#105 Georgia Agriculture Bulletin, BFC

05/2021

105 Geo r g i a

#

Agriculture Bulletin State-Owned Agricultural Land Available to Farmers for Purchase at 25% Discount USAID Program to Support More Than 30 SMEs World Bank Launches EUR 85 Million MSME Assistance Program 46.1% Rise in Potato Imports in 2020

All materials are published “as is” and are the property of their respective owners.

Georgian Agriculture Finance Bulletin Edition #105, May 2021

Contents State Initiatives ........................................................................................................... 2 1)

State-Owned Agricultural Land Available to Farmers for Purchase at 25% Discount ..................... 2

Foreign Aid ................................................................................................................. 2 2) 3) 4) 5)

USAID Program to Support More Than 30 SMEs............................................................................. 2 World Bank Launches EUR 85 Million MSME Assistance Program ................................................. 2 World Bank Meets with Government Officials to Discuss Green Economy Development ............. 2 Online Event Celebrates Potential of Tea in Georgia, Azerbaijan ................................................... 3

Private Sector.............................................................................................................. 3 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18)

46.1% Rise in Potato Imports in 2020 ............................................................................................. 3 Georgian Agriculture: High Potential with Low Levels of Professionalism ..................................... 3 First Commercial Avocado Farm Opens in Georgia ......................................................................... 3 Independent International Organizations to Help Test Georgian Export Wines ............................ 4 Georgian Farm Set Up with French Cattle ....................................................................................... 4 Wine Exports Up 15% ...................................................................................................................... 4 Wine Producer Aims to Produce Expensive Georgian Wines.......................................................... 4 Analysts Predict Lesser Cherry Harvest, Higher Prices .................................................................... 4 Nut Exports Up 109%....................................................................................................................... 5 Georgian Wines Take Home Top Awards at the International Wine Challenge ............................. 5 Wheat Flour Subsidies Set to Expire at the End of June.................................................................. 5 Qvevri Wine Become Product of Protected Geographical Origin ................................................... 5 Preventative Measures Underway Following Locust Outbreaks in Eastern Georgia ...................... 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 »

BFC Max-Högger-Strasse 6 CH-8048 Zurich, Switzerland

Phone: +41 44 784 22 22 Fax: +41 44 784 23 23

info@bfconsulting.com www.bfconsulting.com

BFC. Georgian Agriculture Finance Bulletin. Edition #105, May 2021

State Initiatives 1)

State-Owned Agricultural Land Available to Farmers for Purchase at 25% Discount

May 10th, 2021, https://agenda.ge/en/news/2021/1233

In order to increase the availability of agricultural land, farmers who rent land from the state will now be able to buy the land they currently occupy at a 25% discount rate. The initiative is part of an effort to help farmers boost production, ensure there is no uncultivated land and attract funding into the agricultural sector.

Foreign Aid 2)

USAID Program to Support More Than 30 SMEs

May 17th, 2021, https://agenda.ge/en/news/2021/1301

More than 30 small- and medium-sized enterprises (SMEs) in Georgia will benefit from a new three-year program launched by the United States Agency for International Development (USAID) and Gazelle Finance, a financial company that invests in SMEs in the Eurasia Region. Under the program, highpotential SMEs will be given assistance in attracting private-sector financing, expanding their businesses and generating employment opportunities. The program aims to create more than 1,677 new jobs and catalyze more than USD 15 million in foreign direct investment.

3)

World Bank Launches EUR 85 Million MSME Assistance Program

May 18th, 2021, https://agenda.ge/en/news/2021/1316

About 6,000 micro-, small- and medium-sized enterprises (MSMEs) in Georgia impacted by the COVID19 pandemic will benefit from EUR 85 million in financing support from the World Bank. Under the program, MSMEs will be able to address immediate liquidity constraints by accessing grants and other cofinancing support aimed at reducing borrowing costs. The program also aims to upgrade payment system infrastructure in the country to facilitate faster and easier access to funds.

4)

World Bank Meets with Government Officials to Discuss Green Economy Development

May 19th, 2021, https://sputnik-georgia.ru/economy/20210519/251764341/

The World Bank and representatives from the government of Georgia held a virtual meeting to discuss the potential of a green economy model in Georgia. Such a model seeks to use natural resources efficiently, minimize pollution and environmental damage and demonstrate resilience to the effects of climate change. The meeting comes following a recent World Bank report that highlighted the short-, medium- and long-term economic and social damages of non-green development measures.

