10/2017
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62 Geo r g i a Agriculture Bulletin Meat and fish processing plant opens in Gori Loan guarantee agreements for SME development signed Investment in agricultural fixed assets increasing Georgian citrus has great global potential
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5)
Meat and fish processing plant opens in Gori ................................................................................. 2 Georgia has until end of year to pass 3 EU directives ..................................................................... 2 Irrigation network in Gori to be finished by year’s end .................................................................. 2 GEL 15 million spent combatting Asian pests invasion ................................................................... 3 Fruit processing plant opens in Mtskheta ....................................................................................... 3
Foreign Aid ................................................................................................................. 3 6) 7)
Conference held on ENPARD rural development projects .............................................................. 3 Loan guarantee agreements for SME development signed ............................................................ 4
Private Sector.............................................................................................................. 4 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20)
Investment in agricultural fixed assets increasing .......................................................................... 4 Georgian citrus has great global potential ...................................................................................... 4 Potato harvest enough for local demand and exports .................................................................... 5 New FAO study proposes greater support for villages.................................................................... 5 Meat, milk and egg production down ............................................................................................. 5 Finca Bank project with agro-insurance successful ......................................................................... 6 Lack of knowledge and skill holding back agriculture ..................................................................... 6 International Center for Potatoes opened in Georgia .................................................................... 6 New Georgian-Swiss farm to be established in Racha .................................................................... 7 Asian pests destroy 50% of citrus crop............................................................................................ 7 New scientific base to help revive rare bee species ........................................................................ 7 DCFTA makes trade complicated for Abkhazia hazelnuts ............................................................... 7 Georgia nut exports halved ............................................................................................................. 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)
Meat and fish processing plant opens in Gori
October 6th, 2017, https://sputnik-georgia.ru/economy/20171006/237638190/Zavod-po-pererabotke-mjasa-i-ryby-otkryli-vGori.html
A new meat and fish processing plant equipped with modern technologies has opened in Gori. The new plant will be able to produce about 300 tons of various canned and instant soups annually and employs 230 people. The enterprise was established within the framework of the state-run ‘Unified Agroproject’ and benefitted from financing under the ‘Project on Self-Financing of Enterprises for Processing and Storage of Agricultural Products’. In total, the company invested USD 459,800, of which USD 189,900 came in the form of a grant and USD 229,900 was a concessional agro-credit. Since 2013, the Agriculture Projects Management Agency (APMA) has been implementing projects to open new enterprises and expand existing ones. The project has already financed more than 750 operating and 162 new enterprises, including the opening of 19 new enterprises and the expansion of 81 existing enterprises in the Shida Kartli region.
2)
Georgia has until end of year to pass 3 EU directives
October 11th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10052113
According to an agreement with the European Union (EU), Georgia is to have implemented a total of ten directives related to plant protection, three of which must be implemented by the end of this year. Of these three directives, two concern measures to control potato diseases (ring rot and black rot) and one concerns the verification of the health and identity of certain plants, vegetable products and other objects. While none of the measures is fulfilled at the moment, work on the necessary legislation has begun. The Ministry of Agriculture has already completed proposed legislation regarding ring rot and is working to finish a proposal for black rot. The Ministry is also working with the Finance Ministry’s Revenue Service to complete the final proposal regarding the verification of the health and identity of certain plants, vegetable products and other objects.
3)
Irrigation network in Gori to be finished by year’s end
October 17th, 2017, http://www.sarke.com/cgi/search/news.asp?Code=10052146
The Ministry of Agriculture has reported that a GEL 1.7 million irrigation project in the Gori municipality (Shida Kartli region) being implemented by Georgian Melioration should be completed by the end of the year. After completion, 282 hectares of agricultural land in the Gori municipality will be irrigated. Since 2012, 45 irrigation rehabilitation projects have been implemented in the Shida Kartli region, resulting in the provision of water for 20,855 hectares.
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4)
GEL 15 million spent combatting Asian pests invasion
October 18th, 2017, http://www.apsny.ge/2016/other/1508369098.php
Approximately GEL 15 million has been spent fighting the invasion of Asian pests, mainly in the rural areas of Western Georgia. Most of this money was spend on the acquisition of chemicals and equipment as well as the engagement of 3,000 people in a program to combat the effects and spread of the pests. In total, approximately 110,000 hectares of arable land have been treated with special chemicals in Georgia. With the onset of colder weather, the pests are preparing for their wintering stage; however, Georgians will need to be virulent once the pests become more active in the spring and summer. It is worth nothing that, while the problem has mostly affected regions in Western Georgia, the National Food Agency has taken the precautionary measure of also informing residents and farmers in other regions about how to combat the pests.
