04/2018
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68 Geo r g i a Agriculture Bulletin GEL 9 million for state agricultural insurance program State program on pasture use expands EU, EBRD financial support to Georgian SMEs extended Agrofood product exports up 34.7%
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4)
GEL 9 million for state agricultural insurance program................................................................... 2 State program on pasture use expands........................................................................................... 2 Draft bill ‘On Agricultural Land’ being finalized............................................................................... 2 TBC Insurance joins state agroinsurance program .......................................................................... 3
Foreign Aid ................................................................................................................. 3 5) 6) 7) 8) 9) 10) 11) 12)
Agricultural training and education program concludes ................................................................. 3 ADA working to strengthen Georgian agriculture ........................................................................... 3 Rural development workshops held in 10 regions .......................................................................... 4 DCFTA resource centers to be opened ............................................................................................ 4 EU to assist in developing national crop variety catalogue ............................................................. 4 UNDP trains rural development professionals ................................................................................ 5 EU, EBRD financial support to Georgian SMEs extended ................................................................ 5 ENPARD III receiving project proposals ........................................................................................... 5
Private Sector.............................................................................................................. 6 13) 14) 15) 16) 17) 18)
Investments in agriculture have decreased .................................................................................... 6 Agrofood product exports up 34.7% ............................................................................................... 6 Taxation hindering agricultural development in FIZs ...................................................................... 6 European distributors interested in Georgian raspberries ............................................................. 6 Total area of unused agricultural land growing .............................................................................. 7 Only 25% of foreign-owned agricultural land cultivated ................................................................ 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)
GEL 9 million for state agricultural insurance program
April 4th, 2018, http://agenda.ge/news/98628/eng
The government of Georgia has allocated GEL 9 million for the state-run agricultural insurance program. Under the program, 70% co-financing for the cost of insurance will come from the state (50% for vines), and farmers can purchase insurance policies from one of five insurance companies operating in Georgia. The policies can be bought between September 1 and November 30 and will protect against losses due to hail, flood, storms and autumn frosts (only citrus crops). The government has also updated the program this year, making it mandatory for land to be registered in order to be involved in the program. To make this easier, they have simplified the registration processes for agricultural land in the country.
2)
State program on pasture use expands
April 5th, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10053702
10 agricultural cooperatives are set to join the state program for rational use of state-owned pastures located in mountainous regions. The program envisages 25-year rentals for pastures as well as state cofinancing for necessary machinery. In 2017, 29 cooperatives from 21 mountainous regions joined the program. The government also amended the program to include the construction and equipping of dairy enterprises in the Dmanisi, Tsalka and Akhalkalaki municipalities, with each enterprise capable of having a production level of 10 tons of milk daily. Previously, the program only provided for the construction of a dairy enterprise in the Dusheti municipality. All four dairy enterprises built within the framework of the state program will be sold at preferential prices to agricultural cooperatives that meet the requirements of the program.
3)
Draft bill ‘On Agricultural Land’ being finalized
April 24th, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10053850
Otar Danelia, chairman of Parliament’s Agrarian Committee, has stated that the draft bill ‘On Agricultural Land’ will be finalized and submitted for approval shortly. Danelia specifically commented that the bill addresses uncultivated land that is held in foreign ownership, forcing owners to take some action to cultivate these lands, give them for rent or sell them. If foreigners fail to comply, the bill would allow for the seizure of such land and allow those actively working agricultural lands that chance to purchase them. Danelia also noted that the bill, while still prohibiting foreigners from purchasing farmland, would allow them to rent it.
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4)
TBC Insurance joins state agroinsurance program
April 25th, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10053871
TBC Insurance has become the seventh local insurance company to join the state agroinsurance program and will make it possible for those participating in the program to purchase policies in their regional branches in Kakheti, Shida Kartli, Kvemo Kartli and Samtskhe-Javakheti. The state agroinsurance program offers 70% subsidies for the insurance of grains, legumes, melons, nuts, fruits and vegetables as well as 50% subsidies for the insurance of grapes. The 2018 state budget envisages GEL 9 million for the agroinsurance program, up from GEL 7 million in 2017.
