08/2018
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72 Geo r g i a Agriculture Bulletin Agricultural land reform will hinder the sector EU support helps Georgian herb producer enter EU markets First Beekeeping Board meeting held
New hazelnut enterprise opens in Samegrelo
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Contents State Initiatives ........................................................................................................... 2 1) 2)
Agricultural land reform will hinder the sector ............................................................................... 2 New fruit processing enterprise launched in Kakheti ..................................................................... 2
Foreign Aid ................................................................................................................. 2 3) 4) 5)
Regional development manual published ....................................................................................... 2 EU support helps Georgian herb producer enter EU markets ........................................................ 3 Report outlines strategies for taking advantage of DCFTA ............................................................. 3
Private Sector.............................................................................................................. 3 6) 7) 8) 9) 10) 11) 12) 13) 14) 15)
First Beekeeping Board meeting held ............................................................................................. 3 Georgian wine exports increase ...................................................................................................... 4 New hazelnut enterprise opens in Samegrelo ................................................................................ 4 Fungal diseases threatening the nut harvest .................................................................................. 4 Second quarter meat and milk production down ........................................................................... 4 Number of bovine animals in Georgia decreases ............................................................................ 5 Georgia ranks 5th in average wine export price ............................................................................. 5 Kakheti grape harvest projected to be 200,000 tons ...................................................................... 5 Only 4-5% of farmers have agricultural insurance .......................................................................... 5 Processing of hail-damaged grapes complete ................................................................................. 6
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)
Agricultural land reform will hinder the sector
July 30th, 2018, http://cbw.ge/business/agricultural-land-reform-as-a-hindering-factor-of-business/
Following the presidential election of 2018, the Georgian Constitution is expected to be amended to restrict ownership of agricultural land to the state, a Georgian citizen or a group of Georgian citizens. The new amendments are expected to have a negative impact on the agricultural sector, especially in terms of investments. It is worth noting that draft legislation is being discussed that will allow some foreign ownership of agricultural land; however, the proposed bill lacks specific criteria (e.g. minimum investment amount, priority directions, minimum investment area, etc.) and does not guarantee property rights for foreign entities. Additionally, the draft bill is unclear on a number of other important issues, including mortgages (something that can severely impact a farmer’s ability to access financing). Earlier attempts at similar restrictions were made via traditional legislative means; however, Georgia’s Constitutional Court repealed them, citing them as unconstitutional. Amending the Constitution will circumvent this obstacle.
2)
New fruit processing enterprise launched in Kakheti
August 2nd, 2018, http://www.sarke.com/cgi/search/news.asp?Code=10054768
A new fruit processing enterprise has been established in the Telavi municipality (Kakheti region) with the help of the Unified Agroproject. In total, LLC Achinebuli received GEL 2.5 million in investments to open its doors, including GEL 975,402 in preferential agricultural credit and GEL 632,835 in a state grant. The enterprise, capable of producing more than 500,000 liter of juice annually, plans to employ 25 people permanently and have 8-10 seasonal workers. Initially, the enterprise will focus on providing juice to local markets; however, it also plans on introducing ISO 22000 food safety measures within the year and exploring export opportunities soon afterwards. 173 new enterprises, including 57 in the Kakheti region, have been financed under the Unified Agroproject since 2013.
Foreign Aid 3)
Regional development manual published
August 22nd, 2018, http://enpard.ge/en/eu-supported-regional-development-manual-published-cenn-keda-leader-project/
The ‘Keda LEADER’ project of the European Union (EU)-supported European Neighborhood Program for Agriculture and Rural Development (ENPARD) has published a regional development manual. The manual stresses the importance of the various rural functions of villages beyond simple agricultural purposes and aims to raise public awareness of bottom-up regional development approaches. The manual is recommended both for organizations working on regional development-oriented projects and as a supplementary textbook for educational institutions. The ENPARD ‘Keda LEADER’ project is being implemented by CENN in partnership with the Center for Strategic Research and the Development of Georgia, the Institute of Democracy and the Austrian Institute for Regional Studies and Spatial Planning. The project aims at diversifying local economic activities, improving the investment climate and empowering competitive agricultural and environmental practices in the Keda municipality via bottom-up strategic rural development planning. Page 2
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4)
EU support helps Georgian herb producer enter EU markets
August 27th, 2018, https://www.euneighbours.eu/en/east/stay-informed/news/georgian-greens-producer-accesses-eu
Herbia Ltd, a company from the Tskaltubo region, has become the first producer in Georgia to export Georgian herbs to European Union (EU) markets. The company specializes in growing dill, parsley, coriander, celery, various types of lettuce, green onions, basil, mint and oregano. Herbia Ltd took advantage of the EU’s Deep and Comprehensive Free Trade Area (DCFTA) as well as a credit line offered by the European Bank for Reconstruction and Development (EBRD) (via the EU4Business initiative). The credit line enabled the company to expand its greenhouse farming and update its packaging equipment. In 2017, the company saw its production double, with sales growing in both domestic and foreign markets. EBRD, through the EU4Business initiative, works to help small- and medium-sized enterprises in Georgia, Moldova and Ukraine take advantage of the opportunities provided by DCFTA.
