11/2016
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51 Geo r g i a Agriculture Bulletin APMA Publishes Data on the United Agro Project ENPARD Launches Call for Rural Development Proposals in Georgia The Uncertain Future of Agricultural Cooperatives in Georgia Nut Export Revenue Hits USD 146 Million in 2016
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Contents State Initiatives ........................................................................................................... 2 1) 2)
Eastern Partnership Program to Benefit Georgia ............................................................................ 2 APMA Publishes Data on the United Agro Project .......................................................................... 2
Foreign Aid ................................................................................................................. 3 3) 4) 5)
ENPARD Launches Call for Rural Development Proposals in Georgia ............................................. 3 FAO to Launch New, Four‐Year Project ........................................................................................... 3 Stakeholders Meet for Rural Development Policy Support Workshop ........................................... 4
Private Sector .............................................................................................................. 4 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16)
The Uncertain Future of Agricultural Cooperatives in Georgia ....................................................... 4 International Conference on Livestock Sector Development ......................................................... 5 Georgian Wine Exports Increase 37% ............................................................................................. 5 Fruit and Vegetable Processing Plant Opens in Gori ....................................................................... 6 Georgian Citrus Harvest Begins ....................................................................................................... 6 Leaderfood LLC to Become Largest Meat‐Producing Factory in the Caucasus ............................... 6 ENPARD Helps Bulachauri Strawberry Cooperative Thrive ............................................................. 7 Nut Export Revenue Hits USD 146 Million in 2016 .......................................................................... 7 First Corn Oil Factory to Be Opened in Khobi .................................................................................. 7 NGOs: Support for Agricultural Cooperatives too Small ................................................................. 7 Georgian Wheat Harvest Expected to Exceed 200 Thousand Tons ................................................ 8
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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State Initiatives 1)
Eastern Partnership Program to Benefit Georgia
November 3rd, 2016, http://agenda.ge/news/69302/eng
Georgia is getting fully involved in an export promotion program set to launch in summer 2017 that will boost foreign awareness and global sales of locally made goods. The export promotion program was designed for six eastern European countries: Georgia, Armenia, Azerbaijan, Belarus, Moldova and Ukraine ‐ all members of the European Union’s Eastern Partnership (EaP). Georgia, as an EaP member, will directly benefit from projects that support small‐ and medium‐sized entrepreneurs in getting involved in the international trade network. To help achieve this, Georgia has been receiving support from the International Trade Center (ITC). A delegation from the ITC visited Georgia to negotiate with local authorities about creating an export promotion plan for specific exported products, in particular those products which are identified as having the biggest potential to be sold in European Union (EU) markets during the next two‐three years. The ITC delegation also highlighted the benefits Georgia could use from the Association Agreement and Deep and Comprehensive Free Trade Area deal it earlier signed with the EU.
2)
APMA Publishes Data on the United Agro Project
November 10th, 2016, http://agenda.ge/news/69783/eng
Georgia’s Agricultural Projects Management Agency (APMA) of the Ministry of Agriculture has released the latest statistical data about the United Agro Project, which includes different agricultural programs launched in recent years. Eight agricultural programs were earlier united under one umbrella with the aim of better communicating information about available agricultural support. APMA has reviewed all the programs and published detailed information about their progress. So far, 293 beneficiaries have planted 308 nurseries on 2,044 hectares of land, using GEL 9.7 million in state resources, as part of the 2015‐launched Plant the Future program. The Preferential Agro Credit Project was launched in 2013 to improve the processes of primary agricultural production, processing, storage and sales by providing farmers and entrepreneurs with cheap, long‐term and preferential funds. Between 2013 and 2016, the state issued cheap loans worth GEL 720 million in the national currency and USD 222 million in foreign currency. The Co‐financing of Agro Processing and Storage Enterprises project is comprised of two components: a co‐financing component for agricultural processers and a co‐financing component for storage enterprises. So far this year, the state has co‐financed 30 enterprises under the project with nearly USD 7 million. The Agricultural Insurance program came into force in 2014 and aimed to develop the insurance market in the agricultural sector, promote agricultural activities, retain income for eligible individuals and reduce risks. So far this year, 16,139 policies have been issued within the Agro Insurance program with APMA paying premiums totaling GEL 7.7 million. The Small Farmers Spring Works Support Program was created to give a helping hand to farmers during spring works. So far this year, more than 770 thousand farmers have received more than GEL 48 million from the state to cultivate over 206 hectares of land. Nearly GEL 125 million in state funds have been used to create 154 new enterprises involved in such activities as wine production, poultry farming, livestock farming, fruit processing, greenhouses, nut processing and milk processing. Page 2
