01 BFC Georgia Agriculture Finance Bulletin

11/2012

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1 Geo r g i a Agriculture Finance Bulletin Agriculture ministry outlines objectives of the One Billion Fund Mountainous regions to receive special attention from central government EU support to agriculture in Georgia

Georgian agriculture: the birth of a hub?

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Georgian Agriculture Finance Bulletin Edition #1, November 2012 The Georgian Agriculture Finance Bulletin presents a round-up of the most up-to-date headlines from one of the economy’s most important sectors.

This bulletin is prepared by Business & Finance Consulting (BFC 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 »

Contents State Initiatives

Agriculture committee chairman and deputy chairman make contradictory statements regarding the One Billion Fund ................................................. 2 Agriculture ministry outlines objectives of the One Billion Fund ...................... 2 MFOS do not see the One Billion Fund for Agriculture as a competitor ............... 3 Mountainous regions to receive special attention from central government ........ 3 Foreign Aid

EU support to agriculture in Georgia ......................................................... 4 Program to promote economic development and employment in the South Caucasus ........................................................................................... 4 Public Sector

“Populi” to carry out goods imports without the services of distribution companies ....................................................................................................... 5 Georgian agriculture: the birth of a hub? ................................................... 5

Disclaimer: In this bulletin, Business & Finance Consulting provides extracts from articles that have been published by others and as a result cannot be held responsible for such content. The articles do not necessarily reflect the opinions of BFC, its staff, its associates or its partners. Copyright of articles is retained by their authors.

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Agriculture Finance Bulletin, Edition #1, November 2012

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State Initiatives Agriculture committee chairman and deputy chairman make contradictory statements regarding the One Billion Fund The Agriculture Committee of Parliament is yet to begin work on the One Billion Fund for Agriculture, states Deputy Chairman of the Committee and "National Movement” member, Giorgi Gviniashvili.

In response, the Committee Chairman, Gigla Agulashvili, commented that this is not a legal entity of public law (LEPL) and that its legal base is still to be determined. Given this, it is improper to comment on the launching, or non-launching, of the One Billion Fund. Mr. Agulashvili stated that he is not aware of the details of Giorgi Ghviniashvili’s vision regarding this issue. Read more » November 14, 2012, Commersant.ge Source: http://www.commersant.ge/eng/index.php?id=3694

Agriculture ministry outlines objectives of the One Billion Fund The Ministry of Agriculture has defined the objectives of the One Billion Fund, which include:  A support program for farmers with small land plots  Promotion of rural - agricultural corporations  Infrastructure development  Provision of cheap credit to companies involved in agriculture  Provision of co-funding for food processing enterprises  Implementation of agricultural insurance.

In addition, the ministry has stated that work is now underway on the unprecedented plowing and sowing program. Read more » November 26, 2012, Сommersant.ge Source: http://www.commersant.ge/eng/index.php?id=3796

Agriculture Finance Bulletin, Edition #1, November 2012

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MFOS do not see the One Billion Fund for Agriculture as a competitor "A billion fund will cause market growth" Will the One Billion Fund for Agriculture compete with agro loans?

The Fund has been initiated by the Prime Minister to provide farmers with loans at a reduced rate of interest, envisaged to be between 3%-5%. The head of MFO "Crystal" explains to radio "Commersant" that the agricultural sector in Georgia remains far behind that of developed countries. As a result, cheaper credit is not the only solution needed - the Fund should also act to introduce new technologies and education for farmers. Read more» November 30, 2012, Commersant.ge Source: http://www.commersant.ge/eng/index.php?id=3870

Mountainous regions to receive special attention from central government The Minister of Agriculture, David Kirvalidze, met with the population of Sno and Arshi villages in Kazbegi Municipality. The Minister discussed with residents the strategic attitude of the central government to development of remote areas of the country.

“Kazbegi is a very important part of Georgia, it is our North gate, deserving of a special attitude, support and love that it will definitely receive from central government”, said the Minister.

David Kirvalidze highlighted several projects that are intended to be accomplished in spring 2013, including: long-term and preferential credits, free cultivation of land for small farmers and the establishment of small enterprises. As the Minister added, the beekeeping, live-stock, trout and greenhouse farming sectors, which have been traditionally located in this region, will be especially targeted. Read more» November 27, 2012, Ministry of Agriculture of Georgia Source: http://moa.gov.ge/?p=2013&lang=en

Agriculture Finance Bulletin, Edition #1, November 2012

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Foreign Aid EU support to agriculture in Georgia The EU is to conduct a “40 million investment in Georgian agriculture, in the form of the Sector Policy Support Program (SPSP), which is due to begin by the end of 2012. The program’s overarching objectives are to increase food production in Georgia and reduce rural poverty by supporting the implementation of the national sector strategy and strengthening small farmers’ organizations.

The programme will include: a) 18 million for the implementation of the agriculture strategy b) 15 million in grant programs for the establishment of farmers’ organizations c) 3 million for technical Assistance targeted at institutional reform of the Ministry of Agriculture d) 4 million in support to agriculture in Adjara. Read more» October 31, 2012, Agrogeorgia, EU Support to Agriculture in Georgia, 11/2012 Source: http://agrogeorgia.posterous.com

Program to promote economic development and employment in the South Caucasus The Swiss Agency for Development and Cooperation and the Danish Neighborhood Program, together with the Ministry of Agriculture, will soon begin a program to promote agriculture and the economy in the southern regions of Georgia.

According to the Ministry of Agriculture, "the purpose of the program is to promote economic growth and reduce poverty in the Samtskhe-Javakheti and Kvemo Kartli regions, to improve quality of output indicators and to promote investments, based on the needs of the agricultural sector".

As stated by the ministry, the program will increase productivity and competitiveness by raising the capacity of farmers, entrepreneurs and service providers.

The duration of the program is four years, with a budget of USD11 million.

November 26, 2012, Newsgeorgia.ru Source: http://newsgeorgia.ru/economy/20121116/215340638.html

Agriculture Finance Bulletin, Edition #1, November 2012

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Public Sector “Populi” to carry out goods imports without the services of distribution companies The supermarket chain, "Populi", is to conduct product imports without distribution companies, radio "Fortuna" reports. "Fortuna" management has stated that as a result of this strategic change, the company's expenses will be significantly reduced, with customers being able to buy any product at the lowest price in "Populi".

In addition, the retail network has explained that the “Populi” management team is holding talks with local manufacturers regarding the purchasing of products directly from them, and so therefore removing the need for distributors. Read more» November 1, 2012, Commersant.ge Source: http://www.commersant.ge/eng/?id=3549

Georgian agriculture: the birth of a hub?

Entrepreneurs and policy makers are betting on new initiatives to bolster agricultural production in the country, initiatives that will allow Georgia to take its first steps to becoming a food products export and re-export hub.

With Georgia's unique climates, soil types, and delicious produce, few disagree with the country’s potential as a regional center for agricultural goods. The question, however, is how to tap into such potential?

Currently, official statistics show that Georgia in fact imports 80% of the food that it consumes. In addition, the agricultural sector has been steadily shrinking, from 47% of GDP in 1995 to just 9% in 2012. Read more» November 2012, Investor.ge Source: http://investor.ge/article.php?art=8

Prepared by Business & Finance Consulting (BFC) www.bfconsulting.com In this bulletin, BFC provides extracts from articles that have been published by others and as a result cannot be held responsible for such content.

The articles do not necessarily reflect the opinions of BFC, its staff, its associates or its partners.

Copyright of articles is retained by their authors.