5)
Report outlines strategies for taking advantage of DCFTA
August 27th, 2018, http://georgiatoday.ge/news/12030/New-Research-Reveals-Regional-Crops-are-Far-from-Export-Ready
PMC Research has published new reports on value chain analyses conducted as part of the European Union (EU)-funded ‘Civil Society Organizations Supporting Free Trade with Europe’ project. The project looked at three regions (Kvemo Kartli, Mtskheta-Mtianeti and Adjara) to determine how to best build the capacity of local farmers to be able to benefit from the Deep and Comprehensive Free Trade Area (DCFTA) with the EU. Researchers selected one crop from each region (broccoli in Kvemo Kartli, raspberries in Mtskheta-Mtianeti and mandarins in Adjara) to focus on. They found that, while exporting the selected crops from each region to the EU is far from realistic given the current conditions, several strategies are available that could help Georgian farmers take full advantage of the opportunities DCFTA offers (providing that communities can appropriately make use of available resources). The project was implemented by People in Need, a Czech non-governmental organization, in partnership with PMC Research, the Rural Communities Development Agency, Atinati, Bridge and the Georgian Alliance on Agriculture and Rural Development. PMC Research is the research arm of the Tbilisi-based Policy and Management Consulting Group (PMCG), an international development consulting company focused primarily on transitional and developing countries.
Private Sector 6)
First Beekeeping Board meeting held
August 1st, 2018, http://cbw.ge/economy/47-of-exported-georgian-honey-go-to-japan/
At the first meeting of the Beekeeping Board, Agriculture Minister Levan Davitashvili discussed the importance of expanding the reach and popularity of Georgian honey in European Union (EU) markets. In particular, the Minister noted the need for Georgia to showcase its honey by participating in international exhibitions such as the 2019 Montreal International Exhibition and the Apimondia Congress. Participants at the meeting also noted the progress made in Georgia’s honey sector, including the growth of both beekeeping and honey production as well as the introduction of branded products in domestic markets. Page 3
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Currently, 47% of Georgian honey exports are sent to Japanese markets, with honey exports also reaching Bahrain, Iraq, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
7)
Georgian wine exports increase
August 8th, 2018, https://www.georgianjournal.ge/business/34850-the-level-of-georgian-wine-and-chacha-exported
Georgia exported 45.5 million bottles of wine to 50 countries during the January-July 2018 period, a year-on-year increase of 19%. Profit from these wine exports amounted to USD 107.8 million, a 28% year-on-year increase. These numbers include 9.9 million bottles of Georgian branded wine (20% more year-on-year) that generated USD 20 million (7% year-on-year higher) in profit. The top five importers of Georgian wine were: Russia (28.56 million bottles), Ukraine (5.04 million bottles), China (3.51 million bottles), Kazakhstan (2.00 million bottles) and Poland (1.89 million bottles). In addition to wine, Georgia exported 219,500 bottles of Chacha to 24 countries, a 144% year-on-year increase. Chacha profits during this period amounted to USD 638,500.
8)
New hazelnut enterprise opens in Samegrelo
August 10th, 2018, http://cbw.ge/economy/new-hazelnut-drier-enterprise-opened-in-samegrelo/
A new hazelnut drying and warehouse enterprise that has the capacity to serve more than 600 farmers has opened in the village of Natsatsu (Samegrelo region). The new enterprise is capable of storing 1,000 tons of hazelnuts and 500 tons of processed goods. The enterprise was established with co-financing from the Georgian Nut Production Association and AgriGeorgia-Ferrero.
9)
Fungal diseases threatening the nut harvest
August 10th, 2018, https://commersant.ge/en/post/40-50-of-nut-harvest-has-been-destroyed-by-fungus
While efforts to combat pests that destroy nuts appear to have been largely successful, a new threat has emerged and is threatening this year’s nut harvest. Fungal diseases have already destroyed nearly 40% of nuts in Western Georgia and have caused prices for nuts to drop, going from GEL 4-5 last year to just GEL 2 currently. The problem is exasperated by the costs associated with treating land, including the need for a large amount of equipment, as most farmers do not have the necessary funds available for proper treatment. According to preliminary forecasts, this year’s nut harvest is expected to better than last year’s in terms of volume; however, the lower quality of the nuts seriously threatens many farmers’ financial situations.
