#97 Georgia Agriculture Bulletin, BFC

09/2020

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97 Geo r g i a Agriculture Bulletin Fruit and vegetable processing center opens in Gurjaani Anti-crisis plan to provide new land reclamation benefits to farmers EU, FAO support the growth of future Georgian agronomists Georgia a top-5 wine-producing country

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Georgian Agriculture Finance Bulletin Edition #97, September 2020

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

Fruit and vegetable processing center opens in Gurjaani ............................................................... 2 Subsidy amount for substandard apples to increase to GEL 0.22 ................................................... 2 Anti-crisis plan to provide new land reclamation benefits to farmers............................................ 2 National Wine Agency to employ students during grape processing season ................................. 2 Viticulture subsidy program receives GEL 50 million in proposals.................................................. 2 Government prepared to subsidize food prices if necessary .......................................................... 3

Foreign Aid ................................................................................................................. 3 7) 8) 9) 10) 11)

Hazelnut processing complex opens in Kakheti .............................................................................. 3 EU, FAO support the growth of future Georgian agronomists........................................................ 3 Vegetable producer gives shining example of compassion in difficult times ................................. 3 EBRD, FAO initiative to promote agritourism in Georgia ................................................................ 4 UNDP supporting institutional reforms to maximize rural development ....................................... 4

Private Sector.............................................................................................................. 4 12) 13) 14) 15) 16) 17) 18) 19)

Sown area increased this year ......................................................................................................... 4 Apple orchards established on 1,128 hectares under state program ............................................. 4 More than 25,000 tons of peaches and nectarines exported ......................................................... 5 Georgian tomatoes exported for first time in decades ................................................................... 5 Georgia a top-5 wine-producing country ........................................................................................ 5 133,000 tons of grapes harvested in Kakheti so far ........................................................................ 5 Georgian blueberry exports set for record year in 2020 ................................................................. 5 Hazelnut exports up 74% ................................................................................................................. 5

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 #97, September 2020

State Initiatives 1)

Fruit and vegetable processing center opens in Gurjaani

September 1st, 2020, https://cbw.ge/economy/fruit-and-vegetable-processing

A new fruit and vegetable processing center operated by Georgian Agro Product Ltd. has begun operations in the village of Chumlaki (Gurjaani municipality). The center, which cost more than GEL 4 million, was built under the framework of the United Agro Project, which provided a grant of GEL 600,000 and GEL 1.5 million in preferential credit.

2)

Subsidy amount for substandard apples to increase to GEL 0.22

September 3rd, 2020, https://agenda.ge/en/news/2020/2717

The government of Georgia has decided to increase the subsidy amount for substandard apples from GEL 0.10 to GEL 0.22. According to Georgian Prime Minister Giorgi Gakharia, the reasons for the increase are (1) to support farmers in handling the economic challenges caused by COVID-19 and (2) to respond to the price of apples falling in international markets.

3)

Anti-crisis plan to provide new land reclamation benefits to farmers

September 5th, 2020, https://sputnik-georgia.ru/economy/20200905/249365703

As part of an effort to mitigate the economic damage caused by COVID-19 and further stimulate Georgia’s economy, the Ministry of Agriculture has developed its Caring for the Village and Farmers anticrisis plan. Under the plan, farmers can save more than GEL 2.9 million in future land reclamation fees.

The plan also provides for the write-off of nearly GEL 8 million in debt owed to the Georgian Melioration Company (from between 2012 and 2020) by 42,000 individuals and legal entities.

4)

National Wine Agency to employ students during grape processing season

September 7th, 2020, https://kalo.ge/news/view?id=8881

The National Wine Agency plans on employing students living in the Kakheti region as operators in local wineries during the grape processing season this year. In total, 120 students have been selected after an interview process and are receiving training from specialists at the Ministry of Environment and Agriculture at the Vintage Coordination Headquarters. Some of the selected young people already have similar work experience from previous years. Students will be distributed in wineries according to their place of residence.

