#100 Georgia Agriculture Bulletin, BFC

12/2020

100 Geo r g i a

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Agriculture Bulletin More than 325,000 hectares protected against brown marmorated stink bug Updated Animal Identification and Traceability System now fully operational Working capital financing harder to find for hazelnut exporters Russia not banning the import of Georgian agricultural products

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Georgian Agriculture Finance Bulletin Edition #100, December 2020

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4)

More than 325,000 hectares protected against brown marmorated stink bug ............................. 2 Farmers take advantage of anti-crisis measures to save money .................................................... 2 Government to subsidize 10,000 tons of wheat flour per month................................................... 2 Government plan to expand the country’s fishing fleet ................................................................. 2

Foreign Aid ................................................................................................................. 3 5) 6) 7) 8) 9) 10)

Updated Animal Identification and Traceability System now fully operational ............................. 3 EU, FAO grants bolster food production and security..................................................................... 3 United States to assist in implementation of agricultural projects ................................................. 3 EU, UNDP launch new COVID-19 grant program to support rural businesses ................................ 3 ENPARD IV to kick off with EUR 55 million budget.......................................................................... 4 FAO, ADC conduct trainings on modern agriculture ....................................................................... 4

Private Sector.............................................................................................................. 4 11) 12) 13) 14) 15) 16) 17) 18)

Working capital financing harder to find for hazelnut exporters .................................................... 4 Food security in Georgia during the COVID-19 pandemic............................................................... 4 Russia not banning the import of Georgian agricultural products .................................................. 5 Increased investments needed in value-added agricultural production ........................................ 5 No food shortage amid COVID-19 pandemic .................................................................................. 5 Agricultural exports increase ........................................................................................................... 5 State program boosting farmer confidence in agricultural insurance ............................................ 6 30,000 tons of wheat to be imported from the United States ....................................................... 6

Note: The Georgian Agriculture Finance Bulletin presents a monthly roundup of headlines and news stories related to investments and financing flows to Georgia’s agricultural sector.

This bulletin is prepared by Business & Finance Consulting—a Swiss-based development finance consulting company with a long history of working in Georgia. Currently, BFC is implementing the Agricultural Lending Programme for KfW. Read more »

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BFC. Georgian Agriculture Finance Bulletin. Edition #3, January 2013

State Initiatives 1)

More than 325,000 hectares protected against brown marmorated stink bug

December 2nd, 2020, https://sputnik-georgia.ru/economy/20201202/250225125/

In total, Georgia took measures to protect 325,700 hectares of agricultural land against the brown marmorated stink bug this year. This includes measures to reduce the impact of pesticides on the environment. As a result of the work carried out, the number of the pests was reduced to a minimum level, and farmers had good and plentiful harvest of hazelnuts, corn and citrus fruits. This, in turn, had a positive effect on the country's export potential, especially hazelnut exports (which were up 37% year-on-year).

2)

Farmers take advantage of anti-crisis measures to save money

December 4th, 2020, https://sputnik-georgia.ru/economy/20201204/250243619/

In order to mitigate the economic damage caused by COVID-19 in Georgia, as well as stimulate the economy, the Ministry of Agriculture developed the Caring for the Village and Farmers anti-crisis plan, which provides significant benefits in terms of land reclamation. So far, 34,600 farmers have taken advantage of this measure and been exempt from land reclamation fees. This has resulted in them saving GEL 3.8 million. The Caring for the Village and Farmers anti-crisis plan has also written off the debt of 42,000 individuals and legal entities (amounting to GEL 8 million) owed to the Georgian Melioration company.

3)

Government to subsidize 10,000 tons of wheat flour per month

December 7th, 2020, https://bm.ge/en/article/the-government-to-subsidize-10000

The government of Georgia has decided to subsidize wheat flour to avoid increases in the price of bread.

Specifically, the government will spend GEL 2 million GEL to subsidize 10,000 tons of wheat flour per month. Under the terms of the subsidy program, any company that receives a subsidy must sell their flour for no more than GEL 53 per bag. The subsidy program will run through March 2021.

4)

Government plan to expand the country’s fishing fleet

December 8th, 2020, https://sputnik-georgia.ru/economy/20201208/250274993/Gosudarstvo

The Ministry of Economy and Sustainable Development and the Produce in Georgia agency have begun joint work to support the fishing industry. Specifically, they will work to expand the country's fishing fleet, thereby creating new jobs. As part of this effort, they also intend on introducing new technologies and expanding their export potential. To this end, they will provide up to GEL 5 million for a credit guarantee scheme. Currently, their efforts are focused on two fishing companies, Nana-25 and Temo, both of whom plan to expand their operations through the acquisition of new fishing vessels.

