#94 Georgia Agriculture Bulletin, BFC

06/2020

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94 Geo r g i a Agriculture Bulletin Subsistence farmers no longer to be considered self-employed ENPARD grant competition announced Swiss dairy school to be established in Kvemo Kartli Bank of Georgia, Visa and others partner to support farmers

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Georgian Agriculture Finance Bulletin Edition #94, June 2020

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6)

Subsistence farmers no longer to be considered self-employed .................................................... 2 State support for winemakers amid COVID-19 pandemic .............................................................. 2 Participation in state agricultural insurance program up 40% ........................................................ 2 Prime Minister highlights state support for agriculture .................................................................. 2 Farmers receive cards under state’s Agrodiesel program............................................................... 3 Government developing plan to help winemakers ......................................................................... 3

Foreign Aid ................................................................................................................. 3 7) 8) 9) 10)

ENPARD grant competition announced .......................................................................................... 3 Swiss dairy school to be established in Kvemo Kartli ...................................................................... 3 ENPARD project supports women farmers in Georgia .................................................................... 4 The importance of geographically-indicated food products ........................................................... 4

Private Sector.............................................................................................................. 5 11) 12) 13) 14) 15) 16) 17) 18) 19)

Bank of Georgia, Visa and others partner to support farmers ........................................................ 5 Georgia prepares for bumper peach, nectarine harvest ................................................................. 5 80 tons of blueberries expected to be harvested this year............................................................. 5 Racha ham and Gurjaani peaches added to list for geographical indication .................................. 5 Slaughterhouses processed more than 40,000 tons of meat in 2019............................................. 6 Digital marketing and digital channels important for small Georgian wineries .............................. 6 2019 agricultural review .................................................................................................................. 6 Georgian company exports 20 tons of berries to the United States............................................... 6 Wine sales down 10-15%................................................................................................................. 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 #94, June 2020

State Initiatives 1)

Subsistence farmers no longer to be considered self-employed

June 1st, 2020, https://agenda.ge/en/news/2020/1705

Subsistence farmers will no longer be recorded as self-employed by the National Statistics Office of Georgia. Prior to the change, 840,000 people were considered self-employed, of which 75% were engaged in agricultural activities. Of that 75%, 70-80% were subsistence farmers. The change means that these subsistence farmers will no longer be considered self-employed. They will not, however, automatically be considered as unemployed as that requires the fulfillment of additional criteria (e.g. actively looking for work).

2)

State support for winemakers amid COVID-19 pandemic

June 2nd, 2020, https://agenda.ge/en/news/2020/1718

Georgia is already making preparations for the major grape harvest season, during which more than 100,000 tons of grapes will be picked, packed and sold locally or exported. In particular, the government is taking measures to support the winemaking sector, which has been hit hard by the impact of COVID19. Specifically, the government is supporting the winemaking sector through its anti-crisis plan, which is aimed at broad economic support throughout the country, as well as by extending its agro-credit program to cover winemakers and help them overcome COVID-19-related problems. In addition, the Prime Minister has tasked the Ministry of Agriculture with ensuring that farmers do not face any problems regarding grape storage and that the public as well as the private sector are well prepared for the harvest season.

3)

Participation in state agricultural insurance program up 40%

June 2nd, 2020, http://bizzone.info/agriculture/2020/1591143091.php

The number of farmers participating in the state agricultural insurance program in Georgia has increased by 40% compared with the last year. The number of insurance policies issued for a month and a half amounted to 7,990, covering an area of 7,544 hectares. The total value of insured crops amounts to GEL 74 million (USD 23.2 million).

Under the program, 70% of the cost of a policy is covered by the state (50% for grape production), with the rest needing to be covered by farmers themselves.

