04 BFC Georgia Agriculture Finance Bulletin

02/2013

#

4 Geo r g i a Agriculture Finance Bulletin David Shervashidze Met with Representative of Engineering-consulting Company TAHAL Group European Union will help Georgia with 20 million Euros Onishchenko: Georgian wine could control some 4% of Russian alcohol market “VTB Bank” is ready to cooperate with the Billion fund of agriculture

All materials are published “as is” and are the property of their respective owners.

Georgian Agriculture Finance Bulletin Edition #4, February 1—15, 2013

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

David Shervashidze Met with Representative of Engineering-consulting Company TAHAL Group 3 Over 600 000 Farmers to Get Vouchers for Spring Agricultural Works .......................................... 3 8 Vocational colleges will re-train up to 900 tractor operators ...................................................... 3 Government to Ensure Issuance 7—8% Loans to Farmers ............................................................. 3 420 $ million will be allocated in Georgian agriculture at this stage—B. Ivanishvili ....................... 3 Georgian government will help land-poor farmers ......................................................................... 4

7)

Georgian farmers will be able to obtain a consumer credit in the amount of 5 to 100 thousand GEL ................................................................................................................................................... 4 Issuing agricultural vouchers will start on February 11 ................................................................... 4 Are 7—8% Consumer Loans Acceptable for Farmers or not? ......................................................... 4 Georgia created sovereign investment funds ................................................................................. 4 Kirvalidze: This year we have exported 30 thousand tons of tangerine from Georgia ................... 5 Farmers will benefit from concessional loans from March ............................................................. 5 Program for small grants will be implemented in Georgia ............................................................. 5 Government to Use World Bank Loan for Rural Infrastructure Development ............................... 5 Preferential agro-credits project poses swindling risks .................................................................. 5

8) 9) 10) 11) 12) 13) 14) 15)

Foreign Aid ................................................................................................................. 6 16) International organizations to finance Georgian agriculture .......................................................... 6 17) European Union will help Georgia with 20 million Euros ................................................................ 6

Private Sector.............................................................................................................. 6 18) Cartu Fund Maintains Insurance Program for Sachkhere Residents, will Finance Agribusiness Sector ............................................................................................................................................... 6 19) Head of National Wine Agency: Georgian Companies will return to Russian Market on Equal Terms ............................................................................................................................................... 6 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 »

20) Wine and water from Georgia should soon begin flowing back to Russia, after Moscow agreed in principle on Monday to lift an embargo in a step towards rebuilding relations shattered by their August 2008 war .............................................................................................................................. 7 21) Onishchenko: Georgian wine could control some 4% of Russian alcohol market .......................... 7 22) French “Carrefour” Plans to Reduce Share of Imported Fruit and Vegetables in the Georgian Market ............................................................................................................................................. 7 23) Georgian canned food might return to Russian market following wine ......................................... 7 24) “VTB Bank” is ready to cooperate with the Billion fund of agriculture ........................................... 8 25) Russian Media: “Borjomi” Returns in Russia as a Rich Man’s Drink ............................................... 8

BFC. Georgian Agriculture Finance Bulletin. Edition #4, February 1—15 2013

State Initiatives 1)

David Shervashidze Met with Representative of Engineering-consulting Company TAHAL Group

January 29th, 2013, Moa.gov.ge

David Shervashidze, First Deputy Minister of Agriculture met with Eli Barak, Director of International Agriculture Development of TAHAL Group.

TAHAL Group is successful international engineering-consulting company executing up to 600 various irrigation and agricultural projects through 50 countries. Company is working in several directions— projecting and building of irrigation and drainage system, effective and optimal water usage, implementation of modern irrigation systems and agricultural development... Read More »

2)

Over 600 000 Farmers to Get Vouchers for Spring Agricultural Works

January 29th, 2013, Prime-news.ge

Tbilisi. January 29 (Prime-News)—Over 600 000 farmers will get vouchers for spring agricultural works, Minister of Agriculture Davit Kirvalidze told reporters after the Cabinet meeting on Tuesday.

He said that registration was a major problem in this process. According to him, 800 000 land plots have been registered... Read More »

3)

8 Vocational colleges will re-train up to 900 tractor operators

February 1st, 2013, Mes.gov.ge

With the initiative of the Ministry of Agriculture of Georgia and with the support of the Ministry of Education and Science of Georgia and UNDP, up to 900 tractor operators will be retrained during the period of 35 days at state vocational colleges of Kachreti, Akhaltsikhe, Ambrolauri, Kobuleti, Ozurgeti, Senaki, Gori and Didi Jikhaishi... Read More »

4)

Government to Ensure Issuance 7—8% Loans to Farmers

February 4th, 2013, News.Boom.Ge

Tbilisi (GBC)—The Georgian government will spend 700 million GEL on the agriculture sector development in 2013, Georgian Prime Minister Bidzina Ivanishvili noted on February 5 when introducing a report on the 100-day performance.