Foreign Aid 5)
Agricultural training and education program concludes
March 30th, 2018, http://eugeorgia.info/en/latestarticle/433/evrokavshiris-dafinansebit
The ‘Development of Formal and Non-formal Vocational Education in Georgia’ project has been concluded in the Imereti region. The project, funded by the European Union (EU) and implemented by People in Need (PIN), worked to promote the agribusiness sector as well as enhance knowledge and teaching methods in vocational education. The project included labor market research, upon which a labor market monitoring mechanism was developed and shared with private businesses and vocational education institutions. Following this, a platform was created to enable private businesses to better understand ongoing reforms in Georgia and what changes are likely to result from them. A training program was also initiated under the project. In total: 73 farmers were involved in the biohumus production training; 30 socially vulnerable farmers were trained in gardening and beekeeping; 20 farmers received nutrient care training; 1,200 farmers were provided with information on advanced practices of breeding and dairy products; and 350 schoolchildren were provided information on professional education issues. The project also provided training for the Imereti veterinary association and worked to enhance the relationships between veterinarians, farmers and agribusinesses in the area. More than 1,000 farmers and veterinarians received trainings and materials on various diseases and primary care. In addition, they were provided with information about pesticides and medicines for internal and external parasites. The ‘Development of Formal and Non-Formal Vocational Education in Georgia’ project was implemented between 2015 and 2017, with a total budget of EUR 27 million.
6)
ADA working to strengthen Georgian agriculture
April 2nd, 2018, http://georgiatoday.ge/news/9746/ADA%3A-Strengthening-Georgia%E2%80%99s-Agricultural-Economy
The Austrian Development Agency (ADA) has been working heavily in Georgia to improve crop farming strategies, agricultural infrastructure and the efficiency and sustainability of forests. ADA Georgia partners with various government offices, non-governmental organizations (NGOs) and international organizations like the United Nations (UN) as well as private companies and funds to work in a wide variety of directions and manage various-sized projects (anywhere form EUR 10,000 to EUR 5,000,000). ADA Georgia’s main focus is on developing the agricultural sector, with around 70% of their funds being directed towards this. Within this context, ADA works both on smaller-scale projects such as improving irrigation systems and on larger-scale initiatives such as helping develop a forestry industry that is both competitive and respects the need to protect forested areas. To this end, ADA has been active in Page 3
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working to strengthen the National Forest Association and create a national awareness about the importance of forests for Georgia. They have also been working to set up biomass energy facilities in order to reduce illegal cutting from those using trees from the forest as a source of heat energy, although the financial schemes supporting these initiatives are proving difficult to sustain. ADA also provides assistance to government and civil society projects (20-30% of their total budget).
7)
Rural development workshops held in 10 regions
April 3rd, 2018, http://georgiatoday.ge/news/9764/EU%2C-UNDP-Support-Rural
Approximately 200 representatives of regional and local authorities from ten regions have attended interactive workshops on rural development. The workshops, held by the Ministry of Agriculture and with assistance provided by the European Union (EU) and the United Nations Development Program (UNDP), aimed to promote the rural development policy of Georgia and build capacity of local officials for its implementation. Participants discussed strategic approaches to sustainable rural development, including: effective instruments that promote the growth and diversification of local economies, the improvement of social and public services, the sustainable management of natural resources, climate action and citizen engagement. They also focused on Georgia’s progress in introducing and implementing the national rural development concept and ways to adapt European experiences to local realities. Representatives of the regional and local authorities stressed that rural development, if backed by the sound policies and active citizens, can successfully counter the economic and social challenges faced by the disadvantaged rural regions of Georgia. They also agreed that the LEADER approach is an effective model of citizen engagement and requested more information about such pilot projects being supported by the EU in eight municipalities of Georgia.
