has arisen to provide state support to economic entities procuring fruits and vegetables, grapes and potatoes by means of granting targeted loans under affordable conditions.

(point 17.2 supplemented by No 1031-L of 24 June 2021)

17.3. Within the scope of Action 24 for addressing the economic impact of the Coronavirus, approved by Decision of the Government of the Republic of Armenia No 1355-L of 13 August 2020, similar support has already been provided to economic entities carrying out procurement of grapes for the purpose of cold storage and export in 2020 by providing the opportunity to benefit from a loan of up to AMD 1.5 billion, as a result of which around 5.3 thousand tons of grapes were procured and exported at the expense of the loan of AMD 1.4 billion provided to one beneficiary, which made up around 21 percent of the total volume of grapes exported from the Republic in 2020.

(point 17.3 supplemented by No 1031-L of 24 June 2021)

17.4. Chinchilla breeding in the Republic of Armenia started in 2015, and according to the estimates, there are around 30 thousands heads of chinchilla maternal breed in around 600 peasant households engaged in chinchilla breeding in 2021. This non-traditional direction in agriculture has a big prospective for development and is an alternative for peasant households willing to be engaged in chinchilla breeding in the regions with scarce and rain-fed lands of the Republic.

(point 17.4 supplemented by No 1031-L of 24 June 2021)

17.5. Chinchilla breeding is considered to be one of the leading branches of exotic animal husbandry due to its high profitability, low cost and low risk, and chinchilla fur is one of the most expensive animal furs and has a high demand in the international market.

(point 17.5 supplemented by No 1031-L of 24 June 2021)

17.6. Individual economic operators co-operate with peasant households engaged in chinchilla breeding and export the fur from chinchilla purchased therefrom.

(point 17.6 supplemented by No 1031-L of 24 June 2021)

17.7. According to the data of customs statistics, 900 chinchilla furs were exported in 2020 and according to estimates, this figure may reach up to 20 thousand in the upcoming years.

(point 17.7 supplemented by No 1031-L of 24 June 2021)

17.8. Taking into consideration the development trends in and big export potential of the sector, it is considered to be expedient to provide state support to economic entities carrying out purchases of chinchilla through granting targeted loans under affordable conditions.

(point 17.8 supplemented by No 1031-L of 24 June 2021)

III. GOAL AND OBJECTIVES OF THE PROGRAMME

18. The main goal of the Programmes is to increase the affordability level of extension of loans through subsidising the interest rate on targeted loans granted to legal persons and individual entrepreneurs procuring agricultural raw materials, operating in the territory of the Republic.

(point 18 amended by No 1031-L of 24 June 2021)

19. Loans subject to subsidisation must be directed only at the payment of the price of stored agricultural raw materials.

20. To achieve the said goal, the following issues should be resolved:

(1) offering affordable mechanisms for providing loan funds for the purpose of organising the procurement of agricultural raw materials;

(2) clarifying the classification of directions for providing targeted loans with subsidisation of interest rates;

(3) estimating the necessary funds and the part thereof to be subsidised;

(4) clarifying the method for subsidising loans;

(5) managing Programme risks, including proposing mechanisms for monitoring of implementation of the Programme.

(point 20 amended by No 1031-L of 24 June 2021, No 1436-L of 2 September 2021)

IV. PROGRAMME DESCRIPTION

21. Participants of the Programme for Subsidising Interest Rates of Loans Granted for the Purpose of Procurement (Purchase) of Agricultural Raw Materials shall be:

(1) legal persons and individual entrepreneurs carrying out procurement (purchase) of agricultural raw materials, meeting the financial (creditworthiness) requirements of the Programme and the bank or credit organisation participating therein;

(2) any bank and credit organisation meeting the Programme requirements and granting loans to legal persons and individual entrepreneurs carrying out procurement (purchase) of agricultural raw materials in accordance with the conditions of the Programme;

(3) Rural Finance Facility (hereinafter referred to as "the RFF") of the "Rural Areas Economic Development Programme Implementation Unit" State Institution of the Ministry of Economy of the Republic of Armenia;

(4) Ministry of Economy of the Republic of Armenia.

(point 21 amended by No 835-L of 21 May 2020, No 1031-L of 24 June 2021)

22. The objectives of loans granted with subsidisation of interest rates under this Programme shall be classified according to the following directions:

(1) purchase of fruits and vegetables and glass jars, lids, aseptic bags and containers thereof, used in the production of fruit and vegetable preserves;

(2) purchase of grapes;

(3) purchase of milk;

(4) purchase of agricultural animals by slaughterhouses;

(5) purchase of chinchillas.

(point 22 supplemented by No 685-L of 30 April 2020, No 835-L of 21 May 2020, No 1031-L of 24 June 2021)

23. Interest rates on targeted loans granted by commercial banks or credit organisations (hereinafter referred to as "FI") operating in the territory of the Republic of Armenia with the following pre-requisites shall be subject to subsidisation:

(1) the size (amount) of the granted loan shall not exceed the purchase price of raw materials indicated in agreements concluded between the borrower and peasant households and/or legal persons engaged in milk collection, including cooperatives and/or individual entrepreneurs (hereinafter referred to as " the seller"), and where it is calculated by minimum purchase prices of raw materials — 120 percent of the expected purchase price of raw materials; moreover, the calculation of the amount of the loan granted shall not include the price specified in agreements on purchase of raw materials from the harvest of land parcels belonging to the borrower by the right of ownership or use or cultivated by persons who are the founders or shareholders of the borrower, or members of their families (parent, spouse, child), or the milk of agricultural animals or agricultural animals or chinchillas, or concluded with a person collecting wild fruits, berries and vegetables and the borrower;

(1.1) apart from the loans granted to borrowers carrying out procurement of fruits and vegetables for the purpose of production of preserves under sub-point 1 of this point, borrowers may be granted an additional loan before 30 December 2021 in the amount necessary for purchasing glass jars, lids, aseptic bags and containers thereof for containerisation of finished products obtained from the processing of procured fruits and vegetables;

(1.2) apart from the loans granted for procurement (purchase) for the purpose indicated in sub-point 2 of point 24 of this Programme, the beneficiaries may be granted an additional loan from 1 May 2022 to 30 December 2022 for purchasing glass jars, lids, aseptic bags and containers thereof for containerisation of fruit and vegetable preserves;

(1.3) the size of the loan granted for procurement (purchase) for the purposes indicated in sub-points 1.1 and 2.2 of point 24 of this Programme shall be calculated according to the agreements on purchase of agricultural raw materials concluded by 1 July of the given year; the amount of the loan granted in 2022 for procurement (purchase) for the purpose indicated in sub-point 1.1 of point 24 of this Programme shall be calculated according to the agreements concluded from 1 January2022 to 1 November 2022;

(1.4) the size of the loan granted for procurement (purchase) for the purposes indicated in sub-point 2 of point 24 of this Programme shall be calculated according to the agreements on purchase of agricultural raw materials concluded until 1 October of the given year;

(2) an agreement concluded with borrower peasant households and/or legal persons engaged in milk collection and/or individual entrepreneurs and/or cooperatives shall include the following provisions:

a. the size of the land parcel (land parcels) belonging to a peasant household by the right of ownership or used on a rental basis, or the stock of agricultural animals belonging to the peasant household, or the type and stock of agricultural animals sold, or the stock of chinchillas;

b. the quantity, time limits of the purchase of raw materials and the actual or minimum purchase price, according to separate varieties or species;

c. the procedure and time limits for paying the price of raw materials;

d. rights, obligations and responsibilities of parties;

e. force major;

f. validity period and grounds for termination of the agreement;

g. bank account number provided by the seller. Where the bank account number provided by the seller is not indicated in the agreement on purchase of raw materials, the borrower must provide, in any other manner, to the FI the bank account number submitted by the seller;

h. on providing to the peasant household the advanced payment necessary for production of raw materials (upon necessity);

