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17принимаемых проектных решений, снижает их рис-ковость.
5. Формирование маркетинговой привлекательности проекта и его результата на рынке. Стейкхолдеры являются активными трансляторами информации о проекте, его результате, технологиях и участниках во внешнюю среду. При этом передаваемая информация формирует отношение к продукту проекта у потенциальных потребителей, стимулируя или блокируя спрос на него. Генерируемая стейкхолдерами информация имеет и отложенные эффекты, выходящие за границы конкретного проекта. Так стейкхолдеры формируют партнёрский имидж всех участников проекта, предопределяя возможность их участия в последующих проектах.
6. Интеграция коммуникаций проекта. Множественность субъектов проектной деятельности, преследующих порой разнонаправленные цели, распространяют во внешнюю и внутреннюю проектную среду противоречивую информацию. Такая нескоординированность коммуникаций наносит, с точки зрения маркетинга, существенный вред как процессу и результату проектной деятельности, так и конкретному предпринимателю или организации в целом.
Определение основных функций управления стейкхолдерами проекта, имеющими оптимизационный потенциал в использовании маркетингового подхода является лишь первым этапом исследования. Полученные результаты позволяют говорить о возможности маркетинговой технологизации и операционализации выделенных функций. На это будут направлены наши дальнейшие исследования.
References
1. Freeman, R.E. Stakeholder Theory: The State of the Art / R.E. Freeman, J. Harrison, A. Hicks, B. Par-mar and S. de Colle. - Cambridge: Cambridge University Press, 2010. - 343 p.
2. Berman, S. Does stakeholder orientation matter? Relationship between stakeholder management models and firm financial performance / S. Berman, A. Wicks, S. Kotha, T. Jones // The Academy of Management Journal. Special Research Forum on Stakeholders, Social Responsibility, and Performance. - 1999. -Vol. 42. - № 5. - P. 488-506.
3. Fontaine, C. The Stakeholder Theory / C. Fontaine, A. Haarman, S. Schmid // [Electronic resource]. - Access mode: 180 https://pdfs.seman-ticscholar.org/606a/828294dafd62aeda92a77bd7e5d0a 39af56f.pdf
4. Tsipes, G.L. Management of relations with stakeholders of the project: from simple to complex (part 2) / G.L. Tsipes, N.M. Shadaye-va // Project and program management. - 2015. - No. 03 (43). - S. 218228.
5. Furta, S. D. Project stakeholder management: revision of the 5th edition of the PMBOK Guide (Part II) / S.D. Furt, T.B. Solomatina, T. Hoppl // Initiatives of the XXI century. - 2014. - No. 2. - S. 27-42.
6. Chernobaeva G., Nurmaganbetova J. Marketing support of social projects on the market of physical culture and sports services // Trajectory of Science. 2018.Vol. 4.No. 9.S. 2020-2024.
7. Dokholian SV, Magomedova PA, Mirzoeva AR Marketing approach to the management of organizational projects in construction // RPE. 2012. No. 1.URL:
https ://cyberleninka. ru/article/n/marketingovyy -
podhod-k-upravleniyu-organizatsionnymi-proektami-
v-stroitelstve
8. A Guide to the Project Management Body of Knowledge. Seventh Edition// Project Management Institute URL: https://www.pmi.org/pmbok-guide-stand-ards/foundational/pmbok
PRICE CHANGES AND PRICING MECHANISMS IN THE POULTRY MARKET OF THE
REPUBLIC OF ARMENIA
Mkrtchyan T.,
Doctor of Economics,
Associate Professor of the Armenian State University of Economics, Armenia, Yerevan, 0025, 128 Nalbandyan Hambardzumyan E.,
PhD in Economics,
Associate Professor of the Armenian State University of Economics, Armenia, Yerevan, 0025, 128 Nalbandyan Karapetyan N.,
PhD student at the chair of Finances at the ASUE, Armenia, Yerevan, 0025, 128 Nalbandyan
Galstyan M.
Bachelor student at the department of Finances at ASUE, Armenia, Yerevan, 0025, 128 Nalbandyan
Abstract
Changes of food prices, which assume daily consumption, directly affect the volume and consumption structure of households, therefore, consumers are sensitive to price changes in these product markets. Among these is the poultry market, as poultry has a significant share in the structure of food consumption of the population of
Armenia, thanks to its relatively low price and dietary properties. However, the level of poultry self-sufficiency is quite low in Armenia and the majority of the demand for this product is satisfied by imports, due to which the world market prices have a big influence on the market prices of poultry. On the other hand, the poultry market of RA cannot be free from internal inflationary pressures and other economic effects. In this context, in this article, a comprehensive analysis of price changes and pricing mechanisms in the poultry market of the Republic of Armenia is carried out. In addition to internal and external macro determinants, the micro-factors, influencing the mechanism, have also been analyzed. In particular, an analysis of cost components has been done to identify poultry pricing mechanisms.