5)

Viticulture subsidy program receives GEL 50 million in proposals

September 23rd, 2020, https://bm.ge/en/article/government-establishes-crop

The State Procurement Agency is considering two proposals under the viticulture subsidy program to support grape producers this year. The first proposal is for the procurement of GEL 35 million worth of grapes for Akura Ltd. (a wine company subordinated to the Project Management Agency of the Ministry of Agriculture), and the second proposal is for the procurement of GEL 15 million worth of grapes for the Crop Management Company (100% owned by the National Agency for State Property). Under both proposals, the grapes will be processed into wine material or alcohol, which will then be sold by the state

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BFC Georgian Agriculture Finance Bulletin. Edition #97, September 2020

6)

Government prepared to subsidize food prices if necessary

September 29th, 2020, https://agenda.ge/en/news/2020/3009

Georgian Agriculture Minister Levan Davitashvili has stated that the government is prepared to subsidize food prices if necessary to support important sectors of the economy and Georgian markets. In spring of this year, the government allocated GEL 10 million to subsidize nine food products (rice, pasta, sunflower oil, flour, sugar, wheat, buckwheat, beans and milk powder and its derivatives).

According to the latest inflation data, the prices of food and non-alcoholic beverages decreased 0.5% last month. At the same time, the Georgian lari (GEL) has continued to lose value against the U.S. dollar and the euro.

Foreign Aid 7)

Hazelnut processing complex opens in Kakheti

September 2nd, 2020, https://cbw.ge/economy/hazelnut-processing-plant-opens-in-kakheti-region

A hazelnut sorting, drying and storing complex has opened in the village of Eniseli (the Kvareli District of the Kakheti Region). The complex, operated by LLC Agri Management Group of Georgia, was constructed using GEL 1 million in investments under the United Agro Project, including GEL 370,000 in grants and GEL 300,000 in preferential credit. Additional support in its construction was provided by the Georgian Ministry of Agriculture, USAID, the FERRERO company and the Georgian Hazelnut Sector Development Project (G-HIP).

The complex currently employs 16 local residents and is capable processing 50,000 tons of hazelnuts each year (serving approximately 300 farmers).

8)

EU, FAO support the growth of future Georgian agronomists

September 4th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1306160/

The European Union (EU) and Food and Agriculture Organization of the United Nations (FAO), through the European Neighborhood Program for Agriculture and Rural Development (ENPARD), are providing future Georgian agronomists with modern agricultural knowledge and hands-on experiences by allowing young agronomists from four Georgian universities the unique chance to work and study at FAO’s agricultural demonstration plots all over Georgia. By doing so, they work closely with international and national experts as well as local farmers to enrich their knowledge of and experience in important topics such as client-smart agriculture, integrated pest management, conservation agriculture and sound agricultural practices. Students will spend several days each week at the FAO farms and greenhouses and support local farmers in setting up gardens and plots as well as organizing farmer field days.

9)

Vegetable producer gives shining example of compassion in difficult times

September 9th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1306806/

Keti Tomeishvili, a Georgian vegetable producer, is leveraging the knowledge she gained from a study tour organized by the European Bank for Reconstruction and Development (EBRD) and the Food and Agriculture Organization of the United Nations (FAO) to help women in her community recover from the impact of the COVID-19 pandemic.

After learning how to grow culinary herbs (a high-demand product in large markets such as Russia) alongside her normal production of cucumbers and opening up new markets and revenue streams from Page 3

BFC Georgian Agriculture Finance Bulletin. Edition #97, September 2020

this, Keti was able to continue supporting four female employees despite rising costs and a devalue currency. But Keti went much further, she decided to allow the four employees to use one of her five greenhouses to grow cucumbers of their own. Moreover, when their first harvest comes, she has promised to help them sell it to give them additional income. She is a true example of neighbor helping neighbor and community bonding.

10) EBRD, FAO initiative to promote agritourism in Georgia September 25th, 2020, https://cbw.ge/economy/ebrd-and-fao-to-assist-georgia-in-agro-tourism

The European Bank for Reconstruction and Development (EBRD) and the Food and Agriculture Organization of the United Nations (FAO) have put forth a new initiative aimed at promoting agritourism. Under the initiative, a special focus will be placed on the authenticity of a number of national and regional products as well as how they are produced. Products and producers meeting strict qualifications will be able to use a special trademark label of geographic origin and authenticity to distinguish them. As part of the initiative, small companies will also be given assistance in producing higher-quality products and penetrating new markets.

11) UNDP supporting institutional reforms to maximize rural development September 28th, 2020, http://enpard.ge/en/eu-boosts-support-institutional-reforms-rural-development-georgia/

With the support of the United Nations Development Program (UNDP), Georgia’s Ministry of Environmental Protection and Agriculture is undertaking a series of structural and business process changes in order to maximize the impact of the national rural development policy objectives and the European Union (EU) approximation process. This is expected to result in enhanced institutional capacities, specifically through the creation of a managing authority and paying agency for rural development as well through the development of a national training mechanism.

