#50 Georgia Agriculture Bulletin, BFC

10/2016

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50 Geo r g i a Agriculture Bulletin Israeli Company to Invest USD 15 Million in Greens Production in Imereti EU Helping Georgia Achieve Greater Food Safety Standards Agro+ Invests in Blueberry Plantation in the Imereti Region Georgian Citrus Harvest Forecast at Half of Last Year’s Production

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

Agriculture Minister Meets with the Shepherds Association of Georgia ........................................ 2 Georgian Farmers to Grow Cancer Resistant Potato Breeds .......................................................... 2 Ministry of Agriculture Discussing Agricultural Extension Strategy Project .................................... 2 Israeli Company to Invest USD 15 Million in Greens Production in Imereti .................................... 3 USAID Project to Promote Public Agriculture Service Centers ........................................................ 3

Foreign Aid ................................................................................................................. 3 6) 7)

Bulgarian Food Safety Agency Representatives make Official Visit ................................................ 3 EU Helping Georgia Achieve Greater Food Safety Standards ......................................................... 4

Private Sector .............................................................................................................. 4 8) 9) 10) 11) 12) 13) 14) 15) 16) 17)

Two Years after DCFTA .................................................................................................................... 4 Agro+ Invests in Blueberry Plantation in the Imereti Region .......................................................... 4 Georgian Grape Harvest Valued at Nearly GEL 100 Million ............................................................ 5 Georgian Citrus Harvest Forecast at Half of Last Year’s Production ............................................... 5 Chinese Companies Submit Plan for Georgian Tea Development .................................................. 5 Georgian Agricultural Exports on the Rise ...................................................................................... 6 Georgian Hazelnut Exports Increase 67.3% ..................................................................................... 6 The Largest Greenhouse in Georgia now at 12 Hectares ................................................................ 6 130 Georgian Products may be given Geographic Signs ................................................................. 7 Demand for Georgian Sheep on the Rise ........................................................................................ 7

Note: The Georgia Agriculture Bulletin presents a monthly roundup of headlines and news stories related 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. Read more »

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BFC Agriculture Bulletin

State Initiatives 1)

Agriculture Minister Meets with the Shepherds Association of Georgia

October 7th, 2016, http://moa.gov.ge/En/News/1206

Agriculture Minister Levan Davitashvili met with members of the Shepherds Association of Georgia, and the two sides have agreed to set up a commission to focus on the current challenges facing the sheep sector and find the tools and resources necessary to help the sector overcome them. The commission will include representatives from the Ministry of Agriculture, the National Food Agency, the Agricultural Projects Management Agency and the Shepherds Association of Georgia.

The sheep sector has been neglected for decades and a lot of problems have accumulated in that time.

The Ministry has implemented a number of activities aimed at assisting the sector, including compulsory vaccination programmes and biosafety points to help ensure the treatment of parasites and to stop the spread of diseases. The Minister, while noting the works already done for the sector, also understood that more work remains and that some problems are beyond the scope of the Ministry’s direct work.

The Minister did reiterate the Ministry’s commitment to helping the sector find the solutions necessary to help the sector thrive.

This year, 35,000 head of sheep have been exported to Arab countries like the United Arab Emirates, Saudi Arabia and Qatar. Georgia also recently reached an agreement with the European Union (EU) which allows for the export of Georgian wool into the EU.

2)

Georgian Farmers to Grow Cancer Resistant Potato Breeds

October 19th, 2016, http://cbw.ge/economy/georgian‐farmers‐grow‐potato‐cancer‐resistant‐breeds‐private‐land‐plots/

Due to the danger presented if an outbreak of potato cancer were to occur, the government of Georgia passed a resolution regarding potato cancer control regulations. Under the new regulations, agricultural research centers will be required to submit a list of potato breeds which are resistant to the disease each year to the Ministry of Agriculture.

Starting in the spring of this year, specialists from the Ministry’s research center and the National Food Agency have been testing various potato breeds resistant to pathogens that provoke the potato cancer disease. The group has searched out and planted cancer resistant potato breeds in several villages with six of the fifteen planted breeds showing resistance. The specialists noted that they will transmit cancer resistant seed material to farmers in the near future.

3)

Ministry of Agriculture Discussing Agricultural Extension Strategy Project

October 20th, 2016, http://moa.gov.ge/En/News/1214

The Ministry of Agriculture has discussed the agricultural extension strategy introduced by the Food and Agriculture Organization of the United Nations. The strengthening extension system, which includes research and training activities, has been deemed a priority by the Ministry. At the meeting, Ministry officials discussed the main directions of the draft strategy document: goals of agricultural extension, packages and a purposeful approach, the role of government in agricultural extension, organizational structure and information systems.