(2.1) beneficiaries (except for slaughterhouses) shall attach to the loan application submitted to the FI the carbon copies of agreements on purchase of raw materials or chinchilla and Form No 1 filled in based thereon in “Excel” and signed or sealed by the beneficiary;

(2.2) agreements on procurement (purchase) for the purpose referred to in sub-point 1.1 of point 24 of this Programme shall be concluded in accordance with the model form defined by Form No 4, those for procurement (purchases) for the purpose referred to in sub-point 2 — in accordance with the model form defined by Form No 5, with respect to procurement of grapes referred to in sub-point 2.2 — in accordance with the model form defined by Form No 4, with respect to fruits and vegetables referred to in sub-point 2.2 — in accordance with the model form defined by Form No 5, and for procurement (purchases) for the purpose referred to in sub-point 2.1 — in accordance with the model form defined by Form No 6;

(3) slaughterhouses shall attach to the loan application submitted to the FI the plan of the slaughterhouse and the preliminary agreements on purchase of agricultural animals, concluded with sellers;

(4) in case preliminary agreements on purchase of agricultural animals have not been concluded, slaughterhouses shall conclude with sellers agreements on purchase of agricultural animals at the moment of purchase;

(5) after the process of purchase of agricultural animals, slaughterhouses shall submit to the FI documents certifying the purchase of agricultural animals, carbon copies of agreements on purchase of agricultural animals concluded with sellers, and information on agreements on purchase of agricultural animals concluded within the scope of the granted loan, pursuant to Form No 3, in “Excel” and signed or sealed by the beneficiary;

(point 23 supplemented by No 685-L of 30 April 2020, No 835-L of 21 May 2020, amended, supplemented by No 1031-L of 24 June 2021, No 1436-L of 2 September 2021, supplemented by No 506-L of 15 April 2022, amended by No 992-L of 30 June 2022, supplemented by No 1506-L of 29 September 2022)

24. The targeted loans provided by the FI, subject to subsidisation under this Programme, shall:

(1) be provided in Armenian dram;

(1.1) each borrower carrying out grape processing activities may be granted a loan of up to AMD 4.0 billion annually for the purpose of procurement (purchase) of grapes;

(2) the balance of the principal amount of loans granted to each borrower carrying out processing activities for the purpose of procurement (purchase) of fruits and vegetables may not exceed AMD 3.0 billion;

(2.1) the balance of the principal amount of loans granted to each borrower carrying out processing activities for the purpose of procurement (purchase) of milk may not exceed AMD 1.0 billion;

(2.2) the balance of the principal amount of loans granted to each borrower carrying out cold storage and export activities for the purpose of procurement (purchase) of fruits and vegetables may not exceed AMD 3.0;

(2.3) loans granted to each borrower carrying out slaughterhouse activities for the purpose of purchasing agricultural animals shall be calculated based on the area of the slaughterhouse — no more than AMD 2.0 million for an area of 15m2 and no more than AMD 5.0 million for a mobile slaughterhouse;

(2.4) the balance of the principal amount of loans granted to each borrower carrying out activities of export of chinchilla fur for the purpose of purchases of chinchilla may not exceed AMD 50.0 million;

(2.5) granting of loans for procurement (purchase) by the same borrower for the purposes referred to in sub-points 1.1, 2, 2.1, 2.2, 2.3, and 2.4 of this point shall be carried out based on separate applications;

(2.6) in the case of loans granted under sub-point 2.5 of this point, a loan in the maximum defined amount may be granted for the purposes of one of them upon the choice of the borrower, and the amounts of loans granted for the other purposes should not exceed 50 percent of the maximum amount of loans defined for the given purpose;

(3) have a maximum:

a. 3 years repayment period for loans granted under sub-point 1.1 of this point;

b. 1.5 years repayment period for loans granted under sub-points 2, 2.1, 2.2, 2.3, and 2.4 of this point;

(4) shall be granted at a maximum nominal interest rate of 12 percent per year; moreover, no other fees shall be charged for the services of the FI related to the loan (cashing fee, service fee, commissions, etc.).

(5) the grace period defined for the repayment of the principal amount of loans shall be calculated no more than 12 months from the moment of granting the loan for the loans granted under sub-point 1.1 of this point and no more than 6 months from the moment of granting the loan for the loans granted under sub-points 2, 2.1, 2.2, 2.3, and 2.4 of this point, and the obligation to pay the non-subsidised interests on the loan arises with the borrower from the moment the loan is granted;

(5.1) the time limits defined for the repayment of the principal amount of loans granted in 2020 under sub-points 1.1, 2, 2.1, 2.2 and 2.3 of this point, as well as the grace period and the time limits for the repayment of the principal amount of loans granted in 2021 may be extended for a period of up to 6 months upon mutual consent of financial institutions and beneficiaries participating in the Programme;

(6) transfer of the subsidised amount of the interest rate on loan by the RFF to the FI may be made within up to 3 months from the moment of granting the loan, and then each month;

(7) in case of early repayment of the principal amount of the loan and the interest rate on the loan upon the wish of the borrower, no penalties and/or fines shall be charged;

(8) penalties and/or fines shall not be subject to subsidisation;

(9) the amount of the interest payment shall be calculated against the balance of the principal amount of the loan;

(10) the principal amount of the loan being subsidised shall have no minimum threshold.

(point 24 amended by No 1429-L of 17 October 2019, supplemented by No 835-L of 21 May 2020, No 1138-L of 2 July 2020, edited , supplemented by No 1031-L of 24 June 2021, supplemented, amended, edited by No 1436-L of 2 September 2021, supplemented by No 506-L of 15 April 2022)

25. The part (amount) of the interest rate on the loan equal to up to 9 percentage points shall be subsidised annually so that the annual interest rate on the loan paid by the borrower makes up 3 percent, and the subsidisation of the interest rate on the loan for economic operators carrying out activities in border settlements, receiving the social assistance approved by Decision of the Government of the Republic of Armenia No 1444-N of 18 December 2014, will be carried out for the part (amount) of the interest rate on the loan equal to up to 12 percentage points, so that the annual interest rate on the loan paid by the borrower makes up 0 percent.

(point 25 supplemented by No 345-L of 4 April 2019)

26. The agreement on granting a loan with subsidisation of the interest rate concluded between the FI and the borrower shall provide for provisions to the effect that:

(1) the size (amount) of the loan granted to the borrower must meet the requirements set forth by sub-point 1 of point 23, and the interest rate shall be subsidised by the RFF;

(1.1) subsidisation of the interest rate on the loan provided to the borrower shall start following the receipt of the information prescribed by sub-points 2 and 5 of point 28;

(2) within ten working days following each quarter, the borrower must submit to the FI information on volumes of manufactured and sold finished products at the current prices for the relevant year;

(3) provisions on subsidised interest amount of the loan and conditions for termination of subsidisation in accordance with this Programme;

(4) granting of loans with subsidisation of interest rate shall be carried out in accordance with the requirements of the internal legal acts of the FI; moreover, the FI shall, within a ten-day period following the approval of the loan and the proper legal formulation of the loan and the measures of securing the loan, based on the document confirming the purchase of the raw materials, submitted by the borrowers, transfer the cost of the transferred raw materials to the bank account indicated in the agreement on purchase of raw materials or additionally provided by the borrower to the FI;

(5) in the loan repayment schedule attached to the agreement, the entire amount of the interest of the loan, the amount of the interest subject to payment by the borrower to the FI and the amount of the interest of the loan subsidised by the RFF must be indicated in a separate line.

