#93 Georgia Agriculture Bulletin, BFC

05/2020

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93 Geo r g i a Agriculture Bulletin Georgia to conduct systematic registration of 1.2 million hectares of land FAO webinar supports Georgian seedling production GEL 3.2 million in emergency grant support for smallholder farmers Food and beverage prices up 16%

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Georgian Agriculture Finance Bulletin Edition #93, May 2020

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8) 9)

Georgia to conduct systematic registration of 1.2 million hectares of land ................................... 2 State Agricultural Support Program renewed for another year...................................................... 2 Georgia continues efforts to increase uptake of agricultural insurance ......................................... 2 Government anti-crisis plan for agriculture unveiled ..................................................................... 2 Government plan to inform farmers about available support programs ....................................... 3 State program to stimulate agricultural land owners ..................................................................... 3 State agro-diesel program has helped over 5,000 farmers ............................................................. 4 Fight against stink bug to begin earlier this year ............................................................................ 4 State program to provide co-financing to modernize the dairy industry ....................................... 4

Foreign Aid ................................................................................................................. 5 10) 11) 12) 13) 14) 15)

FAO webinar supports Georgian seedling production .................................................................... 5 Grant competition announced to support organic agriculture ....................................................... 5 EU, UNDP grant program to help rural regions respond to COVID-19 crisis ................................... 5 United States to deliver 27,000 tons of high-quality wheat to Georgia ......................................... 6 GEL 3.2 million in emergency grant support for smallholder farmers ............................................ 6 Georgian tea has a strong potential, especially with niche consumers .......................................... 6

Private Sector.............................................................................................................. 6 16) 17) 18) 19) 20)

Food and beverage prices up 16%................................................................................................... 6 Hazelnut industry not negatively impacted by COVID-19 crisis ...................................................... 7 Georgian winemakers prepare for a very difficult year .................................................................. 7 More than two thirds of agricultural markets have reopened ....................................................... 7 Kalo.ge introduces remote agricultural consultancy package ........................................................ 7

Note: The Georgian Agriculture Finance Bulletin presents a monthly roundup of headlines and news stories related to investments and financing flows 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. Currently, BFC is implementing the Agricultural Lending Programme for KfW. Read more »

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BFC Georgian Agriculture Finance Bulletin. Edition #93, May 2020

State Initiatives 1)

Georgia to conduct systematic registration of 1.2 million hectares of land

May 10th, 2020, https://www.newsgeorgia.ge/za-tri-goda-v-gruzii-provedut

Over the next three years, the government is planning to systematically register 1.2 million hectares of land. The land registration project will be implemented in three phases, starting in several mountainous regions and then expanding to cover all regions of the country. Georgia has been working to expand land registration since 2016 and has seen some success in this regard, especially with simplified procedures. Land registration will enable easier and less-costly logistical processes for the government and private entities, making it much more efficient to provide aid when necessary and contact the right person(s).

2)

State Agricultural Support Program renewed for another year

May 12th, 2020, https://mepa.gov.ge/En/News/Details/18941

The Ministry of Agriculture is renewing the Agricultural Support Program for another year in order to further promote primary production in the country. The program includes a GEL 10 million co-financing component designed to help agricultural producers procure agricultural machinery and other resources necessary to modernize production techniques in the country. The amount of co-financing available under the program is up to 50% of the total cost of investment and up to GEL 50,000. The program also includes a GEL 1.5 million technical assistance component to further promote high-quality production.

Eligible beneficiaries include registered natural or legal persons engaged in agricultural production.

3)

Georgia continues efforts to increase uptake of agricultural insurance

May 12th, 2020, https://mepa.gov.ge/En/News/Details/18943

The government of Georgia, in continuation of its efforts begun in 2014, has announced a three-year agricultural insurance project that will provide up to 70% co-financing for small farms in order to encourage increased uptake of available agricultural insurance policies in the country. This covers policies that insure farmers against hail, floods, hurricanes and autumn frosts. In 2020, the budget for this project will be GEL 9 million, which is enough to cover 15,000 policies and 12,000 hectares. Eligible beneficiaries are those that are natural or legal person who own or use agricultural land that is registered in the National Public Registry.

4)

Government anti-crisis plan for agriculture unveiled

May 13th, 2020, https://cbw.ge/economy/details-of-anti-crisis-plan-on-agriculture

In response to the COVID-19 crisis the government has passed a series of anti-crisis measures designed to ensure the long-term security and safety of the country. For the agricultural sector, this plan calls for giving every farmer with registered land direct financial aid in the form of GEL 200 per hectare as well as a guarantee to be able to purchase 150 liters of diesel at a price of GEL 1 cheaper than market rates.