If officially approved, the strategy will become a key contributor to the Georgian extension service.

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4)

Israeli Company to Invest USD 15 Million in Greens Production in Imereti

October 20th, 2016, http://cbw.ge/business/israeli‐businessman‐invest‐15‐million‐usd‐greens‐production‐imereti‐region/

The Industrial Development Group of the Ministry of Economy has prepared a project for developing greens production in the Imereti Region and exporting them to European markets. An Israeli company has decided to invest USD 15 million in the project and will introduce technologies, arrange certifications, find global markets and sign preliminary agreements for the export of the products.

Initially, the Industrial Development Group had planned on engaging cooperatives to implement the project; however, they are ill‐prepared for project implementation at the current time.

5)

USAID Project to Promote Public Agriculture Service Centers

October 28th, 2016, http://www.sarke.com/cgi/search/news.asp?Code=10048972

The Georgian Ministry of Agriculture announced that United States Agency for International Development’s (USAID) Growth in Georgia project will promote the growth capacities of agricultural information and consultancy centers under a memorandum of cooperation scheduled to begin from November 1, 2016. Under the memorandum, existing agricultural information and consultancy centers run by the Ministry will receive lab equipment which will allow experts to diagnose diseases and consult with farmers on the spot.

The Growth in Georgia project is a five‐year project aimed at promoting sustainable economic development in 70 communities in six regions of Georgia.

Foreign Aid 6)

Bulgarian Food Safety Agency Representatives make Official Visit

October 17th, 2016, http://moa.gov.ge/En/News/1211

Nodar Kereselidze, Deputy Minister of Agriculture, met with representatives of the Bulgarian Food Safety Agency within the framework of the memorandum of cooperation signed between Georgia, Bulgaria and the United States. The memorandum aims to provide technical assistance and expertise regarding strengthening the capacity of relevant institutions of Georgia for risk assessment and risk management and will help Georgia meet its obligations as part of the Deep and Comprehensive Free Trade Agreement (DCFTA). In speaking at the meeting, the Deputy Minister noted that Bulgaria’s prior experience will be invaluable for Georgia and that strengthening capacity in risk management and risk assessment systems will ensure effective mechanisms for identification, assessment and management of hazards in foods of animal origin, and further facilitate the process of gradual approximation with European Union (EU) standards.

The Bulgarian representatives also held working meetings with representatives of the subordinate institutions of the Ministry of Agriculture, including the National Food Agency, the Agricultural Scientific‐ Research Center and the Ministry of Agriculture laboratory.

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7)

EU Helping Georgia Achieve Greater Food Safety Standards

October 24th, 2016, http://www.finchannel.com/world/georgia/60669‐eu‐helping‐georgia‐with‐safer‐food‐standards

With European Union (EU) support and the adoption of European levels of food safety and animal health and plant protection standards, greater protection is being offered to Georgian consumers. As part of the EU’s efforts in the area, the EU Neighbors East project made a visit to a dairy processing plant in the village of Uraveli (220 kilometers southeast of Tbilisi). The plant has benefitted from advice provided as part of the EU‐funded Comprehensive Institution Building (CIB) support program which provides trainings, exchange programs, technical assistance, counterpart cooperation with EU institutions, and funding for updated equipment for food safety specialists.

The CIB support program overarching goal is to protect Georgian consumers by helping to develop, introduce and implement European level food safety and animal health and plant protection standards in Georgia.

Private Sector 8)

Two Years after DCFTA

October 1st, 2016, http://www.investor.ge/article.php?art=3

Georgia entered into the Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union (EU) on September 1, 2014. Since then, Georgian products have had easier access to the EU’s 500‐million consumer market, including zero customs duties for 9,600 varieties of products. As a result of DCFTA, the share of Georgian exports heading to EU countries increased by 4% in 2015, even as overall foreign trade declined. The main exports driving the growth were a 4% increase in walnut exports, a 40% increase in the export of vegetables and canned fruit, and a 104% increase in the export of nitrogen fertilizers. These increases, however, do not indicate any major new markets for Georgian products as most of the Georgian products were already covered by the EU General System of Preferences (GSP+) which has been in force since 2005. DCFTA simply expanded the list and simplified the export of products of animal origin.

