AGRICULTURE BULLETIN All materials are published “as is” and are the property of their respective owners. 4,305 Preferential Loans Issued to Promote Annual Crop WheatCultivationandBarley Exports Banned for One Year World Bank Report Highlights Main Constraints to Agricultural Growth Flour Volumes Sufficient for Preventing Bread Price Increases #118 GEORGIA 06/2022
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 Phone: +41 44 784 22 22 info@bfconsulting.com CH 8048 Zurich, Switzerland Fax: +41 44 784 23 23 www.bfconsulting.com Georgian Agriculture Finance Bulletin Edition #118, June 2022 Contents State Initiatives ........................................................................................................... 2 1) 4,305 Preferential Loans Issued to Promote Annual Crop Cultivation 2 2) Wheat and Barley Exports Banned for One Year ............................................................................ 2 Private Sector.............................................................................................................. 2 3) World Bank Report Highlights Main Constraints to Agricultural Growth 2 4) Report on Tea Plantations Delivered to Agrarian Issues Committee .............................................. 2 5) Sugar Imports Up 61% 2 6) Georgia No Longer a Top Three Nut Producer ................................................................................ 3 7) Annual Inflation Rate Hits 13.3% 3 8) Georgia’s Dependence on Russian Wheat Untenable .................................................................... 3 9) Georgian Potato Exports on the Decline 3 10) Increased Wheat Harvests ............................................................................................................... 3 11) Snail Processing Plant Established in Central Eastern Georgia 4 12) Blueberry Exports Begin .................................................................................................................. 4 13) Flour Volumes Sufficient for Preventing Bread Price Increases 4 14) Quick View of Georgian Wheat Exports Over the Last Five Years ................................................... 4
3) World Bank Report Highlights Main Constraints to Agricultural Growth May 31st, 2022, https://georgiatoday.ge/improving georgias agriculture
June 2nd, 2022, https://bm.ge/en/article/we aim to facilitate tea growing in georgia agrarian issues-committee/110088/
The government of Georgia has decided to ban the export of wheat and barley for a one year period, starting July 4, 2022. This decision is the result of supply complications in the Black Sea region caused by the ongoing war in Ukraine and the need to ensure food security in the country. It should be noted that it is expected that the local market (including processors) will be fully absorb all locally produced wheat and barley.
State Initiatives
2) Wheat and Barley Exports Banned for One Year June 28th, 2022, https://agenda.ge/en/news/2022/2462
The chair of the Agrarian Issues Committee has delivered a report to the Working Group on Tea Growing Problems that identifies problems in the tea growing sphere as well as recommendations for overcoming them. The largest problems relate to the fact that tea farms were largely destroyed in the past, with producers then electing to replace tea plantations with other, cheaper to start production. As the state looks to reestablish tea plantations in Georgia, the report recommends the creation of a five year development/action plan and the approval of certain technical regulations on tea.
4) Report on Tea Plantations Delivered to Agrarian Issues Committee
5) Sugar Imports Up 61% June 3rd, 2022, https://commersant.ge/en/post/sugar imports up-61 In April 2022, Georgia imported 16,600 tons of sugar (worth USD 9.5 million). This is a 60.9% year on-year increase. The top three countries to supply Georgia with sugar were Mexico (11,500 tons), Poland (3,500 tons) and Azerbaijan (1,600 tons). The average purchase price of sugar also increased, by 16.3% year on year. The retail price of sugar in Georgia has increased 29.5% year on year.
BFC. Georgian Agriculture Finance Bulletin Edition #118, June 2022 Page 2
1) 4,305 Preferential Loans Issued to Promote Annual Crop Cultivation
June 2nd, 2022, https://agenda.ge/en/news/2022/2076
Private Sector
A new World Bank synthesis report has summarized the main constraints facing Georgia’s efforts to boost its agricultural sector, which is considered as a key to economic growth, job creation, poverty reduction, food security and climate resilience. The report identified the sustainable and productive management of resources (including water) as well as improved land management/administration as important for further agricultural sector development, noting that simultaneous interventions will be required to adequately address these issues.
A total of 4,305 preferential loans worth GEL 70.9 million have been issued within the Preferential Agrocredit Project since March 22, 2022 to promote the cultivation of annual crops. Within this project, the Rural Development Agency co finances 12 months of interest on loans. Eligible beneficiaries receive loans of between GEL 5,000 and GEL 100,000 at a rate of up to 18%, with the Agency covering 9%.
