#102 Georgia Agriculture Bulletin, BFC

02/2021

102 Geo r g i a

#

Agriculture Bulletin Deadline for Registration in Agricultural Support Program Extended 41% of the Population Accounts for Only 6.5% of GDP EU, FAO Support Establishment of Seed and Saplings Association USD 19 Million in Tangerines Exported from Georgia

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Georgian Agriculture Finance Bulletin Edition #102, February 2021

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5)

Discount Diesel Fuel Program to Continue Through 2021 .............................................................. 2 Deadline for Registration in Agricultural Support Program Extended ............................................ 2 Norwegian Trout and Salmon Farm Opens in Guria........................................................................ 2 41% of the Population Accounts for Only 6.5% of GDP .................................................................. 2 State Aims to Support Agritoursim in a Post-Pandemic World ....................................................... 3

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

EU, FAO Support Establishment of Seed and Saplings Association ................................................. 3 SQIL Project Grant Competition Announced ................................................................................... 3 New Project Aims to Boost Domestic Popularity of Georgian Agricultural Products ..................... 3 New Working Group to Promote Climate-Smart Agriculture ......................................................... 4 Two New Greenhouses Built Under the EU4Business Program ...................................................... 4

Private Sector.............................................................................................................. 4 11) 12) 13) 14)

USD 19 Million in Tangerines Exported from Georgia..................................................................... 4 Georgian Apple Exports Mostly Bound for Russia ........................................................................... 4 Georgian Milk and Meat Production Show Increases in 2020 ........................................................ 4 Volume of Hazelnut Exports Up 53%............................................................................................... 5

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 #102, February 2021

State Initiatives 1)

Discount Diesel Fuel Program to Continue Through 2021

January 29th, 2021, http://bizzone.info/agriculture/2021/1611961613.php

The Ministry of Agriculture has announced that the program to provide Georgian farmers with discounted diesel fuel has been extended until the end of 2021. Minister of Agriculture Levan Davitashvili noted that the program was very successful in 2020, providing 125,000 farmers will benefits of more than GEL 7 million. He also noted that, this year, the Ministry has developed a special electronic platform that will allow farmers to register for the program at gas stations around the country.

Registration for the program for this year began on February 1, with discount cards being gradually activated starting on February 7.

Under the program, diesel fuel is provided at a discounted price to individuals and legal entities owning agricultural land of at least 0.25 hectares. The program provides for diesel fuel discounts of up to 150 liters per hectare.

2)

Deadline for Registration in Agricultural Support Program Extended

February 4th, 2021, http://bizzone.info/agriculture/2021/1612499668.php

Small- and medium-sized farmers who did not apply for financial support in 2020 under the state’s Incentives for Agricultural Landowners program received an extended registration deadline (February 20, 2021). The program is part of the anti-crisis plan of the Ministry of Agriculture and provides direct state subsidies to farmers who own plots of agricultural land between 0.25 and 10 hectares. GEL 200 in subsidy support is available per hectare for the purchase of planting material, fertilizers and plant protection products.

Only to farmers who have registered their land in the National Register of Real Estate and a special registry of farmers at the Ministry of Agriculture are eligible to participate in the program. To date, approximately 246,000 Georgian farmers have benefitted from a total of more than GEL 32 million under the program.

3)

Norwegian Trout and Salmon Farm Opens in Guria

February 14th, 2021, https://georgianjournal.ge/business/36854-norwegian-trout-and-salmon-to-be-farmed-in-guria.html

A Norwegian trout and salmon fingerling farm has opened Guria, in the village of Kviriketi (Ozurgeti municipality). The farm will employ local residents and plans to sell its products both domestically and in foreign markets. The opening was made possible due to GEL 4 million in investment funds and GEL 1.5 million in affordable credit under the Affordable Agricultural Credit program. So far, the program has helped 220 agricultural enterprises establish themselves.

4)

41% of the Population Accounts for Only 6.5% of GDP

February 16th, 2021, http://bizzone.info/agriculture/2021/1613509566.php

Georgia remains a country with an extremely inefficient agricultural sector, as evidenced by 41% of the employed population being engaged in agricultural production at some level yet agriculture only accounting for 6.5% of GDP. By comparison, in most developed countries, only 2-3% of the working population is engaged in agriculture, and agriculture accounts for 2-3% of GDP. At the same time, this 2Page 2

BFC. Georgian Agriculture Finance Bulletin. Edition #102, February 2021

3% produces an average of ten times more than Georgia’s 41%, both in terms of quantity and monetary value.

The main reasons for the low efficiency in Georgia are the small average size of farms and the overall lack of modern technology. If Georgia is to move towards a modern agricultural sector, much work needs to be done, especially with regard to the introduction of modern technologies.

5)

State Aims to Support Agritoursim in a Post-Pandemic World

February 21st, 2021, http://www.investor.ge/2021/02/15/agritourism-support-bill-gives-hope-to-struggling-industry/

A bill passed in October 2020 aims to extend targeted assistance to the agritourism sector once normalcy resumes following the end of the COVID-19 pandemic. The bill aims to create a legal framework within which the government can interact with agritourism businesses, shore up food safety, offer tax benefits to incentivize the development of rural businesses and promote the sector through marketing campaigns. An additional measure, if passed, would exempt agritourism facilities from both income and employment taxes if they have an annual turnover of less than GEL 200,000.

