01/2017
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53 Geo r g i a Agriculture Bulletin New beef labeling regulation comes into force
Agreement signed with Spanish seedling producer
Georgia adopts first rural development strategy
50 million bottles of wine exported in 2016
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5)
New beef labeling regulation comes into force .............................................................................. 2 Seed certification underway in Georgia .......................................................................................... 2 Produce in Georgia for Rapid Development begins ........................................................................ 2 Vineyard cooperatives support program launches ......................................................................... 3 Agreement signed with Spanish seedling producer ........................................................................ 3
Foreign Aid ................................................................................................................. 3 6) 7) 8)
Georgia adopts first rural development strategy ............................................................................ 3 EU grant awarded to Georgia .......................................................................................................... 4 New agricultural cooperatives presented in Dusheti ...................................................................... 4
Private Sector .............................................................................................................. 5 9) 10) 11) 12) 13) 14) 15) 16) 17)
50 million bottles of wine exported in 2016 ................................................................................... 5 Herbia asks government for greater support .................................................................................. 5 Lumpy skin disease cases found in Georgia .................................................................................... 5 Revitalizing Georgia’s agricultural sector ........................................................................................ 6 Georgian dried fruits in high demand in Germany .......................................................................... 6 Georgian external trade grew 20% in 2016 ..................................................................................... 6 Georgian products on show at international exhibition ................................................................. 7 2016 nut exports reach USD 179 million ......................................................................................... 7 Exports and imports with Russia increased in 2016 ........................................................................ 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 Georgian Agriculture Bulletin
State Initiatives 1)
New beef labeling regulation comes into force
January 9th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10049571
The labeling of beef and beef products became mandatory on January 1, 2017. Labels should now identify the slaughterhouse or enterprise where the cattle was slaughtered and processed. In addition, any imported beef or beef from imported cattle must now also be labeled with a “live animal import” notation and indicate country of origin. These requirements do not apply to beef produced from imported cattle which were slaughtered in Georgia after 30 days from the date of import. Ana Gemazashvili, deputy head of National Food Agency, notes that voluntary labeling was introduced some time ago and did not cause beef prices to increase. Thus, she does not expect that the regulation will have a significant impact on the market price of beef. The fine for a labeling violation is GEL 400, with the fine increasing to GEL 1,000 for repeated violations within a year. It should be noted that labeling is currently voluntary for pork but is expected to become mandatory in the future as well.
2)
Seed certification underway in Georgia
January 10th, 2017, http://www.commersant.ge/?m=5&news_id=46559&cat_id=1
Certification of cereal seeds has started in Georgia under the government’s resolution on the distribution of seeds and planting materials in Georgia. Certification of soy, sunflower and potato seeds will remain voluntary until 2020 while grain seed certification will become obligatory in 2018. The new quality control measures will maintain genetic purity, supply farmers with genetically clean materials, ensure higher quality harvests and protect the market from falsified products. The Science‐Research Center of the Ministry of Agriculture spearheaded the project with support coming from the United Nations Food and Agricultural Organization (FAO). Seed material certification is part of the Deep and Comprehensive Free Trade Agreement (DCFTA) Georgia signed with the European Union and will help open international markets for Georgian entrepreneurs.
3)
Produce in Georgia for Rapid Development begins
January 12th, 2017, http://www.moa.gov.ge/En/News/1260
Starting at the beginning of 2017, all state programs focused on the development of entrepreneurship in Georgia and targeting the popularization of Georgian products and export growth will be united under the umbrella of the Produce in Georgia for Rapid Development program. This includes entrepreneurship development projects belonging to the Entrepreneurship Development Agency of the Ministry of Economy and Sustainable Development as well as projects under the Ministry of Agriculture’s Projects Management Agency and Georgian Partnership Fund (Produce in Georgia, the United AGROPROJECT, Start‐up Georgia, Plant the Future, etc.). Entrepreneurship support programs such as Produce in Georgia which have been initiated by the government have reached the point of needing to go to the next stage of focusing on enterprise promotion that will maximize the effect of government spending efforts and work for the prosperity of the entire country. Structuring and segmentation for government support to better adjust to economic needs will also mean a focus on strengthening technical support (project design, information support,
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mentoring). Under the new umbrella program, loans will only be issued in the national currency and a new infrastructure component will also be added for infrastructure development. The Produce in Georgia program has been successfully implemented for the last two years, helping Georgia to replace imports with domestic products, and is now looking to help Georgian businesses gain a competitive advantage in global markets.
