07/2017
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59 Geo r g i a Agriculture Bulletin Georgia prepares for 2017 grape harvest
FAO holds informational meetings on NAITS project
Georgian wool primed for massive growth Georgian wine producers launch informational website
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4)
Government program to support beekeeping in Georgia............................................................... 2 Georgia prepares for 2017 grape harvest ....................................................................................... 2 EEN system to aid in the export of Georgian production................................................................ 2 Agricultural sector financial resources declining............................................................................. 3
Foreign Aid ................................................................................................................. 3 5) 6) 7) 8)
FAO holds informational meetings on NAITS project ...................................................................... 3 New fish enterprise to open in Kareli .............................................................................................. 4 Joint FAO-EBRD project to bolster Georgian agriculture ................................................................ 4 Conference held on women’s role in agriculture ............................................................................ 4
Private Sector.............................................................................................................. 5 9) 10) 11) 12) 13) 14) 15) 16) 17) 18)
Georgian wool primed for massive growth ..................................................................................... 5 Georgian olives to appear on international markets ...................................................................... 5 Qatari markets open up to Georgian produce ................................................................................ 6 AntGroup interested in Georgian agricultural sector...................................................................... 6 Georgian wine producers launch informational website ................................................................ 6 Georgia has potential to be a regional “know-how” hub................................................................ 6 Report identifies 9 sectors with investment potential .................................................................... 7 Georgian hazelnut brand growing and overcoming issues ............................................................. 7 Georgia’s peach exports up 44% ..................................................................................................... 8 Expanding Georgia’s peach industry ............................................................................................... 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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BFC Agriculture Bulletin
State Initiatives 1)
Government program to support beekeeping in Georgia
July 11th, 2017, http://www.messenger.com.ge/issues/3925_july_11_2017/3925_econ_one.html
The government of Georgia has launched a new state program to support beekeepers in boosting production. The new state program encourages the creation of honey cooperatives and aims to improve the material-technical base of beekeeping as well as to increase the quality and quantity of honey and other beekeeping products. The first honey cooperative enterprise will soon be created in Georgia, in which about GEL 900,000 will be invested. The new enterprise will be equipped with modern technologies in the primary production of honey and other beekeeping products. In order to ensure high quality honey production, all programparticipant cooperatives will be obligated to follow the Honey Technical Regulations and to introduce traceability as well as hazard analysis and critical control point (HACCP) systems. The state has also been giving beehives to local beekeepers that are part of cooperatives in an effort to boost honey production in the country. Within the program, farmers pay 30% of the total cost of the hive, with the remaining 70% covered by the state. So far, 164 cooperatives have received 13,931 beehives; 28 cooperatives have received 28 honey extractors; and 27 cooperatives were given 713 tanks with a 61,400 liter capacity.
2)
Georgia prepares for 2017 grape harvest
July 27th, 2017, http://agenda.ge/news/84338/eng
The government of Georgia is supporting the wine sector ahead of the major grape harvesting season, during which more than 100,000 tons of grapes will be picked, packed and sold domestically or exported. The government has already introduced several initiatives to support the sector, with more actions planned in the future. Agriculture Minister Levan Davitashvili stated the wine sector has been developing in Georgia as a direct result of state support. For example, the state has supported and financed 24 new enterprises involved in producing wine and other alcoholic beverages and helped a further 48 enterprises expand their activities. Additionally, 5,123 hectares of vineyards have been insured as part of the state agriculture insurance program. Georgia is also working to diversify their wine markets and continue to increase their exports of alcoholic beverages each year. Because of the aforementioned efforts, the government has decided not to subsidize high-quality grapes in Kakheti; however, the Aleksandrouli and Mujuretuli grape varieties will be subsidized in RachaLechkhumi.
3)
EEN system to aid in the export of Georgian production
July 28th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10051489
A memorandum of cooperation has been signed in Tbilisi between the state-run ‘Produce in Georgia’ program, the Agency of Innovations and Technologies and Georgian Chamber of Commerce and Industry regarding the usage of the Enterprise Europe Network (EEN) system in Georgia. The EEN system
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will assist in the export of Georgian production as it is used by over 600 organizations in 67 countries around the world. Any Georgian company which applies to the EEN-Georgia consortium is eligible to receive EEN services.