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Foreign Aid 3)
ENPARD Launches Call for Rural Development Proposals in Georgia
November 2nd, 2016, http://www.finchannel.com/world/georgia/60992‐eu‐launches‐call‐for‐proposals‐for‐rural‐development‐ in‐georgia
The European Union (EU)‐funded European Neighborhood Program for Agriculture and Rural Development (ENPARD) has announced a call for proposals on diversification of the rural economy, including support for more competitive and climate resilient agricultural practices as well as the promotion of viable off‐farm economic activities and the sustainable management and protection of environmental resources. The total value for projects to be funded from this call is GEL 10 million (approximately EUR 4 million). The deadline for the submission of concept notes is December 15, 2016. This latest call for proposals is similar a 2014 call which provided funding for ongoing rural development projects in Kazbegi, Lagodekhi and Borjomi as well as another call earlier in 2016 which provided funding for three additional projects scheduled to start before the end of the year. The ENPARD programme has been supporting Georgia’s agriculture and rural development since 2013 and is composed of a variety of aid modalities from direct budget support to the government to technical assistance and small grants to NGOs. The total budget for ENPARD in Georgia for 2013‐2019 is EUR 102 million.
4)
FAO to Launch New, Four‐Year Project
November 24th, 2016, http://www.fao.org/georgia/news/detail‐events/en/c/455139/
The Food and Agriculture Organization (FAO) of the United Nations and the Georgian Ministry of Agriculture are launching a new, four‐year project financed by the Swiss Development Cooperation (SDC) and Austria Development Agency (ADA). The project is worth more than USD 5 million and includes four main directions: epidemic diseases, disease prevention, zoonosis and food safety. The project aims to increase agriculture competitiveness through the improvement of food safety and animal health standards. More specifically, the project will facilitate the establishment of the integrated, European Union‐compliant National Animal Identification, Registration and Traceability System (NAITS) for livestock in Georgia. NAITS functions will be based on four basic elements which will be tightly connected with each other: unique ID codes inscribed onto an animal identification device (e.g. an ear tag) for livestock; animal documentation bearing the animal ID code and showing the animal’s ownership and movement history; unique ID codes for holdings, farms, market centers, border information posts, and slaughter; and a centralized database which contains all aforementioned data. FAO will take a major role in supporting the National Food Agency (NFA) of the Ministry of Agriculture in ensuring all users of the system receive the appropriate training to adapt to the new electronic system and use it properly. The animal Identification project will lead to improved animal health, reduced food risks and facilitate access to regional and international markets, allowing for a higher income for farmers.
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5)
Stakeholders Meet for Rural Development Policy Support Workshop
November 25th, 2016, http://enpard.ge/en/stakeholders‐gather‐at‐rural‐development‐policy‐support‐workshop‐in‐tbilisi/
The European Union (EU), the Food and Agriculture Organization of the United Nations (FAO) and United Nations Development Programme (UNDP) organized a workshop within the framework of the European Neighborhood Program for Agriculture and Rural Development (ENPARD) regarding support for the Georgian Rural Development Policy. The workshop is a follow up to the intense support provided by both FAO and UNDP since 2015 in helping the Ministry of Agriculture (MoA) shape the Rural Development Strategy and increase the capacities of MoA staff. The MoA, along with representatives from the EU, FAO and UNDP, intensively worked to develop the Rural Development Strategy; the document is expected to be finalized and adopted shortly. Rural development is a complex area which addresses a range of social and economic issues such as employment, business development, access to services, education, social aid and environmental risks. Sharing best international practices in this field assisted Georgia in planning effective policy support for rural development and integrating it into national and local development strategies. To this end, the FAO team shared the experience of rural development in Hungary, including the LEADER approach, a powerful tool for local empowerment through local participation through the Local Action Groups (LAGs) to set up local priorities and develop local strategies for rural development.
