07/2018
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71 Geo r g i a Agriculture Bulletin Prime Minister proposes VAT-free dairy production Over 500,000 land registration applications received New project supports hazelnut, fruit juice and tea sectors Peach exports reach 4,400 tons
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6)
Prime Minister proposes VAT-free dairy production ...................................................................... 2 13 dairy-producing cooperatives to be built ................................................................................... 2 Over 500,000 land registration applications received .................................................................... 2 Procedures for exporting wine to Japan simplified ......................................................................... 2 State program to introduce international standards ...................................................................... 3 2018 grape harvest will not be subsidized ...................................................................................... 3
Foreign Aid ................................................................................................................. 3 7) 8) 9) 10) 11)
EBRD, EU join forces to promote agritourism in Georgia................................................................ 3 New project supports hazelnut, fruit juice and tea sectors ............................................................ 3 EU4Business supporting first female winery in Georgia ................................................................. 4 17th ENPARD stakeholders’ meeting held ...................................................................................... 4 Workshop held on establishing a rural development network ....................................................... 4
Private Sector.............................................................................................................. 5 12) 13) 14) 15) 16) 17) 18) 19) 20)
Georgian wine exports up 21% ....................................................................................................... 5 2.1% decline in agricultural production .......................................................................................... 5 Peach exports reach 4,400 tons ...................................................................................................... 5 Agricultural cooperatives participate at Coop Market in Tbilisi ...................................................... 6 Nitrate levels being tested in watermelons and melons................................................................. 6 Hazelnut exports down ................................................................................................................... 6 Tea exports increasing ..................................................................................................................... 6 Russia to increase control over Georgian alcoholic imports ........................................................... 6 The link between household agricultural production and poverty ................................................. 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)
Prime Minister proposes VAT-free dairy production
July 4th, 2018, http://cbw.ge/economy/what-to-expect-from-vat-free-dairy-production/
New Prime Minister Mamuka Bakhtade has proposed an initiative to exempt natural milk and dairy products from VAT payments. The reforms are aimed at: (1) enabling farmers to have greater incomes, (2) allowing dairy plants to use natural milk instead of milk powder and (3) giving Georgians greater access to dairy products made from natural milk. Specialists and representatives of the dairy sector also welcome the initiative. They believe that it will have the effect of developing cattle breeding, boosting dairy production, increasing demand for dairy products and making Georgian dairy products more competitive. They also believe that the initiative will not make dairy products more expensive in the country. In the first quarter of 2018, milk production in Georgia amounted to 98.3 million liters, a decrease of 1.4% year-on-year.
2)
13 dairy-producing cooperatives to be built
July 6th, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10054553
13 cooperative enterprises will be built in 8 Georgian regions under the state program to support dairyproducing agricultural cooperates. The new enterprises will help ensure that dairy products are produced in line with new standards. Specifically, 4 will be built in the Samtskhe-Javakheti region, 3 in the Racha-Lechkhumi region and 1 each in the Guria, Imereti, Mtskheta-Mtianeti, Shida Kartli, Kvemo Kartli and Ajara regions.
3)
Over 500,000 land registration applications received
July 6th, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10054546
More than 500,000 applications have been received so far under the state’s land registration reform effort. This includes 67,000 applications that the National Register has conducted searches on for necessary documentation as well as another 25,000 applications that have been forwarded to the commission on property right recognition. The land registration reform effort has been extended until January 1, 2019 and offers citizens the possibility to take advantage of free services necessary to register land, including free notary mediation on disputed lands.
4)
Procedures for exporting wine to Japan simplified
July 9th, 2018, http://georgianwine.gov.ge/En/News/17561
According to the National Wine Agency, four Georgian laboratories have been added to the list of foreign laboratories registered in Japan. This will greatly simplify Georgian wine import procedures in Japan. Prior to the Georgian laboratories being registered in Japan, customs and verification procedures caused additional costs and procedural issues. Japan represents a strategic export market for Georgian wine. In the past 6 months, 130,000 bottles of Georgian wine have been exported to Japan, a 200% year-on-year increase. Page 2
BFC Agriculture Bulletin
5)
State program to introduce international standards
July 16th, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10054617
The Georgian government has approved a state program to introduce international standards and branding in agricultural cooperatives. By ensuring the safety, traceability and reliability of production, the program hopes to raise the competitiveness of cooperatives’ production. Financing for the program will come from state budgetary funds allocated to the Agricultural Cooperatives Agency for 2018-2019.
6)
2018 grape harvest will not be subsidized
July 25th, 2018, http://georgianwine.gov.ge/En/News/17566
Agriculture Minister Levan Davitashvili has announced that the government of Georgia has decided not to subsidize the 2018 grape harvest. This will be the first grape harvest in the last ten years not to be subsidized by the state. Last year, the government only subsidized the Aleksandrouli and Mujuretuli grape varieties in the Racha-Lechkhumi region. The government explained that the decision was taken because the wine sector has been adequately developed with state support and is now capable for moving forward on its own. The 2018 grape harvest is expected to begin at the end of August.
