09/2017
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61 Geo r g i a Agriculture Bulletin Free trade agreement with EFTA enters into force Danish fund allocates USD 5 million for grant program Slaughterhouses closing in Georgia
Georgian tea exports to China begin
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4)
Free trade agreement with EFTA enters into force ......................................................................... 2 First harvest under ‘Plant the Future’ yields 50 tons ...................................................................... 2 New tax for poultry producers introduced...................................................................................... 2 Proposed bill to amend law on agricultural land ownership .......................................................... 3
Foreign Aid ................................................................................................................. 3 5) 6) 7) 8) 9) 10) 11) 12)
EPPO to support Georgia in fight against stink bug ........................................................................ 3 Dairy forum held in Kobuleti ........................................................................................................... 3 Rural development project launched in Keda ................................................................................. 4 Rural development project launched in Khulo ................................................................................ 4 Danish fund allocates USD 5 million for grant program .................................................................. 4 Global Goals Festival held in Rustavi ............................................................................................... 5 Farmers’ Council established in Georgia ......................................................................................... 5 ‘Local Action Group Kazbegi’ project results presented ................................................................. 5
Private Sector.............................................................................................................. 6 13) 14) 15) 16) 17)
Fourth hazelnut stakeholder forum held in Tbilisi .......................................................................... 6 Slaughterhouses closing in Georgia ................................................................................................. 6 Total agricultural output up 8% year-on-year ................................................................................. 6 French cooperative ready to work with Georgia............................................................................. 7 Georgian tea exports to China begin ............................................................................................... 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)
Free trade agreement with EFTA enters into force
September 1st, 2017, https://www.newsgeorgia.ge/soglashenie-o-svobodnoj-torgovle-gruzii-s-efta-vstupilo-v-silu/
On September 1, 2017, a free trade agreement between Georgia and the European Free Trade Association (EFTA) entered into force. The agreement, which opens a market of 14 million people with high purchasing power to Georgian producers, means that any industrial products from Georgia will flow to EFTA countries without additional customs taxes. A zero tariff will also be in effect for agricultural products. For certain other products, tariffs will be reduced. EFTA, created in 1960, includes Norway, Iceland, Switzerland and Liechtenstein. The agreement is currently only between Georgia, Norway and Iceland, with Switzerland and Liechtenstein joining three months after ratification of the agreement by the legislative bodies of those countries. The Georgian Free Trade Agreement with EFTA was signed on June 26, 2016.
2)
First harvest under ‘Plant the Future’ yields 50 tons
September 8th, 2017, http://moa.gov.ge/En/News/1360
The first harvest of an apple garden in Karbi (Gori region) amounted to 50 tons. This is the first harvest since the garden received GEL 39,900 in assistance from the state-run ‘Plant the Future’ program. The program provided the funding for the garden to purchase seedlings and install drip irrigation on 3.99 hectares of land. The garden also benefited from GEL 175,000 in preferential agro credit under another state program. There are currently 10 people employed in the garden. Within the frame of the ‘Plant the Future’ project, different perennial fruit gardens were planted on 1,169 hectares of land in the Shida-Kartli region, with the amount of funding provided reaching GEL 7,703,963. In total, GEL 18.2 million has been invested in creating 3,600 hectares of fruit gardens with irrigation systems.
3)
New tax for poultry producers introduced
September 15th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10051839
According to a new government plan, a new tax for the cost of veterinary checks of chicken meat will amount to GEL 0.05 per chicken. Poultry breeders oppose this regulation, stating that the current VAT has already placed a heavy burden on this sector and that the new, additional fee will destroy small producers and that large producers will pass these expenses on to end customers. Poultry producers also wonder why the tax only applies to them and not to cattle producers. Currently, there are over 300 poultry breeders registered in the country and only one slaughterhouse for them. It should be noted that local production satisfies only 30% of domestic demand.
