#115 Georgia Agriculture Bulletin, BFC

03/2022

115 GEO R G I A

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AGRICULTURE BULLETIN USDA to Co-Finance Equipment Procurement for Meat and Dairy Producers Working Session on Agricultural Extension Strategies Held Georgian Blueberries Need Diversified Markets

Agricultural Product Prices Expected to Increase

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Georgian Agriculture Finance Bulletin Edition #115, March 2022

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

USDA to Co-Finance Equipment Procurement for Meat and Dairy Producers ............................... 2 Annual Crop Producers Eligible for Low-Interest Loans .................................................................. 2 Program to Support Cooperatives in Creating Vegetable Storage Facilities ................................... 2

Foreign Aid ................................................................................................................. 2 4) 5) 6) 7)

Working Session on Agricultural Extension Strategies Held ........................................................... 2 FAO Trains Women Farmers on Gender Equality in the Agricultural Sector .................................. 2 Need to Explore New Market Opportunities for Georgia’s Wine Industry ..................................... 3 Georgia, FAO Sign New Agreement to Develop Agrifood Systems ................................................. 3

Private Sector.............................................................................................................. 3 8) 9) 10) 11) 12) 13) 14)

Georgian Blueberries Need Diversified Markets ............................................................................. 3 Agricultural Product Prices Expected to Increase ........................................................................... 3 EU Remains a Priority for the Export of Georgian Dairy Products .................................................. 4 No Food Supply Shortages Expected Due to War in Ukraine .......................................................... 4 40% Growth in Wine Sector Exports ............................................................................................... 4 Potato Exports Hit a Record High .................................................................................................... 4 No Problems Importing Wheat and Flour ....................................................................................... 4

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 #115, March 2022

State Initiatives 1)

USDA to Co-Finance Equipment Procurement for Meat and Dairy Producers

March 21st, 2022, https://bm.ge/en/article/meat-and-dairy-product

The United States Department of Agriculture (USDA) is funding a grant component of the Investing in Safe and Quality Livestock – Georgia project. Under the grant component, 11 Georgian meat and dairy producers will receive co-financing to support their acquisition of modern equipment. In total, the equipment obtained with the co-financing funding will be worth USD 440,000.

2)

Annual Crop Producers Eligible for Low-Interest Loans

March 21st, 2022, https://agenda.ge/en/news/2022/814

Agriculture Minister Otar Shamugia has announced that Georgian farmers will be able to obtain lowinterest loans for the production of annual crops. New changes to the state’s preferential agricultural credit program will allow producers of annual crops to receive loans that are subsidized 9% by the state.

3)

Program to Support Cooperatives in Creating Vegetable Storage Facilities

March 22nd, 2022, https://www.apsny.ge/2022/eco/1647953215.php

The government of Georgia is implementing a new program to support farmer cooperatives in creating vegetable storage facilities. Under the new program, up to 80% state co-financing is available to eligible cooperatives. The goal of the program is to ensure Georgian farmers can store products in accordance with modern standards and supply them to the market as needed.

Foreign Aid 4)

Working Session on Agricultural Extension Strategies Held

March 15th, 2022, https://www.fao.org/georgia/news/detail-events/en/c/1476827/

The European Union (EU) and Food and Agriculture Organization of the United Nations (FAO) held a working session with public and private stakeholders of Georgia’s agricultural sector to discuss the main findings of an evaluation of the National Strategy for the Agricultural Extension in Georgia 2017–2020.

Participants of the working session noted that the implemented activities resulting from the strategy, overall, brought positive results. At the same time, they also noted room for further development, especially in building trust in extension services, in integrating public and private extension service providers, in improving access to quality advice and information and in developing the level of extension expertise in Georgia. Participants also discussed the main challenges and priorities for the future Strategy of Extension 2022–2027, including adaptation to climate change, irrigation, innovation, the use of big data, mechanization, the marketing of agricultural products, support for the preparation of business plans and the stimulation of entrepreneurship.

5)

FAO Trains Women Farmers on Gender Equality in the Agricultural Sector

March 16th, 2022, https://www.fao.org/georgia/news/detail-events/en/c/1476836/

More than 30 women farmers from the Tsalka municipality (Kvemo Kartli region) took part in a gender equality training organized by the Food and Agriculture Organization of the United Nations (FAO). The training, which took place within the framework of the European Union (EU)-supported European Page 2

BFC. Georgian Agriculture Finance Bulletin. Edition #115, March 2022

Neighborhood Program for Agriculture and Rural Development (ENPARD), helped raise the awareness of women producers about gender-based constraints in the sector, stressed the importance of equality and detailed how prevailing gender stereotypes continue to affect rural women and create barriers for their further development. Gender inequality remains a main concern for continued development in Georgia and is a priority item on its development agenda.

6)

Need to Explore New Market Opportunities for Georgia’s Wine Industry

March 17th, 2022, https://agenda.ge/en/news/2022/755

Agriculture Minister Otar Shamugia has met with Kelly Degnan, United States Ambassador to Georgia, and Peter Wiebler, director of the United States Agency for International Development (USAID) in Georgia, to discuss challenges facing Georgia’s wine industry, including the need to diversify its export markets.

