03/2019
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79 Geo r g i a Agriculture Bulletin Ministry of Agriculture unveils 2019 plans Georgia, Belarus to form joint tractor and elevator producer United Agro Project: a lifeline for rural Georgia
Georgian meat production hits five-year high
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Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5)
Ministry of Agriculture unveils 2019 plans ...................................................................................... 2 Financial institutions will be unable to use and hold agricultural lands ......................................... 2 Georgia, Belarus to form joint tractor and elevator producer ........................................................ 2 New state initiative to create intensive livestock farms ................................................................. 3 Sanctions proposed for foreigners who fail to develop agricultural land ....................................... 3
Foreign Aid ................................................................................................................. 3 6) 7) 8) 9) 10) 11) 12)
United Agro Project: a lifeline for rural Georgia.............................................................................. 3 Fruit and berry conference held in Tbilisi ........................................................................................ 4 IFAD project on cattle farming to launch in September.................................................................. 4 5th annual dairy congress held in Tbilisi ......................................................................................... 4 EU launches new rural development program in Tsalka ................................................................. 5 FAO, CARD organize B2B dairy event .............................................................................................. 5 USAID to provide technical, financial assistance to cooperatives ................................................... 5
Private Sector.............................................................................................................. 6 13) 14) 15) 16) 17) 18) 19)
Georgian wine exports up 13% ....................................................................................................... 6 Georgian meat production hits five-year high ................................................................................ 6 Foreign direct investments in fishing up 62.4% .............................................................................. 6 Berry cultivation area expected to hit 1,000 hectares by 2021 ...................................................... 6 Ban on agricultural land sales to foreigners driving down investments ......................................... 7 Pistachio trees to be planted in Georgia ......................................................................................... 7 Georgia poised to become major worldwide player in olives ......................................................... 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)
Ministry of Agriculture unveils 2019 plans
March 7th, 2019, http://agenda.ge/en/news/2019/636
The Ministry of Agriculture has unveiled its plans for 2019, which include the following:
2)
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Windbreaks will be installed in the Gardabani, Gori and Kareli municipalities to help maintain soil fertility.
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All manufacturers will be obligated to reduce negative environmental impacts.
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A new waste management code (adopted in 2014) will enter into force in December.
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Georgia’s protected areas will be increased by 190,000 hectares.
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Ecotourism infrastructure will be developed around the Okatse waterfall (Imereti region).
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Early warning systems for adverse weather conditions will be installed.
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A committee of geologists will be formed to research the causes of natural disasters in Western Georgia and provide recommendations for mitigating measures.
Financial institutions will be unable to use and hold agricultural lands
March 12th, 2019, https://kalo.ge/news/view?id=5927
Financial institutions whose dominant partner is foreign will be able to hold agricultural land for a maximum of two years under the draft Law on Agricultural Land. Moreover, they will be prohibited from using the land for any purpose, including agricultural purposes. This includes international financial institutions such as the European Bank for Reconstruction and Development (EBRD), the Overseas Private Investment Corporation (OPIC) and the Asian Development Bank (ADB). Many experts believe that this will negatively impact Georgian farmers’ access to finance as financial institutions may be more reticent to accept agricultural land as collateral given these new legislative restrictions.
3)
Georgia, Belarus to form joint tractor and elevator producer
March 20th, 2019, http://agenda.ge/en/news/2019/768
Georgian Prime Minister Mamuka Bakhtadze and Belarus Vice Prime Minister Mikhail Rusyi met to discuss a number of issues, including the development of a joint venture to produce tractors and elevators. To this end, a working group will be established and is expected to create an implementation plan within two months.