4)
Agricultural sector financial resources declining
July 31st, 2017, http://cbw.ge/economy/financial-resources-declining-agriculture-sector/
2017 has seen a decline in both the amount of state financing directed towards the agricultural sector as well as the amount of foreign direct investments (FDI) in the sector. This year, the government reduced its subsidizing of the agricultural sector to GEL 83 million, and the Agricultural Development Program was reduced by GEL 75.43 million. Additionally, financing for food safety, plant protection and epizootic development shrank by GEL 450,000, and financing of research works in the agricultural sector declined by GEL 3.4 million. The government will also stop subsidizing several grape varieties this year. It remains to be seen if the government will maintain this position as they have previously tried to stop subsidies, only to concede the position when protests erupted. Additionally, the government is quick to point out that it is not withdrawing its support of the agricultural sector; rather, it is transitioning to a new phase more focused on brand promotion as the sector moves towards greater self-sufficiency. Along with declining state financial resources, FDI is also decreasing in the agricultural sector. No foreign investment was made in agriculture sector during the first quarter of 2017, largely due to the ban on the sale of agricultural land to foreigners. In fact, between 2007 and 2016, just 1% (USD 134 million) of total FDI inflow went to the agricultural sector. Moreover, the average annual growth of the sector in the past ten years is 0.7%. Despite this, the government remains optimistic about the future of the agricultural sector, noting that more than USD 1 billion has been mobilized in the agricultural sector with the support of Georgian authorities and the private sector and that positive trends and increased land prices indicate a strong and growing industry. Without government support and investments, however, the sector’s growth is expected to drop further, potentially harming the 48% of Georgians employed in agricultural-related activities.
Foreign Aid 5)
FAO holds informational meetings on NAITS project
July 14th, 2017, http://www.fao.org/georgia/news/detail-events/en/c/1024561/
The Food and Agricultural Organization of the United Nations (FAO) and the National Food Agency (NFA) held informational meetings on the new National Animal Identification and Traceability System (NAITS) in the Kakheti region. During the meetings, FAO representatives introduced the recently launched NAITS program to the local veterinarians, slaughterhouse owners, live animal collectors and large farmers. They highlighted that, under the new program, ear tagging of large and small ruminants will continue and that an electronic database will soon be implemented that will enable farmers and veterinarians to obtain information about registered animals. FAO and NFA representatives also spoke about the legislation scheduled to enter into force on January 1, 2018 that will prohibit slaughterhouses from providing services to farmers with untagged animals. Page 3
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The new regulation will strengthen the animal traceability process and improve food safety standards as well as the protection of consumer rights. The project was implemented by FAO with the help of the National Food Agency (NFA). It was funded and supported by the Swiss Agency for Development and Cooperation and the Austrian Development Agency.
6)
New fish enterprise to open in Kareli
July 17th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10051367
LLC Akhali Tevzi (Fresh Fish) has been created and launched under the Unified Agroproject. The new company will be located in Kareli (Shida Kartli region) and will employ 30 people. It plans to produces 150 tons of fish and caviar annually. Akhali Tevzi also plans to receive ISO:22000 certification with the support of the Agricultural Projects Management Agency (APMA) and a USAID/REAP project. Investments in the enterprise amounted to USD 1.5 million, including a grant of USD 249,081 and USD 311,352 in preferential agrocredit. More than 750 current and 162 new enterprises have been already supported within the Unified Agroproject.
7)
Joint FAO-EBRD project to bolster Georgian agriculture
July 18th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10051371
A joint project of the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD) aims to strengthen the institutional framework of geographical indications and develop steady value chain in Georgia’s dairy sector. According to project coordinator Kateryna Poberezhna, geographical indications add EUR 50 billion to global income annually. She also notes that over 40 products in Georgia already have geographical indications registered; however, they are currently unable to take advantage of this because of a lack of appropriate marketing around it. The project is now working to harmonize legislation and set up certification that will allow geographical indications to add value to Georgian products. Poberezhna also spoke about the project’s goal of improving food safety in Georgia’s dairy sector. To this end, a food safety expert will arrive in Georgia in August 2017 to meet with producers and discuss the possibilities of securing the safety of traditional Georgian cheeses.
8)
Conference held on women’s role in agriculture
July 19th, 2017, http://bizzone.info/agriculture/2017/1500514746.php
A conference was recently held in Georgia to discuss more active participation of women in Georgia’s agricultural cooperatives. Participants to conference exchanged experience and discussed the role of women in agricultural cooperatives and rural development in Georgia. Attendees included representatives of the Georgian Ministry of Agriculture, the Agency for the Development of Agricultural Cooperatives and international organizations. Representatives of women's cooperatives and clubs were also present.
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The event was organized in the framework of the European Neighborhood Program for Agriculture and Rural Development (ENPARD) and the EU-funded ‘Support to the Development of Agricultural Cooperatives in Georgia’ project.