Foreign Aid 7)
EBRD, EU join forces to promote agritourism in Georgia
July 3rd, 2018, https://www.ebrd.com/news/2018/ebrd-and-eu-promote-georgias-agritourism-potential.html
Georgia has much to offer in terms of agritourism, especially given Georgia’s proud winemaking tradition. For this reason, the European Bank for Reconstruction and Development (EBRD) has joined forces with the European Union (EU) (through the EU4Business initiative) to foster agritourism potential in the country via innovative approaches to training and business. This will help empower Georgian businesses with the skills and knowledge they need to make the most of their agritourism potential. The first efforts are being undertaken in Mukhrani; however, EBRD representatives hope that the project will prove fruitful and that it will lead to more agritourism projects in Georgia as well as in other countries.
8)
New project supports hazelnut, fruit juice and tea sectors
July 6th, 2018, https://www.euneighbours.eu/en/east/stay-informed/news/eu-support-hazelnut-fruit-juice-and-tea
The new European Union (EU)-funded ‘Eastern Partnership: Ready to Trade – an EU4Business initiative’ project has been launched in an effort to improve the competitiveness of Georgia’s small- and mediumsized enterprises (SMEs) by helping them make connections in international (especially EU) markets. The project began in March 2018 with an SME survey within the agro-processing sector. Based on the results of the survey as well as the findings of the project inception phase, three value chains (hazelnut, fruit juice and tea) have been prioritized for further assistance within the project. The survey results show that 49% of surveyed SMEs are already exporting to the EU and that 37% have an interest in entering EU markets. Page 3
BFC Agriculture Bulletin
9)
EU4Business supporting first female winery in Georgia
July 16th, 2018, http://georgiatoday.ge/news/11303/Winery-By-and-For-Women-Gets-EU-Support
Madamwine is the first winery in Georgia that is entirely created and run by women. The enterprise is being supported in its efforts by the EU4Business initiative, which boosts the growth of small- and medium-sized businesses by improving their access to financing and new markets. Specifically, EU4Business is giving the winery financial support and connecting them with a leading IT advisory firm to help broaden their online marketing strategies in order to attract new customers and international investors. Eventually, Madamwine plans to build a larger-scale winery and actively participate in wine tourism.
10) 17th ENPARD stakeholders’ meeting held July 25th, 2018, http://www.fao.org/georgia/news/detail-events/en/c/1146689/
The Food and Agriculture Organization of the United Nations (FAO) has brought together stakeholders and implementing partners of the European Neighborhood Program for Agriculture and Rural Development (ENPARD) for the 17th stakeholders’ meeting. The meeting served as a platform for updating stakeholders on European Union (EU)-supported agricultural and rural development projects as well as for discussions related to access to finance for agriculture and rural development projects in Georgia. A presentation on contract farming also received much attention as it is widely viewed as a mechanism that could play a significant role both in linking producers with retailers and in reducing the risk profile of farmers when requesting loans. Aiming to reduce rural poverty in Georgia, ENPARD has been implemented since 2013. Its first phase focused on developing national agriculture potential, while the second and third phases have focused on creating economic opportunities for the rural population that go beyond agricultural activities. ENPARD has had a total budget of EUR 179.5 million.
11) Workshop held on establishing a rural development network July 27th, 2018, http://enpard.ge/en/european-network-rural-development-supports-georgia-establishing-national
A training workshop on European Union (EU) rural networks was held in Batumi. The training workshop was aimed at: (1) stimulating awareness about how rural networks drive rural development policy implementation and (2) facilitating the establishment of a Georgian rural development network. Participants were introduced to the objectives, membership and governance of rural networks in Europe and became more acquainted with the work of the European Network for Rural Development, specifically focusing on topics such as smart and competitive rural areas, greening the rural economy, social inclusion and generational renewal. The training workshop also showcased European best practices and policy in action, especially the value of the LEADER approach. Participants to the workshop included representatives of Georgian local action groups (LAGs), partner non-governmental organizations (NGOs) of the European Neighborhood Program for Agriculture and Rural Development (ENPARD) and government and international experts. The workshop was organized by the United Nations Development Program (UNDP), with the support of the European Union (EU) and in cooperation with the Georgian Association of LAGs, the Ministry of Agriculture and the Ajara government.
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Private Sector 12) Georgian wine exports up 21% July 5th, 2018, http://georgianwine.gov.ge/En/News/17560
190 companies exported 38.2 million bottles of Georgian wine to 48 countries in the first six months of 2018, a year-on-year increase of 21%. This generated USD 90.3 million, a 28% year-on-year increase. The top five importers of Georgian wine were: Russia (24.02 million bottles), Ukraine (4.19 million bottles), China (2.98 million bottles), Kazakhstan (1.65 million bottles) and Poland (1.57 million bottles). Wine export growth was particularly notable to Japan (a 200% increase), the Czech Republic (a 134% increase), Kyrgyzstan (an 81% increase), South Korea (a 78% increase) and the Netherlands (a 68% increase). During the same period, Georgia also exported 8.4 million bottles of Georgian brandy (a 23% increase) and 178,000 bottles of Chacha (a 100% increase).