Keywords: poultry market, chicken price, cost of chicken, level of poultry self-sufficiency, poultry production, import of poultry.
Introduction. Meat products have a significant share in the structure of food consumption of the population of the Republic of Armenia (about 23%), of which poultry is often preferred thanks to its relatively low price and dietary properties.
Year by year, the supply of poultry, and more specifically, chicken meat, is growing in Armenia - fluctuating in the range of 40-58 thousand tons in the last 5 years, of which, however, only 20-25% is provided by domestic production. Thus, the share of poultry imports in the total supply of poultry in Armenia has always exceeded domestic production (4.4 times on average) from 2005 to 2020. The lowest import/ production ratio
was recorded in 2006 when the import has exceeded the production more than 2 times, and the highest in 2011 - more than 7 times. The volume of imports has exceeded the volume of production more than 3 times in 2020, composing 77.5% of the total supply of poultry (57.9 thousand tons). During the observed period, the volume of poultry production showed a stable growth tendency (average annual growth rate - 8.3%) and have not fluctuated sharply over the years, except for 2009, when have decreased by more than 30% compared to the previous year (because of the financial and economic crisis). But the volume of imports has shown highly volatile behavior.
70 60 50 40 30 20 10
i^witttttttli
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
I Production
I Import
I Aggregate supply
•The level of self-sufficiency,%
Pic. 1. Volumes of poultry production, imports, aggregate supply, the level of self-sufficiency in Armenia in
2005-2020 (thousand tons)
As the biggest part of domestic demand for poultry is ensured through imports, the effect of import prices on the prices of both domestic and poultry meat products is a fact. Except for import prices, the market prices of poultry meats are influenced both by supply and demand factors. Emphasizing the role of poultry price changes for consumer behavior and the consumption structure, in this research, we aim to reveal the pricing mechanism of poultry and the factors behind price changes in Armenia. To do this, we set a task to study the cost components of both imported and locally produced poultry assessing the impact of the latter on changes in sales prices.
Literature review. A comprehensive study of the poultry market of the Republic of Armenia, particularly the chicken market, has not been conducted in recent years, although some issues related to the field have been addressed in some researches. Research of this product market was conducted in 2012 by the Center of Economic Development and Research [1]. The research paper by S.S. Avetisyan and A.V. Grigoryan
(2015) on "Typical features and regulatory structures of essential food and non-food markets in the Republic of Armenia" presented methodological approaches of food market research - referring also to the poultry market [2]. As the Republic of Armenia is a member of EAEU, the trends of the food markets of the member states of the Union affect the economy of the Republic, which is being reflected in the behavior of its food markets [3-4]. In recent years, restrictions imposed by Covid-19 in all countries of the world have led to both structural shifts in the economy [5]. The world meat market has undergone qualitative and quantitative changes due to fluctuations in supply and demand. In the uncertain environment, from the point of view of food production and consumption risks, the regular forecasts of the development trends of agriculture, in particular, of food markets, published by the OECD and FAO, are valuable [6]. fAo regularly publishes researches on the current state of meat prices and the world market, as well as the prices in the meat market and the trends in their change [7-9]. Dmitri Orekhov
0
and Aleksandr Rogov have studied the possible developments in the Russian meat market during the pandemic, which is valuable from the point of view of our research, considering that most of the poultry meat is imported to Armenia from Russia [11].
Research methodology: Because of the low level of poultry self-sufficiency, the market price of poultry meat in Armenia is majorly influenced by the world market prices and their changing tendencies, for that reason the price changes in the poultry market of the Republic of Armenia were viewed in the context of internal and external factors influencing them, and cost analysis was performed to identify pricing mechanisms.
Poultry imported to Armenia is sold frozen, and the produced poultry is mainly fresh or chilled. Although these two types of poultry are mutually interchangeable, they differ in their pricing mechanisms, production processes, and chain of sales. Therefore, considering the mentioned differences in the production processes of poultry importing and producing companies, poultry sales chains, cost structure, selling price formation mechanisms were considered separately for producing and importing companies. In this research, the chicken market was separated from the poultry market, since both in the world and in Armenia, the "Poultry" product group is presented in the form of chicken by about 98-99%, although this product group also includes other poultry meat - turkey, duck, etc.