(point 26 supplemented by No 1436-L of 2 September 2021)

27. The FI and the RFF shall defined that during the validity period of the agreement concluded between the FI and the borrower on granting a loan with subsidisation of the interest rates, legal, economic, financial and other information on the borrower shall be exchanged as prescribed by the legislation of the Republic of Armenia in compliance with the requirements of the legislation of the Republic of Armenia on bank and trade secrets.

27.1 The FI shall, following the receipt of the application from the beneficiary, conduct a compliance review of provisions included in the agreement and the requirements on the information of Form No 1 provided for by the Programme, as well as agreements on the size (amount) of the requested loan.

(point 27.1 supplemented by No 1436-L of 2 September 2021)

28. The FI shall submit the following to the electronic mail of the Ministry of Economy of the Republic of Armenia at secretariat@mineconomy.am:

(1) information on the receipt of the loan application within one working day following the day of receipt thereof, by including the following data: the name of the borrower, the amount of the loan and the volume of purchases of raw materials provided for under the loan (total fruits, vegetables, grapes, milk, chinchilla or agricultural animal);

(2) within three working days following the day of approval of the loan granted for the purchase of fruits and vegetables, grapes, milk or chinchilla, Form No 1 revised based on the results of the review conducted thereon by the FI under point 27.1, signed or sealed by the beneficiary and signed by the responsible officer of the FI verifying the compliance, and the “Excel” version thereof;

(3) where amendments are made to the agreement on the purchase of raw materials after the approval of the loan provided for the purchase of fruits and vegetables, gapes, milk and chinchilla — information thereon within three working days, the amended Form No 1 revised based on the results of the review conducted thereon by the FI under point 27.1, signed or sealed by the beneficiary and signed by the responsible officer of the FI verifying the compliance and the “Excel” version thereof; moreover, the amended lines in Form No 1 shall be highlighted or filled in with a different colour;

(4) within three working days following the day of approval of the loan provided for the purchase of agricultural animals — information thereon, by including the following data: the name of the borrower, the amount of the loan, the type and stock of agricultural animals to be purchased under the loan, where available;

(5) after the purchase of agricultural animals and payments made for them — information on sellers in “Excel” within five working days of the month following the payment, in accordance with Form No 3.

(point 28 amended, supplemented by No 835-L of 21 May 2020, No 1031-L of 24 June 2021, No 1436-L of 2 September 2021)

29. Where no objections on the information indicated in sub-point 1 of point 28 of this Programme are received from the Ministry of Economy of the Republic of Armenia within a period of one day, the position of the Ministry of Economy of the Republic of Armenia shall be considered as positive, and the FI shall start the process of examining the loan application.

(point 29 amended by No 835-L of 21 May 2020)

30. Where a milk purchase agreement is concluded between the borrower and legal persons engaged in milk collection, including cooperatives and/or individual entrepreneurs, the latter shall submit to the borrower Form No. 1 signed by the responsible officer and the “Excel” version thereof, which the borrower shall, within five working days from the day of approval of the loan, submit to the electronic mail of the Ministry of Economy of the Republic of Armenia at secretariat@mineconomy.am.

(point 30 amended by No 835-L of 21 May 2020, No 1031-L of 24 June 2021, No 1436-L of 2 September 2021)

31. The process of subsidising the interest rate on the loan:

(1) the process of subsidisation of the interest rate on the loan shall be initiated by the FIs granting new loans complying with the conditions of this Programme;

(2) subsidisation of the interest rate on the loan shall be carried out by the RFF based on a bilateral agreement concluded between the RFF and the FI;

(3) the FI shall submit the application to the RFF by the fifth working day of the month following the actual repayments of the subsidised interests of the loans by borrowers;

(4) the RFF shall be obliged to transfer the interest rate on the loan being subsidised, indicated in the application in the manner and within the time limits defined by the agreement concluded between the FI and the RFF;

(5) the FI shall submit the application to the RFF electronically or in paper form;

(6) the form of the application shall be developed by the RFF;

(7) based on the projections of the FIs, the RFF shall estimate the approximate annual demand for the amount of the subsidy and submit it to the Ministry of Economy of the Republic of Armenia;

(8) informing potential beneficiaries on the procedure for subsidising the interest rate on the loan defined by this Programme and on participating FIs, as well as on the Programme for subsidisation of the loan shall be reserved to the RFF and the Ministry of Economy of the Republic of Armenia.

(point 31 amended by No 835-L of 21 May 2020)

32. Termination and completion of subsidisation of the interest rate on the loan:

(1) subsidisation of the interest rate on the loan shall be terminated upon the following grounds, where:

a. there are overdue obligations of the given borrower against the FIs for more than 60 days in aggregate within the period of one year (preceding 12 months), or the loan is not classified as standard in accordance with the current procedure for classification of loans due to overdue obligations towards the FI;

b. the loan has been used n manner and/or in a manner inconsistent with the subsidisation conditions. The loan shall be considered to be used in a non-targeted manner and/or in a manner inconsistent with the subsidisation conditions, if the loan funds have been used inconsistently with the conditions defined by the loan agreement concluded between the FI and the borrower. The FI shall immediately terminate the subsidisation of the interest of the loan and, within five working days, notify the RFF and the Ministry of Economy of the Republic of Armenia in writing, where a fact of non-targeted uses of the loan is recorded based on the findings of the monitoring of the targeted use of the loan conducted thereby, or in case a relevant opinion drawn up on violations of conditions of this Programme are revealed as a result of the monitoring conducted by the RFF or the Ministry of Economy of the Republic of Armenia;

c. the borrower has failed to provide, in the prescribed manner, the FI with the relevant information required under sub-point 2 of point 26 of this Programme, this shall be a basis for the FI to terminate the subsidisation;

(2) subsidisation within the scope of this Programme shall be terminated starting from the day of the previous repayment by the borrower defined by the repayment schedule of the given loan;

(3) in case the loan is used in a non-targeted manner and/or in a manner inconsistent with the subsidisation conditions, the subsidy amount provided until that moment shall be subject to return within thirty calendar days following the day of revealing the violation, except for the termination of subsidisation upon the ground of sub-point 2 of point 26 of this Programme. The return of the subsidised amount to the RFF shall be carried out by the FI;

(4) completion of subsidisation of the interest rate on the loan shall correspond to the expiration of the time limit that must be defined by the loan agreement concluded between the FI and the borrower in accordance with the requirements of point 26 of this Programme.

(point 32 amended by No 835-L of 21 May 2020)

V. PROGRAMME MONITORING AND IMPLEMENTATION RISKS MANAGEMENT

33. Programme monitoring shall be carried out by the RFF and the Ministry of Economy of the Republic of Armenia based on the information provided by the FI and as a result of random reviews of the borrowers. The types of monitoring — documentary, visits and surveys, directions, scope and indicators of compliance with targets shall be defined through the internal procedure developed by the RFF.

(point 33 amended by No 835-L of 21 May 2020)

33.1. When conducting the monitoring of the Programme, the Ministry of Economy of the Republic of Armenia may request additional information from the FI and beneficiaries, in particular, raw materials purchase agreements, documents confirming the purchase of and payment for raw materials, as well as statements of information on the cultivated land parcel or the stock of agricultural animals or chinchilla.

