07/2020
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95 Geo r g i a Agriculture Bulletin Change made to Preferential Agro Credit program
Wine and spirit quality control efforts step up More than GEL 2 million in agricultural grants awarded under ENPARD III program 150,000-ton wheat harvest and 80,000-ton barley harvest predicted this year
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Georgian Agriculture Finance Bulletin Edition #95, July 2020
Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7) 8)
Change made to Preferential Agro Credit program ........................................................................ 2 26,000 hectares of agricultural land treated against locusts .......................................................... 2 Plant the Future program beneficiaries expecting first harvests .................................................... 2 Wine and spirit quality control efforts step up ............................................................................... 2 Agricultural land in Western Georgia prepped against marble bed bugs ....................................... 3 More than 10,000 hectares of agricultural land registered ............................................................ 3 State support for the agricultural sector this year .......................................................................... 3 Beneficiaries of state agricultural insurance program to receive compensation for hail damage . 3
Foreign Aid ................................................................................................................. 4 9) 10) 11) 12) 13)
New hazelnut processing and storage complex opens in Lagodekhi .............................................. 4 More than GEL 2 million in agricultural grants awarded under ENPARD III program ..................... 4 Restoration of native Georgian agricultural products being emphasized....................................... 4 FAO announces grant competition to support agricultural investments........................................ 4 USDA, Land O’Lakes International launch livestock investment project ........................................ 5
Private Sector.............................................................................................................. 5 14) 15) 16) 17) 18) 19) 20) 21) 22)
150,000-ton wheat harvest and 80,000-ton barley harvest predicted this year ............................ 5 Prices of food and non-alcoholic beverages up 13.6% year-on-year .............................................. 5 Bank of Georgia supports Kakhetian traditional winemaking project ............................................ 5 TBC Bank offers improved loan conditions under Preferential Agro Credit program..................... 6 Peach, nectarine exports exceed 6,000 tons................................................................................... 6 Fish production up 3.5% .................................................................................................................. 6 USD 100 million hazelnut harvest predicted for 2020 .................................................................... 6 Georgia a top-20 wine exporter ...................................................................................................... 7 Okriba Ltd. establishes tea plantation in Tkibuli ............................................................................. 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 #95, July 2020
State Initiatives 1)
Change made to Preferential Agro Credit program
July 2nd, 2020, https://mepa.gov.ge/En/News/Details/19001
Changes have been made to the state-run Preferential Agro Credit program to allow the program to better address the economic damage caused by the COVID-19 pandemic. In particular, the following changes have been made: • • • • •
2)
Grape producers and processors will now be eligible to participate in the program. The limit for preferential agricultural credit under the program will be raised from GEL 5 million to GEL 10 million. The leasing limit under the program will be raised from GEL 5 million to GEL 10 million, and the co-financing term will be extended to up to 36 months (instead of up to 24 months). A secondary collateral component for loans issued for working capital in hazelnut production will be added within the program. A sub-component to support tea production will also be added under the program, allowing beneficiaries to take a working capital loan of between GEL 20,000 and GEL 5 million for a period of up to 12 months.
26,000 hectares of agricultural land treated against locusts
July 3rd, 2020, http://bizzone.info/agriculture/2020/1593824574.php
Approximately 26,000 hectares of agricultural land in Georgia have been treated against locusts, including in the Kakheti, Kvemo Kartli, Mtskheta-Mtianeti, Samtskhe-Javakheti and Shida Kartli regions as well as in the suburbs of Tbilisi. The National Food Agency carries out measures against the pest annually under its Plant Protection and Phytosanitary Reliability program and has been successful in stopping the spread of the pest and limiting its damage to the agricultural sector.
3)
Plant the Future program beneficiaries expecting first harvests
July 7th, 2020, https://agenda.ge/en/news/2020/2140
Farmers and beneficiaries of the state-run Plant the Future program are expecting their first harvests this year. Among them is a cherry farmer operating in the village of Pkhvenisi (Gori municipality), who is expecting a 30-ton harvest from his eight hectares of land. He received GEL 72,000 in financing from the state to start his cherry orchard. The Plant the Future program began in 2015 in order to boost agriculture and help open new enterprises. More than GEL 16 million has been allocated through the program, helping establish nurseries and orchards on more than 10,000 hectares.