8)
DCFTA resource centers to be opened
April 5th, 2018, http://eugeorgia.info/en/latestarticle/434/dcfta-s-sainformacio-resurs-magidebi-7-regionshi-amoqmeddeba/
The Czech organization People in Need (PIN) has started a new project with the support of the European Union (EU) and the Czech Development Agency. The project will open information resource centers in the Imereti, Mtskheta-Mtianeti, Kakheti, Samtskhe-Javakheti, Samegrelo, Zemo Svaneti, Adjara and Kvemo Kartli regions. PIN has signed cooperation agreements with 23 regional organizations to provide these services. Studies show that a large number of small enterprises in Georgia are not well-informed about the Deep and Comprehensive Free Trade Area (DCFTA). As such, the centers will assist local agricultural enterprises, farmers and agricultural entrepreneurs in finding out more information about DCFTA, particularly about quality requirements and how to gain access to EU markets. This assistance will include helping link business projects in Georgia with potential donors.
9)
EU to assist in developing national crop variety catalogue
April 10th, 2018, http://cbw.ge/economy/eu-to-help-georgia-systemise-agricultural-crop-varieties/
When Georgia adopted the ‘Law on Allowing the Use of Agricultural Crop Varieties Subject to Mandatory Certification and Seed Production’ in 2017, they requested assistance from the European Commission’s Technical Assistance and Information Exchange Instrument (TAIEX). As part of this Page 4
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assistance, a French expert has visited Georgia to process and examine subordinate Georgian laws and European Union (EU) legislation relevant to creating a national catalogue. The expert also conducted trainings on a variety of registration methods according to DUS (Distinctness, Uniformity and Stability) and VCU (Value for Cultivation and Use) testing results. TAIEX is a demand-driven tool that supports partner countries with the adaptation of national laws, regulations and quality standards to match those of EU member states and is offered in the framework of cooperation or association agreements signed with the EU.
10) UNDP trains rural development professionals April 17th, 2018, http://enpard.ge/en/eu-partnership-undp-assists-georgia-build
30 local experts were trained on rural development topics as part of a training of trainers supported by the European Union (EU) under the European Neighborhood Program for Agriculture and Rural Development (ENPARD). The training, organized in by the United Nations Development Program (UNDP) in cooperation with the Ministry of Agriculture, is part of a larger capacity building initiative that aims to increase understanding of rural development in Georgia, transfer international knowledge, promote cooperation among the stakeholders and build a national network of qualified rural development professionals. Facilitated by international expert Brigitte Mehlmauer-Larcher, the training of trainers brought together participants from various backgrounds in economic and social development, environmental protection and sustainable management of natural resources. Knowledge and expertise of the new trainers will help boost institutional and policy reforms and promote rural development in general in Georgia.
11) EU, EBRD financial support to Georgian SMEs extended April 24th, 2018, http://georgiatoday.ge/news/10012/New-EU-EBRD-Financial-Support-for-Georgian-SMEs
The European Union (EU) and European Bank for Reconstruction and Development (EBRD) are extending their support for small and medium-sized enterprises (SMEs) in Georgia, Moldova and Ukraine to a total of EUR 1.1 billion in credit lines and EUR 58.3 million in grants. Specifically, the EU4Business-EBRD credit line works to assist local SMEs in benefitting from the free trade agreements with the EU. Through the EU4Business-EBRD credit line, more than 100 Georgian companies have already received EUR 60 million in financing. Companies that benefit from the program also receive free technical assistance provided by an international team of experts.
12) ENPARD III receiving project proposals April 25th, 2018, http://cbw.ge/economy/enpard-starts-receiving-project-proposals/
With financial support from the European Neighborhood Instrument in Georgia, the delegation of the European Union to Georgia (EU) has announced that it is now accepting rural development proposals within the European Neighborhood Program for Agriculture and Rural Development (ENPARD III). The goal of the grant competition is to improve access to economic opportunities, social integration and basic social services for vulnerable populations in the low-income regions and rural areas, especially eco-migrants, conflict-affected population and ethnic minorities. Approved projects will be implemented in the Samegrelo-Zemo Svaneti, Kvemo Kartli and Kakheti-Imereti regions. Page 5
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Private Sector 13) Investments in agriculture have decreased April 3rd, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10053684
Although agriculture in Georgia is growing, investments in the sector have decreased nearly six times. Moreover, investments that are made into the sector are, by and large, made into processing and not into the production of the raw materials. According to Professor Paata Koguashvili of the Agricultural Sciences Academy, this is due to agriculture in Georgia not yet being ready for large-scale investments, mostly because of a fragmented production base and both incorrect and inadequate state efforts.
