Rationale: Milk production has traditionally been one of the main occupations for rural communities in Armenia. Although milk production in Armenia has increased by approximately 34% over the last 15 years, the country remains a net importer of milk and relies heavily on imported dairy products. There is a serious demand and market for milk and milk by-products in Armenia, and it is believed that dairy farmers have the potential to become real economic anchors within the country. However, due to a lack of capabilities, the industry continues to function at less than 30% of its potential.

The milk production process is complex and begins from what the lactating cattle are fed at the farm, to the temperature regulation of transportation of the final, packaged product from the dairy to the retailers’ shelves. Currently, the post-production phases of milk production in Armenia are relatively stable and efficient. However, the pre-production stages require further development and strengthening on multiple levels. Not only is there a lack of well-bred cows, but the continued reliance on manual labour practices, among other factors, has prevented the country’s dairy industry from advancing and functioning at a competitive level, both nationally and internationally.

An average milk producing farming household of six has 3-10 cows, each producing approximately 1,500-2,000 litres of milk per year. 1 litre of milk in Armenia is sold by the farmer for approximately 100 AMD.

Therefore, even if a farmer is at the high end of this average and has 10 cows that each produce 2,000 litres, he is still only earning a yearly gross income of 2,000,000 AMD, i.e. about US$6,700. Taking into account the annual expenses for keeping one cow, which is about US$500, the farmer’s net annual income shrinks to US$1,700 only. This amount is not sufficient for a family of six to live even from hand to mouth.

The current average milk yield estimation shows that at least 35 cows are required for each farming household for sustaining their livelihood. This would raise their yearly net income to US$6,000. Furthermore, through the use of at least one milking unit and improved breeding practices this income could be raised by around 30%.

Expected results and outputs

Through the provision of automated milking units the Project expects to reach the following results:

* The farmers will be able to increase the efficiency of milking and the quantity of produced milk. Meanwhile they will cut their running costs for hiring outside help.
* The overall quality of the milk will be improved by ensuring that sanitary norms are maintained and the bacteria levels are kept below the norm.

The outcome of the project is an overall improvement in the dairy production practices in Armenia.
The specific outputs of the project are:

* Purchase and provision of milking units to farmers through a loan guarantee scheme in partnership with the Dairy Production Development Cooperative and the Ashtarak Kat Company.
* Special training for the farmers on the general use and maintenance of the milking equipment.
* Capacities for the farmers to observe the milking standards.

Project Status

Since its start in September 2008 the Project has already provided 6 milking units to farmers living in the regions of Gegharkunik, Syunik and Shirak. 36 more units will be distributed to more farmers in February-March of 2009. These 42 units were funded by the Armenian Community of Argentina and were purchased in Iran to reduce the transportation costs.

The units are provided to farmers at no initial cost and at no interest. The farmers, however, are to pay back the price of the unit in instalments through the course of a 12-month period. That money will be used to purchase additional units to increase the number of beneficiaries.

This project is being operated in conjunction with other Rural Development projects, in partnership with the Swiss Agency for Development and Cooperation and others.