4)
Wine and spirit quality control efforts step up
July 20th, 2020, https://mepa.gov.ge/En/News/Details/19027
In early 2020, significant changes were made to the technical regulations for wine and spirits production as part of an effort to better detect possible falsifications in alcoholic beverages and protect the competitiveness of wine and spirits in local and international markets. Under the changes, the carbon isotope ratio analysis and testing will be conducted to determine that products are produced from grapes. So far this year, products designated for export were inspected at 175 wine and spirits companies, resulting in 13 of them being denied certification.
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BFC Georgian Agriculture Finance Bulletin. Edition #95, July 2020
5)
Agricultural land in Western Georgia prepped against marble bed bugs
July 21st, 2020, https://sputnik-georgia.ru/society/20200721/249028354/V-Gruzii-
The Georgian National Food Agency and the Coordination Center for the Control of Marble Bed Bugs are preparing hazelnut plantations and corn fields in the western part of the country by spraying to protect them against the marble bed bug pest. The marble bug appeared in Georgia in 2015, destroying a large portion of hazelnut and citrus harvests that year. Since then, the government has developed a special project to combat the pest, resulting in success. Despite recent success however, cultivation of the fields is mandatory in order to ensure that the situation remains under control.
6)
More than 10,000 hectares of agricultural land registered
July 24th, 2020, https://mepa.gov.ge/En/News/Details/19036
Land registration is an important part of agricultural development, and the state has made it a precondition for accessing benefits under state programs. This has resulted in more than 35,000 individuals and legal entities having made an initial registration of more than 10,000 hectares worth of agricultural land plots. The state hopes that most agricultural land will be registered within 3-4 years.
7)
State support for the agricultural sector this year
July 24th, 2020, https://www.apsny.ge/2020/eco/1595650644.php
The state has been active in supporting the agricultural sector this year. In particular, the state has: • • • •
8)
Provided GEL 21 million in subsidies to 115,000 farmers under the state incentive program for landowners Given 106,000 farmers state cards for the purchase of discounted diesel fuel Issued 15,433 agricultural insurance policies under the state agricultural insurance program Provided interest subsidies for 1,528 agricultural loans (issues for a total of over GEL 28 million) under the Preferential Ago Credit program
Beneficiaries of state agricultural insurance program to receive compensation for hail damage
July 27th, 2020, https://cbw.ge/economy/compensation-for-beneficiaries-of-state-agricultural-insurance-program-starts
Beneficiaries of the state agricultural insurance program will soon start to receive compensation for the damage caused by recent hail in the Kakheti region. Insurance companies involved with the state program are currently in the process of calculating the damage caused. The state agricultural insurance program is open to individuals or legal persons who own or use up to 5 hectares (up to 30 hectares for wheat producers) of agricultural land. Under the program, the state finances 70% of the insurance policy (50% for vineyards) for a period of three years. As of July 2020, the number of policies issued under the program amounted to 15,422, covering more than 15,000 hectares.
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BFC Georgian Agriculture Finance Bulletin. Edition #95, July 2020
Foreign Aid 9)
New hazelnut processing and storage complex opens in Lagodekhi
July 7th, 2020, https://cbw.ge/economy/agritrade-hazelnut-processing-complex-opens-in-lagodekhi
A new hazelnut drying and storage complex, AgriTrade LLC, has opened in the village of Tela (Lagodekhi municipality) thanks to project being implemented with support from TBC Bank and the United States Agency for International Development (USAID). The complex has a capacity to process 1,000 tons of hazelnuts per month and plans to export products to China, Israel, and Mexico.
10) More than GEL 2 million in agricultural grants awarded under ENPARD III program July 9th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1297446/
The European Union (EU), the Food and Agriculture Organization of the United Nations (FAO) and the Ministry of Agriculture have awarded more than GEL 2 million in agricultural grants under the ENPARD III program. The grants have been awarded in response to the COVID-19 pandemic and includes grants for the installation of drip irrigation systems, the procurement of equipment for cattle farming and the procurement of dairy production equipment. In total, more than GEL 18 million will be awarded under the program over the next three years.
