EC/FAO Programme on Information Systems to Improve Food Security Decision-Making GCP/GLO/275/EC. Round table discussion on agricultural cooperatives

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1 EC/FAO Programme on Information Systems to Improve Food Security Decision-Making GCP/GLO/275/EC Round table discussion on agricultural cooperatives Minutes Yerevan, 30 April Background A round table discussion was organised on 30 April 2013 under the EC/FAO Programme on Information Systems to Improve Food Security Decision-Making in the European Neighbourhood Policy (ENP) East Area to discuss the options available for promoting agricultural cooperatives in Armenia and review the paper prepared by an FAO Consultant, in support of the Ministry of Agriculture (MoA), on the development of Republic of Armenia (RA) Law on Agricultural Cooperatives. 2. Objective of the meeting The main objective of the meeting was to introduce a study prepared by the FAO Consultant and to stimulate a discussion on the development of the Law and establishment of agricultural cooperatives. The meeting was also useful to brief Ministry s staff and NGO s on this component of the Programme. The paper developed by the Consultant was sent to the participants two weeks prior to the meeting. 3. Participation As the establishment of cooperatives is a crucial matter for the Armenian Government the meeting was attended by the Minister, Deputies, Chief of Staff and Heads of relevant Departments (figure 1). The list of participants is provided in Annex Process The Minister of Agriculture, Sergo Karapetyan, welcomed all participants and briefly presented the objective of the meeting. He highlighted that the issue of a national law on agricultural cooperatives is important because the agricultural sector is recognised as one of the priority sectors for the development of the Armenian economy. The discussions on establishment of cooperatives have been on-going for two years but the Law needs to be developed. The working group established included not only the MoA staff but also representatives from the Agrarian Academy and other institutions. The round table was devoted to the analysis of the document providing guidance for the development of the RA Law on Agricultural Cooperatives.

2 Figure 1. Round table on law on agricultural cooperatives Figure 2: Vardan Urutyan presented the study prepared by the FAO Consultant Vardan Urutyan, Director of the International Center for Agribusiness Research and Education (ICARE) Foundation, introduced the study prepared by the Consultant (figure 2). The results of his research refer to the necessity of legal reforms focused on sustainable development of agricultural cooperatives in Armenia. While elaborating the study, the provisions of the declarations and other primary documents adopted by the International Co-operative Alliance, International Labour Organization, UN and other agencies were taken into consideration. The reporter briefly addressed issues related to the importance of cooperatives, their definition, economic impact, social value, the understanding of the concept and identity of cooperatives in Armenia, and the current state of the cooperative movement in the country. Then Urutyan addressed the existing legislation regulating the activities of cooperatives in the country, the significant gaps therein, and the need to have a new, comprehensive law on cooperatives. The experience of a number of countries in Eastern and Western Europe and the comparative analysis of the relevant cooperative laws in those countries was presented to the working group. The study gives proper attention also to the state policies for promoting the development of cooperatives. Urutyan suggested to be guided by the UN Guidelines aimed at creation of a supportive and enabling environment for the development of cooperatives, European Commission s Communication on promotion of cooperative societies, and ILO s Recommendation 193 on Promotion of Cooperatives. These documents value the role of governments in public recognition of cooperatives and in understanding their importance. He also mentioned the necessity of addressing issues which relate to cooperative statistics, research and education in the state policies. 2