(point 33.1 supplemented by No 1436-L of 2 September 2021)

34. Where the RFF or the Ministry of Economy of the Republic of Armenia reveal a violation of the conditions of this Programme as a result of the monitoring, a relevant conclusion thereon shall be drawn up, and it shall be informed to each other and the FI within five working days following the day of revealing the violation.

(point 34 amended by No 835-L of 21 May 2020)

35. As a result of summarising applications for subsidising the interest rate on the loan, the RFF shall establish a statistical database.

36. The RFF shall, each month, within ten working days following the month, submit a summary report to the Ministry of Finance of the Republic of Armenia, the Ministry of Economy of the Republic of Armenia, the Central Bank of the Republic of Armenia and the Office of the Prime Minister of the Republic of Armenia, pursuant to Form No 2.

(point 36 amended by No 835-L of 21 May 2020)

37. The report must contain detailed information on process, including:

(1) summary information on granted loans by marz distribution, which must include:

a. the size of the loan granted;

b. the planned and actual volume of the purchase of raw materials within the scope of the loan by range;

c. number of agreements on purchase of raw materials concluded within the scope of the loan;

d. payments made for the raw materials purchased within the time limits defined by the concluded agreements;

(2) projections of volumes of subsidising the interest rate on loans for the upcoming year;

(3) information on revealed violations;

(4) recommendations on the improvement or refinement of the conditions of this Programme.

38. The risks of implementation of the Programme for Subsidising Interest Rates on Loans Granted for the Purpose of Procurement (Purchase) of Agricultural Raw Materials shall be:

(1) inaccurate assessment of priorities for provision of targeted loan funds under affordable conditions for the purpose of organising procurement under the Programme for Subsidising Interest Rates on Loans Granted for the Purpose of Procurement (Purchase) of Agricultural Raw Materials;

(2) inaccurate assessment of capacities for granting loan resources meeting the requirements of this Programme by the FIs;

(3) restriction with respect to availability of free collateral necessary for benefiting from this Programme by organisations;

(4) failure to ensure the expected revenues for borrowers due to difficulties in sales of finished products produced by organisations, slow pace thereof, and other factors;

(5) low qualitative and quantitative indicators and high cost price of produced agricultural raw materials conditioned by the nature and climate and other factors;

(6) saving, by beneficiaries of the Programme, of their own working capital and attracting cheap loan funds (fraud and moral risks), as well as procurement of crops of land parcels owned by the right of ownership or use, or of milk of agricultural animals.

(point 38 amended by No 1031-L of 24 June 2021)

39. Opportunities for risk mitigation shall be the following:

(1) potential participation of all stakeholders to ensure the substantiation in the process of selection and approval of agro-processing organisations that are beneficiaries of the Programme for subsidisation for the purpose of organising storage;

(2) raising loan resources meeting the requirements of this Programme;

(3) acceptance by FIs the finished products of agro-processing organisations that are beneficiaries of the Programme as collateral;

(4) implementation of the support measures referred to in the last paragraph of the "5.9. Processing Industry" section of the Programme of the Government of the Republic of Armenia approved by Decision of the Government of the Republic of Armenia No 65-A of 8 February 2019;

(5) improvement of mechanisms for providing professional consultancy to peasant households upon necessity;

(6) there is currently no need to mitigate or manage fraud and moral risks, since, according to assessments, organisations of the industry processing agricultural raw materials constantly meet the need for replenishment of working capital at the expense of loan funds due to the scarcity or the lack of their own free funds. Relatively large organisations in the sector with which free working capital is generated (for example, "Yerevan Brandy Factory" CJSC, "Yerevan Ararat Brandy-Wine-Vodka Factory" OJSC and other organisations) did not benefit from the Programme in the procurement seasons in the previous two years, and the other organisations, where they have free working capital, channel them to the procurement of additional quantities of raw materials and other auxiliary materials necessary for current activities (containerisation, packaging and other auxiliary materials). In addition, in order to not to allow the purchase of raw materials of own production, sub-pointy 1 of point 22 has been included in the Programme.

VI. FINANCIAL EVALUATION OF IMPLEMENTAION OF THE PROGRAMME

40. Financing provided from the State Budget for subsidising interest rates on loans for the purpose of implementation of the Programme shall be carried out at the expense of the amounts provided for by the State Budget of the Republic of Armenia for the given year with respect to the Programme.

41. The annual calculation of the amount of subsidisation of interest rates on loans is presented in the table.

VII. EXPECTED OUTCOMES FROM IMPLEMENTATION OF THE PROGRAMME

42. As a result of implementation of the Programme for subsidisation of interest rates on loans of economic operators procuring agricultural raw materials:

(1) pre-conditions will be created for increasing the level of creditworthy demand in the sector, which will result in making, within a short period of time, the payments to peasant households for purchasing agricultural raw materials;

(2) the risks of banks and credit organisations will reduce as a result of diversification thereof between the State, FIs and borrowers;

(3) the level of competitiveness of products received from processing of agricultural raw materials by Programme beneficiary borrowers will increase by 5-7%;

(4) volumes of production and export of products received from processing of agricultural raw materials will increase to a certain extent, which will positively affect the creation of new jobs, increase the incomes of those engaged in the sector and improvement of the foreign trade turnover;

(5) the level of attractiveness of the industry processing agricultural raw materials will increase to a certain extent;

(6) the fundamental problem of selling agricultural raw materials will be significantly mitigated, the demand for agricultural raw materials will increase, which will contribute to the development of value chains and increase of the level of marketability of agriculture;

(7) based on the outcomes of the first year of the validity of the Programme, an opportunity will be created to form recommendations aimed at reviewing the scopes of the Programme and increasing the efficiency of the process of implementation of the Programme.

(point 42 amended by No 1031-L of 24 June 2021)

Prime Minister

of the Republic of Armenia

N. Pashinyan

Form No 1

INFORMATION

ON AGREEMENTS ON PURCHASE OF RAW MATERIALS CONCLUDED WITHIN THE SCOPE OF THE GRANTED LOAN

NN i/s	Seller party of to the agreement						Raw materials sold within the scope of the agreement
	Title or name, surname	Agreement number	Telephone number	Location		Size of the cultivated land parcel (ha) or the stock of agricultural animals or chinchillas (pcs.)	type	quantity (tons) (litres)	Price per 1 kg or 1 litre (AMD)
	Title or name, surname	Agreement number	Telephone number	Marz	community		type	quantity (tons) (litres)	Price per 1 kg or 1 litre (AMD)
1.
2.