Private Sector 6)
The Uncertain Future of Agricultural Cooperatives in Georgia
November 1st, 2016, http://cbw.ge/business/agso‐nut‐export‐growth‐conditioned‐due‐opening‐last‐years‐reserves/
The Republic of Georgia was among the first former Soviet countries to implement large‐scale land reform. Today, however, the Georgian agricultural sector is often perceived more as a missed opportunity than a success story. The share of agricultural output in total GDP is down to 9.2 percent, and land fragmentation is one of the main culprits of the low productivity. There are approximately 574,100 agricultural holdings in Georgia, 99.6 percent of which are held by households averaging 1.2 hectares of land each. The development of agricultural cooperatives has been identified as a promising way to encourage the development of the Georgian agricultural sector. By pooling their resources, small farmers can gain better access to credit markets, better physical capital, achieve economies of scale, and improve their bargaining power in the value chain. Georgian farmers, however, have been reluctant to aggregate into cooperatives due to a lack of trust in such institutions and lack of a coherent legislative framework for them. With the support of the European Neighborhood Program for Agriculture and Rural Development (ENPARD), the government of Georgia elaborated the Law on Agricultural Cooperatives to support the development of agricultural cooperatives. Since early 2014, ENPARD has selected and assisted about 250 cooperatives with support for the purchase and installation of machinery and equipment, training, and support for creating linkages with input and output markets among other assistance efforts. Over the same period, the government of Georgia has also introduced several supporting programs directly targeting cooperatives as well as others which could benefit cooperatives as well as other entities. Recently, the government issued the first draft of the state budget for 2017. According to the draft, the Ministry of Agriculture’s budget will decrease by 25%, meaning that there will be significantly less funding to support agricultural cooperatives at exactly the same time ENPARD is ending. In practice, this means that cooperatives are going to experience a remarkable reduction in support. While this may not be a problem if market conditions allow agricultural cooperatives to cope on their own, it seems likely to Page 4
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cause problems among many as most cooperatives are in the embryonic stage of development and market support services are still underdeveloped. This could mean that most cooperatives may not survive without additional support for at least a couple more years. Cooperatives themselves confirm that there are still a number of critical factors constraining their business development: access to credit, access to markets, government regulations, and difficulties accessing inputs and information. If not carefully monitored and managed, insufficient support of developing cooperatives could set them, and arguably the entire agricultural sector, back for years or even decades.
7)
International Conference on Livestock Sector Development
November 2nd, 2016, http://moa.gov.ge/En/News/1226
The “International Experience on Investing in the Livestock Sector for Achieving Success in the Caucasus Region” conference has been held with the goal of sharing international experiences in the livestock industry. During the conference, participants highlighted issues related to livestock farming development throughout the world and elaborated on the potential of and challenges facing the livestock industry in Georgia. Speaking at the event, Agriculture Minister Levan Davitashvili underlined the importance of livestock farming development for agricultural sector development in the country, especially given that half of agricultural production in Georgia and farm income is generated from raising livestock. He noted that species testing and genetic improvement will significantly increase livestock productivity and make a positive impact on farm household incomes and improve local economies. Within the frame of the conference, the First Deputy Minister of Agriculture Nodar Kereselidze also met with representatives of Canadian livestock companies to consider issues of livestock rearing. Both sides expressed their willingness to step up cooperation between the two countries in this regard. The event was organized by Caucasus Genetics along with the Alberta Ministry of Agriculture, Forestry and Rural Development and was supported by the Ministry of Agriculture of Georgia and farmers associations. Among attendees were representatives from the Ministry of Agriculture, the Alberta Ministry of Agriculture, Forestry and Rural Development, the Canadian Chamber of Commerce, Canadian livestock companies, livestock experts, foreign specialists, veterinarians, and farmers.
