The 1996 harvest is officially put at 340 000 tons, nearly 70 000 tons more than in 1995. Despite extensive winterkill, crop yields increased sharply in response to good spring rains, increased use of fertilizer and improved availability of fuel. Moreover, price liberalization of bread and the progressive privatization of the grain processing/distribution chain have increased producer incentives and reduced motivation to under-report actual yields. Production of potatoes , vegetables and grapes also increased. The area sown to winter grains, for harvest in 1997 is also estimated to have increased further. In 1996/97 the cereal import requirement is estimated to fall to 320 000 tons. Concessional credits have been received to import up to 65 000 tons of wheat from the US. The counterpart funds from its sale, at market prices, will constitute a revolving fund to finance commercial imports of wheat by the government. Most of the balance is expected to be imported on a commercial basis by the private sector which has expanded very rapidly following the complete liberalization of bread prices. In 1996/97 the country will receive direct budget support from the EC instead of food aid for monetization. Disbursement is conditional to the implementation of reforms in the agricultural sector, particularly land reform and privatization of the cereal/bread processing and distribution chain. There will continue to be a need for emergency food aid for vulnerable groups. The population targeted for food assistance is around 400 000. WFP is assisting 250 000 people and has a food pipeline covering needs until April. Donors are urged to pled more relief food assistance to Armenia.