6) Georgia No Longer a Top-Three Nut Producer June 3rd, 2022, https://bizzone.info/agriculture/2022/1654306572.php
10) Increased Wheat Harvests
8) Georgia’s Dependence on Russian Wheat Untenable June 8th, 2022, https://bm.ge/en/article/it is important to reduce the dependence-on-russian wheat association/110514/ The Georgian Farmers’ Association recently published a report on the country’s wheat situation. According to the document, 92.1% of Georgia’s wheat imports come from Russia, showing a high dependence on only one market. This situation is even more problematic given Russia’s tendency to leverage such situations for political purposes and the ongoing war in Ukraine. In the current context, Russia has imposed an increasing export tax on its wheat exports, making wheat imports unprofitable for the private sector in Georgia. As a result, the country has largely replaced wheat imports with flour imports. This, however, has resulted in the ceasing of local flour production. To effectively resolve this, Georgia needs to considerably reduce it dependence on Russian wheat.
In April 2022, Georgia exported 3,600 tons of potatoes (worth USD 600,000). This is down 21.5% year on year. Moreover, the price of exported potatoes is also falling, reaching USD 0.16 per kilogram in April 2022 (as compared to USD 0.33 per kilogram in April 2021).
Georgia is no longer a top three nut producing country, a position it had held for many years. This is due to two main factors: (1) the invasion of the brown marmorated stink bug and (2) the significant rise in nut production in Azerbaijan. This is an important development as nut production is important for Georgia’s economy as well as employment opportunities in the country. Currently, Georgia is the fifth largest nut producing country; however, it now significantly lags behind fourth ranked Azerbaijan. To strengthen the sector, drastic state measures will need to be implemented.
7) Annual Inflation Rate Hits 13.3% June 3rd, 2022, https://ru.netgazeti.ge/38296/
9) Georgian Potato Exports on the Decline June 10th, 2022, https://commersant.ge/en/post/georgian-potatoes
According to the National Statistical Office of Georgia, inflation in Georgia for June 2022 is at 1.1% month on month and 13.3% year on year. According to the inflation indicators for the year, the largest price increases in Georgia are in vegetables and gardening (51.1%), bread and baked goods (34.5%), non alcoholic beverages (23.5%), fruits (23.3%), fish (19.4%), oil/fat products (17.7%), dairy products (16.0%), sugar and other sweetening products (15.4%) and meat products (9.6%).
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June 15th, 2022, https://bm.ge/en/article/wheat harvest is growing in-georgia/111053/ According to the National Statistics Office of Georgia, the overall volume of Georgian wheat harvests is growing, mainly due to increased harvest amounts in the Kakheti region. For the last four years, Georgia’s wheat harvest has been 107,000 tons (2018), 101,000 tons (2019), 102,000 tons (2020) and 136,000 (2021). Although production trends are increasing, the country is far from being able to meet local demand. For example, Georgia imported 482,000 tons of wheat in 2021. 95% of that amount was imported from Russia.
12) Blueberry Exports Begin June 17th, 2022, https://bm.ge/en/article/blueberry-exports-started in georgia with high prices-/111182/
June 15th, 2022, https://agenda.ge/en/news/2022/2265
• 2021 – 1,557 tons (worth USD 393,000)
• 2020 – 23 tons (worth USD 12,700)
The export of Georgian blueberries began recently, with prices comparable to those at the beginning of last year’s export season (USD 5 7 per kilogram). As the export season continues, producers expect to prices drop to approximately USD 5 per kilogram, as they did last year. The majority of Georgian blueberries eventually find their way to Russian markets; however, some end up in Middle Eastern markets.
11) Snail Processing Plant Established in Central-Eastern Georgia
A new Georgian processing plant located in Tsilkani plans to produce and export 1,000 tons of snails annually. The plant is a GEL 7 million investment by Georgian company Timeo, which has partnered with the French company Escal. All plant production will be sold to Escal. The plan employs 100 people.
13) Flour Volumes Sufficient for Preventing Bread Price Increases
June 27th, 2022, https://agenda.ge/en/news/2022/2442
Bread prices in Georgia are largely contingent on costs associated with flour/wheat imports, the consistency of the quality of flour/wheat and the price of natural gas. According to Malkhaz Dolidze, the head of the Georgian Bread Manufacturers Union, there is currently a sufficient enough supply of flour in the country to prevent an increase in the price of bread. At the same time, he called for increased imports of wheat to boost wheat stocks. It should be noted that Georgia’s own wheat harvest is forecast to be 20% higher year on year.
14) Quick View of Georgian Wheat Exports Over the Last Five Years
• 2018 – 10,058 tons (worth USD 2.1 million)
• 2017 – 5,991 tons (worth USD 1.3 million) The top export markets for Georgian wheat in 2021 were Armenia (1,468 tons), Turkey (49 tons) and Ukraine (40 tons).
BFC. Georgian Agriculture Finance Bulletin Edition #118, June 2022 Page 4
June 28th, 2022, https://bm.ge/en/article/how much wheat did georgia-export-in the last-5-years/111919/
• 2019 – 3,286 tons (worth USD 877,000)
The government of Georgia is banning wheat and barley exports for a one year period in an effort to protect residents from global food security risks. In the last five years, Georgian wheat exports have amounted to:
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