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4)
New state initiative to create intensive livestock farms
March 24th, 2019, https://agroface.ge/news/111a9d2f-c28a-42fd-a5d5-fa85c104254d
The state-run ‘Produce in Georgia’ program is launching an initiative to increase interest in creating high-tech intensive livestock farms. Specifically, the initiative will assist entrepreneurs in setting up such farms with financing options for between GEL 1.5 million and GEL 5 million. In order to qualify under the initiative, entrepreneurs must represent a new or expanding enterprise that satisfies Georgian environmental, sanitary and food safety requirements. Financing will be provided by commercial financial institutions and supported by the state covering up to 10% of interest on amounts loaned under the initiative.
5)
Sanctions proposed for foreigners who fail to develop agricultural land
March 24th, 2019, https://kalo.ge/news/view?id=5864
A new draft law proposes that any foreigner or legal entity with a dominant partner who is foreign and/or is registered abroad will now be obligated to ensure the development of all agricultural land owned by that individual/entity. In the event the foreigner or legal entity fails to comply with this new directive, sanctions will be imposed. The proposed sanctions depend on the size of agricultural land, the presence of any housing and the number of years of incompliance. The draft law also proposes similar sanctions be imposed on any non-compliant financial institution whose dominant partner is foreign and/or is registered abroad, albeit with slightly higher maximum sanction amounts.
Foreign Aid 6)
United Agro Project: a lifeline for rural Georgia
March 4th, 2019, http://georgiatoday.ge/news/14698/United-Agro-Projects%3A-A-Life-Line-in-Rural-Georgia
Agriculture is an important sector in Georgia, accounting for 8.1% of Georgia’s GDP and employing 55% of Georgia’s labor force (including those engaged in subsistence farming). Given the importance of agriculture to Georgia, especially rural Georgia, projects financed by the United Agro Project are vital to ensuring the continued development of agriculture and rural areas. Launched in 2013, United Agro Project has, so far, helped establish more than 180 new agricultural factories and provided more than USD 222.4 million in financing to over 700,000 Georgian agricultural producers. Despite the success of various projects under United Agro Project and other similar programs, rural areas are still in need of more support, especially infrastructure and access to resources, if rural Georgia is to survive. The continued support and success of such projects is also vital to progressing Georgia’s agricultural sector.
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7)
Fruit and berry conference held in Tbilisi
March 12th, 2019, http://www.fao.org/georgia/news/detail-events/en/c/1184961/
The ‘Fruits and Berries of Georgia: Efficiency of Production and Marketing’ conference was held in Tbilisi with the goal of helping local growers take advantage of numerous local and international investment and market opportunities through the sharing of best production, storage, handling and marketing practices. The conference was followed by training sessions on modern production techniques, storage and marketing as well as tours of an intensive apple orchard and modern cold storage facility in Georgia’s Mtskheta region. The conference was organized by the European Bank for Reconstruction and Development (EBRD) and the Food and Agriculture Organization of the United Nations (FAO); it was also supported by the European Union (EU) under its EU4Business initiative and Georgia’s Ministry of Agriculture.
8)
IFAD project on cattle farming to launch in September
March 12th, 2019, https://agroface.ge/news/959f6e5e-f482-46a9-bd43-68a61386a372
The implementation of a new International Fund for Agriculture Development (IFAD) project is expected to begin in September of this year. The project is part of the massive and universal modernization program of cattle farming and will focus on work with six modern farms. Specifically, the project will deepen the knowledge and experience of Georgian cattle farmers in current best practices and techniques. These farmers will then pass that knowledge on to other, smaller cattle farmers, resulting in an increased capacity across the entire cattle value chain.
9)
5th annual dairy congress held in Tbilisi
March 14th, 2019, http://www.fao.org/georgia/news/detail-events/en/c/1185413/
More than 200 commercial dairy farmers, processors, equipment suppliers, industry experts and government representatives met in Tbilisi to take part in Georgia’s annual dairy congress. This year, the congress focused on three main ideas: staying competitive, increasing milk production and the environment. More specifically, participants discussed the importance on improving the quality and safety of dairy products as well as addressing the lack of proper knowledge among many professionals involved in dairy production. At the same time, they also discussed the importance of boosting available quantities of quality milk by increasing the number of commercial farms. One session also addressed the environmental impact of the dairy sector, especially ways to lower the carbon footprint per liter of milk produced. This fifth edition of the congress was organized by the European Bank for Reconstruction and Development (EBRD) and the Food and Agriculture Organization of the United Nations (FAO), with support from the Ministry of Agriculture and the European Union (EU) (via its EU4Business initiative).