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4)
Proposed bill to amend law on agricultural land ownership
September 20th, 2017, http://cbw.ge/economy/government-admits-exceptions-land-law-legal-amendments-expectedoutcomes/
Parliament is considering a bill to amend the Law on the Ownership of Agricultural Lands. The bill, if passed, would be in effect only as a transition until a more permanent piece of legislation comes into force. As written, the bill would suspend the current moratorium on the ownership rights of agricultural land plots for microfinance organizations and commercial banks, who would have 1 and 2 years (respectively) to sell any land they came to acquire. This would allow financial institutions to use agricultural land as collateral for loans. The bill also gives the government discretionary powers to make exceptional cases to allow foreigners to purchase agricultural land. Critics of the proposed amendments argue that it allows government authorities to, essentially, have a monopoly on agricultural land sales, arbitrarily deciding who can and cannot purchase lands. Moreover, they argue that this will continue to hurt the Georgian land market and that, if opened up, privatization would act as a natural regulator for the market, bringing a balance to foreign vs. domestic interests in Georgian agricultural land. Critics also fear that such amendments will scare off investments and could frustrate the further development of the agricultural sector. Currently, 60% of agricultural lands are under state ownership, with foreign citizens owning approximately 5% of agricultural lands plots and 2% of the total land fund.
Foreign Aid 5)
EPPO to support Georgia in fight against stink bug
September 6th, 2017, http://moa.gov.ge/En/News/1357
Agriculture Minister Levan Davitashvili met with Martin Ward, the director-general of the European and Mediterranean Plant Protection Organization (EPPO), to discuss issues related to plant protection and pest control. Both quickly drew their attention to problems related to the brown marmorated stink bug, which has been damaging crops across Georgia. The spread of the pest is an international problem, and Georgia’s fight against it will play a significant role in the international research. Both sides underlined the importance of engaging sectoral international organizations in the battle against the invasive pest. With European Union (EU) support and assistance from the government of Georgia, a team of experts will conduct a survey in Georgia on the brown marmorated stink bug in order to develop effective methods of combatting it. Following this, the most effective biocontrol agents which are in compliance with EU regulations will be created to reduce the pest. At the meeting, Mr. Ward also congratulated the Minister and welcomed Georgia as a member of the EPPO. Georgia joined the EPPO in 2016.
6)
Dairy forum held in Kobuleti
September 13th, 2017, http://www.economists.ge/en/news/219-european-union-supports-dairy-forum
A dairy forum was held in Kobuleti (Adjara region) with support from the European Neighborhood Program for Agriculture and Rural Development (ENPARD). The forum was designed as a coordination platform for any party interested in the dairy sector to discuss ways to improve dairy production and processing as well as ways to make the markets and services more accessible for cooperatives and Page 3
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individual farmers/agribusinesses. Recommended solutions discussed at the forum will be shared with the Ministry of Agriculture, the Agricultural Cooperatives Development Agency, the National Food Agency and other relevant agencies, in order to support dairy development in Georgia. More specifically, forum participants discussed: Georgia’s current dairy market, competition between cooperatives and individual farmers, challenges with primary production, the need to renew livestock species, current laboratory services, dairy-sector regulations and diseases and preventative measures that can be taken. The forum was organized within the scope of the ‘Enhancing Small Farmers’ Cooperation and Productivity in the Imereti and Racha Regions’ project and in partnership with the Association of Young Economists of Georgia (AYEG).
7)
Rural development project launched in Keda
September 15th, 2017, http://enpard.ge/en/european-model-rural-development-will-introduced-keda-municipality/
The European Union (EU) has launched the new ‘Optimizing the Potential of Local Assets for Rural Development of Keda Municipality’ project. The project, being implemented by Caucasus Environmental NGO Network (CENN) in partnership with the Center for Strategic Research and Development of Georgia (CSRDG), the Institute of Democracy (IoD) and the Austrian Institute for Regional Studies and Spatial Planning (AIRSSP), aims to diversify local economic activities, improve the investment climate and empower competitive agricultural and environmental practices in the Keda municipality via bottom-up strategic planning of rural development. The project follows earlier EU-supported rural development projects in the Borjomi, Lagodekhi and Kazbegi municipalities and is part of a series of current rural development projects in five municipalities: Khulo, Keda, Dedoplistskaro, Akhalkalaki and Tetritskaro.