4)
Vineyard cooperatives support program launches
January 25th, 2017, http://cbw.ge/business/new‐program‐launch‐vineyard‐agriculture‐co‐operatives/
A new program, Vineyard Agriculture Cooperatives Support, for agricultural cooperatives has been launched and will give program participants benefits for grape and wine production. The program aims to give needed equipment to at least three agricultural cooperatives which have at least 250 members and 316 hectares of vineyard. To participate in the program, members of cooperative should each own at least 20 hectares of vineyard which produce one or more of the following types of grape: Rkatsiteli, Saferavi, Mtsvane, Kikhvi, Kisi, Chinuri, Tsolikauri, Krakhuna, Alesandrouli, Ojaleshi, Chkhaveri, Aladasturi, Usakhelouri, Mujurutuli, Tsulikidzis/Rachuli tetra.
5)
Agreement signed with Spanish seedling producer
January 26th, 2017, http://cbw.ge/economy/new‐types‐orchards‐subtropical‐nut‐trees‐import‐spain/
An agreement has been signed between the Agricultural Science Research Center of Georgia and La Encina, a Spanish seedling producer company. Within the framework of the agreement, the two sides will work together to create new seedlings and implement common scientific research. Internship opportunities in Spanish companies will also be offered to Georgian professionals. The agreement also includes the Seedling Agriculture program that will provide Georgian farms and orchards with standard seedlings. As part of this program, healthy apple, peach, plum and pear trees will be imported from Spain. In addition, new varieties of subtropical and walnut trees will be imported from Spain in spring 2017, with test samples of the new trees being planted in the east and west bases of the Agricultural Science Research Center.
Foreign Aid 6)
Georgia adopts first rural development strategy
January 4th, 2017, http://georgiatoday.ge/news/5543/UNDP%3A‐Georgia‐Adopts‐First‐National‐Strategy‐for‐Rural‐ Development
The United Nations Development Program (UNDP) reports that Georgia’s government has adopted its first‐ever national strategy for rural development. The plan outlines the country’s vision for three years (2017 to 2020) in key areas of rural development and focuses on promoting entrepreneurship and civil engagement as well as on improving the quality of people’s life while paying special attention to the values of natural and cultural heritage.
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Following its adoption by the government in late 2016, the Interagency Coordination Council on Rural Development is being established and will be led by the Ministry of Agriculture. The council will coordinate the implementation of the strategy and will look into specific initiatives for individual regions of Georgia. The Rural Development Strategy 2017–2020 was initiated by the government of Georgia and supported by the European Union (EU) and two United Nations agencies — the UNDP, and the Food and Agriculture Organization (FAO). It falls under the scope of the EU‐funded European Neighborhood Program for Agriculture and Rural Development (ENPARD).
7)
EU grant awarded to Georgia
January 9th, 2017, http://www.euneighbours.eu/en/east/stay‐informed/news/eu‐supports‐trade‐vocational‐education‐ agriculture‐and‐internally‐displaced
The European Union (EU) has awarded a grant to Georgia to support the country’s reform progress with trade and business development, vocational education and employment, agriculture, and integration of internally displaced people (IDPs). EU support aims to help Georgian businesses maximize their trade potential with the EU through better job opportunities and capacity building for small farmers. Budget support is an instrument the EU uses with partner countries and involves direct financial transfers to the state budget. The EUR 43.95 million grant is given provided that Georgia continues to show progress with its reforms. The grant is only disbursed when agreed conditions for results are met. If the EU considers performance on any of these points is insufficient, it withholds a part or the whole disbursement until credible measures have been established. This is a way of fostering Georgia’s ownership of development policies and reforms and addressing the source of underdevelopment as opposed to the symptoms. EU grants were also made for Georgia's justice sector, public administration, public finance management and regional development policy.