13) 2.1% decline in agricultural production July 5th, 2018, http://cbw.ge/economy/agriculture-sector-decreased-by-2-1-in-georgia/
Agricultural production in 2017 decreased 2.1% overall, with plant-growing production decreasing 0.4% and animal production decreasing 3.8%. Although revenue from the sale of agricultural products has also decreased, the level of commercialization in the sector has actually increased. This trend is particularly persistent in animal production, where its share in enterprises increased from 21% to 27%. May 2018 prices in the category of food and non-alcoholic beverages decreased 0.7% on a monthly basis (i.e. compared to April 2018) and 1.8% on annual basis (i.e. compared to May 2017). Prices in the group of oil and fats increased 4.6% compared to May 2017, driven by a 12% increase in the price of butter and spreads (most likely caused by new technical regulations for the dairy sector). Agricultural exports to the European Union (EU) decreased 38% in 2017, mostly due to a significant decrease in hazelnut exports. Georgia’s agricultural exports to countries in the Commonwealth of Independent States (CIS) have increased in the last few years.
14) Peach exports reach 4,400 tons July 6th, 2018, http://agenda.ge/news/103657/eng
AAs of July 5, 2018, Georgia has exported 4,400 tons of peaches this year, five times more than during the same period of 2017. Georgian peaches were mainly exported to: Russia (66.5%), Armenia (16.1%) and Azerbaijan (14.6%). Other export markets included Kazakhstan, Qatar, Ukraine and the United Arab Emirates. To support peach producers, a special group was created in the Kakheti region to help farmers prepare all necessary documents needed during harvest, processing and export.
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15) Agricultural cooperatives participate at Coop Market in Tbilisi July 8th, 2018, http://agenda.ge/news/103699/eng
More than 20 agricultural cooperatives from various regions of Georgia have been participating at the Coop Market organized by the Agricultural Cooperatives Development Agency, presenting domesticallyproduced honey, wine, tea, Churchkhela, dried fruit, fruit and cheese. The Coop Market is part of a state effort to support farmer cooperatives that began in 2013. Currently, there are more than 1,200 farmer cooperatives across Georgia, producing a variety of agricultural products.
16) Nitrate levels being tested in watermelons and melons July 15th, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10054608
The National Food Agency has begun monitoring nitrate levels in watermelons and melons from chain stores and agricultural markets. So far, about 30 of the planned 70 samples per year have been tested. Last year, only one violation of permissible nitrate levels was found; however, the Consumer Protection Association notes that the level of nitrites in watermelons and melons exceeds permissible norms by 3-4 times on average.
17) Hazelnut exports down July 17th, 2018, https://commersant.ge/en/post/georgias-hazelnut-export-down
In 2017, 15,136 tons of hazelnuts were exported, amounting to USD 82.3 million in value. This represents a significant drop-off from the 27,108 tons (valued at USD 179.2 million) exported in 2016. At the same time, walnut exports grew significantly, growing from a value of just USD 2,000 in 2016 to USD 224,400 in 2017. Georgia imported processed nuts worth USD 7.4 million in 2017, including pistachios, almonds and peanuts.
18) Tea exports increasing July 18th, 2018, http://georgiatoday.ge/news/11365/Tea-Export-Grows-by-54%25
In 2017, overall tea exports grew by 54% in terms of value and by 44% in terms of volume. Specifically, tea exports grew from 1,567 tons in 2016 to 2,270 tons in 2017. At the same time, tea imports also increased, with black tea imports growing 7% to 2,101 tons and green tea imports soaring 840% to 521 tons.
19) Russia to increase control over Georgian alcoholic imports July 20th, 2018, https://commersant.ge/en/post/russias-watchdog-will-enhance-control-over-alcohol-from-georgia
Rospotrebnadzor, Russia's consumer rights and sanitary watchdog agency will strengthen control over alcoholic beverages supplied to Russia from Georgia. In the first half of 2018, Rospotrebnadzor found alcoholic products from Georgia that did not meet the Russia’s mandatory requirements for consumer protection, resulting in 16,000 liters of alcoholic beverages not being allowed to enter Russia. The Russian agency noted that its controls revealed “insufficient control over the products by both manufacturers and by authorized Georgian government agencies.�
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20) The link between household agricultural production and poverty July 23rd, 2018, https://www.finchannel.com/world/georgia/74749-mamuka-bakhtadze-fifty-percent-of-georgia-s-population
In 2017, agricultural production engaged nearly 736,500 Georgians (about 43% of the country’s active workforce). Of those, the share of self-employed is high (at 47.7% as of 2016), with a majority being domestic households. Another way of looking at it is that 43.2% of those engaged in agriculture in Georgia create only 8.2% of the total value produced in the sector. This means that a majority of domestic household production is for self-consumption and is usually of poor quality. In fact, the average monthly income in the agricultural sector is 30-40% lower than the national average for all sectors. This equates to a general lack of income among those engaged in domestic household production, resulting in greater poverty and lower standards of living.
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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.