5)
Fruit processing plant opens in Mtskheta
October 19th, 2017, http://moa.gov.ge/En/News/1379
A fruit processing plant has opened in the city of Mtskheta (Mtskheta-Mtianeti region) with an annual capacity of 50 tons. The company uses local raw materials for its products, which it then exports abroad. A total of USD 1.7 million was invested in the ‘Caucasus Organic Fruits’ project, including USD 250,000 provided by the state and USD 500,000 from the preferential agro credit program. This is the ninth enterprise opened in Mtskheta-Mtianeti region with the support of the Agriculture Projects Management Agency (APMA).
Foreign Aid 6)
Conference held on ENPARD rural development projects
October 5th, 2017, http://enpard.ge/en/eus-partner-organisations-presented-results-two-year-activities-enpards-ruraldevelopment-projects/
The consortia implementing ENPARD’s rural development projects in Georgia organized the third ‘Rural Development in Georgia’ international conference. At the conference, implementing partners summarized the results and achievements under the pilot rural development projects supported by the European Union (EU) in the municipalities of Lagodekhi, Borjomi and Kazbegi. Stakeholders also presented their views on the continuous implementation of the European rural development model approach in Georgia. At the end of the conference, ENPARD partner organizations signed a communique supporting the establishment of the Georgian Association of Local Action Groups (GALAG). The GALAG will unite municipal-level Local Action Groups (LAGs) in Georgia and will actively cooperate with the European Association of LAGs to implement joint rural development initiatives in the country. Overall, the EU has allocated EUR 3 million for the first phase of implementation of the pilot rural development measures in all three municipalities. In the scope of the projects, partners conducted an active information campaign with the respective communities, established LAGs and drafted the Strategies of Local Development along with Action Plans. Partners then announced grant contests in which EU funding was approved for over 100 development initiatives, including within the sectors of agriculture, environment, tourism and other non-agricultural businesses, public infrastructure, Page 3
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education, sport and culture. These initiatives have provided better employment to over 1,000 rural households and have improved the living conditions of over 54,000 rural inhabitants. In 2016, the existing three pilot projects were extended, and three new rural development projects were launched in Akhalkalaki, Dedoplistskaro and Tetritskaro. In 2017, two additional rural development projects were launched in the Keda and Khulo municipalities in the autonomous republic of Adjara. At present, eight rural development projects operate with EU support throughout Georgia. Moreover, in 2016, the government of Georgia, with the EU support, adopted its first-ever National Rural Development Strategy and Action Plan.
7)
Loan guarantee agreements for SME development signed
October 27th, 2017, http://www.finchannel.com/world/georgia/69096-eu4business-initiative-additional-loans-to-be-offered-tosmes-in-georgia-moldova-and-ukraine
The European Investment Bank (EIB) and European Investment Fund (EIF) signed the first guarantee agreements to provide EUR 100 million in loans to support small- and medium-sized enterprises (SMEs) in Georgia, Moldova and Ukraine. These agreements, under the EU4Business initiative, will facilitate access to finance for local SMEs by providing a 70% guarantee on each loan and offer financing at favorable conditions, including reduced collateral requirements. The three guarantee transactions are expected to unlock additional financing for SMEs and ultimately create and maintain jobs and new business opportunities in Georgia, Moldova and Ukraine. These guarantees are funded by the European Union through the Neighborhood Investment Facility, within the context of the EU4Business initiative.
Private Sector 8)
Investment in agricultural fixed assets increasing
October 4th, 2017, http://agenda.ge/news/88159/eng
Investments in the fixed assets of Georgia’s agriculture sector more than doubled from 2015 to 2016. In 2016, the amount of investments to buy fixed assets in agriculture reached GEL 180 million, compared to only GEL 80 million in 2015 and GEL 110 million in 2014. Overall, investments in the food and beverage sector increased 30% in 2016. Additionally, the value added indicator in 2016 for the food and beverage sector increased 18% year-on-year.
9)
Georgian citrus has great global potential
October 9th, 2017, https://sputnik-georgia.ru/georgia/20171009/237666548/Mahmudov-gruzinskie-citrusy-zajmutdostojnoemestonamirovomrynke.html
Alisher Mahmudov, general director of the Central Asian Trade House, believes that Georgian citrus products have a great potential internationally. Mr. Mahmudov noted that the main advantage of Georgian citrus is its reputation as being natural and environmentally friendly. He also noted that citrus products from Georgia have a good chance of developing a niche not only in Commonwealth of Independent States (CIS) countries but also in Europe and other countries globally.