Page 2

BFC. Georgian Agriculture Finance Bulletin. Edition #105, May 2021

5)

Online Event Celebrates Potential of Tea in Georgia, Azerbaijan

May 20th, 2021, http://www.fao.org/georgia/news/detail-events/en/c/1401313/

Georgian and Azerbaijani teas took center stage during an online celebration in preparation of International Tea Day. The event, organized by the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD), highlighted both countries’ potential to produce high quality and specialty teas as well as ways to help the industry develop in both countries.

The virtual event drew over 100 participants, including representatives from government agencies, research institutions, financial institutions and private sector companies as well as Azerbaijani and Georgian tea producers.

Private Sector 6)

46.1% Rise in Potato Imports in 2020

May 5th, 2021, https://bm.ge/en/article/potato-imports-was-up-in-georgia/81784/

Georgia imported 46.1% more potatoes in 2020 than in 2019, mostly from Germany (1,193,800 tons), Turkey (883,000 tons), the Netherlands (565,000 tons), Azerbaijan (394,400 tons) and Russia (327,500 tons). At the same time, Georgia also exported 9.7% more potatoes in 2020 than in 2019, mostly to Russia (669,100 tons), Azerbaijan (319,100 tons), Armenia (34,400 tons), Moldova (32,900 tons) and Belarus (12,300 tons).

7)

Georgian Agriculture: High Potential with Low Levels of Professionalism

May 11th, 2021, https://bm.ge/en/article/high-potential-and-the-lowest-level-of-georgian-agro-sector/82207/

Despite its high potential, Georgia’s agricultural sector lags behind in terms of the level of industry professionalism, especially when compared to Azerbaijan, EU countries, Iran, Russia and Ukraine. The reason for this stems from the combination of short-term mentalities within Georgia as well as the low level of knowledge among agronomists. To resolve this and help Georgia’s agricultural sector realize its full potential, experts are calling for increased agricultural education. Not only will this help bolster the agricultural sector, it will also lead to greater food independence as well as improve the livelihoods of those living in rural areas. This includes both education campaigns as well as the construction of agricultural schools that teach students about proper farming techniques.

8)

First Commercial Avocado Farm Opens in Georgia

May 12th, 2021, https://bm.ge/en/article/the-first-commercial-avocado-farm-established-in-georgia/82385/

Georgian company Geonuts has established the first avocado farm on six hectares in Guria. Although the first harvests are expected as early as next year, the farm will only enter full production in 4-5 years. If successful, the farm could inspire more farmers to pursue avocado production and, eventually, lead to a full-fledged agricultural subsector in Georgia. In this regard, more research and experimentation with different varieties is necessary.

Page 3

BFC. Georgian Agriculture Finance Bulletin. Edition #105, May 2021

9)

Independent International Organizations to Help Test Georgian Export Wines

May 12th, 2021, https://agenda.ge/en/news/2021/1257

At the request of local wine companies, independent international organizations will be involved in the process of testing Georgian export wines. Negotiations in this regard have been concluded with the Swiss SGS and are underway with the French Bureau Veritas. It is hopes that the inspections will help ensure the quality of Georgian export wines, including those protected by a geographical origination designation.

10) Georgian Farm Set Up with French Cattle May 13th, 2021, https://sputnik-georgia.ru/economy/20210513/251722342/Frantsuzskie-korovy-pereekhali-zhit-v-Gruziyu.html

A cattle farm has been set up in Kvemo Kartli with a herd made up of a French breed (Salers). The farm currently has 820 hectares of pasture and arable land and is equipped with modern agricultural infrastructure. The company, which employs locals, eventually plans to increase the number of head from 130 to 900 and produce and sell up to 1,000 tons of beef per year.

The farm was established with Georgian-French investments as well as the support of a GEL 6 million preferential loan from TBC Bank.

11) Wine Exports Up 15% May 14th, 2021, https://wine.gov.ge/En/News/33774

During the first four months of 2021, 28.3 million bottles of wine were exported from Georgia to 55 countries, representing a value of USD 65 million. This is a year-on-year increase of 15% in terms of volume and 7% in terms of value. The top five importing countries were: Russia (17.20 million bottles), Ukraine (3.34 million bottles), Poland (1.84 million bottles), China (1.56 million bottles) and Kazakhstan (1.03 million bottles). In addition to wine, Georgia also exported 10.2 million bottles of brandy (USD 19 million in value) and 195,000 bottles of Chacha (USD 500,000 in value) during the same period.