8)
New agricultural cooperatives presented in Dusheti
January 18th, 2017, http://www.finchannel.com/world/georgia/62835‐georgia‐new‐agricultural‐cooperatives‐to‐be‐presented‐ in‐dusheti
The EU‐funded European Neighborhood Program for Agriculture and Rural Development (ENPARD) and Oxfam presented three agricultural cooperatives in the Dusheti Municipality. The cooperatives (Pomodorna, Saaragvo and Maghrani Naturaluri) were all established within the framework of the EU‐ funded Supporting Agricultural Cooperation in Georgia project and will contribute to the development of agriculture and trade in Dusheti through the ecologically clean production of several varieties of tomatoes, elite potatoes and grains. ENPARD has been working in Georgia since 2013 with the goal of reducing rural poverty in Georgia though support to rural and agricultural development. Program assistance is provided to the government and NGOs working directly with communities on the ground.
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Private Sector 9)
50 million bottles of wine exported in 2016
January 4th, 2017, http://www.commersant.ge/index.php?m=5&news_id=46330&cat_id=5
In 2016, Georgia exported 50 million bottles of wine to 53 countries, a 38% increase as compared to 2015’s wine exports. Exports to China grew by 98%, to Ukraine by 70%, to Russia by 49%, to Poland by 46% and to Canada by 34%. The top five countries that imported Georgian wine were Russia (27,222,076 bottles), Ukraine (5,811,050 bottles), China (5,299,149 bottles), Kazakhstan (3,393,435 bottles) and Poland (2,329,820 bottles).
10) Herbia asks government for greater support January 11th, 2017, http://cbw.ge/business/herbia‐domestic‐market‐unprotected/
Herbia, a major manufacturer of greenery in Georgia, has asked the government to foster domestic production in light of the fact that domestic production is currently able to replace imported products but is largely unprotected and does not have the support it needs. As an example, Herbia pointed to Georgia importing 25‐27 thousand tons of agrarian products in 2016 and that domestic manufacturers cannot produce this same volume only because of expensive energy costs. If farmers unite efforts and create cooperatives, required volumes will be produced and satisfy market demands domestically and be able to be exported. There is much demand for Georgian greenery, but yearlong supplies of products to markets cannot be currently guaranteed. For example, the price of one kilogram of greenery is EUR 25‐30 in Poland, whereas it is GEL 10 (approximately EUR 3‐4) in Georgia. If production could be increased and yearlong supply be guaranteed, Georgia could make a large impact in world markets. Instead, Georgia imports about USD 100 million products from Turkey, Armenia and Iran, meaning a big lost opportunity for the Georgian economy.
11) Lumpy skin disease cases found in Georgia January 13th, 2017, http://www.fao.org/georgia/news/detail‐events/en/c/463164/
Georgia saw its first cases of lumpy skin disease appear in late 2016. The lumpy skin disease virus is transmitted by insects and takes its name from the characteristic nodules that appear beneath the skin of infected animals. It can mean economic losses due to temporary declines in milk production, lower market weights and sterility in bulls; furthermore, secondary infections can even lead to the animals’ deaths. The skin nodules also reduce the value of hides, and countries with the outbreaks of the virus may face trade restrictions with other countries seeking to prevent the spread of the disease. To prevent the further spread of the virus, the National Food Agency vaccinated cattle in the regions at risk and the country will host a mission by FAO experts who will evaluate Georgia’s situation and provide training to assist national authorities in coming to grips with the disease. A cost‐benefit analysis will be used to compare outbreak control options. Since few veterinarians in Europe have ever encountered lumpy skin disease, a manual with step‐by‐ step guidelines is being developed to ensure proper procedures are followed. Additionally, a three‐day regional workshop in Budapest is planned for March where experts from across Europe and Central Asia will review and revise current strategies and update their knowledge of the tools and approaches for preventing, monitoring and coping with the disease. Page 5
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12) Revitalizing Georgia’s agricultural sector January 16th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10049668
Norberto Pignatti, professor at the International School of Economics at Tbilisi State University (ISET) outlined two main factors needing to be addressed in order to help revitalize a struggling Georgian agricultural sector: the average age of land owners and employment levels when labor market conditions are unfavorable. The Georgian population is aging quickly, and the share of land owned by individuals 55 years of age or more has increased from 55% to 61% in the last ten years and is likely to rise to 83% in the next ten years. Pignatti also argues that households which own lands need to be able to ensure that their household members are employed, even when the labor market conditions are unfavorable, and can count on agricultural production as a supplement to their consumption. Revitalizing the Georgian agricultural sector and overcoming these issues will require a structured and well‐thought‐out approach. Pignatti argues that the government needs to eliminate disincentives to land consolidation and agricultural‐related entrepreneurial activities that currently exist in the tax legislation while also pushing forward land registration. Moreover, agricultural development initiatives should be provided separately from social assistance components. The government must work, he concludes, to provide a safety net which will reduce the role of land as an “insurance tool” for the elderly and most disadvantaged groups in the labor market in order to free up the land for modernized agricultural development.
