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A cheese-making business flourishes in rural Armenia

A microcredit loan can make all the difference in transforming a failing small business into a flourishing one. A precarious enterprise run by a widowed mother of three in a remote, post-conflict community of Armenia has become a financially viable business, thanks to a microcredit loan provided through an IFAD-supported project. The business has also stimulated the local economy, providing small-scale dairy farmers with added income.

Aida Ghasryan lives in Syunik district, one of the most remote and least developed regions of the Republic of Armenia. The region’s economy, already fragile after the collapse of the Soviet Union, was badly damaged during the conflict with Azerbaijan over the Nagorno-Karabakh region from 1991 to 1994. Its distance from the capital and lack of transport connections has impeded economic recovery.

When her husband died, Ghasryan was left alone without a job and with three small children to support.

“I couldn’t give up,” she says. “Three lives depended on me.” Ghasryan had a small dairy farm and some experience in cheese processing, having worked as a qualified cheese maker in the local factory during the Soviet period. She began to produce cheeses from home on a very small scale.

Today, thanks to her dogged determination and a loan through the IFAD-funded Agricultural Services Project, Ghasryan’s company is a prosperous family business, producing almost 20 tonnes of cheese a year. The project, implemented in Armenia from 2001 to 2006, provided microcredit services for small business development, as part of a broader drive to support rural and economic development in disadvantaged and remote areas of Armenia.

Loan helps overcome hurdles

Ghasryan faced a number of challenges getting her small business off the ground. For one thing, cheese making in itself is a risky venture. It is a slow and labour-intensive process that requires a great deal of supervision, as well as laboratory analysis and tests. The smallest instance of carelessness can spoil the product, and many risks are involved in the different stages of production, from milk storage,  pasteurization and curd-making to pressing of the cheese, salting, ripening and storage.

On top of that, she had to deal with other overwhelming difficulties, particularly in the early stages. With few assets, no equipment or production site, and no access to markets, Ghasryan found the start-up to be particularly difficult.

But undaunted by the risks and responsibilities involved, Ghasryan sold her farm to invest more money in the business, and began buying milk from her neighbours.

Eventually her hard work paid off. When she secured the US$20,000 loan from the IFAD-funded project in 2004, it made a crucial difference to her business. She bought new processing equipment, repaired and expanded the production site, and founded Daliha Ltd, named after her three children, David, Lilit and Hakob.

Daliha Ltd specializes in making a Roquefort-type cheese.

“This is an especially risky type of cheese,” says Ghasryan. “It takes three months to ripen, and even then you have no guarantee of getting the right quality. I also make fresh cheese to cover operational costs.”

Market links stimulate economy

Another major obstacle Ghasryan has had to overcome is the difficulty of gaining market access. Syunik is remote and there is little demand for her cheeses in the district. But she has managed to solve the problem of product distribution by establishing links with three dealers who sell her products in Yerevan, the capital.

Ghasryan’s business is helping stimulate the local economy. By purchasing 650 litres of milk per day from 15 families, she generates income for her fellow villagers.

In the future Ghasryan and her children intend to take out a second  loan to expand production. They plan to buy a farm, equipment and a laboratory and open up a second production site.

“I’m so happy that I have overcome so many obstacles and been able to secure this prosperous future for my children,” she says.

Since 2002, IFAD has helped strengthen the economic and social position of women through the programmes and projects it supports in eastern European and former Soviet countries, by helping women’s businesses take root and thrive.

Source: IFAD