14) Agrofood product exports up 34.7% April 5th, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10053700
As of April 1, 2018, the value of agrofood product exports this year reached USD 207.5 million, a 34.7% year-on-year increase. The leading importers of Georgian agrofood products this year are: Russia (USD 52.2 million), the European Union (USD 42.6 million), Azerbaijan (USD 23.2 million), Turkey (USD 22.2 million), Ukraine (USD 16.5 million) and Kazakhstan (USD 11.1 million). The main agrofood products exported were: natural grape wines (USD 41.9 million), mineral and spring waters (USD 32.3 million), alcoholic drinks (USD 28.5 million) and hazelnuts (USD 18.6 million). It is worth noting that agrofood product exports to the European Union increased 38.1% year-on-year, mostly due to a growth in the export of alcoholic drinks, grape wines and hazelnuts to the Union.
15) Taxation hindering agricultural development in FIZs April 19th, 2018, https://commersant.ge/?view=post&id=141934&lang_id=en
According to Soso Nibladze, CEO at Kutaisi Free Industrial Zone, current Georgian legislation is not allowing for the development of agriculture in free industrial zones (FIZs). The CEO has stated that there is great potential for fruit processing and canning as well as for attracting investors in these areas. However, taxation of local raw products, buildings, equipment and tools is problematic for investors when they look into potential investment opportunities. The end result is that investors end up going for other opportunities, meaning that farmers miss out on another outlet for selling their products and Georgia misses out on a chance to increase exports and provide new products in domestic and foreign markets.
16) European distributors interested in Georgian raspberries April 19th, 2018, http://eugeorgia.info/en/latestarticle/436/italiel-da-holandiel-distribu
Italian and Dutch entrepreneurs are interested in importing Georgian raspberries into European markets following a tasting of the Georgian product at the GEA cooperative. The problem is that European distribution companies want at least 50 tons of raspberries; however, the cooperative is only capable of producing 10-12 tons at the moment. Moreover, the cooperative must ensure that all berries produced are uniform and consistent. The GEA cooperative currently has 3 hectares in the Gori regions and has purchased another hectare in an attempt to meet European demand. The cooperative is also examining the potential of collaborating with other cooperatives to meet demand. If they are able to provide the requested quantity and quality Page 6
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of berry to European distributors, all transport expenses will be covered by the distributors and the cooperatives will have entered into new markets with a great potential for future growth. The GEA cooperative was created in 2015 with the support of the European Neighborhood Program for Agriculture and Rural Development (ENPARD).
17) Total area of unused agricultural land growing April 19th, 2018, https://commersant.ge/?view=post&id=141952&lang_id=en
The total area of land plots sown with summer and autumn crops fell to a four-year low of 214,900 hectares in 2017. The total areas for spring crops and cereals have also fallen (to 46,000 hectares and 162,400 hectares respectively). These reductions have resulted in the lowest citrus (58,000 tons) and fruit (111,800 tons) harvests in four years. Member of Parliament (MP) Zurab Chiaberashvili believes that this reduction in land usage is largely due to the growth of land taxes, which have made it difficult for many rural residents to also have funds available to purchase the materials and inventory necessary for working the land. The MP argues that government initiatives, although well-intended, have only served to exacerbate the problem by unintentionally increasing the cost of agricultural products. The Ministry of Agriculture has yet to comment on the issue and is working with the state statistical agency to study individual details in greater depth, after which a report will be published.
18) Only 25% of foreign-owned agricultural land cultivated April 24th, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10053861
In Georgia, foreigners own between 45,000 and 50,000 hectare of agricultural land, only 12,000 hectares of which are being cultivated. Moreover, the number of foreign investors into agriculture is very small. It is thought that this could be due to the moratorium on the alienation of agricultural land that passed in June 2017. As a result, policy makers are considering amending the moratorium to allow representatives of the financial sector (including banks) to be able to register ownership of agricultural land for the purpose of further alienation.
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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.