4)

Prime Minister highlights state support for agriculture

June 10th, 2020, https://agenda.ge/en/news/2020/1814

Georgian Prime Minister Giorgi Gakharia met with farmers of the Shida Kartli region to discuss the challenges the agricultural sector faces as well as government plans to help the sector. The Prime Minister noted that agriculture is an industry in need of financial help and is a priority sector for the government. To this end, the government has allocated GEL 300 million, although the Prime Minister acknowledged that this sum is likely not sufficient given the current status of the economy. The government is also exempting 42,000 farmers from having to pay irrigation taxes in 2020 and providing up to 50% co-financing for those purchasing special agricultural equipment or erecting greenhouses or Page 2

BFC Georgian Agriculture Finance Bulletin. Edition #94, June 2020

irrigation systems. It is also worth noting that the government, under the Agrodiesel program, is providing farmers with 150 liters of subsidized diesel fuel per hectare.

5)

Farmers receive cards under state’s Agrodiesel program

June 20th, 2020, https://sputnik-georgia.ru/economy/20200620/248777286/

Within the framework of the state-run Agrodiesel program, cards for the purchase of diesel fuel were distributed to more than 60,000 farmer beneficiaries. Within the framework of the program, qualifying farmers will be able to use the cards to purchase diesel fuel at below market value. At the same time, both monetary funds and points will be credited to the cards, which farmers can use to also purchase fertilizers and plant protection products, chemical and biological plant protection products and seeds or seedlings as well as pay for agricultural services.

The provision of diesel fuel to farmers at preferential prices is one of the points of a government effort to help revitalize villages. In total, about 200,000 farmers will be able to use the program.

6)

Government developing plan to help winemakers

June 27th, 2020, https://sputnik-georgia.ru/economy/20200627/248839163/

The government of Georgia is working on a program to help winemakers impacted by the COVID-19 pandemic, which has caused exports over the first five months of the year to drop 11.3% compared to last year. It remains uncertain exactly what form this assistance will take, although other government efforts to support the sector have already been made, most notably a GEL 60 million (USD 20 million) subsidy program to ensure the grape harvest is as undisturbed as possible.

The plan itself is expected to be revealed in early July.

Foreign Aid 7)

ENPARD grant competition announced

June 1st, 2020, https://kalo.ge/news/view?id=8478

The Food and Agriculture Organization of the United Nations (FAO) has announced a grant competition to support agricultural initiatives within the framework of the European Neighborhood Program for Agriculture and Rural Development (ENPARD). The grant competition aims to improve access to finance, services and industrial technical equipment for Georgian farmers, rural households, cooperatives and small- and medium-sized enterprises, with the ultimate goal of improving competitiveness in the agricultural sector and creating better livelihoods for the rural population.

8)

Swiss dairy school to be established in Kvemo Kartli

June 12th, 2020, http://georgiatoday.ge/news/21476/Georgia%E2%80%99s-Future-Farmers-to-Benefit-from-Swiss-Experience

Over the next ten years, Georgia will graduate 300 professional farmers skilled in milk and dairy production thanks to a new vocational training institution – the Swiss Agricultural School Caucasus.

Modeled on the historic Plantahof agricultural school in Switzerland, the school is set to open in 2021 Page 3

BFC Georgian Agriculture Finance Bulletin. Edition #94, June 2020

and will serve as a model training facility for cattle breeding and dairy farming. The total investment needed to establish the new institution is estimated at USD 3,000,000. Funding will come from Swiss and Georgian private sources, including the Swiss South Caucasus Foundation.

Additional support is being provided by the Swiss Agency for Development and Cooperation (SDC) and the United Nations Development Program (UNDP), which are developing school curricula that blends theoretical and practical training in cattle breeding and dairy production based on the Swiss Plantahof model. UNDP support will also include the retraining of teachers, the setting up of extension services for farmers and the arrangement of internships for students and trainers as well as offer business consulting to school graduates. This assistance is part of a wider partnership between UNDP and SDC to help reform vocational education and training so that the educational system responds to the demands of the labor market.