13) Georgian dried fruits in high demand in Germany January 18th, 2017, http://cbw.ge/business/georgian‐ingredients‐fruit‐tea‐production‐emerge‐demand‐products‐germany/
GEO‐Flower, a company that exports Georgian ingredients to Germany, has reported a high demand in Germany for Georgian dried fruits used to make fruit tea. The company believes the demand to be great in other European countries as well but cannot produce the required volume to satisfy demand in Germany, let alone other countries. Approximately 600 tons of dried fruit were exported to Germany by GEO‐flower in 2016.
14) Georgian external trade grew 20% in 2016 January 20th, 2017, http://agenda.ge/news/73434/eng
Georgia’s external trade grew by 20% in 2016 and totaled USD 11.96 billion. Georgia’s top 10 trading partners in 2016 made up 68% of the country’s total trade turnover, with Canada (USD 1.83 billion), Turkey (USD 1.53 billion) and Russia (USD 881 million) filling the top three spots. In addition, trade turnover with European Union (EU) countries increased by 14% year‐on‐year and amounted to USD 3.60 billion in 2016. In total, exports to the EU were worth USD 571 million (down 12%) while imports from the EU reached USD 3.03 billion (up 20%). The external trade turnover of Georgia with Commonwealth of Independent States (CIS) countries totaled USD 2.72 billion in 2016, a 3% year‐on‐year decrease, with exports worth USD 739 million (down 12%) and imports at USD 1.98 billion (up 1%).
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Georgia’s main exports were: copper ores and concentrates (USD 312 million), nuts (USD 179 million) and ferro‐alloys (USD 169 million). Georgia’s main imports were: medicines (USD 2.9 billion), petroleum and petroleum oils (USD 619 million) and motor cars (USD 473 million).
15) Georgian products on show at international exhibition January 23rd, 2017, http://georgiatoday.ge/news/5655/Georgian‐Products‐on‐Show‐at‐Berlin‐International‐Agricultural‐ Exhibition
Several Georgian agricultural products were on display at the Gruene Woche Agriculture and Gardening Exhibition in Berlin. The Georgian stand featured seventeen wine companies and Georgian treats such as churchkhela, gozinaki, fruit leather, lemonades, tea, chacha and a variety of Georgian spices. Gruene Woche is one of the largest and most prestigious events in the agriculture sector and has been held annually since 1926. Each year, more than 400,000 visitors and 1,500 companies participate in the exhibition.
16) 2016 nut exports reach USD 179 million January 24th, 2017, http://www.commersant.ge/index.php?m=5&news_id=47095&cat_id=5
Nuts were Georgia’s second largest exported product in 2016. Nut exports amounted to USD 179 million and accounted for 9% of total Georgian exports for the year. Copper and concentrates, valued at USD 312 million, topped the list of exports while ferro‐alloys ranked third with a value of USD 169 million. The top 10 exported products for 2016 also included vehicles (7.9%), wine (5.4%) and medications (5.1%).
17) Exports and imports with Russia increased in 2016 January 30th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10049769
In 2016, Georgian exports to Russia amounted to USD 206.23 million, a 26.6% year‐on‐year increase. The three largest items exported from Georgia to Russia were: natural wines amounting to USD 55.76 million (a 28.6% growth), ferroalloys amounting to USD 39.44 million (a 74.1% growth) and mineral and spring water amounting to USD 35.3 million (a 6.9% growth). Imports from Russia to Georgia amounted to USD 675 million in 2016, an 8% year‐on‐year increase. The three largest imports from Russia were: oil products amounting to USD 101.95 million (a 46.9% growth), wheat amounting to USD 85.9 million (a 25% decline) and natural gas amounting to USD 30.82 million (a 61.6% decline). Russia ranked third among Georgia’s trading partners in 2016, with total turnover amounting to USD 881.23 million, an 11.8% year‐on‐year increase.
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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.