Swiss-funded SIGMA project introduces systemic solutions in Armenia's agriculture sector

Only 57.2% of agricultural produce in Armenia is sold locally or exported. A key challenge for rural households is the lack of aggregation and cold storage facilities. For example, the only operational cold storage facility in Vardenik, Armenia’s largest village, was established in October 2024 with support from the Sustainable Inclusive Growth in Mountainous Armenia (SIGMA) project. The SIGMA project is funded by the Swiss Agency for Development and Cooperation.

The facility helps farmers from Vardenik and around 20 nearby settlements sell their entire harvest, motivating them to increase their yields. The Vardenik cold storage facility was established using the Market Systems Development (MSD) approach which is being increasingly adopted in Armenia and other developing countries each year.

Unlike initiatives that provide direct support and offer quick but short-term solutions to challenges in agriculture and other sectors, MSD projects drive long-term, systemic change. While grant-based projects address specific social and economic needs for a limited number of beneficiaries through financial aid, technical assistance, or material support, MSD projects promote sustainable market system development.

The MSD approach focuses on building market systems that continue to function beyond the project's lifespan. To ensure sustainable growth, these projects collaborate with a wide range of stakeholders from both the private and public sectors. Private sector organisations in target industries play a crucial role, as MSD projects co-invest with them to drive long-term community development.

The SIGMA project utilises the Market Systems Development approach to reduce poverty and inequality in Armenia’s mountainous settlements. It implements interventions in agriculture in an inclusive, innovative, and environmentally sustainable manner. SIGMA is dedicated to increasing incomes and creating employment opportunities for rural households while prioritising the economic inclusion of socially vulnerable groups.

During the first stage of the project, the target regions are Shirak, Lori, Tavush, and Gegharkunik. The SIGMA project supports the development of core market systems for grains, legumes, potatoes, fruits and berries, vegetables, and beekeeping.

To promote lasting change, the project has identified the key obstacles hindering the development of these market systems. These include issues related to irrigation, agro-machinery, aggregation and processing, crop seeds and seedlings, beekeeping support services, and agri-technologies.

SIGMA addresses these challenges by offering systemic solutions through partnerships with private companies and co-investments in agricultural systems to foster community development. As a result of these investments, rural households gain access to new or improved agricultural services, increasing their productivity and income, while tapping into expanded markets. SIGMA’s partners also benefit by creating new revenue streams as service providers.

In 2024, eight interventions were approved and are now at various stages of implementation. As a result of four of these interventions, nine new services have been developed, benefiting approximately 200 rural households. Around AMD 100 million has been co-invested by partner private companies to support the development of target market systems.

A key intervention currently underway aims to establish a grain sorting and treatment facility in the Vardenis community of the Gegharkunik region. In Armenia, up to 70% of farmers use low-quality seeds, which significantly affects both the quality and quantity of their yields. As part of this initiative, an innovative seed treatment machine made in Europe has been purchased with the support of the SIGMA project to enhance seed quality. The facility will produce and sell high-quality seeds, as well as offer sorting and treatment services to farmers in Vardenis and nearby communities, ultimately boosting crop yields.

As part of another co-investment project, an advanced Educational, Scientific, and Industrial Beekeeping Centre is being established in the Margahovit settlement of the Lori region. The facility will provide a range of beekeeping services designed to improve the quality, marketability, and sale of bee products. The centre is expected to become operational in the summer of 2025.

In addition, as a result of efforts to advance farm mechanisation, a full range of services is now available to farmers in the communities of Gyulagarak and Akhuryan, located in the Lori and Shirak regions, respectively. This has been made possible through the use of modern equipment provided by the SIGMA project, along with additional equipment invested by partners.

Plans are also underway for a new cold storage facility to be established in the Berd community of the Tavush region, as well as a modular grain mill in the village of Urut in the Lori region. Additionally, drone-based air spraying and plant protection services are planned for all target regions.

SIGMA is expected to generate higher incomes and create new or improved employment opportunities for more than 3,400 households during its first phase, which runs until the end of 2026. This number is projected to exceed 4,000 by 2028.

To ensure sustainable and inclusive growth in mountainous Armenia, SIGMA prioritises the economic participation of women, forcibly displaced people from Nagorno Karabakh, persons

with disabilities, and ethnic minorities. To support this, the project implements a comprehensive action plan, which includes capacity-building initiatives.

SIGMA co-invests in agriculture services that are not only effective and innovative but also replicable in other communities across Armenia. The project supports the implementation of these interventions by providing expertise and technical assistance.

The budget for the SIGMA project totals CHF 12 million (subject to the financial situation of the SDC over time). This ten-year project is implemented by DAI Global UK (DAI) and its branch in Armenia, in collaboration with AMPERA Consulting Company as a local partner.