10) Second quarter meat and milk production down August 17th, 2018, https://commersant.ge/en/post/meat-production-down-13-in-q2-says-sakstat
According to preliminary data of the National Statistical Office, meat production in the second quarter of 2018 decreased by 13% year-on-year and amounted to 14,000 tons. Milk production also decreased to 183.4 million liters, a 5.2% drop. At the same time, egg production amounted to 156.5 million eggs, a 0.1% increase.
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11) Number of bovine animals in Georgia decreases August 17th, 2018, https://www.finchannel.com/world/georgia/75167-agriculture-in-georgia
Preliminary data on agriculture for the second quarter of 2018 indicates a 5.9% drop in the number of bovine animals in the country since the second quarter of 2017, including a 7.5% decrease in the number of dairy cows and buffaloes. Currently, there are an estimated 977,400 heads of bovine animals, including 467,000 heads of dairy cows and buffaloes. At the same time, the number of sheep and goats has increased 2.2% to 1.2 million heads, and the number of pigs increased 14.3% to 226,500 heads. The number of poultry animals in the country also experienced an increase of 0.4% and now amounts to approximately 11.6 million heads.
12) Georgia ranks 5th in average wine export price August 21st, 2018, https://commersant.ge/en/post/georgia-is-the-5th-in-the-wines-average-export-price-per-liter
According to the American Association of Wine Economists, Georgia ranked fifth in the world in terms of the average wine export price (per liter) for the 2014-2016 period. France ranked first, followed by New Zealand, the United States and Austria.
13) Kakheti grape harvest projected to be 200,000 tons August 23rd, 2018, https://commersant.ge/en/post/white-grape-price-is-expected-to-be-70-80-tetri-this-year
The grape harvest is about to commence in the Kakheti region, starting in the Dedoplistskaro municipality and gradually expanding to include the entire region. In total, the grape harvest from the region is expected to be approximately 200,000 tons. Andro Aslanishvili, acting char of the National Wine Agency and head of the Vineyard Coordination Headquarters, has announced that this year’s grape prices are expected to be the same as last as year’s – GEL 0.70-0.80 per kilogram for white grapes and GEL 1.60-1.70 per kilogram for red grapes. The Vineyard Coordination Headquarters has also announced its intention to work nonstop (i.e. 24 hours a day) throughout the entire harvest period to coordinate and simplify relationships between processing enterprises and grape producers in order to ensure the smoothest harvest period possible.
14) Only 4-5% of farmers have agricultural insurance August 27th, 2018, https://commersant.ge/en/post/only-4-5-of-farmers-are-using-agro-insurance-in-georgia
It is estimated that only 4-5% of Georgian farmers make use of agricultural insurance, although the official figure is unknown as both the total area of agricultural land and the total number of farmers is unknown. In order to gain a clearer picture of the agricultural sector, the Agricultural Projects Management Agency (APMA) of the Ministry of Agriculture has started a project to register farms, the first phase of which is expected to be completed by the end of the year. The state agricultural insurance program was launched in 2014 and insures harvests against four natural disasters (hail, floods, high winds and autumn frosts). Under the program, a physical or legal person with a land of plot of no more than five hectares can take part in the program that covers 70% of the cost of the insurance. This year, land plots were required to be registered in order to be considered for the program. According to insurance expert Giorgi Gigolashvili, the low level of interest in agricultural Page 5
BFC Agriculture Bulletin
insurance stems from the high cost of the insurance as well as the low culture of insurance in the country. As of July 31, 2018, 10,927 insurance policies had been issued under the program, insuring GEL 82.7 million worth of crops over 11,048 hectares. GEL 4.28 million in subsidies was paid out for these policies.
15) Processing of hail-damaged grapes complete August 29th, 2018, http://georgianwine.gov.ge/En/News/17575
The processing of grapes damaged by hail in the Kakheti region has been completed, with a total of 1,100 tons processed. Hail damaged 500 hectares of vineyards in the Akhmeta and Telavi municipalities on August 18, 2018. As a response, the Vintage Coordination Headquarters (Vintage HQ) initiated a plan to take care of farmers whose harvest was damaged and did not have vineyard insurance. Part of this assistance included the processing of damaged grapes starting the day after the disaster. Vintage HQ officially opened for this season on August 20, 2018 and is ready to start processing this year’s harvest. Vintage HQ will work 24 hours a day during the harvesting period. There are currently 41 companies active in grape processing that are registered with Vintage HQ. Grape harvesting will start in the Dedoplistskaro municipality and will gradually expand throughout the entire Kakheti region.
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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.