Private Sector 12) Sown area increased this year September 2nd, 2020, https://commersant.ge/en/post/georgias-gross-sown-area-increased-in-2020

In 2020, the area for autumn and spring crops amounts to 208,800 hectares, an increase of 5,800 hectares from 2019. This includes 59,000 hectares for wheat and oats as well as 101,300 hectares for grain, oats, rye, barley, potatoes and vegetables.

13) Apple orchards established on 1,128 hectares under state program September 16th, 2020, https://cbw.ge/economy/apple-gardens-arranged-on-1128-hectares-under-plant-the-future-program

Apple orchards have been set up on 1,128 hectares under the state-run Plant the Future program, which provided GEL 9 million in co-financing to establish the orchards. The government has been promoting the apple sector in recent years, providing subsidies for nonstandard apples. These efforts have resulted in an expected harvest of 120,000 tons this year, up 300% year-on-year.

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BFC Georgian Agriculture Finance Bulletin. Edition #97, September 2020

14) More than 25,000 tons of peaches and nectarines exported September 18th, 2020, https://commersant.ge/en/post/georgia-exported-25070-tons-of-peaches-and-nectarines

Georgia has exported more than 25,000 tons of peaches and nectarines so far this year, an 88% year-onyear increase. The largest importing countries are Russia (16,527 tons), Armenia (7,492 tons) and Azerbaijan (567 tons). Unsurprisingly, the revenue generated from peach and nectarine exports is also up (69% year-on-year), amounting to USD 21.04 million.

15) Georgian tomatoes exported for first time in decades September 21st, 2020, https://kalo.ge/news/view?id=8936

For the first time in decades, Georgian tomatoes have reached export markets. This represents a huge milestone for tomato producers in the country; however, much work remains to be done if Georgian tomatoes are to become a long-term, viable agricultural export product. Specifically, tomato producers need to accumulate more knowledge and work to meet stringent export conditions that will ensure the delivery of quality, homogeneous products at reasonable prices. If successful, Georgian tomato producers and exporters could see international demand soar.

16) Georgia a top-5 wine-producing country September 21st, 2020, https://commersant.ge/en/post/georgia-among-the-top-five-wine-producing-countries

Georgia has been named among the top-5 wine-producing countries in the world. This is an incredible achievement as Georgia’s wine industry exported only 23 million bottles of wine (worth USD 75 million) in 2012. That amount, as of last year, had risen to 94 million bottles (worth USD 237 million). Georgia has also increased the number of countries to which it exports wine from 40 in 2012 to 54 last year.

17) 133,000 tons of grapes harvested in Kakheti so far September 22nd, 2020, https://agenda.ge/en/news/2020/2929

The grape harvest continues in the Eastern region of Kakheti, where 133,000 tons of grapes have already been processed, including 100,000 tons of Rkatsiteli grapes, 27,000 tons of Saperavi grapes and 2,000 tons of Kakhuri Mtsvane grapes. It should be noted that the government of Georgia is subsidizing this year’s grape harvest (especially Rkatsiteli and Kakhuri Mtsvane grapes) to support grape producers.

18) Georgian blueberry exports set for record year in 2020 September 24th, 2020, https://cbw.ge/economy/east-fruit-georgia-beats-blueberry-exports-record-in-2020

According to the East Fruit analytical platform, Georgia’s blueberry sector has demonstrated very strong growth in recent years and is on pace to become a top-25 blueberry exporter in the near future.

According to preliminary indicators, Georgia’s blueberry export this year is 630 tons, eclipsing last year’s record of 185 tons. The primary export market for Georgian blueberries is Russia, although experts are pushing for greater market diversification.

19) Hazelnut exports up 74% September 25th, 2020, https://agenda.ge/en/news/2020/2972

So far this year, Georgia has exported 4,466 tons of hazelnuts, a 74% year-on-year increase. The top five importing countries for Georgian hazelnuts have been Germany (1,393 tons), Italy (809 tons), the Czech Republic (280 tons), Russia (268 tons) and Armenia (256 tons). In total, Georgia is expected to harvest approximately 50,000 tons of high-quality hazelnuts this year.

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