8)
Rural development project launched in Khulo
September 18th, 2017, https://www.georgianjournal.ge/business/33785-eu-supported
The European Union (EU) has launched the new ‘Promotion of Rural Development and Diversification in Khulo Municipality’ project. The project, being implemented by Caritas Czech Republic in Georgia (CCRG), aims to improve employment and living condition in Khulo through diversification of the rural economy. The project will introduce the European model of rural development and will create new economic and social opportunities in Khulo municipality, maximizing the engagement of private, civil and public sector participation in the rural development process at the same time. The project follows earlier EU-supported rural development projects in the Borjomi, Lagodekhi and Kazbegi municipalities and is part of a series of current rural development projects in five municipalities: Khulo, Keda, Dedoplistskaro, Akhalkalaki and Tetritskaro.
9)
Danish fund allocates USD 5 million for grant program
September 19th, 2017, http://cbw.ge/economy/danish-fund-allocates-5-million-usd-grant-for-young-farmers/
The Danish Foundation Danida has allocated a USD 5 million grant program to encourage young people to engage in the agricultural sector of Georgia. Funding criteria for the grant program is currently being finalized with donors, after which the program will be implemented. Within the framework of the program, between 15,000 and 100,000 small and medium-sized grants will be made available for young entrepreneurs. Page 4
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10) Global Goals Festival held in Rustavi September 25th, 2017, http://www.fao.org/georgia/news/detail-events/en/c/1039513/
Rustavi hosted the Global Goals Festival in Georgia, which was organized by the United Nations in cooperation with the Rustavi City Hall. One of the main highlights of the event was FAO’s Green Corner, which featured an exhibition of agricultural plants, seeds and flowers as well as a workshop in gardening conducted by famous Georgian gardener Zura Shevardnadze. The aim of the workshop was to promote balcony gardening, small agricultural production and the protection of the environment by showing that human life depends on the Earth for sustenance and livelihoods. The Festival also included a series of other activities in the Rustavi City park, which highlighted some key areas of sustainable development. The Global Goals Festival in Georgia was part of the international Global Goals Week, which brought together individuals, governments, businesses, civil societies, international organizations and other partners during the United Nations’ General Assembly in New York.
11) Farmers’ Council established in Georgia September 26th, 2017, http://cbw.ge/economy/farmers-council-establishes-georgia/
The European Neighborhood Program for Agricultural and Rural Development (ENPARD) and the ‘Improving Regional Food Security through National Strategies and Small Holder production in the South Caucasus’ project have worked to establish the Farmers’ Council in Georgia. The Council will work to enhance communication networks at a municipal level and carry out activities for the determination and timely elimination of problems faced by the agricultural sector. The new consultative body will be involved in the legislative decision-making processes for agriculturerelated issues and will actively facilitate the implementation of development projects that impact farmers. The Council is composed of 120 farmers, representing 60 municipalities.
12) ‘Local Action Group Kazbegi’ project results presented September 28th, 2017, http://enpard.ge/en/results-eu-funded-project-local-action-group-kazbegi-presented-stepantsminda/
The non-governmental organization People in Need (PIN) have presented the results of the European Union (EU)-funded ‘Local Action Group Kazbegi’ rural development project. The project introduced the European rural development model — the LEADER approach — in the Kazbegi municipality and aimed to help reduce poverty and promote participatory mechanisms in local decision-making processes. Additionally, the individual business initiatives supported by small grants became positive models to follow, brought innovations to remote areas and improved the quality of life for residents. During the first stage of the project, PIN conducted an informational campaign, helped establish a Local Action Group (LAG) and drafted a strategy for local development and an action plan. Following the priorities defined by the local development strategy, PIN announced grant contests and approved grants for 63 development initiatives, including 7 initiatives from the agricultural sector, 33 initiatives from the tourism sector and non-agricultural businesses, 12 initiatives for public infrastructure and 11 initiatives related to education, sport and culture.
