Sunday, 23 September

Tougher Times for Armenia's Cheese Producers

By Seda Hergnyan

Times are getting tougher for Armenia’s cheese makers.

Cheese prices have fallen, leading to a cut in production, and exports aren’t as profitable as expected.

Armen Gigoyan, president of the Lari Union of Cheese Manufacturers, says the price of milk obtained from farms and village residents has remained around 120 AMD per liter.

But lower milk prices have surprisingly worked against cheese producer companies. Villagers are now keeping the milk and producing cheese themselves rather than selling their milk at such cheap prices.

And rural residents are selling the cheese that make for less than the big companies. This in turn had led the companies to drop their prices in return.

Companies are not only competing amongst themselves but with small household operations.

Lower prices are good for consumers, but the benefits aren’t absolute. Producers have cut corners on quality due to dropping prices.

Gigoyan claims that the fall in quality is temporary.

In the past Hetq had written that prices for milk obtained from villagers in Armenia had dropped due to the powdered milk price drop in the international market and increased amounts of powdered milk imports.

Gigoyan says he doesn’t understand the drop in the sale of domestic cheese in Armenia over the past few years. He says there is no connection between the drop and the rise of imported cheeses. Only 5% of the cheese consumed in Armenia is imported, Gigoyan claims.

Domestic cheese makers are still trying to understand the factors involved in the drop.

Another problem facing domestic producers is that exports have become much less profitable.

Russia is the largest importer of cheese produced in Armenia, but the devaluation of the ruble and worsening financial times have negatively impacted all Armenian manufacturers, cheese makers included.

While only 5% of the cheese made in Armenia is exported, this market has become non-profitable.

Should exports to Russia be stopped or continued is the question facing Armenia’s cheese producers. Armenian cheese hasn’t made a foothold elsewhere in the international market.

Gigoyan says it isn’t a question of quality that Armenian cheese hasn’t broken into the international market, but rather due to political factors and inter-governmental relations.

“We aren’t in that zone. It’s off limits to us. For example, Armenians living in Marseille wanted to import Armenian cheese into France but understood that they couldn’t. They came from Iran with a similar request. It never happened. Today, we don’t have any presence in the international market,” Gigoyan said.

According to Armenia’s National Statistical Service (NSS), some 8,800 tons of cheese were produced in Armenia in the first half of 2015. That’s 3.8% more than the same period in 2014.

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