11) Restoration of native Georgian agricultural products being emphasized July 16th, 2020, https://mepa.gov.ge/En/News/Details/19021
Nino Tandilashvili, Deputy Minister of the Ministry of Agricultural, and Luisa Winton, the head of the United Nations Development Program (UNDP) in Georgia, made a joint visit to a demonstration nursey farm in the village of Asureti (Tetritskaro municipality) to promote the restoration, preservation and reproduction of Georgian wheat species. The Deputy Minister noted such efforts are important for Georgia in developing its wheat production capacities. This view is also supported by UNDP and the Global Environment Facility (GEF), which are funding a number of small, local projects across Georgia to preserve local biodiversity while still developing sustainable agricultural practices.
12) FAO announces grant competition to support agricultural investments July 16th, 2020, https://agroface.ge/news/a778c26a-ebb5-46f3-b3b7-2f8cd0a51d7a
The Food and Agriculture Organization of the United Nations (FAO), within the framework of the European Union (EU)-funded European Neighborhood Program for Rural and Agricultural Development (ENPARD), has announced a grant competition to support agricultural initiatives as part of a larger effort to increase the competitiveness of the agricultural sector and create better livelihoods for the rural population by facilitating better access to finance, services and industrial production equipment for Georgian farmers, rural households, cooperatives and small- and medium-sized entrepreneurs. Grants will be awarded in amounts of between USD 1,000 and USD 150,000, up to 40% of the total cost of the investment. Priority will be given to applicants that demonstrate how investments will have a great economic, social and/or environmental impact, especially with regard to the production of vegetables, wheat, milk and/or meat.
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BFC Georgian Agriculture Finance Bulletin. Edition #95, July 2020
13) USDA, Land O’Lakes International launch livestock investment project July 21st, 2020, https://agroface.ge/news/0ebb9f0c-dde9-48ec-8224-000e8cf88d0f
The five-year Invest in Safe and Quality Livestock (SQIL) project has been launched in Georgia to increase local beef and dairy productivity as well as boost producer competitiveness and market access. Specifically, the project aims to: (1) increase access to appropriate technologies, (2) improve productivity and (3) instill practices that boost food safety. To accomplish this, the project will provide co-financing support to private local enterprises as well as offer business development opportunities. Eligible beneficiaries are profit-oriented enterprises registered in Georgia that are currently engaged in producing beef and dairy products. Startups are not eligible to participate. Co-financing will be provided up to 50% of the total cost of investment and must be between USD 5,000 and USD 25,000 (in national currency equivalent). The project is being funded by the United States Department of Agriculture and Land O’Lakes International Development Georgia.
Private Sector 14) 150,000-ton wheat harvest and 80,000-ton barley harvest predicted this year July 3rd, 2020, https://agenda.ge/en/news/2020/2109
The harvesting of wheat and barley in the Kakheti region has entered an active phase, with this year’s forecasts predicting that 150,000 tons of wheat and 80,000 tons of barley will be harvested. This is less than last year, mostly due to struggles associated with climatic conditions. At the same time, demand for both wheat and barley have been increasing, leading to the higher prices for both products than in previous years. Harvesting began in mid-June in the Kakheti region. Wheat-cultivating areas make up approximately 71,000 hectares in the region, and barley-cultivating areas make up approximately 22,000 hectares. Reports so far indicate that the harvest and storage of grain crops is proceeding smoothly.
15) Prices of food and non-alcoholic beverages up 13.6% year-on-year July 3rd, 2020, https://bm.ge/en/article/fruit-price-increased-by-46-meat--by-132-dairy-products--by-172-in-june-/59695/
According to Geostat, the prices of food and non-alcoholic beverages have increased 13.6% in the last year. This includes the prices of fruits and grapes (up 46.5%); milk, cheese and eggs (up 17.2%); fish (up 15.8%); coffee, tea and cocoa (up 14.8%); oils and fats (up 13.5%); meat (up 13.1%); sugar, jam, honey, chocolates and confectioneries (up 12.6%); bread and cereals (up 10.0%); and mineral waters, soft drinks and fruit and vegetable juices (up 9.3%). The overall annual inflation rate was 6.1%.