The statistical source for the research was the information bases of the Statistical Committee of the Republic of Armenia and State Revenue Committee on the production of poultry meat, in particular, chicken meat, volumes of import, prices, as well as the publications of the RA SCPEC of different years, information sources on world food production and international
6 5 4 3 2 1 0
Low level of self-sufficiency and wide import geography make the market vulnerable to external shocks, therefore, it is not accidental that in recent years price fluctuations are often observed in the poultry market of the Republic of Armenia. Combined with international poultry prices, in particular EU average poultry prices, a positive correlation is evident. Thus, if in 2019 the price of poultry in the EU markets was higher than the
prices of the United Nation's Food and Agriculture Organization (FAO) [12-16]. The analysis of the poultry import and production cost structure was based on the results of a survey conducted among large economic entities engaged in the import and production of poultry meat within the framework of this research.
As for the methodology of calculating the indicators used in the analysis, then the total supply of poultry meat includes the balance at the beginning of the year subtracted the sum of production during the year for non-consumption uses (sum of production losses, other fodder, fodder, and other uses) and the sum of the balance at the end of the year, and consumption - the difference between the supply volume and the year-end balance. The level of self-sufficiency was determined as the ratio of the difference between production volume and loss to the volume of food consumption.
During the research, were used mathematical, statistical, graphical analysis and comparison methods, statistical analysis of numerical series of indicators, and the method of correlation.
Analysis: The economy of the Republic of Armenia has a major tendency towards importing poultry, which is explained by the relatively high prices of poultry production in the Republic. Thus, the comparison of the average prices of poultry producers in Armenia with similar indicators in Georgia and Russia shows that the prices of producers in Armenia are incomparably higher. If in 2006-2008 they were somewhat comparable, in recent years the price gap has widened. In 2019, the prices in Armenia are more than three times higher than the prices in Georgia and Russia (pic. 2). Considering insignificant transportation costs from Georgia to Armenia and the membership of the Russian Federation in the EAEU, such a large price difference is somewhat problematic, therefore, the pricing chain in the poultry market of RA needs to be thoroughly studied.
average of the last 5 years, then in 2020 it has sharply decreased, it was lower than the average of the last 5 years. 2021 was marked by sharp inflation, which in July reached 2.1 euros per kilogram [10]. It is the highest in the period starting from January 2019 and ending in October 2021. This tendency is generally reflected in the price developments of the chicken meat market of the Republic of Armenia.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
> Armenia > Georgia 9 Russia
Pic. 2 Price trend of poultry producers in Armenia, Georgia, and Russia in 2006-2019
(thousand US dollars/ton)
1700,00 1600,00 1500,00 1400,00 1300,00 1200,00 1100,00 1000,00
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000000
OOOOOO^H^H (N(N(N(N(N(N(N(N
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
22 00
(N(N(N(N(N(N (N(N(N(N(N(N(N(N(N(N(N(N(N(N(N(N(N(N(N(N(N(N
Frozen chicken Линейная (Frozen chicken)
■ Chilled /fresh/ chicken Линейная (Chilled /fresh/ chicken)
Pic. 3. Average monthly prices of frozen chicken, chilled/fresh chicken in Armenia from 2015 to 2021
August /1 kg, AMD /
Chicken meat is imported to Armenia mainly frozen (both whole and sliced), but locally produced chickens enter the consumer market mainly chilled or fresh, therefore, we have considered price changes in this product market for these two product types separately. First, we analyze the dynamics of frozen chicken prices.
As it can be seen in Chart 3, the trend of average monthly prices of frozen chicken in Armenia is negative. In 2017-2021 the price ranged from 1445 to 1208 AMD. Moreover, from May 2017 to July 2018, it showed a downward trend reducing by approximately 13 %. However, this trend was not maintained in the following months, and until April 2019 prices began to rise. Thus, in April 2019, the price of 1 kg of frozen chicken meat increased by about 9. 4% compared to 2018. This can be a result of the growing uncertainty of business expectations due to political risks. In the following months, prices were decreasing, which contin-
ued until the beginning of the third quarter of 2020, registering the lowest price in the observed period - 1208 AMD. However, the downward trend of prices has not been maintained and from October 2020 to the end of the year prices have risen by about 13%. This was mainly due to the difficulties of interstate cargo transportation, the war situation, and the expected increase of import duties from third (non-EAEU) countries. At the same time, inflationary pressures were maintained until August 2021, when the price of frozen chicken increased by about 6% compared to December 2020, amounting to 1445 AMD.