During the meeting, Minister Shamugia noted that Georgia has been able to reduce the share of wine exports to the Russian (from 80% to 57%) in a short period of time. At the same time, Georgia will need to boost exports to other markets, especially large markets like the United States, in order to offset losses in the Russian market. Both representatives of the United States offered their support in helping Georgia accomplish this goal.

7)

Georgia, FAO Sign New Agreement to Develop Agrifood Systems

March 23rd, 2022, https://www.fao.org/georgia/news/detail-events/en/c/1480365/

The government of Georgia and the Food and Agriculture Organization of the United Nations (FAO) have signed the new FAO Country Programming Framework, which will help shape the development of Georgia’s agrifood systems for the period of 2021–2025 as well as contribute to the achievement of the sustainable development goals (SDGs) within FAO’s new Strategic Framework 2022–2031. The new agreement clearly intends to support smallholders and family farms in developing productivity and competitiveness as well as improve rural livelihoods (especially for disadvantaged groups) and agrifood systems. The new agreement is also focused on improving food safety standards and better adapting Georgia’s agricultural sector to climate change.

Private Sector 8)

Georgian Blueberries Need Diversified Markets

March 8th, 2022, https://bm.ge/en/article/is-georgia-ready-to-export-blueberries-to-the-eu/103897/

Georgia has recently become a blueberry producing and exporting country; however, most (90%) of those exports have gone to Russian markets. With the war in Ukraine triggering massive sanctions against Russia, Georgian blueberry producers are concerned that lesser buying power from Russian consumers will lead to a reduced demand for their product. While alternative markets (e.g. in the European Union (EU) and Gulf states) exist, most producers are not ready to export to these markets due to logistical issues (including certification and food safety-check issues) and unfavorable returns. While many are hoping that Russian markets will not be completely closed to them, most are quickly realized that greater efforts are needed to diversify their markets.

9)

Agricultural Product Prices Expected to Increase

March 9th, 2022, https://bm.ge/en/article/agricultural-products-will-get-more-expensive-this-year--association/103971/

With the war in Ukraine drastically changing trade relationships between countries, some experts are predicting that the prices for food products in Georgia will increase. This is especially true for products Page 3

BFC. Georgian Agriculture Finance Bulletin. Edition #115, March 2022

dependent on wheat as Georgia is heavily reliant on Russian wheat imports. To combat this, experts are calling for the country’s agricultural sector to update their agricultural technologies as well as recruit and employ experienced specialists capable of increasing domestic yields.

10) EU Remains a Priority for the Export of Georgian Dairy Products March 10th, 2022, https://agenda.ge/en/news/2022/630

Agriculture Minister Otar Shamugia has noted that Georgia is still dependent on the import of dairy products. Moreover, Georgian enterprises engaged in producing dairy products are limited in the resources available for exporting their products to different markets. Earlier, Russia’s veterinary and phytosanitary supervision agency, Rosselkhoznadzor, approved 15 Georgian enterprises to supply milk and dairy products to Russia; however, many believe this to be a political ploy, and Minister Shamugia notes that Georgia’s priority market should still be the European Union (EU). To this end, the government has been working carefully to introduce the standards and regulations necessary for increasing the export of products of animal origin to the EU.

11) No Food Supply Shortages Expected Due to War in Ukraine March 10th, 2022, https://agenda.ge/en/news/2022/643

Responding to concerns over possible food supply shortages due to the ongoing war in Ukraine, Agriculture Minister Otar Shamugia stated that “no delays” should be experienced for Georgian consumers. The Minister urged consumers to remain calm and avoid bulk buying and stock piling in order to prevent artificial price increases. He also noted that he Ministry will continue to monitor food supplies and replenishment processes throughout the country.

12) 40% Growth in Wine Sector Exports March 21st, 2022, https://agenda.ge/en/news/2022/821

Georgian wine exports grew by more than 40% in the first two months of 2022. According to Agriculture Minister Otar Shamugia, this is the result of the government’s “purposeful policies” to support sector growth. Minister Shamugia also noted that overall exports of agricultural products are increasing, in large part due to a concerted effort to diversify the country’s export markets.

13) Potato Exports Hit a Record High March 23rd, 2022, https://commersant.ge/en/post/georgias-potato-exports-broke-the-all-time-record

Georgia exported an unprecedented amount of potatoes in the first two months of 2022. In total, 7,938 tons of potatoes valued at USD 1.8 million were exported during this period. For comparison, Georgia only exported 1,405 tons valued at USD 197,000 during the first two months of 2021. The top countries to import Georgian potatoes were Russia, Azerbaijan, Ukraine, Armenia and Moldova.

14) No Problems Importing Wheat and Flour March 28th, 2022, https://agenda.ge/en/news/2022/938

According to Finance Minister Lasha Khutsishvili, there is no current threat to Georgia’s food security as the country has enough wheat reserves to last for more than one month and can easily import more as necessary. He added that there have been no problems observed related to the supply of wheat or flour to Georgia and that the government is considering eliminating the import tax on wheat in order to facilitate cheaper prices in the market.

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