Private Sector 9)
Georgian wool primed for massive growth
July 3rd, 2017, http://georgiatoday.ge/news/6950/Georgian-Wool%3A-Can-It-Become-the-%E2%80%9CGoldenFleece%E2%80%9D-Again%3F
After signing an Association Agreement with the European Union (EU) in 2014, Georgia had many more opportunities for agricultural exports, providing that producers could meet safety and quality standards. For Georgian wool, these standards were met last year, and wool became the first product of animal origin to be exported from Georgia to the EU. In 2016, Georgia produced 2,000 tons of wool, 50% of which was exported with an average price of USD 507 per ton. The rest of the wool was used domestically to make woolen garments or was wasted. This is important because wool has a great potential for creating jobs and generating income, a potential that is all-to-often burned or thrown away as unprocessed wool often gets only a low price not worth the cost of shearing and transportation. This, however, does not need to be the case. The demand for semi-processed wool is on an upward trend due to woolen clothes and accessories becoming more popular. Moreover, new technologies suggest that coarse wool is a good material for energy-efficient insulation. With government and donor support to help the sector develop new products and explore new markets, the wool in Georgia is ready for massive growth. In order for this to happen, farmers must be motivated to produce good quality wool. And this requires more processors to make fully processed or semiprocessed wool. The key is to ensure that all actors along the wool value chain profit equally. This could easily be encouraged by the formation of wool cooperatives which share in expenses and allow for better agreements to be arranged with producers. With the right coaxing, Georgian wool could become a major source of income for many Georgians.
10) Georgian olives to appear on international markets July 3rd, 2017, http://agenda.ge/news/82704/eng
The first olive processing plant in Georgia, established last year in the Kakheti region, is set to process its first harvest this year and plans to sell its products both domestically and abroad. Company representatives plan to conquer export markets in cooperation with Carrefour and other international trading networks and have already made plans to export to Transcaucasian countries, Europe and Commonwealth of Independent States (CIS) countries. The plant was created with the help of state programs and a joint Dutch-Turkish investment. The total investment in the project was GEL 5 million.
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11) Qatari markets open up to Georgian produce July 4th, 2017, http://agenda.ge/news/82753/eng
In June this year, larges Qatari companies approached Georgia regarding potential Georgian partners for exporting Georgian food products to the Arab nation. In response, Georgia’s state-run ‘Produce in Georgia’ program contacted more than 100 private companies and provided all information about these companies to the Qatari representatives. The results of those efforts are now being seen, with Uvie's Berries having recently exported blueberries, tomatoes, coriander, parsley, dill and other greens to Qatar as part of an agreement with Qatari hypermarket network Lulu. Georgian producers hope to make a significant impression in Qatar and continue to boost exports to the country.
12) AntGroup interested in Georgian agricultural sector July 5th, 2017, http://cbw.ge/economy/antgroup-shows-interest-making-investments-georgias-agribusiness-sector/
Turkish company AntGroup is planning on making investments in Georgia’s agribusiness sector. The company plans on building a grain processing plant and to launch production of maize glucose and amylum. To this end, an AntGroup delegation met with the manager of the Partnership Fund to discuss agricultural sector investment potential and future perspectives. AntGroup has 40-year experience operating the world over and has partnered with companies such as AlfaLaval (Switzerland), Anhydro (Denmark), Westfalia-Seperator (Germany) and Fluid-Quip (United States). The company is also involved in the manufacture of machineries and production lines and provides technical support for such companies as Cargill and Amylum.
13) Georgian wine producers launch informational website July 18th, 2017, http://cbw.ge/wine/georgian-wine-producers-launch-online-information-platform-help-eu4business/
Winemakers in Georgia have launched a website which shares the details of more than 100 wines for sale in the country. The platform offers consumers and tourists effective information on red and white wines as well as on grape producers, products, food and wine making issues. It also serves as a sales channel for Georgian wine companies. The platform is in the process of developing a shopping service that will allow wines to be bought directly online from producers across the country. 118 products from six Georgian regions are currently featured in the website’s wine catalogue, with the site sharing information about their production, location, history, prevalence and agricultural characteristics. The website also contains detailed information about the cultivation local grape varieties as well as Georgia’s long history of winemaking. The website was launched with support from the EU4Business East Invest 2 project and a twinning project between the Georgian Wine Association and the Bulgarian Chamber of Commerce and Industry.
14) Georgia has potential to be a regional “know-how” hub July 18th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10051385
Vasil Akhvlediani, deputy head of representation for the German company Hipp, believes that Georgia has the potential to become a “know-how” hub in the South Caucasus for biotechnologies. To this end, Hipp is interested in expanding biofarms to a large scale in Georgia. Page 6
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Hipp currently owns 80 hectares near Tskhinvali, where it plans to create a biofarm and introduce new technologies. Hipp’s decision is the result of their plant in Agara suspending operations due to insufficient raw materials to provide for the plant’s full operation. The company hopes that the biofarm will not only provide the plant with needed raw material but also serve as inspiration to others to produce the same.