Foreign Aid 6)

EU, FAO Support Establishment of Seed and Saplings Association

February 1st, 2021, http://www.fao.org/georgia/news/detail-events/en/c/1371758/

The Georgian Seeds and Saplings Association (GEOSSA) has been established under the EU Innovative Action for Private Sector Competitiveness in Georgia project (with the support of the European Union (EU) and the Food and Agriculture Organization of the United Nations (FAO)) to: (1) boost the production of high quality seeds and planting material in Georgia and (2) comply with the forthcoming seed certification system that is aligned with international standards. To accomplish this, GEOSSA will support private nurseries and seed producers in improving the quality of their production while also encouraging collaborations and advocating for producer interests at the government level. This, in turn, will contribute to higher quality products capable of being sold in both domestic and foreign markets.

7)

SQIL Project Grant Competition Announced

February 8th, 2021, https://agroface.ge/news/1d4a5a33-0b62-404a-b879-e49593c8f021

A new grant competition has been announced under the SQIL project that will provide 50% grant cofinancing for investment projects of between USD 10,000 and USD 75,000. The grant competition aims to support the dairy and meat industries in business expansion and development activities.

8)

New Project Aims to Boost Domestic Popularity of Georgian Agricultural Products

February 9th, 2021, https://agenda.ge/en/news/2021/350

The Georgian Retailers Association and the Agriculture Program of the United States Agency for International Development (USAID) have teamed up to support the sale of Georgian agricultural products. More specifically, special stands featuring Georgian products will be set up at 25 stores in Tbilisi, with the goal of increasing awareness of the agricultural products among local consumers.

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BFC. Georgian Agriculture Finance Bulletin. Edition #102, February 2021

Products are eligible to be featured at the stands if: the products are non-perishable; the product packaging complies with labeling norms; and the producer was a participant in any USAID program.

9)

New Working Group to Promote Climate-Smart Agriculture

February 17th, 2021, http://www.fao.org/georgia/news/detail-events/en/c/1375656/

The European Union (EU) and the Food and Agriculture Organization of the United Nations (FAO) are supporting the Ministry of Agriculture in establishing a climate agriculture working group. The group aims to raise awareness on climate smart agriculture and also develop a set of recommendations for Georgian authorities to minimize the climate-change effects of and reduce greenhouse gas emissions from the agricultural sector. More specifically, the group aims to establish a comprehensive road map that will lead to the development and adoption of a modern climate policy in Georgia.

10) Two New Greenhouses Built Under the EU4Business Program February 23rd, 2021, http://bizzone.info/agriculture/2021/1614121458.php

Two greenhouses have been built in Georgia within the framework of the EU4Business program. The two greenhouses will be used to grow endemic varieties of grapes and fruit trees as well as improve storage conditions in the genetic bank at the Jigaur Research Station. In addition, the greenhouses will isolate plants from the possible spread of viruses. Over time, they will eventually transition into private nurseries that provide quality, certified planting material. The new greenhouses will greatly improve the quality of seedlings available to Georgian farmers, boosting the overall quality and quantity of agricultural production in the country.

Private Sector 11) USD 19 Million in Tangerines Exported from Georgia February 9th, 2021, https://commersant.ge/en/post/georgia-exported-tangerines-worth-190-mln-as-of-february-7-2021

Between August 1, 2020 and February 7, 2021, Georgia exported a total of 39,000 tons of tangerines, valued at USD 19 million. This represents a year-on-year increase of 25% in terms of volume and 17% in terms of value. The tangerines were mainly exported to Russia (22,500 tons), Armenia (8,700 tons) and Ukraine (5,300 tons), with lesser volumes exported to Azerbaijan, Belarus, Germany, Kazakhstan, Kyrgyzstan, Lithuania, Moldova, Russia, Slovenia, Tajikistan, Turkmenistan and the United States.

12) Georgian Apple Exports Mostly Bound for Russia February 10th, 2021, https://bm.ge/en/article/georgian-apples-mainly-exported-to-russia-in-2020---the-ministry/75490/

Between August 1, 2020 and February 9, 2021, Georgia exported 11.2 tons of apples. This represents a year-on-year increase of 38%. The majority of Georgian apples were exported to Russia (10.8 tons), with less amounts exported to Armenia, Hong Kong, Hungary, Kazakhstan, Singapore and Turkey.

13) Georgian Milk and Meat Production Show Increases in 2020 February 17th, 2021, http://bizzone.info/agriculture/2021/1613598055.php

Preliminary data shows that the number of chickens (9.9 million), cattle (923,100), at pigs (155,000) in Georgia at the end of 2020 increased by 4.7%, 6.2% and 0.2% respectively compared to the end of 2019.

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BFC. Georgian Agriculture Finance Bulletin. Edition #102, February 2021

At the same time, the number of goats (793,000) declined by 11.0%. The same data also shows that milk production in the country amounted to 99.7 million liters (a 5.3% year-on-year increase) and meat production amounted to 22,000 tons (a 5.0% year-on-year increase).

14) Volume of Hazelnut Exports Up 53% February 22nd, 2021, https://commersant.ge/en/post/georgian-hazelnuts-worth-861-million-exported-from-georgia

Georgia exports 16,500 tons of hazelnuts worth USD 86.1 million between August 1, 2020 and February 21, 2021. This represents a 53% year-on-year increase in terms of volume and a 55% year-on-year increase in terms of value. The hazelnuts were mainly exported to European Union (EU) markets, most notably Germany (4,342 tons), Italy (3,927 tons) and the Czech Republic (804 tons). At the same time, some hazelnuts exports did go to markets outside of the EU, most notably Russia (799 tons), Armenia (573 tons) and Turkey (530 tons).

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