-------------------------------------- signature	_____________________________________________________ name, surname, patronymic of the representative of the beneficiary
-------------------------------------- signature	______________________________________________________ name, surname, patronymic of the FI officer
------------------------ 202

(Form amended, supplemented by No 1031-L of 24 June 2021, edited by No 1436-L of 2 September 2021)

Form No 2

Subsidiser:

"Rural Areas Economic Development Programme Implementation Unit" State Institution of the Ministry of Agriculture of the Republic of Armenia

Reporting period:

Date of submitting the report:

Name of the institution to be submitted to:

REPORT No _______

ON WOKS PERFORMED WITHIN THE SCOPE OF THE PROGRAMME FOR SUBSIDISATION OF INTEREST RATES ON LOANS GRANTED FOR THE PURPOSE OF PROCUREMENT (PURCHASE) OF AGRICULTURAL RAW MATERIALS

(title amended by No 1031-L of 24 June 2021)

Incremental report
NN i/s	BORROWER								AGREEMENT ON PURCHASE OF RAW MATERALS
	(title or name/ surname)			Contractual amount of loan	date of granting the loan	date of completion of the loan	loan balance in the reporting period	annual interest rate on the loan	number of agreements (pcs.)	planned type of purchase of raw materials	actual type of purchase of raw materials	quantity of the purchase of the planned raw materials	quantity of the purchase of the actual raw materials	price of agreement or agreements on purchase of raw materials (AMD million)	actual payments made against the agreements (AMD million)
		address
		marz	community
1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16
1
2
3
4
5
6
7
8
9
10
11	TOTAL:


SUBSIDISATION					OTHER
annual interest rate on the loan	interest paid in the reporting period (incremental) (AMD million)	percentage point subject to subsidisation	amount subsidised (incremental) (AMD million)		violations revealed	other notes
17	18	19	20	21	22	23

Sincerely, _____________________________________

Subsidiser: ____________________________________

______________________________________________________

Authorised person: position, name, surname

____________________________________

signature, seal

(Form amended by No 1031-L of 24 June 2021)

Form No 3

INFORMATION

ON AGREEMENTS ON PURCHASE OF AGRICULTURAL ANIMALS CONCLUDED WITHIN THE SCOPE OF THE LOAN GRANTED

NN i/s

Seller party to the Agreement

Agricultural animals sold within the scope

of the agreement

title or name, surname

Agreement number

telephone number

location

stock of agricultural animals (pcs.)

type

quantity (pcs.)

weight (kg)

price per 1kg (AMD)

number of Form 1 veterinary certificate for transportation and date of issuance thereof

Number of record-registration, where available

marz

community

___________________________ signature	_____________________________________________________ name, surname, patronymic of the representative of the beneficiary
__________________________ signature	______________________________________________________ name, surname, patronymic of the FI officer
___________________ 202

(Form supplemented by No 835-L of 21 May 2020, edited by No 1436-L of 2 September 2021)

Form No 4

MODEL GRAPE PURCHASE AGREEMENT No

--------------------------------------
(place of conclusion)

----------------------------------------
(day, month, year)

"___________________", represented by ________________________________, acting based on ______________, on the one hand, hereinafter referred to as "Buyer", and "_______________________", represented by __________________________ acting based on ___________________, hereinafter referred to as "Seller", on the other hand, hereinafter jointly referred to as "Parties", and separately as "Party", concluded this Agreement on the following:

1. Subject matter of the Agreement

1. The Seller undertakes to sell the grape harvest grown in 202__ (hereinafter referred to as "goods") to the Buyer within the time limits, in the quantity, at the price and under the conditions defined by this Agreement, and the Buyer undertakes to purchase it.

2. Requirements to the quality, quantity and stages of sale of goods

2. The goods will be purchased exceptionally from the products obtained from the land parcel cultivated by the Seller and referred to in this point, which shall be certified by the certificate of ownership of the land parcel attached to this Agreement, and where the land parcel is cultivated by lease — by the land parcel lease agreement. Where necessary, a statement of information on the functional use of the land parcel issued by the local self-government body shall be attached to this Agreement and the Certificate of Ownership of the land parcel or the Land Parcel Lease Agreement, which shall contain the following information:

location: ___________ marz, community __________, productive area: _____ ha.

(point 2 edited by No 1506-L of 29 September 2022)

3. The quantity of goods sold to the Buyer will be distributed by varieties or species as follows:

1. ______________________________	ha	t	4. .__________________________________	ha	t
2. ______________________________	ha	t	5. __________________________________	ha	t
3. ______________________________	ha	t	6. __________________________________	ha	t

------------------------------------------------------------------------------------------------------------

Total:_____________ ha ____________t

4. During the contractual year, the Seller and the Buyer may change the quantity of goods referred to in point 3 and sub-point 1 of point 7, before the 1st day of ______ month. Such changes shall be made by drawing up a written document between the Parties, which shall be an integral part of this Agreement. Where the Parties do not reach an agreement on the quantity of goods, each of the Parties may unilaterally rescind this Agreement by notifying the other Party thereon in writing at least one month before the purchase starts.

5. The goods must be ripe and have the quality parameters approved by the Annex to this Agreement, which shall be confirmed by the Parties to the Agreement.

6. The purchase of goods may be carried out in stages, under the following conditions: purchase dates: _________ purchase quantities: _______________.

3. Rights and obligations of Parties

7. The Seller shall have the right:

(1) to sell to the Buyer, and the Buyer shall be obliged to purchase from the Seller a total quantity of .... tons of goods per year during the validity period of this Agreement;

(2) to request from the Buyer to accept the goods in cases when the Buyer has failed to accept the goods or refused to accept them in violation of the law, other legal acts or this Agreement.

8. The Seller shall be obliged:

(1) to sell the goods to the Buyer in _____________ purchase site of the Buyer;

(2) to submit, during the sale, his or her ________________________________,

(passport), (letter of authorisation), (state register certificate)

copy of this Agreement and the statement of information on being engaged in production of agricultural products and on the cultivated agricultural land types issued by the local self-government body, if the document was not submitted during the previous one year.

9. The Buyer shall have the right:

(1) not to purchase the goods or apply a lower price against the price approved by the Buyer prior to harvesting, referred to in point 11, where the Seller violates the time limits for purchase defined by the Seller. However, the price may not be lower than ___ AMD/kg;

(2) to refuse to accept the goods, where the Seller has violated the obligations stipulated by the Agreement, or one of the cases related thereto, referred to in point 18 of this Agreement, exists.

10. The Buyer shall be obliged:

(1) to purchase from the Seller only the goods of the varieties or species provided for by point 3 of this Agreement;

(2) to purchase from the Seller the goods with the quality parameters approved by the Annex to this Agreement, at the price referred to in point 11 of this Agreement;

(3) in case the Seller transfers to the Buyer less goods than the quantity determined by this Agreement, to notify the Seller thereon through the procedure prescribed by part 1 of Article 499 of the Civil Code of the Republic of Armenia;

(4) where the Buyer accepts goods in excess of the quantity referred to in this Agreement, to pay for the additionally accepted goods to the Buyer at the price defined by the Agreement for the same goods, unless another price is determined upon the consent of the Parties;

(5) to inform the Seller about the time limits for the purchase of goods no later than 1 week prior to the date of purchase, by posting the relevant information at the mentioned purchase site and posting a relevant advertisement on the Internet;

(6) in case of violation of the defined time limits for the purchase thereby, to properly accept the goods transferred by the Seller thereto;

(7) to perform such actions meeting the requirements of this Agreement that will ensure the transfer and acceptance of the goods, unless otherwise provided for by law, other legal acts or this Agreement.

4. Price and payment procedure

11. The price of the goods shall be indicated by the Buyer before harvesting and be confirmed by the latter. The Buyer shall guarantee a minimum purchase price of ____ AMD/kg.

12. The payment will be made in cash or by transfer within ___ calendar days following the acceptance of the goods planned for the relevant year. Where the Seller fails to submit the relevant documents for payment or the submitted documents are incomplete, the calculation of the time period referred to in this point shall start after the submission of the final package of documents.

13. The Buyer may provide the Seller with agrotechnical consultancy, advance payment or other goods necessary for cultivation of grapes (medicinal substance, fuel, fertilisers, etc.).