Additionally, farmers will be fully exempt for having to pay irrigation fees this years and will have access to increased co-financing support for the procurement of agricultural machinery.

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BFC Georgian Agriculture Finance Bulletin. Edition #93, May 2020

5)

Government plan to inform farmers about available support programs

May 16th, 2020, https://mepa.gov.ge/En/News/Details/18952

"We must inform farmers about the benefits envisaged by the agricultural anti-crisis plan " stated Levan Davitashvili The Minister of Environmental Protection and Agriculture Levan Davitashvili and Prime Minister's Adviser in Regional Affairs, Sozar Subari met with the State Representatives. ‘’The agricultural anti-crisis plan " Taking Care for Village and Farmers " is a complex plan, thereby, it is important to inform our residents in a proper and correct manner. Farmers must be aware, that new opportunities were created for them, which are included in the state support programs, the aid package, that Georgian government has developed to overcome the crisis.

These programs give good opportunities to each farmer to receive more benefits from the state programs, that ultimately will contribute to the agricultural development , increase agricultural production and ensure food security in the country "- said the Minister.

Levan Davitashvili noted, that local self-government will play a great role in increasing farmers awareness about the anti-crisis plan.

Relevant services together with the state representatives will work with all links, who will inform farmers about the state programs and benefits envisaged by the Agricultural Anti-Crisis Plan.

Sozar Subari noted, that it is important to tackle existing challenges with dignity and minimize the impact of Covid 19 crisis on each person. " Serious assistance was provided for agricultural development in recent years. Moreover, to overcome the crisis caused by Covid-19, the aid package has been increased, which in fact is targeted at all people who live and work in rural areas. It is necessary to provide farmers with the maximum amount of information about the programs envisaged by the agricultural anti-crisis plan, whereby, the active engagement of all branches of local self-government is of utmost importance � Sozar Subari said.

The participants brought forward priority issues related to the agricultural and farming activities taken in the regions.

6)

State program to stimulate agricultural land owners

May 20th, 2020, https://cbw.ge/economy/liberty-joins-the-agricultural-land-owners-stimulation-program

As of today, more than 200,000 farmers will receive a Liberty "Agro Card" within the framework of the state program to stimulate agricultural land owners and will benefit from the new program throughout the country.

From May 20, Liberty Bank's active account beneficiaries will gradually start accruing points for the Agricultural Land Owners Stimulation Program and the process of procurement and distributing Agro Cards by Liberty.

All individuals and legal entities that own or co-own a 0.25-hectare to 10-hectare plot of agricultural land registered in the public registry will receive a subsidy under the $ 37 million program. According to the program, farmers will be entitled to the corresponding points of the subsidy amount (1 point = 1 GEL) on Liberty Bank's "agro cards" at 0.25 hectares - 50 points, at 1 hectare - 200 points, at 10 hectares - 2,000 points.

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BFC Georgian Agriculture Finance Bulletin. Edition #93, May 2020

In order to receive a card, the farmer must apply to Liberty Bank. Information about the amount of the subsidy and the date of receipt of the card can be found on the website myliberty.ge. The corresponding points of the accrued subsidy can be spent by holding the "Agro Card" post-terminal, in the specialized shops of licensed agricultural goods and in the Agricultural Logistics and Services Company Ltd. Holders of unregistered land until December 31, 2020, have the opportunity to register the land in advance, after which they will be able to participate in the program.

The program will start on May 20, 2020. Individuals who own land will be able to accrue points on ‘agro cards’ in stages from June 1 and will be able to use the accrued points until May 20, 2021.

"We are pleased to be able to offer our customers a new product today - 'agro cards', which will be awarded a subsidy under the state program" Stimulating Agricultural Land Owners ". Liberty has the widest network and is closest to farmers. This program helps farmers to overcome the crisis caused by the new coronavirus pandemic in the country. For their safe service, we have created a special platform myliberty.ge, where it will be possible to get the information provided about this program. - said Irakli Abashidze, Deputy Director of Small and Medium Business at Liberty Bank.

7)

State agro-diesel program has helped over 5,000 farmers

May 22nd, 2020, https://agenda.ge/en/news/2020/1615

Over 5,000 farmers have received a total of 2.7 million liters of diesel at a rate of GEL 1 cheaper than market price under the state’s agro-diesel program. The program has a total budget of GEL 40 million this year and is expected to be continued in the future years as the government considers it one of the most important subsidy programs it operates. To qualify, a farmer must cultivate between 0.25 and 100 hectares of agricultural land.

