#117 Georgia Agriculture Bulletin, BFC

05/2022

117 GEO R G I A

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AGRICULTURE BULLETIN More Than 300,000 Smallholder Farmers to Benefit from State Subsidy Program Agriculture Minister, World Bank Discuss Irrigation and Land Management Food Prices Grow 21.3% in Georgia

Potato Exports Up 270%

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

Georgian Agriculture Finance Bulletin Edition #117, May 2022

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

More Than 300,000 Smallholder Farmers to Benefit from State Subsidy Program ........................ 2

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

UNDP, SDC Agree to Extend Agricultural School Cooperation ........................................................ 2 Agriculture Minister, World Bank Discuss Irrigation and Land Management ................................. 2 EU, FAO Hold Conservation Agriculture Workshop......................................................................... 2

Private Sector.............................................................................................................. 3 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16)

Food Prices Grow 21.3% in Georgia ................................................................................................ 3 The Changing Landscape of Georgian Agriculture .......................................................................... 3 11-Fold Increase in Flour Imports.................................................................................................... 3 Ministry of Agriculture Proclaims Georgian Flour Reserves Are Sufficient ..................................... 3 Agricultural Exports Growing .......................................................................................................... 3 Georgia Faces Dwindling Wheat and Flour Supplies ....................................................................... 4 Georgia Participates in the Caspian Agro 2022 International Exhibition ........................................ 4 Drip Irrigation Manufacturer Implementing Projects in Georgia .................................................... 4 Georgia Can Be a Better Wheat and Wheat Product Producer ...................................................... 4 Potato Exports Up 270% .................................................................................................................. 4 Georgian Berries to Reach Israeli Markets ...................................................................................... 5 Webinar on the Potential of Georgian Blueberries Held ................................................................ 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 #117, May 2022

State Initiatives 1)

More Than 300,000 Smallholder Farmers to Benefit from State Subsidy Program

May 11th, 2022, https://mepa.gov.ge/En/News/Details/20836

Farmers participating in the State Program for Supporting Agricultural Landowners are encouraged to check information about point accrual as points will be gradually accrued over time. Under the program, farmers receive subsidies of GEL 300 per hectare (in the form of 300 points on a bank-issued card) for land amounts of between 0.25 and 1.25 hectares of agricultural land. Points can be used for purchasing agricultural goods, herbicides, pesticides, seed materials, agricultural implements and other necessities for agricultural production at specialized shops. Farmers are encouraged to contact the Ministry of Agriculture for more information on the program.

Foreign Aid 2)

UNDP, SDC Agree to Extend Agricultural School Cooperation

May 12th, 2022, https://georgiatoday.ge/teaching-agriculture-for-high-standards/

The United Nations Development Program (UNDP) and the Swiss Agency for Development and Cooperation (SDC) have signed an agreement to extend cooperation under the Swiss Agricultural School ‘Caucasus’ (SASC) program. Under the program, the Swiss Agricultural School provides instruction to Georgian students on agriculture, with the ultimate goal of improving the lives of Georgian farmers. Since its launch in the fall of 2021, the school has enrolled 10 students in a two-year training course and also provided agricultural extension services to more than 200 farmers.

3)

Agriculture Minister, World Bank Discuss Irrigation and Land Management

May 20th, 2022, https://agenda.ge/en/news/2022/1842

Georgia’s Minister of Agriculture met with World Bank representatives to discuss issues related to strengthening irrigation systems in Georgia as well as the country’s land management system. Both sides stressed the importance of developing an adequate irrigation infrastructure as a way to boost productivity and reduce rural poverty. They also discussed how proper land management can enhance agricultural sector development.

4)

EU, FAO Hold Conservation Agriculture Workshop

May 23rd, 2022, https://www.fao.org/georgia/news/detail-events/en/c/1513619/

The European Union (EU) and the Food and Agriculture Organization of the United Nations (FAO), within the European Neighborhood Program for Agriculture and Rural Development (ENPARD), organized a twoday workshop on conservation agriculture to encourage Gori and Kareli agricultural producers to improve their production techniques in a way that is both environmentally friendly and cost effective, with the end result being cheaper and greener solutions. During the workshop, experts discussed methods which prevent land degradation and soil fertility deterioration.

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BFC. Georgian Agriculture Finance Bulletin. Edition #117, May 2022

Private Sector 5)

Food Prices Grow 21.3% in Georgia

May 5th, 2022, https://commersant.ge/en/post/food-prices-surged-by-213-in-georgia

The prices for food and beverages in Georgia is rising. This includes a 3.3% month-on-month increase as well as a 21.3 year-on-year increase. The largest growth in prices have been seen for vegetables, oils/fats and breads/cereals. Much of this growth in prices is also due to increased transportation and energy prices.

6)

The Changing Landscape of Georgian Agriculture

May 9th, 2022, https://georgiatoday.ge/the-changing-landscape-of-georgian-agriculture/

Though challenged by climate change, invasions of pests and developing from a post-Soviet economy, Georgia’s agricultural sector has become varied and viable in terms of the technologies used, production scales and product diversity. This is particularly impressive given the current lack of foreign investment into the sector (due to land ownership restrictions). In this void, government and international donor organization initiatives have been pivotal, providing necessary support to develop new and innovative production techniques as well as encouraging both traditional and new crops and varieties. Most agree that Georgia has enormous agricultural potential, and it is evident that the agricultural landscape in Georgia is changing.