Wine, in particular, seems to be finding its niche in the EU markets. Over the first five months of 2016, Georgian wine exports to the EU experienced a 44% year‐on‐year increase over 2015, with exports increasing by 79% to Great Britain, 46% to Lithuania, 31% to Germany and 30% to Poland. Some sectors, however, are still struggling to take full advantage of DCFTA due to the EU’s advanced food safety system and agricultural practices which Georgia cannot always meet. Georgian honey, for example, continues to struggle with meeting safety and quality standards for the EU.

The Georgian government says reforms are being implemented over a 13‐year period to coincide with EU standards so that new regulations will not be a heavy burden for producers, meaning that progress will be slow for some sectors in fully penetrating the EU market. Many experts also believe that more should be done to educate Georgian producers, especially small‐ and medium‐sized enterprises, about the DCFTA requirements and the timetables for when certain rules need to be implemented in order to better facilitate Georgian products finding success in the EU.

9)

Agro+ Invests in Blueberry Plantation in the Imereti Region

October 4th, 2016, http://cbw.ge/economy/agro‐invests‐334‐900‐gel‐blueberry‐plantation‐imereti‐region/

The Georgian investment company GSA Invest has implemented a new investment project in Western Georgia through its subsidiary Agro+. The company planted 28,500 blueberry plants and organized Page 4

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modernized infrastructure on a 10‐hectare plot of land it bought in the village of Gubistskali (Tskaltubo District). Agro+ has invested GEL 334,900 in the business project. The company has employed 30 local residents at various stages of project implementation and now maintains an employment level of 12 local residents.

The company also obtained a GEL 100,000 grant for the purchase of plants and installing an irrigation system. The project was implemented as a pilot project, but the company plans on expanding the space used to cultivate blueberries in the near future. The project was implemented under the Plant in Georgia program of the Ministry of Agriculture.

10) Georgian Grape Harvest Valued at Nearly GEL 100 Million October 19th, 2016, http://agenda.ge/news/68064/eng

The grape harvest has come to an end in the Kakheti region, with local farmers harvesting grapes worth more than GEL 97 million. In Kakheti, 178 wine companies processed more than 100,000 tons of grapes.

At the same time, the grape harvest in the Racha‐Lechkhumi region, where a small amount of unique grapes are grown, is in full swing. In this region, 24 wine companies have already purchased and processed more than 500 tons of grapes, and local grape growers have harvested GEL 2.5 million in grapes. In total, over 19,000 farmers sold their harvest to wine companies this year in both regions.

Prime Minister Giorgi Kvirikashvili, in summarizing this year’s grape harvest, thanked the Ministry of Agriculture for their support of the industry and noted that the area covered by vineyards is growing, with special attention being paid to the quality and the place as well as the proper development of the industry. This has enabled Georgian wine exports to Europe and other markets to increase. The Prime Minister also emphasized the importance of exporting Georgian wine to traditional as well as new markets, including China. The establishment of a free trade deal with China, where a number of Georgia‐ made products would be exported tariff free, is also expected to help bolster the Georgian wine industry.

11) Georgian Citrus Harvest Forecast at Half of Last Year’s Production October 20th, 2016, http://www.ekhokavkaza.com/a/28065183.html

The citrus harvest in Georgia is set to begin in early November and, according to preliminary data, this year’s production will be approximately 50‐60 thousand tons, half of last year’s production. 10 thousand tons of the harvest has been marked for industrial processing with the rest going to export.

Last year, the citrus harvest reached nearly 100 thousand tons and more than 75% of it was exported to Russia. There were also mandarin exports to Ukraine, Armenia, Azerbaijan, Kazakhstan and Belarus.

Georgian citrus is also becoming of interest to Baltic States and Uzbekistan.

12) Chinese Companies Submit Plan for Georgian Tea Development October 20th, 2016, http://cbw.ge/business/chinese‐companies‐submit‐business‐plan‐tea‐industry‐development‐georgia/

Several major Chinese companies have visited the Partnership Fund with investment proposals for tea industry restoration and development in Georgia. The companies discussed the availability of implementing industry‐commerce and culture‐tourism complex projects with the Partnership Fund and introduced a high‐budget business plan for tea industry development, including specific investment proposals. The proposed project comprises several parts including arrangements for tea plantations, tea

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processing, tea industry promotion and eco‐tourism development. The parties also discussed the financial model of such an investment project.