14. The provided advance payment shall be repaid (offset) during the purchase of grapes.

5. Liability of Parties

15. In case of failure to sell to the Buyer at least ----% of the total quantity of goods referred to in point 3 and sub-point 1 of point 7 of this Agreement in the relevant year during the validity period of the Agreement, the Buyer shall have the right to request to replenish the quantity of goods transferred less or to reject the goods and the payment for it. Where the Buyer requests and the Seller fails to replenish the quantity of goods transferred less, the Buyer shall have the right to rescind the Agreement and request to pay a fine in the amount of ____% of the value of the quantity of goods transferred less.

16. The Buyer shall pay the Seller a fine for refusing to accept the goods provided by the Seller or accepted with delay, in the amount of____% of the value of the goods not accepted or accepted with delay, and reimburse the costs for transportation of the goods, as well as the losses incurred by the Seller.

17. In case of failure by the Buyer to pay the full value of the goods within the time limit defined by point 13 of the Agreement, the Seller shall have the right to request a penalty in the amount of ---% of the amount not paid for each overdue day.

6. FORCE MAJEURE

18. The Parties shall be exempted from the liability for the complete or partial failure to fulfil the obligations under this Agreement, where it has been a consequence of force majeure which has emerged after concluding this Agreement and which the Parties might not have foreseen or prevented. Those are the earthquake, hailstorm, frostbite, flood, fire and other natural disasters, war, declaration of martial law and state of emergency, political disturbances, strikes, termination of the operation of means of communication, acts of state authorities, etc., that make the fulfilment of the obligations defined under this Agreement impossible. Where the force majeure continues for more than 3 (three) months, each of the Parties shall have the right to rescind the Agreement, by informing the other Party thereon in advance.

7. Final provisions

19. Disputes arisen in relation to this Agreement shall be settled through negotiations. In case of failure to reach an agreement, the disputes shall be settled through judicial procedure.

20. Any change in the time limits for transferring the goods shall be made only upon the written consent of the Parties.

21. Rescission of or any amendment to this Agreement shall be made by signing a written document between the Parties, which will be an integral part of this Agreement.

22. This Agreement shall enter into force from the moment of conclusion and shall be terminated on the grounds of termination of obligations prescribed by the Civil Code of the Republic of Armenia.

23. This Agreement is concluded in Armenian in two copies which have equal legal force. Each Party shall be provided with one copy.

BUYER

____________________________________

(name and registered office of the company)

SELLER

___________________________________

(name, surname, patronymic)

(name of the company)

_________________________________

(account number of Seller)

Annex

to Grape Purchase Agreement

Quality parameters of grapes to be procured

Parameter name

Goods must be ripe and have at least ______% of sugar

Different varieties and species referred to in point 5 of this Agreement must be purchased separately or mixed, or separately — containing ____ % of other varieties

External appearance of the goods must comply with varietal peculiarities of the given variety

Goods must not contain foreign bodies (leaves, branches, stones, pieces of wood, etc.)

Goods must be healthy, free from diseases and pests, without signs of fermentation, etc.

Goods must be with the whole grape berries (not damaged, uncrushed)

Buyer ___________________________________

(signature)

Seller ___________________________________

(signature)

(Form supplemented by No. 506-L of 15 April 2022, edited by No 1506-L of 29 September 2022)

Form No 5

MODEL CROP PURCHASE AGREEMENT No

--------------------------------------
(place of conclusion)

----------------------------------------
(day, month, year)

"_______________________________", represented by _____________________ acting based on ____________________, on the one hand, hereinafter referred to as "Buyer", and "______________________________", represented by ____________________, acting based on ____________________, hereinafter referred to as " Seller", on the other hand, hereinafter jointly referred to as "Parties", and separately as "Party", concluded this Agreement on the following:

1. Subject matter of the Agreement

1. The Seller undertakes to sell the grape harvest grown in 202... (hereinafter referred to as "goods") to the Buyer within the time limit, in the quantity, at the price and under the conditions defined by this Agreement, and the Buyer undertakes to purchase it.

2. Requirements to the quality, quantity and stages of sale of goods

2. The goods will be purchased exceptionally from the products obtained from the land parcel cultivated by the Seller and referred to in this point, which shall be certified by the certificate of ownership of the land parcel attached to this Agreement, and where the land parcel is cultivated by lease — by the land parcel lease agreement. Where necessary, a statement of information on the functional use of the land parcel issued by the local self-government body shall be attached to this Agreement, the certificate of ownership of the land parcel or the land parcel lease agreement, which shall contain the following information:

location: ____________ marz, community _________, productive area: _____ ha.

(point 2 edited by No 1506-L of 29 September 2022)

3. The quantity of goods sold to the Buyer will be distributed by varieties or species as follows:

1. _________________	ha	_____________	4. _________________	ha	t
2. _________________	ha	t	5. _________________	ha	t
3. _________________	ha	t	6. _________________	ha	t

_____________________________________________________________

Total: ............. ha ..............t

4. During the contractual year, the Seller and the Buyer may change the quantity of goods referred to in point 3 and sub-point 1 of point 6, before the 1st day of ______ month. Such changes shall be made by drawing up a written document between the Parties, which shall be an integral part of this Agreement. Where the Parties do not reach an agreement on the quantity of goods, each of the Parties may unilaterally rescind this Agreement by notifying the other Party thereon in writing at least one month before the purchase starts.

5. The purchase of goods may be carried out in stages, under the following conditions: purchase dates: ............ purchase quantities: ....................... .

3. Rights and obligations of Parties

6. The Seller shall have the right:

(1) to sell to the Buyer, and the Buyer shall be obliged to purchase from the Seller a total quantity of .... tons of goods per year during the validity period of the Agreement;

(2) to request from the Buyer to accept the goods in cases when the Buyer has failed to accept the goods or refused to accept them in violation of the law, other legal acts or this Agreement.

7. The Seller shall be obliged:

(1) to sell the goods to the Buyer in _______________ purchase site of the Buyer;

(2) to submit, during the sale, his or her _____________________________,

(passport), (letter of authorisation), (state register certificate)

8. The Buyer shall have the right:

(1) not to purchase the goods in case of violation of the time limits for purchase defined by the Seller;

(2) to refuse to accept the goods, where the Seller has violated the obligations stipulated by the Agreement, or one of the cases related thereto, referred to in point 16 of this Agreement, exists.

9. The Buyer shall be obliged:

(1) to purchase from the Seller only the goods of the varieties or species provided for by point 3 of this Agreement;

(2) to purchase the goods under this Agreement at the price referred to in point 11 and under the conditions indicated below:

a. the goods must be ripe and have the quality parameters approved by the Annex to this Agreement, which shall be confirmed by the Parties to the Agreement;

b. different varieties and species referred to in point 3 of this Agreement must be purchased separately or mixed, or separately — containing ____ % of other varieties;

c. the goods must not contain foreign bodies. To purchase from the Seller the goods with the quality parameters approved by Annex to this Agreement at the price specified in point 10 of this Agreement;

(6) in case of violation of the defined time limits for the purchase thereby, to properly accept the goods transferred by the Seller thereto;

4. Price and payment procedure

10. The price of the goods shall be indicated by the Buyer before harvesting and confirmed by the latter. The Buyer shall guarantee a minimum purchase price of .... AMD/kg.

11. In case of violation of the time limits defined by point 5 of this Agreement, the price determined as prescribed by point 10 of this Agreement or a lower price shall be applied, which however may not be lower than .... AMD/kg.

13. The Buyer may provide the Seller with agrotechnical consultancy, advance payment or other goods necessary for cultivation of grapes (medicinal substance, fuel, fertilisers, etc.).