8)
Georgian Wine Exports Increase 37%
November 7th, 2016, http://www.commersant.ge/index.php?m=5&news_id=43788&cat_id=5
According to the Ministry of Agriculture of Georgia, a more than 38 million bottles of wine have been exported to 50 countries through the first 10 months of 2016, a 37% year‐on‐year increase. This amounts to USD 88.3 million, 14% more than the same period in 2015. Among the growth shown were exports to China (up 138%), Ukraine (up 64%), Belarus (up 57%), Great Britain (up 47%), Poland (up 44%), and Russia (up 20%). Russia is the leading importer of Georgian wine with more than 20 million bottles imported so far this year. Russia is followed by China (4.3 million bottles imported), Ukraine (4.2 million bottles), Kazakhstan (3.0 million bottles) and Poland (1.8 million bottles). In addition, over 7 million bottles of brandy worth USD 16.3 million have been exported to 16 countries through the first 10 months of the year, a 31% year‐on‐year increase. In total, Georgia has exported wine, brandy, vodka and other alcoholic beverages in the amount of USD 148.3 million this year; last year this amount was USD 115.7 million. Page 5
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9)
Fruit and Vegetable Processing Plant Opens in Gori
November 8th, 2016, http://cbw.ge/economy/fruits‐vegetables‐processing‐plant‐opens‐gori/
GeoConcentrate LLC has opened a fruit and vegetable processing plant in the village of Karaleti (Gori Municipality). The plant, equipped with modern technologies, will buy raw materials from local farmers and produce marinades from capers, cucumbers, tomatoes, peppers, cabbage, and garlic as well as stewed fruits from cherries, white plumbs, peaches, cornels, pineapple guavas, strawberries, apples, quinces, and plumbs. The processing plant was aided under the Preferential Agro Credit Project of the Ministry of Agriculture. Total investment in the plant was GEL 1.2 million, including GEL 650 thousand in a preferential loan. GeoConcentrate LLC also received 20,067 square meters of agricultural land and facilities from the government at a symbolic price as part of the project. Ivane Goglidze, founder of GeoConcentrate LLC, noted that the plant now employs about 50 local residents, with 25 additional residents employed seasonally. The daily output of the plant is 10‐12 thousand tons of stewed fruits and capers. In 2017, the plant plans to add new production lines and equipment to increase output. The company will manufacture products under the name Benefit Batono, with products initially being offered on the domestic market prior to expanding into foreign markets.
10) Georgian Citrus Harvest Begins November 11th, 2016, https://www.newsgeorgia.ge/43633‐2/
The citrus harvest has begun in Georgia and coordinating headquarters have opened in Adjara to organize the collection of citrus. This year, 50,000‐60,000 tons of citrus are expected to be harvested from around the country, the majority of which will be exported. Around 10,000 tons will be sent for industrial processing. Last year, approximately 100,000 tons of citrus fruit was harvested in Georgia. Georgia typically exports mandarins to Ukraine, Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia and Azerbaijan. Latvia and Uzbekistan were among the new markets that were interested in importing Georgian citrus fruit. The Adjara government will grant subsidies for the industrial processing of mandarins; the program of subsidization of non‐standard citrus began on November 25th. TCF GEORGIA and Agroinvestservis have already begun accepting citrus for processing, and a new processing plant opened earlier this month. The harvest is expected to last through the first part of February 2017.