13) Georgian Agricultural Exports on the Rise October 24th, 2016, http://agenda.ge/news/68400/eng

From the beginning of the year to October 23, Georgian exports of agricultural products have a value of USD 524.5 million, an 11.5% year‐on‐year increase. Specifically, the following products have seen a significant increase in export capacity: alcoholic drinks, up 33.7% (valued at USD 68.5 million); live cattle, up 80% (valued at USD 29.6 million); wine, up 13.1% (valued at USD 83.6 million); fishmeal, up 133% (valued at USD 14.8 million); and vegetables, up 18%. In all, Georgian exports have found their way to markets in 87 different countries so far this year.

14) Georgian Hazelnut Exports Increase 67.3% October 25th, 2016, http://bizzone.info/agriculture/2016/1477445358.php

Through the first nine months of 2016, Georgia has exported 18.4 thousand tons of hazelnuts, a 67.3% year‐on‐year growth. In the third quarter alone, the external market for the nut was set at 7.1 thousand tons of nuts, itself 36.5% higher than the third quarter of 2015. Total revenue from the export of nuts through the first nine months of 2016, however, only increased 2.1% year‐on‐year and amounted to USD 116.3 million. This represents 7.7% of total Georgian exports and is the fourth‐highest exported Georgian product behind copper ores and concentrates, passenger cars and ferroalloys.

The main markets for Georgian hazelnuts are Europe and the Commonwealth of Independent States (CIS), including Russia, to whom the volume of deliveries this year amounted to 935 tons (down 9.3%).

Georgia ranks fourth in the world in the production of hazelnuts behind Turkey, Italy and the United States.

15) The Largest Greenhouse in Georgia now at 12 Hectares October 27th, 2016, http://georgiatoday.ge/news/5001/Presenting‐Planta‐‐‐the‐Largest‐Greenhouse‐in‐Georgia

Georgia’s Co‐Investment Fund (GCF) presented a successful investment project it has implemented: Planta, the largest greenhouse complex in Georgia. The greenhouse is located in Gardabani (Kakheti region) and, following its first two stages, occupies an area of 12 hectares and had an investment of USD 22.2 million. Planta greenhouse is equipped with modern technologies and has experienced Dutch and French agro engineers, technologists and biologists supervising the working process. The high quality products grown in the greenhouse complex carry the trademark of Planta, and it is the only exporter of cucumber in Georgia, exporting large quantities to the Russian Federation. The greenhouse complex has been producing 2,000 tons of goods annually, but now has the capacity to exceed 6,000 tons annually.

146 local residents are currently employed at the enterprise, but this is expected to increase to 250 by the end of the year.

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16) 130 Georgian Products may be given Geographic Signs October 27th, 2016, http://www.georgianjournal.ge/business/33008‐georgian‐tomato‐mushrooms‐and‐ham‐to‐be‐given‐ geographic‐signs.html

Nearly 130 different products are expected to be given geographic signs including Rachan ham, Kharagauli Caesar’s Mushroom, Lagodekhi watermelon, Choporti tomato and tkemali (sour plums).

Geographic signs designate the name of the geographic area of a product and are used for products whose characteristics and qualities often depend the environmental conditions (soil, water, climate, traditional methods of preparation, etc.) in which they grow. Products bearing such geographic signs can cost up to two and a half times more than those cultivated in other places. Geographic signs can also play a significant role in the regional development of a country as well as contribute to creating new jobs and profits. They also decrease the number of people wanting to leave the country and help in the development of tourism.

Currently, there are more than 40 products made or cultivated in Georgia that have a geographic sign, and a large part of them are exported including: hacha (Georgian grappa), Adjarian chechili cheese, Meskhetian chechilio cheese, Megrelian sulguni, Svanetian Sulguni, dambalkhacho cottage cheese, Machakhela honey, Akhalkalaki potato, Kutaisi greenery and Tkibuli mountain tea. An exhibition and degustation of products with geographic signs was held during a two‐day conference organized by Geopatent and World Intellectual Property in Tbilisi.

17) Demand for Georgian Sheep on the Rise October 28th, 2016, http://bizzone.info/agriculture/2016/1477706842.php

Demand for Georgian sheep is rising, and sales volumes for the Georgian ruminant are increasing.

Companies involved in the production and export of Georgian sheep have reported that the sector is growing stronger, although it is still far from ideal. Until now, cheaper Armenian sheep were taking the place of Georgian sheep in many markets; however, the reduced quality of Armenian sheep in comparison to Georgian sheep has meant that Georgian sheep have bounced back in many markets.

The main importers of Georgian sheep are Middle Eastern countries like the United Arab Emirates, Saudi Arabia, Qatar, Iran and Jordan.

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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com In this bulletin, BFC provides extracts from articles that have been published by others and as a result cannot be held responsible for such content.

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