14. The provided advance payment shall be repaid (offset) during the purchase of the crops.

5. Liability of Parties

15. In case of failure to sell to the Buyer at least ----% of the total quantity of goods referred to in point 4 and sub-point 1 of point 7 of this Agreement in the relevant year during the validity period of the Agreement, the Buyer shall have the right to request to replenish the quantity of goods transferred less or to reject the goods and the payment for it. Where the Buyer requests and the Seller fails to replenish the quantity of goods transferred less, the Buyer shall have the right to rescind the Agreement and request to pay a fine in the amount of - - - % of the value of the quantity of goods transferred less.

16. The Buyer shall pay the Seller a fine for refusing to accept the goods provided by the Seller or accepted with delay, in the amount of- - - % of the value of the goods not accepted or accepted with delay, and reimburse the costs for transportation of the goods, as well as the losses incurred by the Seller.

17. In case of failure by the Buyer to pay the full value of the goods within the time limit defined by point 12 of the Agreement, the Seller shall have the right to request a penalty in the amount of ---%- of the amount not paid for each overdue day.

6. FORCE MAJEURE

18. The Parties shall be exempted from the liability for the complete or partial failure to fulfil the obligations under this Agreement, where it has been a consequence of force majeure which has emerged after concluding this Agreement and which the Parties might not have foreseen or prevented. Those are the earthquake, hailstorm, frostbite, flood, fire, and other natural disasters, war, declaration of martial law and state of emergency, political disturbances, strikes, termination of the operation of means of communication, acts of state authorities, etc., that make the fulfilment of the obligations under this Agreement impossible. Where the force majeure continues for more than 3 (three) months, each of the Parties shall have the right to rescind the Agreement, by informing the other Party thereon in advance.

7. Final provisions

19. Disputes arisen in relation to this Agreement shall be settled through negotiations. In case of failure to reach an agreement, the disputes shall be settled through judicial procedure.

20. Any change in the time limits for transferring the goods shall be made only upon the written consent of the Parties.

21. Rescission of or any amendment to this Agreement shall be made by signing a written document between the Parties, which will be an integral part of this Agreement.

22. This Agreement shall enter into force from the moment of conclusion and shall be terminated on the grounds of termination of obligations prescribed by the Civil Code of the Republic of Armenia.

23. This Agreement is concluded in Armenian in two copies which have equal legal force. Each Party shall be provided with one copy.

BUYER

____________________________________

(name and registered office of the company)

SELLER

___________________________________

(name, surname, patronymic)

(name of the company)

_________________________________

(account number of Seller)

(Form supplemented by No 506-L of 15 April 2022, edited by No 1506-L of 29 September 2022)

Form No 6

MODEL MILK PURCHASE AGREEMENT No

--------------------------------------
(place of conclusion)

----------------------------------------
(day, month, year)

"__________________________________", represented by _____________ acting based on _____________, on the one hand, hereinafter referred to as "Buyer", and "________________________________", represented by ________________________ acting based on _____________________, hereinafter referred to as "Seller", on the other hand, hereinafter jointly referred to as "Parties", and separately as "Party", concluded this Agreement on the following:

1. Subject matter of the Agreement

1. The Seller undertakes to transfer to the Buyer, as prescribed by this Agreement, as ownership the cow milk produced by

_________________________________________________________________________________

(peasant, farm, etc.)

economies (hereinafter referred to as "milk"),and the Buyer undertakes to accept it and pay for it.

1.1. The Buyer shall purchase exceptionally the milk of agricultural animals bred (kept) by the Seller, which shall be certified by the statement of information issued by the local self-government body on being engaged in animal breeding activities and shall contain the following information:

location:____________ marz, community ____________, stock of agricultural animals: ____________ pieces.

(point 1.1 supplemented by No 1506-L of 29 September 2022)

2. The Seller shall transfer to the Buyer milk meeting the requirements defined by this Agreement and the Annex.

3. The Buyer shall accept the milk from the Seller based on the test data.

4. During the validity period of this Agreement, the transfer of milk may be temporarily terminated upon mutual consent of the Parties.

2. Rights and obligations of Parties

5. The Seller shall have the right:

(1) to sell to the Buyer, and the Buyer shall be obliged to purchase from the Seller ___ litres of milk per year during the validity period of this Agreement in accordance with the requirements, the procedure and the time limits provided for by the Annex to this Agreement;

(2) where there is a disagreement with the data of milk testing, to request from the Buyer to conduct a repeat test at the laboratory of the Buyer or at an independent accredited laboratory and to consider the received data as final;

(3) to refuse to sell the milk, if the Buyer has delayed or unreasonably postponed the time limits of the last day referred to in point 12 for the sold milk more than 3 times.

6. The Seller shall be obliged:

(1) to submit relevant supporting documents to the Buyer during the validity period of this Agreements, as prescribed by the legislation of the Republic of Armenia;

(2) in case of animal disease and medicinal treatment, to notify the Buyer on the same day via electronic mail or telephone or short mobile text message and immediately stop selling milk. After completing the treatment or taking medications, to submit a relevant veterinary certificate for the purpose of resuming the sale of milk, which must indicate the fitness of the milk for procurement;

(3) to deliver the milk to the Buyer every day, once or twice a day, according to a mutually agreed schedule;

(4) to observe zoo and sanitary and hygienic rules in the barn or farm;

(5) not to mix milks received from the morning and evening milking, and transfer it to the Buyer in separate containers;

(6) not to impede the process of familiarisation by the Buyer with the sanitary and hygienic condition in the Seller's barn or farm.

7. The Buyer shall have the right:

(1) to refuse to accept the milk, if it does not meet the requirements of the Annex to this Agreement;

(2) to refuse to accept milk, if the Seller fails to fulfil the obligations thereof prescribed by this Agreement;

(3) based on production and conjunctural needs, to stop accepting the milk for a certain period of time, notifying the Seller thereon at least 7 days in advance;

(4) to request from the Seller to properly fulfil the requirements of this Agreement.

8. The Buyer shall be obliged:

(1) to accept the products from the Seller _________________________________________

(at the registered office of the latter or the purchase site of the Buyer)

By complying with the sanitary and hygienic norms, in containers permissible for use in food production (flasks, tanks), which shall be clean inside and outside;

(2) to check the quality and quantity of the milk, immediately inform the Seller about identified inconsistencies or shortcomings;

(3) to calculate and pay for the sold milk in the manner and within the time limits defined by this Agreement;

(4) in order to determine the compliance of the quality of the sold milk with additional conditions, to recalculate the price of the milk in accordance with point 10;

(5) upon the request of the Seller, to conduct repeat testing and accept it as final.

3. Price of goods and payment procedure

9. The base price for the first grade milk purchased under this Agreement shall be defined by the Buyer for the given period, whereon the Buyer shall notify the Seller at least 5 days in advance. The minimum base price for milk during the period of stall bar housing of animals shall be AMD ______, and during the period of pasture housing — AMD ______

10. The price for the milk being purchased shall be determined based on the following re-calculation:

(1) the milk base price for high quality milk shall increase, whereas the milk base price for the first and the second grade milk shall decrease by 10% each;

(2) for each deviation of 0.1% from the base 3,6% fat content in milk, the price of milk shall be increased or reduced by 2.7%;

(3) the increase in the price for the fat content of milk under point 12 shall be calculated for up to 4.0% of the fat content;

(4) in case the milk contains more than 4.0% of fat, only the cost of fat exceeding 4.0% shall be added to the milk price at market prices for fat, which shall be agreed with the Seller.