The Swiss Agricultural School Caucasus campus will be located near the village Sarkineti (Dmanisi municipality) in the Kvemo Kartli region of Georgia. The school expects to offer three-year training courses to 300 students over the next ten years as well as provide agricultural extension services to up to 2,000 farmers.

9)

ENPARD project supports women farmers in Georgia

June 17th, 2020, http://enpard.ge/en/eu-fao-support-women-georgias-rural-areas/

Women working in the agricultural sector in Georgia have limited access to important resources such as land, agricultural inputs, new technologies and financing opportunities as well as information, extension services and training opportunities. To help rural women improve agricultural knowledge, enhance their farms’ production and raise their standard of living, the Food and Agriculture Organization of the United Nations (FAO) and the European Union (EU) are supporting female farmers in Georgia by teaching them the best agricultural practices with a project under the European Neighborhood Program for Agricultural and Rural Development (ENPARD).

Under the project, direct support to women farmers is multidimensional and encompasses FAO’s guidance for establishing demonstration plots and farmer field schools. Along with the capacity development of the female farmers, FAO and EU are also implementing a series of gender training sessions for state agricultural extension specialists. So far, more than 100 people have participated in the specialists training program, which equipped them with the necessary tools for mainstreaming gender into their work. Based on the knowledge obtained through the program, the specialists are expected to design and deliver quality advice to the farmers in a gender-sensitive way.

10) The importance of geographically-indicated food products June 18th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1294444/

Over the past several years, the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD) have been working with governments and producers worldwide to support geographical indications for traditionally made products. Such products have proven to bring higher prices, translating into higher incomes for rural households. Moreover, it also promotes pride in local food cultures and attracts youth to a promising agricultural business.

For Georgia, this represents a great opportunity to not only provide markets with food but also to preserve a rich cultural food heritage and know-how. Moreover, geographically-indicated products can also revitalize even the most remote regions of the country, breathing new life into rural economies and giving youth in those areas a reason to stay.

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BFC Georgian Agriculture Finance Bulletin. Edition #94, June 2020

Private Sector 11) Bank of Georgia, Visa and others partner to support farmers June 1st, 2020, https://cbw.ge/economy/bank-of-georgia

Bank of Georgia is continuing its support of local entrepreneurs and farmers by launching a campaign in cooperation with Visa, soplidan.ge and the Georgia’s Farmers' Association. The aim of the campaign is to support farmers and help them increases their sales. It has the added benefit of giving consumers the opportunity to purchase natural products from rural areas at a discounted price.

The partnership between Bank of Georgia, Visa, soplidan.ge, and the Farmers' Association will make a significant contribution to supporting farmers, providing high-quality customer service and promoting local products.

12) Georgia prepares for bumper peach, nectarine harvest June 3rd, 2020, https://agenda.ge/en/news/2020/1737

Farmers and fruit growers in Georgia's Kakheti region are preparing for a bumper peach and nectarine season, during which about 35,000 tons of fruit is expected to be harvested. Of this total volume, about 15,000 tons will be exported, while the rest will be sold locally. A special peach and nectarine harvest coordination center will be opened in the town of Gurjaani for the issuing of documents required for exports.

Last year Georgia exported 13,256 tons of peaches and nectarines.

13) 80 tons of blueberries expected to be harvested this year June 12th, 2020, https://agenda.ge/en/news/2020/1857

Georgia is expecting to harvest about 80 tons of blueberries this year, the result of an increased area (by 16 hectares) used for blueberry production. A number of state projects in recent years have supported the revival of berry production in general and blueberry production specifically. Currently, the price for blueberries varies between GEL 13 and GEL 15, which provides a good income for producers.

Demand for blueberries is currently high in both domestic and international markets.