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According to preliminary forecasts, the citrus harvest in 2017 will be 60,000 tons. Of these, about 40,000 tons are planned to be exported, with the remainder intended for industrial processing and domestic consumption. The export of Georgian mandarins is currently mainly carried out to Russia, Ukraine, Armenia, Kazakhstan, Belarus and Azerbaijan.
10) Potato harvest enough for local demand and exports October 9th, 2017, http://agenda.ge/news/88460/eng
Georgia has reduced its dependence on potato imports as, this year, local farmers have harvested approximately 250,000 tons of potatoes, enough to meet local demand and also increase potato exports. About 35,000 tons of potatoes have already been exported, and this number is expected to increase by the end of this year. Selling potatoes abroad has increased farmers’ incomes to over USD 5 million already.
11) New FAO study proposes greater support for villages October 10th, 2017, http://cbw.ge/economy/fao-rural-strengthening-is-the-basis-of-economic-development/
According to a study by Food and Agriculture Organization of United Nations (FAO), villages play a decisive role in the economic growth of agricultural sectors. The ‘State, Food and Agriculture 2017’ study notes that it is important to pay more attention to the development of both agriculture and the villages in which the most impoverished and vulnerable people tend to live. The study found that 54.4% of Georgians live in large and small cities, 35.8% live in villages within a three-hour distance from cities and 9.7% live in villages more than three hours away from cities. In order to achieve economic growth, the study emphasizes three main directions: (1) state support for small entrepreneurs in delivering their products to large markets (including improved credit conditions and greater equity in competition), (2) better infrastructure to connect villages to large market centers and (3) integrating trade between large cities and less-developed centers.
12) Meat, milk and egg production down October 10th, 2017, https://sputnik-georgia.ru/economy/20171010/237696224/Proizvodstvo-mjasa-moloka-i-jaic-v-Gruziiumenshilos.html
As of the end of the second quarter of 2017, Georgian farms and households reported having 11.7 million birds, 43,000 less than last year. Also, the number of cattle reported in the second quarter was 1 million head, 8.5% less than last year. At the same time, there has been a 5% increase in the number of sheep and goats (reaching 1.2 million head) and a 10.4% increase in the number of pigs (reaching 194,600). 28,100 tons of meat was produced in Georgia in the first half of 2017, 9% less year-on-year. The production of milk in the first half of the year decreased 4% year-on-year to 283 million liters. Production of chicken eggs in the second quarter amounted to 151.8 million eggs, 7 million less than last year.
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13) Finca Bank project with agro-insurance successful October 11th, 2017, http://bpi.ge/index.php/finkam-agrodazghvevastan-nayofier-partniorobaze-ganackhada/
Finca Bank has announced that a partnership project aimed at providing financial resources and agricultural insurance to producers has been a fruitful one, with 2,300 agricultural insurance policies being issued in two years. The project also offered beneficiaries (small entrepreneurs) a credit product specifically designed to meet their needs. Within the framework of the project, the first warehouse fund was introduced, 14,500 farmers received information on financial and insurance services and 90 insurance agents were trained. There are 800,000 small farmers in Georgia that work an average of 1 hectare of land each.
14) Lack of knowledge and skill holding back agriculture October 11th, 2017, http://bizzone.info/agriculture/2017/1507753264.php
Despite numerous programs and other efforts aimed at development, Georgia’s agricultural sector continues to struggle to realize its potential. According to agricultural expert Akakia Glonti, one of the main reasons for this is the lack of necessary knowledge and skills. Glonti states that local farmer skills and knowledge do not meet modern standards. He adds that Georgia has few agronomists, technologists and machine operators. This has led to many farmers engaging in subsistence farming and nothing more. He further adds that local farmers with, for example, 1 hectare of land are unable to compete with imports because they cannot produce a sufficient quantity. This has led to a state where many villagers are abandoning farms and moving to cities for work.
15) International Center for Potatoes opened in Georgia October 12th, 2017, http://ibusiness.ge/new/9111-saqartveloshi-kartofilis-saertashoriso-centris-tsarmomadgenloba-gaikhsna
The International Center for Potatoes held a ceremonial opening in Georgia. The mission of the center is to cooperate with partners in achieving food safety, helping the needy population and protecting gender equality through the development and implementation of agricultural research and innovation. The center has already signed a memorandum of cooperation with the Ministry of Agriculture for a fiveyear program aimed at introducing innovative technologies for potato care in Georgia as well as presenting new potato varieties and increasing the knowledge of scientists, farmers and producers working in the sector. Gerhard Schumperger, head of the Austrian Development Agency, also announced that the Republic of Austria will fund the ‘Strengthening Rural Livelihoods in Georgia: Implementing an Integrated Approach to Healthy Seed Production in Potato Local Seeds System’ project, which will work with the center. The International Center for Potatoes is an international organization of the Agricultural Consulting International Counseling Group (CGIAR), which was founded in 1971. The center will also become a regional office for Central Asia and Caucasian countries.