8)

Fight against stink bug to begin earlier this year

May 25th, 2020, https://sputnik-georgia.ru/economy/20200525/248571255/

Experts are urging Georgian farmers to begin pest control measures earlier this year as it has been discovered that the brown marmorated stink bug is already laying eggs. The information that the bug is already in the reproductive part of its cycle is thanks to monitoring efforts taking place in Western Georgia. Experts further warn farmers to take this seriously as, although the number of the pest has been reduced from years past, it is capable of causing massive damage to crops (especially hazelnuts) at any time.

The pest first appeared in 2015, when it destroyed massive amounts of hazelnut and citrus harvests.

Since then, the government has developed special measures to combat the pest, including informational campaigns, full-scale monitoring and chemical treatment. These efforts have been largely successful and are now considered as an example for the rest of the world.

9)

State program to provide co-financing to modernize the dairy industry

May 25th, 2020, https://kalo.ge/news/view?id=8459

A state program to support the modernization of Georgia’s dairy industry as well as increase its access to markets has been launched. Under the program, co-financing of between GEL 8,000 and GEL 195,000 is being made available to individuals, legal entities other registered organizations (including cooperatives) to start, expand or modernize milk production, dairy processing, milk collection, feed production and/or veterinary capacities. Program funds can only be used to purchase fixed assets and may not be used to purchase real estate or cattle. The program is targeting younger agricultural Page 4

BFC Georgian Agriculture Finance Bulletin. Edition #93, May 2020

entrepreneurs (18-35 for men and 18-40 for women) operating in the Samtskhe-Javakheti, Kvemo Kartli, Racha-Lechkhumi and Kvemo Svaneti, Imereti, Guria, Samegrelo Zemo Svaneti and Kakheti regions.

Foreign Aid 10) FAO webinar supports Georgian seedling production May 5th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1273769/

Over twenty representatives of private nurseries participated in a first three-day technical webinar organized by the Food and Agriculture Organization of the United Nations (FAO) under the EU Innovative Action for Private Sector Competitiveness in Georgia project. The online webinar trained entrepreneurs on how to produce high-quality, certified seedlings as well as how to continue the development of Georgia’s National Seedling Certification System. In particular, the course focused on providing practical knowledge to align Georgia’s seedling production with international standards and the best practices of European countries. This is especially important as new quality requirements will become mandatory for Georgian seedling producers starting in 2024 as a result of Georgia’s Association Agreement with the European Union (EU).

11) Grant competition announced to support organic agriculture May 5th, 2020, http://bizzone.info/agriculture/2020/1588709325.php

A grant competition to support the creation of economic opportunities within the Georgian organic agriculture sector has been announced as part of the Green Economy - Sustainable Mountain Tourism and Organic Agriculture (GRETA) project. A total of EUR 1.16 million is available to farmers, farmer groups, cooperatives, agricultural processing enterprises and other organic producers operating in the Mestia, Lentekhi, Tsageri, Oni, Ambrolauri, Sachkhere, Chiatura and Tkibuli municipalities. Applications must include measures to: (1) encourage small-sized farms to switch to organic production, (2) increase the productivity and/or market access of existing organic farms and processing enterprises, (3) improve product quality and grow demand in markets, (4) popularize organic agriculture and organic products at the regional and national level, (5) establish communication between organic producers and purchasing companies and/or (6) supply farmers with necessary resources for bioproduction. Grants will be awarded in amounts of between EUR 5,000 and EUR 150,000. Co-financing of at least 10% is required.

The GRETA project is being funded by the European Commission (EC) and the governments of Sweden and Austria. The EUR 6.8 million project is scheduled to run through April 2023.

12) EU, UNDP grant program to help rural regions respond to COVID-19 crisis May 7th, 2020, https://eeas.europa.eu/delegations/georgia/78672/eu-and

To help Georgia’s rural regions respond to the economic and social challenges emerging from the COVID-19 crisis, the European Union (EU) and the United Nations Development Program (UNDP) have launched a GEL 9 million grant program through the Agriculture and Rural Development Agency (ARDA) of the Ministry of Agriculture. The grants are designed to boost rural entrepreneurship, create sustainable jobs, improve the management of natural resources and promote climate action in eight municipalities (Akhalkalaki, Borjomi, Dedoplistskaro, Kazbegi, Keda, Khulo, Lagodekhi and Tetritskaro).

Grants of up to GEL 170,000 are available for non-agricultural business start-ups and growing enterprises, with an additional GEL 30,000 available for energy efficiency improvements. To ensure sustainability, all grantees are expected to provide at least 20% co-financing for their projects.

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BFC Georgian Agriculture Finance Bulletin. Edition #93, May 2020

13) United States to deliver 27,000 tons of high-quality wheat to Georgia May 8th, 2020, https://www.newsgeorgia.ge/ssha-podarjat-gruzii-27-tysjach-tonn-vysokokachestvennoj-pshenicy/

The United States is planning to deliver 27,000 tons of high-quality wheat to Georgia to help the country during the COVID-19 crisis. The wheat is being provided under the Food for Progress program, which has been active in Georgia for many years. The delivery of the wheat is of particular importance now as many countries have banned the export of wheat and grain in order to ensure their own food security.