7)

11-Fold Increase in Flour Imports

May 12th, 2022, https://bizzone.info/agriculture/2022/1652387136.php

Flour imports into Georgia grew 11 times year-on-year in March, reaching 8,724 tons (worth USD 2.5 million). 98.7% of this came from Russia, with small amounts coming from France, Italy and Turkey.

8)

Ministry of Agriculture Proclaims Georgian Flour Reserves Are Sufficient

May 13th, 2022, https://www.apsny.ge/2022/eco/1652471227.php

The Ministry of Agriculture is telling citizens that they should not be concerned about potential global wheat and flour shortages impacting them as they state has plenty of flour stocks. Moreover, the country is expected to begin harvesting its own wheat in the next two months.

9)

Agricultural Exports Growing

May 13th, 2022, https://bizzone.info/agriculture/2022/1652464007.php

Despite the ongoing war in Ukraine and the logistical issues it has caused, Georgian agricultural exports continue to grow. In fact, they grew by 20% year-on-year in the first four months of 2020. At the same time, agricultural exports are working to further diversify markets and find alternative export routes as transportation costs climb. To this end, the government has developed a program that will assist farmers in studying markets and introducing international production standards. Georgia is also an active participant at international food and beverage exhibitions.

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BFC. Georgian Agriculture Finance Bulletin. Edition #117, May 2022

10) Georgia Faces Dwindling Wheat and Flour Supplies May 18th, 2022, https://eurasianet.org/georgia-faces-dwindling-wheat-stocks-as-world-shortage-looms

Georgia is facing a shortage of wheat domestically as the world braces for higher wheat prices and uncertain supplies due to the war in Ukraine. In response, the government has publicly stated that it has ample reserves of flour and that the local harvest is approaching. At the same time, many are uncertain of the quality and durability of such reserves. Historically, Georgia has been dependent on Russian wheat in one form or another. Although the country did recently attempt to replace wheat imports with already processed flour, this has done little toward reducing an overall dependency on Russian wheat.

11) Georgia Participates in the Caspian Agro 2022 International Exhibition May 19th, 2022, https://agenda.ge/en/news/2022/1831

Georgia opened a stand at Caspian Agro 2022, one of the largest international exhibitions in the Caucasus.

In total, 14 Georgian companies participated in the event, presenting Georgian-made alcoholic beverages, nuts, dried fruits, organic juices, honey, canned goods, animal feed and other agricultural products.

Caspian Agro 2022, which was held in Baku, Azerbaijan, brought together input suppliers, producers and suppliers of agricultural products and services from around the world.

12) Drip Irrigation Manufacturer Implementing Projects in Georgia May 20th, 2022, https://cbw.ge/economy/borja-gonzalez-azud-wants-to-be-part-of-developing-agriculture-sector-in-georgia

Leading drip irrigation system manufacturer AZUD is partnering with Agro Solutions Group to develop irrigation modernization projects across Georgia. Currently, the partnership is working to implement modern irrigation solutions for the production of high-value crops such as with nuts and berries. AZUD views Georgia as having incredible agricultural potential, especially given its strategic geographic position in relation to Asia, Europe and the Middle East. The company is also committed to assisting Georgia in overcoming its agricultural dependency on other countries and developing rural Georgian economies.

13) Georgia Can Be a Better Wheat and Wheat Product Producer May 21st, 2022, https://agroface.ge/news/0d4d6820-ba26-4083-943e-1494b24296a3

Food security is becoming a great concern globally due to the war in Ukraine and its impact of global food supplies. In fact, the World Bank is predicting that food prices will increase at least 35% through the end of 2025. For many countries (Georgia included), this should be a call to action to increase its own wheat and flour production and quality. This can be accomplished by strict technical regulations and measures to support such industries (e.g. reducing/eliminating tariffs). In addition to adding to the food security of the country, this will also position Georgia as a foodstuff providing nation in the world and contribute to the country’s overall economic and social growth.

14) Potato Exports Up 270% May 23rd, 2022, https://commersant.ge/en/post/georgia-almost-tripled-its-potato-exports

Over the first four months of 2022, Georgia has seen a 270% year-on-year increase in potato exports, reaching a volume of 15,291 tons (worth USD 2.94 million). The main importing countries were: Azerbaijan (10,973 tons worth USD 1.34 million) and Russia (3,567 tons worth USD 1.48 million).

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BFC. Georgian Agriculture Finance Bulletin. Edition #117, May 2022

15) Georgian Berries to Reach Israeli Markets May 23rd, 2022, https://commersant.ge/en/post/georgian-berries-will-be-sold-in-israel

Georgian berries will soon be sold in Israeli markets for the first time. This represents an important new market for Georgian berries, especially with continued uncertainty over whether or not Russian markets will be open and viable to Georgian berries. Israeli buyers promise good prices for Georgian berries if their quality is high.

16) Webinar on the Potential of Georgian Blueberries Held May 24th, 2022, https://cbw.ge/economy/british-association-writes-about-the-export-prospects-of-georgian-blueberries

A webinar on the possibilities of exporting Georgian blueberries to the United Kingdom was recently organized by the Embassy of Georgia in the United Kingdom. Following the webinar, the British Fresh Produce Trade Association noted Georgia’s strong potential as a blueberry producers and exporter as well as projections that Georgia will eventually reach a total blueberry production of 15,000 tons per year. This offers buyers, importers, wholesalers, distributors and retailers a great opportunity, especially as the sale and consumption of blueberries has consistently risen over the last decade.

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