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10) EU launches new rural development program in Tsalka March 20th, 2019, http://enpard.ge/en/embarce-tsalka-eu-launches-new-rural-development-project-tsalka-municipality/
The European Union (EU) has officially launched a new rural development project in the Tsalka municipality. ‘Embrace Tsalka’ aims to provide support to smallholders, entrepreneurs, women, youth and other local actors by improving access to knowledge, introducing best practices, generating new employment opportunities and creating public-private partnerships and business linkages. By the end of the project, implementing partners hope that the establishment of effective local public-private partnerships will reduce rural poverty and improve living conditions as well as address a number of economic, social and environmental concerns. ‘Embrace Tsalka’ is being implemented under the European Neighborhood Program for Agriculture and Rural Development (ENPARD) by CENN, in partnership with the Georgian Farmers’ Association (GFA) and German partner organization the Institute for Rural Development Research (IfLS). Similar programs have already been implemented in the Borjomi, Lagodekhi, Kazbegi, Keda, Khulo, Dedoplistskaro, Tetritskaro and Akhalkalaki municipalities and are also planned for the Akhmeta, Tskaltubo and Mestia municipalities.
11) FAO, CARD organize B2B dairy event March 20th, 2019, http://www.fao.org/georgia/news/detail-events/en/c/1186025/
The Food and Agriculture Organization of the United Nations (FAO) and the Center for Agribusiness and Rural Development (CARD) organized a business to business (B2B) event in Tbilisi which focused on enhancing market linkages in the dairy sectors of Armenia and Georgia. The overall goal of the B2B event was to present best farming practices and good examples of inputs and technologies to Armenian and Georgian farmers as well as to create market linkages between the two countries’ value chain operators and international suppliers. Specifically, the event focused on the challenges facing the animal husbandry sectors and on opportunities for strengthening those sectors through better animal feed, cow comfort technologies and developments in genetics. It also offered participants a unique opportunity to meet and exchange views, experiences and know-how. In total, more than 50 farmers, veterinarians and agricultural input suppliers from Georgia, Armenia and other countries attended.
12) USAID to provide technical, financial assistance to cooperatives March 20th, 2019, https://kalo.ge/news/view?id=5964
The United States Agency for International Development (USAID) and the government of Georgia have signed a memorandum of cooperation that will help strengthen existing cooperatives and enhance their efficiency through technical support measures and financial assistance. The cooperation will also include support to small- and medium-sized agricultural businesses engaged in the production of berries, medicinal plants, vegetables, peaches, apples, tangerines and grapes. Technical assistance will be offered to any such entity wishing to pursue innovative solutions. The most promising of these entities will then receive financial support in the form of grants of up to USD 75,000. In total, approximately 100 such grants will be issued over a five-year period.
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Private Sector 13) Georgian wine exports up 13% March 6th, 2019, http://georgianwine.gov.ge/En/News/25623
Georgia exported 12.2 million bottles of wine to 32 countries in the first two months of 2019, a year-onyear increase of 13%. This represents USD 30 million in value, a year-on-year increase of 21%. The top five importing countries of Georgian wine were: Russia (8.7 million bottles), Ukraine (976,482 bottles), Poland (628,022 bottles), China (600,783 bottles) and Kazakhstan (346,152 bottles). In addition to wine, Georgia exported 4.2 million bottles of brandy to 13 countries (up 89% year-onyear) and 85,400 bottles of Chacha (up 188% year-on-year). In total, Georgia exported USD 43.6 million worth of alcoholic beverages in the first two months of 2019.