15) Report identifies 9 sectors with investment potential July 19th, 2017, http://cbw.ge/economy/nine-sectors-investment-potential-dcfta/
The Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union (EU) provides Georgia not only a good opportunity for Georgian entrepreneurs to penetrate new markets but also a chance for foreign investors to conclude lucrative business investments in Georgia. As part of an effort to identify Georgian sectors with the strongest potential for investment, PricewaterhouseCoopers Georgia (PwC) conducted a study and outlined nine sectors that have potential; among the identified sectors were berries, honey, wine and processed fruits and vegetables. The study used interviews with representatives of state and nongovernmental sectors as well as an analysis of other countries and international markets to make their conclusions. PwC has delivered the final version of this report to the Ministry of Economy; however, the report will not be released until the Ministry and PwC identify and conduct a deeper analysis of three products from these nine sectors. The reports will be used to attract funds to develop the identified sectors.
16) Georgian hazelnut brand growing and overcoming issues July 25th, 2017, http://cbw.ge/business/georgian-hazelnut-health-hazard-recognized-georgian-brand-europe/
Today, Georgian hazelnut is a brand that competes with Turkish, Azerbaijani and Spanish hazelnuts in world markets, often getting a higher price than its counterparts. Moreover, Europeans have come to prefer the Georgian variety to others. This is why it came as a bit of a surprise when a report began circulating that Georgian hazelnuts were no longer allowed to be imported into European Union (EU) markets due to excessive aflatoxin, a carcinogenic toxin. In response to the report, Georgia’s Ministry of Agriculture noted that only two cases of excessive aflatoxin have been recorded in Georgian hazelnuts in 2017. Others involved in the sector added that the country’s industry is working tirelessly on continued improvement of the hazelnut production process and is dedicated to maintaining the high levels of quality associated with the Georgian hazelnut brand. While acknowledging that issues still need to be resolved, exporters of the product categorically reject the spread of this report as misinformation, pointing to the fact that the Georgian nut is a wellknown brand in Europe and would not be allowed in EU markets if it did not continue to meet their standards. Aflatoxin levels grow when drying occurs improperly and the spoilage process begins. In Georgia, many nuts are dried naturally, which depends on weather conditions. In rainy weather, the spoilage threat is greater. Georgian hazelnut producers recognize the need for specialized drying facilities in order to completely eliminate this threat. With improved drying facilities and an educational campaign for Georgian producers, the industry remains one with great potential. Hazelnuts are among the leading exported products from Georgia, taking a place in the top five exported products in 2016.
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17) Georgia’s peach exports up 44% July 25th, 2017, http://agenda.ge/news/84191/eng
So far this year, Georgia’s peach exports are more than 44% higher than the same period in 2016. During the first seven months of this year, Georgia exported 5,853 tons of peaches. This has amounted to USD 2.2 million in earned revenue. Russia imported 76% of the peaches exported by Georgia, with Azerbaijan importing 14% and Kazakhstan 4%. To support the local peach harvest, a special group was created in Gurjaani (Kakheti region) to help farmers prepare all necessary documents needed for harvesting, processing and exporting the fruit.
18) Expanding Georgia’s peach industry July 25th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10051455
Georgia is currently ranked 47th of the 81 peach-producing countries in the world. Peach production in Georgia mainly occurs in small orchards, most of which are located in the Kakheti and Shida Kartli regions. Peach exports primarily go to post-Soviet countries. The average profit from peach cultivation is GEL 4,000-5,000 per hectare. Research indicates that, if Georgia is to expand its role as a peach producer, there needs to be an emphasis placed on market diversification. Additionally, Georgia currently has a shortage of fruit processing enterprises to produce value-added products such as juice, jam and dried peaches. There are also issues with poor planning and low levels of automation in cold storage facilities. Cultivation of saplings is also problematic as there are no certified seedling farms in the region and saplings are produced under household conditions. Despite issues that need resolving, research shows the relative low prices of Georgian producers in comparison with leading producers in other countries could serve as a strong competitive advantage and help bolster Georgia’s peach industry in the future.
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Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com Articles are taken directly from local sources without any fact-checking; they are provided as a convenience and for informational purposes only. Business & Finance Consulting (BFC)’s editing is limited to providing a short summary in English of the texts, highlighting the main points of the original articles. All rights reserved by the authors. BFC takes no responsibility and does not make any representation or warranty, express or implied, or assume any responsibility whatsoever for the content, accuracy, and reliability, or completeness of any of the articles.