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Private Sector 13) Fourth hazelnut stakeholder forum held in Tbilisi September 7th, 2017, http://moa.gov.ge/En/News/1359
The fourth stakeholder forum dedicated to the hazelnut sector and its challenges took place in Tbilisi. The main focus of the forum was on challenges the sector faces as well as solutions for how to overcome them. Particular emphasis was placed on the fight against the brown marmorated stink bug (currently being worked on by the United States Agency for International Development’s (USAID) ‘Restoring Efficiency to Agriculture Production’ (REAP) project). A focus was also given to ways to provide increased awareness to farmers so that they can take timely preventive and corrective measures to combat diseases and pests in the future. The forum also summed up the results of the 2017 season, which was a disappointing year. Participants discussed the problems with raw materials over the last two years as well as various international projects designed to help develop the hazelnut industry. Government representatives specifically mentioned steps the government has taken to increase productivity and produce higher-quality products, including the planting of 531 hectares of new gardens, the adoption of technical regulations and the proposed introduction of international standards.
14) Slaughterhouses closing in Georgia September 20th, 2017, http://bizzone.info/agriculture/2017/1505941996.php
A shortage of meat in Georgia is causing slaughterhouses in the country to close, with some slaughterhouses reporting a decrease in turnover of 40% or higher in comparison to the same period in 2016. The problem comes largely as a result of the devaluation of the national currency sharply increasing the export potential of Georgian meat, with large quantities of cattle being exported to neighboring Azerbaijan. Additionally, cattle are often slaughtered outside slaughterhouses as it costs less for farmers and rural residents. The growth in electricity tariffs is also proving to be a prohibitive factor. Some are worried that, if everything continues as is, Georgia will be left with few-to-no operating slaughterhouses.
15) Total agricultural output up 8% year-on-year September 20th, 2017, http://cbw.ge/economy/agriculture-sectors-economic-indicators/
The total output of the agricultural sector rose by 8% year-on-year in the first half of 2017, with the production of primary agricultural products increasing 7% year-on-year to GEL 1.9 billion. The output of processed agriculture products in the first half of 2017 made up GEL 2.3 billion, up 9% year-on-year. The number of cattle decreased by 8% year-on-year due to high export figures, while the number of sheep and pigs grew by 5% and 10% respectively. The production of strong drinks also increased and amounted to GEL 409 million, up 33% year-on-year. Dairy product output also increased 11% to GEL 395 million.
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16) French cooperative ready to work with Georgia September 26th, 2017, http://cbw.ge/economy/biggest-agrarian-cooperative-france-cooperate-georgia/
Deputy Agriculture Minister Giorgi Khanishvili met with Jean-Francoise Berger, agrarian development manager of Axereal cooperative, to discuss opportunities for the production of cereal seed materials and bio production development related to poultry. As part of the visit, the Deputy Minister and the French manager visited Lomtagora LLC, a cereals drier and storing complex equipped with modern technologies. Noting Georgia’s huge potential for the bio production of cereal seeds, Mr. Berger expressed his readiness for cooperation and offered Georgian entrepreneurs the chance to test new French grain varieties. The French cooperative is one of the biggest cooperatives in France and unites 13,000 members involved in the poultry meat, egg, seed materials and forage sectors.
17) Georgian tea exports to China begin September 27th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10051952
The Georgian Partnership Fund has announced that the export of Georgian tea to China has begun. Tea exports to China include two kinds of teas grown in the Samegrelo region, both of which were brought from China originally but later disappeared there. The Fund also noted that China plans on cultivating new plantations in Georgia in future. Fund representatives have also held discussions about increasing Georgian exports to China and enhancing cooperation with the country in the trade, economic and tourist sectors.
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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.