The reasons for price fluctuations are also partly due to the cost structure of imported meat. Surveys conducted by us among businesses operating in this product market show that weighted average purchase prices are a determining factor in the cost of imported chicken, making up about 76% of the cost, followed by maintenance and other costs - about 14% and transportation costs - almost 10%.
■ Weighted average purchase price
■ Transportation costs
■ Maintenance and other costs
Pic. 4. The structure ofproduction costs of imported chicken meat (frozen)
These three major spending areas are the cost components of imported chicken meat. According to the average results of the survey, in 2020, the cost price decreased by 7.4% on average compared to the previous year, which had negative benefits from the latter components ' chicken purchase price - 8.3 percentage points, storage costs - 7.2, and positive contribution -transportation costs - 8.1 percentage points. The latter is explained by the difficulties related to cargo transportation and the increase in transportation costs due to the Covid-19 pandemics.
At the same time, according to the results of the survey, the cost of 1 kg of chicken meat imported to the warehouse in 2020 was about 600 AMD and the average
The level of concentration of the frozen poultry import market is a factor in raising the price of frozen chicken. In 2018-2020, the number of economic entities operating in the market fluctuated between 50% and 54%, of which the total shares of the top 3 in the market by years amounted to 63%, 69%, and 65%. The significant impact they have on the market in practice allows them to impact the market price. The price trend of locally produced chicken is generally correlated with the price of imported meat, although the fluctuations are sharper. From 2017 to mid-2018 the 9% decline was followed by a sharper increase, which continued until April 2019, when the price of the chicken increased by about 22% and amounted to 1643 AMD. From May 2019 to July 2020 the prices decreased by about 33%, registering the lowest price in July - 1237 AMD per 1 kg. From August 2020 inflationary pressures intensified again persisting until August 2021, when the highest price of the product was registered in the observed
significant factor in the retail selling price of imported chicken if the import is made from non-EAEU member countries. If we take into account that in 2020 only 15.5% of imported poultry meat was imported from EAEU countries (particularly from the Russian Federation) and the rest - from non-EAEU member countries, in the coming years the prices of poultry should increase because of the increase of customs duties. In 2020 29. 4% of the total volume of imports came from Ukraine (pic. 4), 25.4% from the USA, 15.3% from Georgia, etc. As we can see, the major suppliers of poultry are third countries, some imports from the EAEU countries are made only from Russian Federation.
period - 1661 AMD per 1 kg. Thus, in the observed period, the price of fresh chicken meat increased by about 13% - from 1472 drams in January 2017 to 1661 drams in August 2021 (an increase by 13%, Chart 2). At the same time, locally produced chicken in 2020 was about 12% more than the price of imported chicken. Despite this, locally produced chicken is competitive in the market and is in consumer demand. This is evidenced by surveys, according to which locally produced chicken meat is superior in quality to imported chicken meat.
Analysis of the cost structure of locally produced chicken shows that about half of it is the fodder component. Meanwhile, farms mainly use sunflower oil, corn, soybeans, wheat, etc., which are imported in whole or in part. The cost of a day poult consist around 12.5%, utilities - 11%, salary - 8%, depreciation - 5.9%, administrative expenses - 5.4%, percent in the expenses.
retail price was twice higher. Custom duties are a
Pic. 4. Structure of poultry imports by countries in 2020
2,1 2'8 0,7
IFeed component ISalary
j|Salling expenses
ICost of daily chicken «I Depreciation j|Other costs
I Utility expenses ¡Administrative expenses 'IVeterinary-sanitation costs
Pic. 5. The structure of the cost price of locally produced chicken meat in 2020
To clarify the reasons for the changes in retail prices during the considered period, the contributions of changes in the cost of individual components of cost were assessed. As a result of the estimates, from 3.96% increase in the cost price compared to the previous year, direct expenditures contributed by 2.88 pp., and the indirect expenditures - by 1.08 percentage points. The
biggest positive contributors were the fodder component (4. 27pp.) and utility expenses (2. 92pp.), and the negative contributors were the cost of a day poult (-2. 83pp.) and wage expenditures (-2. 52pp.). As for indirect costs, sale costs had a positive contribution (1. 26pp.), and administrative costs - a negative contribution (-0.19pp.).
Table 1
2020
Direct costs, including: 2.88
Cost of a day poult -2.83
Feed component 4.27
Utility costs (electricity, heating, water 2.92
Salary -2.52
Veterinary sanitation -0.42
Depreciation 1.44
Other costs 0.02
Indirect costs, including 1.08
Administrative expenses -0.19
Selling expenses 1.26
Cost of 1 kg of chicken meat 3.96
The contribution of costs to the change in the retail price is 2.9 percentage points. The cost of locally produced chicken in 2020 was about 786 drams, which is almost 30% higher than the cost of imported chicken meat. Given that local producers sell mostly fresh chicken, in the face of such a significant difference in cost, it becomes clear that imports are more economically viable. In the case of fresh chicken meat, this difference in cost is partially offset by the difference in price, the average price of locally produced fresh chicken was about 12% more expensive than frozen meat.