3 The final part of the report presents the main conclusions and recommendations for the Government of Armenia to draft the law as well as the promotion mechanisms for developing successful cooperatives in Armenia, in particular: Establishment of cooperatives will contribute to poverty reduction, creation of new jobs, etc; Necessity of having a general state policy on cooperatives; Necessity of having a privileged tax policy to run the cooperatives; Necessity of establishment of a register for cooperatives. The whole analysis was oriented on the adjustment of existing environment on cooperatives to Armenia. After the presentation the Minister gave floor to questions and answers. There was a consensus among participants that the paper prepared by the Consultant was a solid and comprehensive document which will provide useful guidance for the development of the Law. The first participant to ask a question was the Chairman of the Federation of Agricultural Associations, Vardan Hambardzumyan. According to the President of the Federation of Agricultural Associations Vardan Hambardzumyan, Urutyan s study contains the most accurate explanations on the cooperative identity in Armenia during the last 20 years. Hambardzumyan expressed his concern about whether it is appropriate at all to include one of the types of cooperatives, the producer cooperatives, in the expected law. He named this type of cooperatives artificially-borne and soviet remnant that must be refused. From the point of view of the success of the cooperative idea and bringing the cooperative movement to a logically new phase, Hambardzumyan valued the concept of cooperation rather than the spirit of competition to be put in the basis of cooperatives, which in turn will result not only in the development of cooperatives but also establishment of corporate responsibility and statesmanlike thinking. Mr. Hambardzumyan also suggested to clearly define in the draft law such concepts like farmer investment and the third force investment, with the possibility of the Government taking the role of that force. The law should be clear also in defining the devisable and indivisible funds as well as the role of the state in management of cooperatives and in ensuring the participation of the cooperative members in that management. This raised a very active discussion. The Head of the Agricultural Development Department, Hrachia Tspnetsyan, asked to present the international documents that relate to cooperatives in a more detailed way. He has also mentioned that although a rather voluminous research works have been done in the field of agricultural cooperatives over the recent years, including professional publications, however Urutyan s study is comprehensive and unique with its in-depth analysis, timeliness of issues raised and the meaningful emphases. In particular, Tspnetsyan valued the information about R193 and other fundamental international documents, the problem of the lack of development and progress in the existing cooperatives (such as in the newly created pasture users coops) because of legislative gaps, as well as specifying tax privileges, in particular in applying the VAT. Tspnetsyan mentioned that after becoming familiar with the data, conclusions and the recommendations of this study, developing this draft law seems to be more complicated, than it was expected before. However, the necessity and timeliness of this law now seems even more substantial. Tspnetsyan also discussed with the reporter the issue of exemplary bylaws of cooperatives. Urutyan believes it is necessary to first adopt the law and only then other necessary documents can be addressed. Moreover, the existing laws, as the RA law On Agricultural Credit Clubs could also serve as a basis for the development of the Law on Cooperatives. 3

4 Vardan Urutyan noted that the new Law should be a general document for any type of cooperatives but the Minister stressed that it would be too much, and would prefer to develop firstly a Law on Agricultural Cooperatives. The Head of Legal Department, Arsen Avetisyan, was interested in taxation system for cooperatives, what would be principles, and the concept of VAT related to cooperatives. The Minister proposed to have a bigger meeting where more people would be invited (NGOs, Agrarian Academy, Parliament, Tax Service representatives). It was also proposed to organise an awareness raising campaign that would facilitate the understanding of cooperatives concept by farmers. He proposed to think of a few slogans to show the difference between kolkhozes/sovkhozes and cooperatives. He highlighted that it is important the farmers clearly see why they have to unite in cooperatives, what advantages they will gain. Besides tax privileges should be put in place. Cooperatives have privileges in paying taxes all over the world; the same should be in Armenia. The Minister ended up the meeting by expressing his gratitude to the author of the study for presenting a comprehensive work and noted that he would expect further active participation by Dr. Urutyan, in particular, in using the international experience applicable for our country. The Minister suggested making the report available to all stakeholders. He said that future belongs to cooperatives and also it is to take into account the Armenian experience and especially the mistakes made, in order to be able to go forward. He valued the wide-range promotional activity and the need to work closely with the relevant commission of the National Assembly (the Armenian Parliament) as well as to involve foreign experts. The Minister thanked FAO for its assistance in preparing a relevant document for the development of the RA Law on Agricultural Cooperatives. 4

5 Annex 1: List of participants in the round table discussion Name Position 1. Sergo Karapetyan Minister 2. Artashes Kirakosyan Chief of Staff, MoA 3. Garnik Petrosyan Deputy Minister, MoA 4. Armen Haroutyunyan Advisor to MoA Minister 5. Hrachia Tspnetyan Head of Agricultural Planning Dpt., MoA 6. Arthur Avagyan Head of Republican Agricultural Support Centre 7. Heriknaz Lemberyan Head of Agricultural Planning Division, MoA 8. Arthur Petrosyan Chief Specialist of Agricultural Planning Department, MoA 9. Arsen Avetisyan Head of Legal Department, MoA 10 Gevorg Harutyunyan Head of Crop Production and Plant Protection Dpt., MoA 11 Vardan Hambardzumyan Agricultural Association Foundation 12 Vardan Urutyan ICARE, Director 13 Sos Avetisyan ICARE 14 Gayane Nasoyan FAOAR 15 Vahagn Martirosyan Head of PR Dpt., MoA 16 Mane Tapaltsyan EC/FAO Programme on Food Security Information Systems 17 Media staff 5