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BFC. Georgian Agriculture Finance Bulletin. Edition #3, January 2013

Foreign Aid 5)

Updated Animal Identification and Traceability System now fully operational

December 4th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1339152/

The National Animal Identification and Traceability System (NAITS), which records information regarding large and small ruminants and their keepers all around the country, has been updated and is now fully operational. The animal identification and registration program initially launched in 2012 but was redesigned and re-developed in 2015 as part of an initiative of the Swiss Development Agency (SDC), the Austrian Development Cooperation (ADC) and the Food and the Agriculture Organization of the United Nations (FAO).

The updated program saves reduces paper records, thereby saving time and other resources. The program also serves as an important part of the food safety chain puzzle as it guarantees the traceability of animal and animal origin products in a prompt and timely manner.

6)

EU, FAO grants bolster food production and security

December 14th, 2020, http://enpard.ge/en/eu-fao-support-georgian-farmers-bolster-food-production-security-covid-19/

The European Union (EU), Food and the Agriculture Organization of the United Nations (FAO) and the Ministry of Agriculture have teamed up to provide 46 grants (worth nearly GEL 1.5 million in total) to support Georgian farmers during the COVID-19 pandemic. The grants were awarded to farmers in 12 municipalities of Georgia for the procurement of drip irrigation kits and other agricultural equipment.

This initiative was part of broader EU support for Georgian farmers and was implemented within the European Neighborhood Program for Agricultural and Rural Development (ENPARD).

7)

United States to assist in implementation of agricultural projects

December 15th, 2020, https://cbw.ge/economy/usa-to-assist-georgia-in-implementing-agricultural-projects

Deputy Agriculture Minister Nino Tandilashvili and Deputy Secretary of the United States Department of Commerce David de Falco met online to discuss the agricultural development of Georgia, including prospects for the introduction of U.S. technologies in the agricultural sector and the work of the SABIT program (which was organized by the United States Department of Commerce). The two sides also agreed that the United States will be active is assisting Georgia in the implementation of agricultural projects.

8)

EU, UNDP launch new COVID-19 grant program to support rural businesses

December 16th, 2020, http://enpard.ge/en/eu-undp-help-rural-businesses-respond-pandemic-crisis/

Given the ongoing COVID-19 pandemic, the European Union (EU) and the United Nations Development Program (UNDP) have revisited their agenda of interventions and projects designed to assist businesses and promote employment in rural Georgia. In particular, they have launched a joint GEL 9 million rural development grant program. Under the program, grants will provide up to 80% of the costs of approved investments that will help rural businesses survive and rebuild during the pandemic and post-pandemic periods.

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BFC. Georgian Agriculture Finance Bulletin. Edition #3, January 2013

9)

ENPARD IV to kick off with EUR 55 million budget

December 17th, 2020, https://agenda.ge/en/news/2020/3945

The Ambassador of the European Union (EU) to Georgia, Carl Hartzell, and the Minister of Foreign Affairs of Georgia, David Zalkaliani, have signed an agreement to kick off the fourth phase of the European Neighborhood Program for Agriculture and Rural Development (ENPARD IV). This fourth phase will provide EUR 55 million to enhance consumer protection, promote EU exports and improve livelihoods of rural population in Georgia. In light of the COVID-19 pandemic, ENPARD IV will also provide extended assistance in the food safety, sanitary and phytosanitary sector. ENPARD IV will also improve the economic and social integration of vulnerable households in disadvantaged rural regions of Georgia, including eco-migrants, conflict-affected people, ethnic minorities, Georgian returnees and migrants.

10) FAO, ADC conduct trainings on modern agriculture December 17th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1365316/

More than 30 field training sessions for approximately 200 farmers in four different communities were conducted by the Food and Agriculture Organization of the United Nations (FAO) and the Austrian Development Cooperation (ADC). These training sessions, conducted between August and November of this year, used different teaching approaches and demonstration plots to deliver modern agricultural knowledge and strengthen the overall capacity of Georgian farmers, with the ultimate goal of increasing productivity and income.

It should be noted that FAO specialists have already begun developing a plan for 2021. This plan is likely to include hands-on trainings for farmers and local extension specialists.

Private Sector 11) Working capital financing harder to find for hazelnut exporters December 1st, 2020, https://bm.ge/en/article/nutsge-banks-cut-working-capital-financing-for-hazelnut-exporters/70085/

According to the director of the hazelnut processor NutsGe, financial institutions have reduced their working capital financing for exporters. This, combined with COVID-19 measures, the complexity of logistics and other issues, has meant that many companies, especially hazelnut processors, are finding it difficult to procure the resources necessary to maintain their businesses. At the same time, most processors remain optimistic that this is only a temporary setback and that they will be even more determined to return to normalcy in 2021.