This circumstance may be conditioned by the volume of chicken imports, up to 3 times exceeding the local production. Under these conditions, local production farms focus on the quality of chicken meat, due to which there is persistent consumer demand.
As chicken has been heavily imported from the United States and Ukraine in recent years, it can be assumed that the main factor driving changes in chicken prices under other equal conditions is domestic prices in the international market. However, the simultaneous change in the prices of local and imported chicken meat indicates their interchangeability, and the gradual dynamics indicate high sensitivity to the development of internal and external macro-environments.
Today there are full preconditions for the development of the sphere in our economy. First, the ever-increasing demand for poultry in the economy, the extremely low level of self-sufficiency make the market quite attractive and profitable. An important factor is that, unlike many poultry products, consumers prefer to buy local products on equal terms. This in itself is a serious competitive advantage for the local producer. On the other hand, according to the tariff change schedule,
which is presented on the official website of the Eurasian Economic Commission, the customs duty on poultry imports should have increased from 22% to 50% by 2021, but within the quota, it increased by only 3 percentage points to 25 %. Since 2022, the customs duties on chicken imports from third countries will increase to 80%.
It is not clear what the quota threshold will be, what customs duties will be set within it, but it is obvious that in the conditions of the above-mentioned changes in conditions, poultry production in Armenia will become quite attractive.
Conclusion: In general, we can say that poultry prices in Armenia show a highly volatile behavior, due to changes in the cost and structure of the cost, as well as systemic risks of the macro-environment, which forces manufacturers and importers to increase overlays. It is clear from the comparison of the cost of imported frozen chicken and the cost of locally produced frozen chicken, that local production is significantly more expensive than imported ones. Naturally, this affects the retail price, which is not proportional to the years and according to the method of sale. The biggest difference in selling prices is in the case of wholesale and the importer is in an indisputable advantageous position, the import overhead is twice as large as the production overhead, making imports more economically viable.
We state that the factors causing fluctuations in the price of chicken meat in the country during 2019-2020 are the changes in the cost price of chicken meat, the degree of centralization of the import market, the import customs duty, as well as the systemic risks of the economy.
References
1. Prices and Vulnerability in Armenia, 2012, Economic Development and Research Center (EDRC)
2. Avetisyan S., Grigoryan A., Features and Regulatory Issues of Food Products Market and NonFood Essentials Market in the Republic of Armenia, Yerevan, Tntesaget, 2015, ISBN 978-9939-61-124-2, Amberd
3. Review of the poultry meat market of the
Member States of the Eurasian Economic Union for 2012 - 2016, Department of Agroindustrial Policy of the Eurasian Economic Commission, Moscow 2017, URL: http ://www. eurasiancommission. org/ru/act/prom _i_agroprom/dep_agroprom/sensitive_products/Docu-ments/
4. Modern Trends in the Development of Food Markets in the Concept of Global Value Chains: Significance for the EAEU, A.V. Pilipuk et al., "Institute of System Research in the Agroindustrial Complex of the National Academy of Sciences of Belarus" Minsk, 2020, (Published in Russian)
5. Market Situation for Poultry, Committee for the Common Organisation of the Agricultural Markets 21 October 2021
6. OECD-FAO Agricultural Outlook 20202029, URL:https://www.oecd-ilibrary.org/agriculture-and-food/oecd-fao-agricultural-outlook-2020-2029_1112c23b-en,
URL: https ://www. fao .org/3 /CB 533 2EN/Meat. pdf
7. Food Outlook - Biannual Report on Global Food Markets, November 2021 URL:https://www.fao.org/markets-and-trade/publications/detail/en/c/1455240/
8. Overview of global meat market developments in 2020, Meat market review, The Food and Agriculture Organization of the United Nations (FAO), March 2021
9. FAO, Meat market review: Price and policy update, August 2021. Rome, URL:https://www.fao.org/3/cb6127en/cb6127en.pdf
10. Dmitry Orekhov, Alexander Rogov, Meat market in a pandemic, Scenarios for the development of the Russian meat market in 2020-2021, Agro-industrial complex, Analytical overview, (Published in Russian),
URL:https://www.ratings.ru/files/research/macro/NC R_MeatMarket_May2020.pdf
11. https://www.armstat.am
12. http://www.fao.org
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