12) Wine Producer Aims to Produce Expensive Georgian Wines May 18th, 2021, https://agenda.ge/en/news/2021/1326

Influential French winemaker Loic Pasquet, founder of the company Liber Pater and producer of the world’s most expensive wine, is interested in launching his first project in Georgia in collaboration with the founder of the local wine company Askaneli. The project aims to cultivate vineyards in Georgia to produce higher-quality Georgian wine. In the end, he hopes that he can produce high-end Georgian wines that reach European Union (EU) markets within 12 years’ time.

13) Analysts Predict Lesser Cherry Harvest, Higher Prices May 19th, 2021, https://commersant.ge/en/post/the-cherry-harvest-in-2021

Analysts with EastFruit are predicting that this year’s cherry harvest will lower than last year (mostly due to frost damage), resulting in higher cherry prices throughout the season. This has already been evidenced with the first small batches of cherries to arrive on the market this year costing 20% more than last year.

Page 4

BFC. Georgian Agriculture Finance Bulletin. Edition #105, May 2021

14) Nut Exports Up 109% May 20th, 2021, https://commersant.ge/en/post/georgia-hazelnut-exports-doubled-in-january-april-2021

Following a three-year decline (caused by the invasion of marble bugs), Georgian nut exports showed a 109% growth in the first four months of this year as compared to last year. This amounted to a value of USD 31 million. In total, the share of nuts in total exports grew from 1.5% to 2.5%.

15) Georgian Wines Take Home Top Awards at the International Wine Challenge May 20th, 2021, https://agenda.ge/en/news/2021/1345

18 Georgian wine companies medaled at the International Wine Challenge, the world’s most influential wine competition. The positive results highlight the breadth of quality wines being produced across Georgia as well as in other lesser-known wine-producing countries such as Moldova, North Macedonia and Turkey. Thousands of wines from over 50 countries took part in the event, which was held in London earlier this year.

16) Wheat Flour Subsidies Set to Expire at the End of June May 21st, 2021, https://sputnik-georgia.ru/economy/20210521/251787567/Khleb-v-Gruzii-mozhet-podorozhat-letom.html

The price of bread in Georgia could rise by as much as GEL 0.15 in July if the government decides to no longer continue subsidizing wheat flour. The Georgian Baker's Union has attended meetings with representatives of the Ministry of Agriculture to discuss the difficult situation and what options are available, including a possible extension of subsidies and a rise in the price of bread. It is unknown which direction government authorities are leaning.

A 4-month subsidy on wheat flour was originally introduced late last year to keep bread prices stable and later extended through June 30, 2021 for the same reason.

17) Qvevri Wine Become Product of Protected Geographical Origin May 24th, 2021, https://wine.gov.ge/En/News/33777

Qvevri wine is the first non-food product to be added to the State Register of Appellations of Origin and Geographical Indications of Goods. Qvevri wine is becoming more and more popular both in Georgia and in the international area following extensive state effort to promote it and enhance its quality. Designation as a protected good of geographical origin will further help its promotion, both inside and outside the country.

In its addition to the register, the unique characteristics of Qvevri wine is now officially detailed, and strict adherence to those details among those wanting to make (and market) Qvevri wine will further improve the overall quality of production. It also helps to promote Georgia’s rich history in winemaking.

18) Preventative Measures Underway Following Locust Outbreaks in Eastern Georgia May 24th, 2021, https://sputnik-georgia.ru/economy/20210524/251809745/

Locust control activities are underway in different municipalities of the Kvemo Kartli and Kakheti regions following the identification of several locust outbreaks. The outbreaks were discovered in their early stages, which is important as measures taken at early stages help reduce the overall population of the pest and protect crops before much economic damage can be done.

Page 5

Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com Articles are taken directly from local sources without any fact-checking; they are provided as a convenience and for informational purposes only. Business & Finance Consulting (BFC)’s editing is limited to providing a short summary in English of the texts, highlighting the main points of the original articles.

All rights reserved by the authors.

BFC takes no responsibility and does not make any representation or warranty, express or implied, or assume any responsibility whatsoever for the content, accuracy, and reliability, or completeness of any of the articles.