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16) New Georgian-Swiss farm to be established in Racha October 17th, 2017, https://www.georgianjournal.ge/business/33856-new-georgian-swiss-farm-to-established-in-racha.html
The Georgian-Swiss company Blauenstein Georgia is continuing its cooperation with local farmers in the Racha region with the establishment of another Georgian-Swiss farm in the area. Within the framework of the ‘Livestock Development Project’, a modern farm will be established in the Skhvava village (Ambrolauri District). The farm will have a capacity of 60 head of cattle. GEL 95,000 will be invested in the construction of the farm. Additionally, the Ministry of Economy and Sustainable Development has given the farm a 25-year lease to support the project. Blauenstein Georgia, which produces fresh meat and meat products, was established through GeorgianSwiss investment in Racha region in 2008. The company has already invested GEL 15 million in the region, through which several farms have been established. The company maintains a close partnership with locals through both training and employment. Blauenstein Georgia plans to continue cooperation with the local population and increase the number of partner-farms in Racha to up to 20 in the near future. Additionally, the company is planning to expand its activities to other mountainous regions of Georgia.
17) Asian pests destroy 50% of citrus crop October 18th, 2017, http://bizzone.info/agriculture/2017/1508361926.php
Asian pests have destroyed approximately 50% of the citrus crop, making it even more difficult for Georgian citrus producers to compete against Turkish products such as mandarins and oranges. Exasperating the problem even more is that the bugs have destroyed not only the fruit but also citrus trees themselves. The damage from the invasion is large since these pests destroy all kinds of plants, including nuts, citruses and apples. Moreover, Georgia has limited experience in combatting the pests. Currently, only Western Georgia has been affected by the invasion; however, they threaten to move east if the situation cannot be controlled.
18) New scientific base to help revive rare bee species October 18th, 2017, http://moa.gov.ge/En/News/1377
A scientific beekeeping base has been opened in the Mukhuri village (Samegrelo region) for the largescale study of Georgian bees. The base will start by working to restore and popularize the Caucasian grey bee species. In the future, it is planned to also restore other local bee populations and create new species. The Mukhuri scientific beekeeping base will also host open-doors days, seminars and other events that will contribute to raising awareness of beekeeping among Georgian farmers.
19) DCFTA makes trade complicated for Abkhazia hazelnuts October 19th, 2017, https://www.economist.com/news/europe/21730456-decades-old-war-may-keep-hazelnuts-reachingeuropes-breakfast-tables-georgia-and-abkhazia?frsc=dg%7Ce
In 2007, Italian company Ferrero set up in Georgia to take advantage of the supply of Georgian hazelnuts for their signature product: Nutella. Since that time, Georgia has become the world’s thirdlargest hazelnut producer, trailing only Turkey and Italy. However, in 2014, Georgia and the European
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Union (EU) signed a Deep and Comprehensive Free Trade Agreement (DCFTA) which has made it more difficult for hazelnut farmers in Abkhazia. The problem comes with that fact that around 10% of Georgian hazelnuts come from the breakaway territory of Abkhazia, which has enjoyed de facto independence since its war of secession in the early 1990s. Georgia has no formal trade relations with Abkhazia, and hazelnuts are the only product which Abkhazian authorities allow farmers to sell in Georgia. DCFTA requires that all Georgian agricultural exports meet EU standards, including having an official certificate of origin. Abkhazian farmers cannot obtain a Georgian certificate, meaning that they will no longer be allowed for export to the EU and will no longer be used in Nutella. There is hope of the eventual normalization of relations between the two sides with peace talks in Geneva; however, progress in this regard is slow, and trade is not something currently on the agenda. Read More Âť
20) Georgia nut exports halved October 23rd, 2017, http://cbw.ge/economy/georgian-nut-export-halved/
Exports of Georgian nuts have decreased. In January-September 2017, nut exports amounted to USD 50.5 million in Utskheti markets; in the same period of 2016, this figure exceeded USD 116.6 million. Despite this decline, nuts are still among the top ten Georgian exports, making up a share of 2.6% of total exports (down from 7.7% during the same period last year).
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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.