11. In case of disagreement with the base price of milk defined by the Buyer, the Seller may terminate this Agreement by notifying the Buyer thereon in writing at least 3 days in advance.

12. The Buyer shall make the payment for the milk sold thereto at the price obtained from the re-calculation made under point 10 of this Agreement, within ____ days following the day of purchase of the milk.

4. Liability of Parties

13. The Buyer may refuse to accept the milk not meeting the requirements defined by this Agreement or provided within a delayed time limit, without bearing any liability.

14. For failure to provide the milk without notifying the Buyer as defined by this Agreement, the Seller shall pay the Buyer a penalty for each day, in the amount of a percentage of the base price of the non-purchased milk.

15. The Buyer shall pay the Seller a fine for refusal by the Buyer to accept the milk meeting the requirements and provided within the time limit defined by the Annex to this Agreement, in the amount of a percentage of the base price of the non-accepted milk, as well as losses incurred by the Seller.

16. In case of delay in accepting the milk meeting the requirements and provided by the Seller within the time limit defined by the Annex to this Agreement, the Buyer, in addition to the fine, shall also pay the Seller the full base price of the milk and transportation costs thereof.

17. In case of failure to pay for the sold milk in time, the Buyer shall pay a penalty for each day of delay in the amount of ____ percent of the price of the entire sold milk. In case of a delay for a term more than ____ days, the offset of the penalty shall be terminated and the Buyer shall, in addition to the offset penalty, pay the Seller a penalty in the amount of ____ percent of the amount not paid in time.

5. FORCE MAJEURE

18. The Parties shall be exempted from the liability for the complete or partial failure to fulfil the obligations under this Agreement, where it has been as a result of force majeure (earthquake, flood, war, declaration of martial law and state of emergency, termination of the operation of means of communication, animal epidemics, etc.) that makes the fulfilment of the obligations under this Agreement impossible. Where the force majeure continues for more than three months, each of the Parties shall have the right to rescind the Agreement, by informing the other Party thereon in advance.

6. Final provisions

19. The Buyer may provide the Seller with consultancy, advanced payment or combined feed, medicinal substances, etc.

20. Disputes arisen in relation to this Agreement shall be settled through negotiations. In case of failure to reach an agreement, the disputes shall be settled through judicial procedure.

21. Rescission of or any amendment to this Agreement shall be made by signing a written document between the Parties, which will be an integral part of this Agreement.

22. This Agreement shall enter into force from the moment of signing thereof by the Parties and shall terminate on the grounds of termination of obligations prescribed by the Civil Code of the Republic of Armenia.

23. This Agreement is concluded in Armenian in 2 copies which have equal legal effect, and the Annex is an integral part of the Agreement. Each Party shall be provided with one copy.

BUYER

____________________________________

(name and registered office of the company)

SELLER

___________________________________

(name, surname, patronymic)

(name of the company)

_________________________________

(account number of Seller)

Annex

to Milk Purchase Agreement

The parameters of the raw materials subject to procurement shall be defined in accordance with the requirements of the Technical Regulation of the Customs Union "Safety of milk and dairy products" (TR TC 033/2013 ) approved by Decision of the Board of the Eurasian Economic Commission No 67 of 9 October 2013.

1. The following shall not be subject to acceptance:

(1) milk received during the first 7 days after calving of animals, within 5 days before calving, and milk received from sick and quarantined animals;

(2) milk containing antibiotics, bacteriostatic residues (substances).

2. The milk transferred for procurement must be purified after milking and cooled for 2 hours to a temperature of 4 ± 20C.

3. Sensitisation, physico-chemical and micro-biological indicators set for raw milk subject to procurement are presented in Table No 1, and the classification of raw milk grades is presented in Table No 2.

Table No 1

Parameter name	Regulatory requirement
Consistency	Homogeneous liquid, without sediment and agglutination. Freezing is not allowed.
Flavour and odour	Pure, without off-flavours and odour not typical to milk
Colour	White to light cream
Mass fraction of proteins, %, not less	2.8
Mass fraction of oil, %, not less	2.8
Mass fraction of dry fat-free substances, %, not less	8,2
Acidity, 0T	16-21
Density (at 200C), kg/m3, not less	1027
Freezing point (0C), not more	-0.505
Bacterial contamination (QMAFAnM), CFU/cm3 (g), not more	5.0x105
Content of somatic cells in 1 cm3, not more	7.5x105
Pathogens, including salmonella, in 25 g	No allowed

Table No 2

Classification of raw milk with 3.6 % base fat content by grades

Parameter name	Milk grade
Parameter name	high	first	second
Mass fraction of proteins, %, not less	3.0	2.8
Mass fraction of oil, %, not less than	2.8
Mass fraction of dry fat-free substances, %, not less	8,2
Purity parameter: quantity of mechanical particles on filter when filtering 250 cm3 milk sample of, up to	2	2	13
Acidity, 0T	16-18	16-19	16-21
Density (at 200C), kg/m3, not less	1028.0	1027.5	1027.0
Freezing point (0C), not more	-0.520	-0.510	-0.505
Bacterial contamination (QMAFAnM), CFU/cm3 (g), not more	1.0x105	3.0x105	5.0x105
Content of somatic cells in 1 cm3, not more	2.5x105	4.0x105	7.5x105

Buyer ___________________________________

(signature)

Seller ___________________________________

(signature)

(Form supplemented by No 506-L of 15 April 2022, No 1506-L of 29 September 2022)

(Annex supplemented by No 345-L of 4 April 2019, amended by No 1429-L of 17 October 2019, supplemented by No 685-L of 30 April 2020, amended, supplemented by No 835-L of 21 May 2020, supplemented by No 1138-L of 2 July 2020, supplemented, amended, edited by No 1031-L of 24 June 2021, No 1436-L of 2 September 2021, supplemented by No 506-L of 15 April 2022, amended by No 992-L of 30 June 2022, supplemented, edited by No 1506-L of 29 September 2022)

Published on a joint site 06.06.2024

Տեղեկատվություն

Ակտի վավերապայմաններ

ՓՈՓՈԽՈՂՆԵՐ ԵՎ ԻՆԿՈՐՊՈՐԱՑԻԱՆԵՐ

Կապեր

DECISION OF THE GOVERNMENT OF THE REPUBLIC OF ARMENIA ON APPROVING THE PROGRAMME FOR SUBSIDISING INTEREST RATES ON LOANS GRANTED FOR THE PURPOSE OF PROCUREMENT (PURCHASE) OF AGRICULTURAL RAW MATERIALS

Համար

No 201-L

Տիպ

Decision

Փաստաթղթի տեսակ

Հիմնական ակտ (17.03.2019-մինչ օրս)

Կարգավիճակ

Active

Սկզբնաղբյուր

Published on a joint site 06.06.2024

Ընդունող մարմին

Government of the Republic of Armenia

Ընդունման ամսաթիվ

28.02.2019

Ընդունման վայր

Yerevan

Ստորագրող մարմին

Prime Minister of the Republic of Armeina

Ստորագրման ամսաթիվ

14.03.2019

Ուժի մեջ մտնելու ամսաթիվ

17.03.2019

Հիմնական ակտ 28.02.2019, No 201-L

Փոփոխման պատմություն

Փոփոխվող ակտ

Փոփոխող ակտ Ինկորպորացիա

Փոփոխություններ է կատարել հետևյալ ակտերում Յուրաքանչյուր փոփոխվողին համապատասխանող ինկորպորացիան

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