14) Racha ham and Gurjaani peaches added to list for geographical indication June 12th, 2020, https://agenda.ge/en/news/2020/1844

Ham from Racha (Western Georgia) and peaches from Gurjaani (Eastern Georgia) are being added to the list of geographically-indicated products. This will help both products become more widely recognized and strengthen producers’ capacities as well as help them more easily collaborate in associations.

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BFC Georgian Agriculture Finance Bulletin. Edition #94, June 2020

15) Slaughterhouses processed more than 40,000 tons of meat in 2019 June 16th, 2020, https://bm.ge/en/article/slaughterhouses-processed-40-3291-t-of-meat-in-2019--geostat/58611/

A total of more than 438,000 livestock were slaughtered in the 106 slaughterhouses active in Georgia in 2019, resulting in over 40,000 tons of meat being produced. Of the produced meat: 40.4% was beef; 38.8% was poultry meat; and 3.9% was pork meat. The share of sheep and goat meat was not significant.

In total, slaughtering services were provided to 40,300 persons, 38.6% of which were households.

Slaughterhouses employed a total of 957 people.

16) Digital marketing and digital channels important for small Georgian wineries June 18th, 2020, https://mepa.gov.ge/En/News/Details/18985

Deputy Minister of Agriculture Khatia Tsilosani met with representatives of small wineries to discuss wine industry problems caused by the COVID-19 pandemic as well as ways to overcome existing challenges. The pandemic has had a significant negative impact on small wineries, affecting exports and stopping wine-related tourism. Accordingly, sides at the meeting discussed the need for alternative ways of promoting wine in international markets. For her part, the Deputy Minister encouraged small wineries to embrace digital marketing tools and digital channels to help popularize and sell their products. The Deputy Minister also spoke about the ongoing programs developed under the Agricultural Anti-Crisis Plan, noting that farmers, including owners of small wine cellars, are eligible to receive significant support in a number of areas such as tax breaks, access to preferential financial credit resources and technical assistance projects.

17) 2019 agricultural review June 25th, 2020, http://georgiatoday.ge/news/21596/Agri-Review-%7C-The-Agricultural-Sector-In-2019

On 15 June 2020, the National Statistics Office of Georgia published its annual publication for the agricultural sector. The publication shows that agriculture, forestry and fishing comprised 7.2% of nominal GDP in 2019, slightly lower than the 7.8% share in 2018 but in line with the general trend over the last five years. In real terms, agriculture, forestry and fishing contributed 7.4% to GDP in 2019, lower than its contribution of 7.9% in 2018. Real output declined by 4% in 2019 compared to 2018, though the share of income from the sale of agricultural production in the total income of households did not change from 2018 (remaining at 5.5% for a monthly average of GEL 60.3).

Additional information on the state of the agricultural sector can be found here.

18) Georgian company exports 20 tons of berries to the United States June 26th, 2020, https://cbw.ge/economy/georgian-strawberry-and-berry-go-to-the-usa

LLC Glenberries, a company founded with state financial support, has announced that it has completed the export of 20 tons of shock-frozen strawberries and other berries to the United States. The company is considered a model for the development and the unveiling of the true potential of Georgian agriculture. It also serves as an example for how a company run properly can support farmers.

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BFC Georgian Agriculture Finance Bulletin. Edition #94, June 2020

LLC Glenberries was established in 2018 with financial support provided under the United Agro Project.

Total investments into the establishment were approximately GEL 5 million, which includes GEL 600,000 in grants provided under the state-run agricultural project.

LLC Glenberries employs 150 local residents and is compliant with ISO 22 000 international food safety standards.

19) Wine sales down 10-15% June 26th, 2020, https://bm.ge/en/article/quotsales-of-the-wine-sector-decreased-by-10-15quot---the-minister-/59288/

According to the Minister of Agriculture, wine sales have decreased by 10-15% due to the impact of COVID-19. This is due to a decline in exports and the near cessation of all activities at hotels, restaurants and cafes. In response, the government is working with winemakers to come up with viable solutions to help the industry rebound.

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