14) GEL 3.2 million in emergency grant support for smallholder farmers May 15th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1275642/

The European Union (EU), the Food and Agriculture Organization of the United Nations (FAO) and the Ministry of Agriculture are teaming up to develop mechanisms for Georgian farmers as part of an effort to build their resilience to the current state of emergency. As part of this effort, GEL 3.2 million in grants has been allocated to support smallholder farmers experiences difficulties. More specifically, this support will focus on co-funding modern drip irrigation kits that can be quickly and easily installed.

These efforts will not only help smallholder farmers but also increase food production and food security in the country.

The 3.2 million is part of a broader GEL 19 million grant initiative being implemented under the European Neighborhood Program for Agricultural and Rural Development (ENPARD). Under the wider grant program, co-funding is available for the purchase of agricultural equipment and installations such as tractors, harvesters and greenhouses.

15) Georgian tea has a strong potential, especially with niche consumers May 21st, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1276787/

Following the collapse of the Soviet Union, tea production fell to less than 2% of its peak during the Soviet era. In recent years however, steps have been taken to revitalize Georgia’s tea industry, especially given its ideal tea growing conditions and natural tea stock. Now, a recent report shared by the Food and Agriculture Organization of the United Nations (FAO) has concluded that Georgian tea producers have the potential to carve out interesting (and profitable) niches in world markets by catering to consumers of quality organic, green, and specialty teas. If responsible agricultural investments can be made to promote sustainable and inclusive growth, Georgia is poised to make a name for itself has one of the best tea producers in the world.

Private Sector 16) Food and beverage prices up 16% May 4th, 2020, https://commersant.ge/en/post/fruit-prices-rose-15-fold-in-one-year

According to the National Statistical Office, the price of food and alcoholic beverages has risen by an average of 16% over the past year. The most notable increases are for fruits (a 45.5% increase), dairy products (a 23.2% increase), sugar, jams and other sweets (a 16.9% increase), meat and meat products (a 15.0 % increase), fish (a 14.9% increase), vegetables and gourds (a 14.1% increase), oil and fat (an 11% increase), water, juices and non-alcoholic beverages (a 10% increase), coffee, tea and cocoa (a 10% increase) and bread and bread products (an 8.4% increase).

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BFC Georgian Agriculture Finance Bulletin. Edition #93, May 2020

17) Hazelnut industry not negatively impacted by COVID-19 crisis May 5th, 2020, https://bm.ge/en/article/association-of-hazelnut-exporters

While most industries have suffered as a result of the COVID-19 crisis, hazelnuts have, by and large, not.

According to industry experts, the crisis has had no impact on the export of Georgian hazelnuts. In fact, exports have even increased to some markets (e.g. Turkey) compared to last year. Moreover, there are many countries where hazelnuts are difficult to find. Despite these positive developments, Georgia’s hazelnut season is quickly coming to an end, meaning that demand is likely to remain high for some time in many marketplaces.

18) Georgian winemakers prepare for a very difficult year May 5th, 2020, https://commersant.ge/en/post/georgias-winemaking-industry-will-have-a-very-difficult-year

Georgian winemakers are in for a difficult year this year as there has been an overall decline in wine exports and sales as well as a near cessation to wine tourism. Many wine companies are not only concerned with how this is impacting sales but also what that might mean for production down the line.

For example, a lack of sales means a decreased demand for fall grapes as producers will still have wine sitting in their tanks waiting to be sold. Most involved in wine production are waiting for nervously for second-quarter results and preparing themselves for a difficult year, with many already looking for additional state support to help them recover once the crisis has passed.

19) More than two thirds of agricultural markets have reopened May 12th, 2020, http://bizzone.info/agriculture/2020/1589320702.php

Of the 90 agricultural markets registered in Georgia, 64 have already reopened following closures due to the COVID-19 crisis. The markets have been reopened with some additional measures to help combat the spread of COVID-19, including some rehabilitation works, daily disinfections, strict social distancing and monitoring to ensure personal protective equipment is used at all times by both merchants and consumers.

20) Kalo.ge introduces remote agricultural consultancy package May 25th, 2020, https://kalo.ge/news/view?id=8461

Agricultural portal Kalo.ge has created a special online consultancy package to make it easier for farmers to care for crops, identify and fight diseases and pests, select appropriate drugs and quickly and easily obtain information on modern agricultural approaches. The special package allows farmers to electronically submit questions, pictures and videos to an expert agricultural advisor and receive recommendations and other advice within one working day.

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