16) Bank of Georgia supports Kakhetian traditional winemaking project July 3rd, 2020, https://netgazeti.ge/news/465332/
In partnership with Bank of Georgia, Kakhetian traditional winemakers have planted vineyards in Gori, Kakheti and Racha as part of a new project started last year. The aim of the project is to prepare approximately 880 hectares of vineyards for cultivation by spring 2021 and approximately 1,000 hectares of vineyards by the end of 2022. This will significantly increase production and give more opportunities for the development of traditional winemaking in the area. Page 5
BFC Georgian Agriculture Finance Bulletin. Edition #95, July 2020
The total cost of the project is approximately USD 20 million, and more than 3,000 people have been employed in these regions as a result of works undertaken thus far.
17) TBC Bank offers improved loan conditions under Preferential Agro Credit program July 14th, 2020, https://bm.ge/en/article/tbc-offers-improved-conditions-to-wineries-under-preferential-agro-credit-/60361/
TBC Bank will offer improved loan conditions to wineries under the state’s Preferential Agro Credit program. The program allows grape processing enterprises (including wineries) to apply for loans of between GEL 20,000 and GEL 15,000,000 and receive up to 11% in co-financing on the annual interest for a period of up to 48 months. The overall aim of the program is to simplify the work of winemakers and give them the opportunity to meet the Vintage 2020 standards.
18) Peach, nectarine exports exceed 6,000 tons July 15th, 2020, https://mepa.gov.ge/En/News/Details/19019
As of July 14, 2020, Georgia exported 6,179 tons of peaches and nectarines, 640 tons more year-onyear. The top countries exported to were Russia (3,796 tons), Armenia (1,857 tons) and Azerbaijan (417 tons). This rise in exports is largely due to the effective work of refrigeration plants and storage enterprises, which have been working at full capacity, as well as the fact necessary export documents can now be prepared and issued under the single window principle.
19) Fish production up 3.5% July 17th, 2020, https://cbw.ge/economy/georgias-fish-production-in-2019-rose-by-35
Fish production in aquaculture complexes in Georgia rose by 3.5% in 2019, amounting to 2,465 tons. This increase is due to an expansion in both aquaculture impoundment space as well as an increase in basin space used in fish production. The Kakheti region was the largest producer of fish in 2019 (35.1% of total fish production), followed by Kartli (30.3%) and Guria (10.1%).
20) USD 100 million hazelnut harvest predicted for 2020 July 18th, 2020, https://cbw.ge/economy/agriculture-minister-expects-100-million-hazelnut-harvest-in-2020
During a meeting with hazelnut growers and the Samegrelo regional governor, Agriculture Minister Levan Davitashvili stated that the government is forecasting an abundant harvest of high-quality hazelnuts this year. In particular, the government believes this year’s harvest will be approximately 55,000 tons and exceed a value of USD 100 million. This would represent a big rebound for the sector, which has struggled in recent years.
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BFC Georgian Agriculture Finance Bulletin. Edition #95, July 2020
21) Georgia a top-20 wine exporter July 28th, 2020, https://commersant.ge/en/post/georgia-among-top-20-wine-exporting-countries
According to statistics published by the American Wine Association, Georgia is now a top-20 wine exporter, with more than USD 220 million in wine exports in 2019 (ranked 16th in the world). The top countries are the United States, Germany, New Zealand, Portugal, Great Britain, South Africa, Argentina, Singapore, China, Hong Kong, Lithuania, the Netherlands, Austria and Belgium.
22) Okriba Ltd. establishes tea plantation in Tkibuli July 29th, 2020, https://cbw.ge/economy/tea-plantations-planted-in-tkibuli-with-the-support-of-the-bank-of-georgia
Within the framework of the United Agro Project and with funding from Bank of Georgia, Okriba Ltd. has established tea plantations on 55 hectares in Tkibuli. In addition to rehabilitating the land, the company also built a tea processing plant and procured equipment to dry and package tea. The company also has the ability to produce dried fruit in its processing plant. In addition to support from the United Agro Project and Bank of Georgia, Okriba Ltd. also received a grant under the state’s rehabilitation program, Georgian Tea. The rehabilitation and establishment of a processing facility project cost an estimated GEL 1.35 million.
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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.