11) Leaderfood LLC to Become Largest Meat‐Producing Factory in the Caucasus November 15th, 2016, http://cbw.ge/business/biggest‐meat‐producer‐factory‐caucasus‐opened/
Within the framework of the Produce in Georgia government program, Leaderfood LLC will broaden production and become the largest meat‐producing factory in the Caucasus. According to the Ministry of Economy, a new factory, scheduled to open in March 2017, is being built and will have modern facilities, new technologies and laboratories where meat quality will be supervised. The company will also introduce a food supervisory management system to ensure their products meet international quality standards. The factory will enable the company to add 300 employees to its existing 400 and is being built in an ecologically clean environment in Mtskheta. Because Leaderfood LLC is getting financial support from the government, the first two years will be co‐financed by the Agency of Entrepreneurship Development. In total, an investment of USD 5 million is being made for the project. Page 6
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12) ENPARD Helps Bulachauri Strawberry Cooperative Thrive November 17th, 2016, http://www.georgianjournal.ge/business/33086‐eu‐financing‐georgian‐entrepreneurship.html
A European Neighborhood Program for Agricultural and Rural development (ENPARD)‐funded project for a small strawberry growing cooperative in the village of Bulachauri is proving fruitful. Following a GEL 63,000 grant from ENPARD partner Oxfam and an initial investment from the cooperative itself of GEL 23,000, the first harvest (in February of this year) came in at 1 ton, enough to supply the demand of Tbilisi. At the moment, they are currently awaiting their second harvest; however, colder temperatures have meant a slowing ripening process, and the cooperative is now looking for additional financing to find an adequate heating method for the greenhouse to help it continue to develop successfully. If they can obtain financial support for heating, it will allow them to increase their productivity and, in the future, expand and build another greenhouse. ENPARD has been active in Georgia since 2013. Their main purpose is to develop Georgian agriculture through supporting small, private businesses. Under this program, the Strategy of Agricultural Development was set up for the 2015‐2020 period; over 400 Ministry of Agriculture staff members were trained; 59 consultation and information centers were established; and more than 1,600 agricultural cooperatives and 14,000 farmers were registered in the agricultural cooperatives database. The total budget for ENPARD in Georgia for 2013‐2019 is EUR 102 million.
13) Nut Export Revenue Hits USD 146 Million in 2016 November 22nd, 2016, http://cbw.ge/business/agso‐nut‐export‐growth‐conditioned‐due‐opening‐last‐years‐reserves/
Largely due to Turkey opening its nut reserves last year, nut prices fell and Georgian nuts did not sell particularly well, prompting a reserve in the Georgian product to be kept. This year, however, a better quality nut harvest in the Kakheti region and the opening of last year’s reserves have helped the growth of nut exports from Georgia. Over the first 10 months of this year, revenues from the export of nuts has made up USD 146 million, up more than USD 1 million year‐on‐year. Consulting company Agro Solution has linked the growth in Georgian nut exports to the opening of last year’s reserves. The company also notes that nut exports have the potential to occupy a significant share of Georgian exports in the future and show signs of being able to grow even more.
14) First Corn Oil Factory to Be Opened in Khobi November 24th, 2016, http://cbw.ge/business/first‐factory‐of‐corn‐oil‐to‐be‐opened‐at‐the‐beginning‐of‐next‐year/
The first corn oil factory will be opened in Georgia at the beginning of next year by the company Kolkha. The factory has been built in Khobi, and it will receive raw materials from local residents. The factory will process 50 tons of corn and produces 1‐1.5 tons of oil from it under the name Karva. The company plans to export the oil to foreign markets. Another factory is scheduled to be built in Khobi which will produce combined food products.
15) NGOs: Support for Agricultural Cooperatives too Small November 25th, 2016, http://www.sarke.com/cgi/search/news.asp?Code=10049238
The non‐governmental organizations (NGOs) United in Georgian Agricultural Development Alliance have announced that planned investment support for agricultural cooperatives within the action plan of the Page 7
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branch development strategy are small and do not meet the needs for the number and scale of existing cooperatives. The groups point to investments of GEL 3.5 million annually as inadequate and have offered to help bolster annual support through 2020 to make it a total of GEL 25 million annually. The groups are also concerned about the ending of preferential taxation for agricultural cooperatives on January 1, 2018, suggesting that it should be extended another 5‐7 years to allow adequate time for cooperatives to fully develop. The groups also noted that the rules governing the status of agricultural cooperatives need to be revised and that programs facilitating and monitoring inventory systems in agricultural cooperatives should be developed.
16) Georgian Wheat Harvest Expected to Exceed 200 Thousand Tons November 26th, 2016, http://www.apsny.ge/2016/eco/1480208834.php
Wheat is considered one of the most important products in terms of food security. In the past, Georgia produced between 50 and 100 tons of the crop, 5‐10% of total consumption. However, recent activities directed towards food security and self‐reliance have resulted in a greater quality and quantity of the crop. In 2015, 130,000 tons of wheat were harvested, and the forecast for 2016 now exceeds 200,000 tons. This represents roughly one third of the total consumption of the country.
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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. The articles do not necessarily reflect the opinions of BFC, its staff, its associates or its partners. Copyright of articles is retained by their authors.