14) Georgian meat production hits five-year high March 11th, 2019, https://commersant.ge/en/post/georgias-meat-production-hit-a-5-year-high
According to the Statistical Office, Georgia produced 67,000 tons of meat in 2018, the highest level in the past five years. Chicken egg production in 2018 also reached a new five-year high of 612,000 units produced. On the other hand, milk production in the country continues to fall, amounting to only 532,000 liters in 2018 (as compared to 588,800 liters in 2017).
15) Foreign direct investments in fishing up 62.4% March 13th, 2019, http://cbw.ge/economy/foreign-direct-investments-in-fishing-industry-grows-by-29/
According to preliminary indicators, foreign direct investments in the fishing industry increased by 62.4% in the fourth quarter of 2018, amounting to USD 4.9 million. Over the past three years, foreign direct investments into agriculture (including the fishing industry) have risen from USD 8.4 million in 2016 and USD 12.4 million in 2017 to USD 16 million in 2018.
16) Berry cultivation area expected to hit 1,000 hectares by 2021 March 18th, 2019, http://eugeorgia.info/ka/latestarticle/444/2021-wlistvis-kenkris-fartobebi-saqartveloshi-1000-heqtars
The Ministry of Agriculture is predicting that, by 2021, the area on which berries are cultivated in Georgia will reach nearly 1,000 hectares, including 505 hectares for blueberries, 250 hectares for raspberries and 225 hectares for blackberries. This is expected to result in an annual production of 7,000 tons. Berry production in Georgia has been on the rise in recent years thanks to favorable climatic conditions, relatively cheap resources (electricity, water and labor), donor support for small- and medium-sized agricultural producers and the Deep and Comprehensive Free Trade Area Agreement (DCFTA) with the European Union (EU).
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17) Ban on agricultural land sales to foreigners driving down investments March 22nd, 2019, https://commersant.ge/en/post/restrictions-on-ownership-of-farmland-by-foreigners-hinder-foreign
According to Nino Zambakhidze, President of the Georgian Farmers Association, the ban on the sale of agricultural land to foreigners is hindering investments in agriculture and has caused a decline in investment volumes in 2018. According to Zambakhidze, the USD 16 million invested in 2018, although an increase over 2017, demonstrates the lack of interest in Georgian agriculture from foreign investors. According to the National Statistical Office, investment inflows in the country's economy dropped by 34% in 2018 (as compared with 2017) and amounted to a total of USD 1.3 billion.
18) Pistachio trees to be planted in Georgia March 27th, 2019, https://www.georgianjournal.ge/business/35704-pistachio-trees-will-be-planted-in-georgia.html
Dozens of hectares of pistachio trees are planned to be planted in Georgia this year as part of an effort to increase Georgian pistachio production. Currently, the Georgian Pistachio Association has approximately 4,000 Turkish pistachio seeds and plans on working with the Ministry of Agriculture to find suitable locations to plant them (most likely in Eastern Georgia). Turkish pistachio trees are thought to be the most suitable for Georgian soil and climate conditions.
19) Georgia poised to become major worldwide player in olives March 28th, 2019, http://eng.ghn.ge/news-11608.html
According to experts, Georgia has the potential to fill a substantial niche in the world olive/olive oil market by implementing a new program for growing and processing olives. As Georgia is a relative newcomer to the olive/olive oil industry, it is uniquely positioned to allow small- and medium-sized companies to thrive and service specific markets that have specific needs. Moreover, Georgia’s growing reputation of being a place for entrepreneurs to thrive makes it an attractive location for investment and long-term planning. The government of Georgia, under the ‘Plant the Future’ program, is also actively involved in promoting the olive/olive oil industry, making it further attractive for investors. Georgia stands at the cusp of a new olive future. It is now up to Georgians to ensure that they are taking all the right steps to encourage this budding industry and are providing a valuable product with great demand the world over.
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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.