12) Food security in Georgia during the COVID-19 pandemic December 3rd, 2020, http://georgiatoday.ge/news/23236/Food-Security-%26-COVID-19-in-Georgia

The government of Georgia has been active in ensuring the food security for its population, including state subsidies on nine important food products. Despite this, the country’s food security status is still uncertain according to the Food and Agriculture Organization of the United Nations (FAO). Most of this uncertainty, however, seems to stem from a lack of regular and/or current data on the four most important food security indicators: food availability, food access, supply stability and food utilization.

Given that there is some uncertainty related to Georgia’s food security situation, FAO is recommending that policymakers focus on investments in food supply chains, address bottlenecks at the various production and sales stages, promote inter-regional trade, recognize the importance of local, domestic food

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BFC. Georgian Agriculture Finance Bulletin. Edition #3, January 2013

markets and work to address the constraints faced by women and youth engaged in food production activities.

13) Russia not banning the import of Georgian agricultural products December 10th, 2020, https://sputnik-georgia.ru/economy/20201210/250303548/

Russia’s Federal Service for Veterinary and Phytosanitary Supervision (Rosselkhoznadzor) recently announced a ban on the import of certain agricultural products from Azerbaijan and specific areas of Armenia, Uzbekistan and Turkey into Russia due to the detection of pests. This has sparked some confusion that Georgian products were also being banned for similar reasons. Rosselkhoznadzor, however, was quick to dismiss this, stating that they have no complaints with the quality of Georgian fruits and vegetables and that Georgian agricultural products continue to be actively imported into Russia.

14) Increased investments needed in value-added agricultural production December 16th, 2020, https://bm.ge/en/article/what-are-some-challenges

According to the Organization for Economic Cooperation and Development (OECD), Georgia’s agricultural sector has the potential to generate substantial benefits for the country’s economy if appropriate investments can be made in its agricultural value chains. In particular, OECD notes that there need to be investments in value-added production in the country, which has declined significantly since the liberalization of the economy over the past decade. Such investments would not only boost the sector as a whole, they would also provide more jobs, improve food security, support rural development and maintain the sector’s competitiveness in international markets

15) No food shortage amid COVID-19 pandemic December 16th, 2020, https://sputnik-georgia.ru/reviews/20201216/250362488/

According to Agricultural Minister Davitashvili, there has been no shortage of food in any region of the country during the COVID-19 pandemic. This is the result of the work of the Ministry of Agriculture in ensuring that issues related to the management of food supplies, logistics and transportation were resolved quickly and effectively. The Ministry was also able to enact program to help farmers find markets for products amid market closures in addition to their other agricultural sector support programs. The Ministry also helped agricultural producers and exporters expand their markets, resulting in record high export rates for many agricultural products.

16) Agricultural exports increase December 16th, 2020, https://mepa.gov.ge/En/News/Details/20179

The Ministry of Agriculture, even amid the COVID-19 pandemic, has been able to successfully help boost agricultural exports. In fact, during the August 1, 2020 through December 13, 2020 period, Georgia has exported 25,287 tons of peaches and nectarines (valued at USD 21.3 million), 16,062 tons of tangerines (valued at USD 7.7 million), 12,664 tons of hazelnuts (valued at USD 65.7 million), 10,834 tons of persimmons (valued at USD 5.7 million), 6,739 tons of apples (valued at USD 2.9 million) and 674 tons of blueberries (valued at USD 3.8 million).

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BFC. Georgian Agriculture Finance Bulletin. Edition #3, January 2013

17) State program boosting farmer confidence in agricultural insurance December 21st, 2020, https://sputnik-georgia.ru/economy/20201221/250404148/

The area of agricultural land covered under the state’s agricultural insurance program in 2020 increased by 31% compared to 2019 and exceeded 18,000 hectares. In total, 17,532 policies were issued under the state program, with more than GEL 8 million in subsidies for these policies. The program, which began in 2014, has allowed farmers to receive more than GEL 44 million in compensation for damaged and/or lost production. The program appears to be successful in its push to develop a transparent and trustworthy agricultural insurance sector in the country.

18) 30,000 tons of wheat to be imported from the United States December 22nd, 2020, https://bm.ge/en/article/30000-t-of-wheat-to-be-imported

According to Georgian Flour Producers Association, 30,000 tons of wheat will be imported from the United States late this year. The import of this wheat is very important for Georgia given the recent difficulties with wheat on the regional market.

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