The state program for assistance of framers with small land plots started on February 1 and will last to August 1. Farmers who own land plots of about 5 hectares will receive agriculture cards for plough, cultivation and fertilizers, Ivanishvili added... Read More »

5)

420 $ million will be allocated in Georgian agriculture at this stage—B. Ivanishvili Page 3

BFC. Georgian Agriculture Finance Bulletin. Edition #4, February 1—15 2013

February 5th, 2013, NewsGeorgia.ru

“At this stage 700 Million GEL (420 Million USD) will be invested in the sphere of agriculture”—Says Bidzina Ivanishvili, on a conference held on Tuesday... Read More »

6)

Georgian government will help land-poor farmers

February 5th, 2013, Bizzone.info

According to the statement of the Prime Minister of Georgia Bidzina Ivanishvili, from February 1 to August 1, a project will be implemented to help land-poor farmers in the spring season. He mentioned this at a press conference, where he summed up the 100-day work of the new government… Read More »

7)

Georgian farmers will be able to obtain a consumer credit in the amount of 5 to 100 thousand GEL

February 5th, 2013, Bizzone.info

“Peasants and farmers will get a consumer credit in the amount of 5 to 100 thousand GEL.”—Says Prime Minister of Georgia, Bidzina Ivanishvili... Read More »

8)

Issuing agricultural vouchers will start on February 11

February 6th, 2013, Bizzone.info

“Agricultural vouchers will be issued, they will help farmers cultivate land.”—Said Minister of Agriculture, David Kirvalidze… Read More »

9)

Are 7—8% Consumer Loans Acceptable for Farmers or not?

February 6th, 2013, Commersant.ge

“If the state guarantees products selling for farmers and peasants, this will be a big help “ Are 7—8% consumer loans acceptable for farmers or not?

According to Bidzina Ivanishvili, farmers will be able to take consumer loans of 5 000-100 thousand GEL at 7—8% while the rest will be funded by One Billion Agricultural Foundation... Read More »

10) Georgia created sovereign investment funds February 7th, 2013, NewsGeorgia.ru

In Georgia, a new—Sovereign Wealth Fund is being created, it will have a function of holding, which will mobilize state assets and execute strategic projects. This was reported by News Georgia in the press conference of the Prime Minister of Georgia, Bidzina Ivanishvili—initiator of the fund… Read More »

Page 4

BFC. Georgian Agriculture Finance Bulletin. Edition #4, February 1—15 2013

11) Kirvalidze: This year we have exported 30 thousand tons of tangerine from Georgia February 10th, 2013, Bizzone.info

According to the Minister of Agriculture David Kirvalidze, this year 30 thousand tons of tangerines were exported from Georgia. While, last year the export index of tangerines was only 13 thousand tons…

Read More »

12) Farmers will benefit from concessional loans from March February 10th, 2013, Bizzone.info

"With the help of the Billion Fund for Agricultural Development in the frames of “Project concessional agricultural credit” Farmers will be able to take advantage of preferential loans in March”—says The Minister of Agriculture David Kirvalidze. According to him, farmers can use credit products in three types:

1. Interest-free trade credit to small farmers.

2. Provision of medium and large farmers subsidized credit.

3. Financing of agricultural enterprises… Read More »

13) Program for small grants will be implemented in Georgia February 11th, 2013, NewsGeorgia.ru

The first meeting of the National Executive Committee of the Small Grants Program was held in Tbilisi, in the Ministry of Environment of Georgia, Georgia-News reported. The Small Grants Program is a project of the Global Environment Facility (GEF), jointly implemented by the Ministry of Georgia on Environmental Protection and Development Program of the environment… Read More »

14) Government to Use World Bank Loan for Rural Infrastructure Development February 12th, 2013, Commersant.ge

What finances will help to fill One Billion Agriculture Fund? The new government plans to build rural infrastructure with a loan taken from the World Bank. According to the Finance Minister, a loan agreement is not signed with the World Bank yet, but it is known that a part of financial resources will be spent on rural irrigation and melioration.. Read More »

15) Preferential agro-credits project poses swindling risks February 14, 2013, Georgianews.ge

Preferential credits to be disbursed to farmers and agriculture-related processing enterprises through the co-financing scheme involving banks, micro-financial organizations and the state-initiated Village and Agriculture Development Fund, poses swindling risks practiced by the banks during Shevardnadze’s regime. To support the agricultural sector, pundits recommend the government to set up cooperative societies based on the state-based investments rather than disbursing preferential credits based on the said co-financing scheme… Read More »

Page 5

BFC. Georgian Agriculture Finance Bulletin. Edition #4, February 1—15 2013

Foreign Aid 16) International organizations to finance Georgian agriculture February 7th, 2013, Bizzone.com

The Ministry of Agriculture of Georgia is on the final stage of their work on new projects that will attract international organizations to invest in Georgia. . As stated by the Minister of Agriculture of Georgia David Kirvalidze, together with the International Fund for Agricultural Development (IFAD), a new project of rehabilitation of irrigation and drainage systems is being developed. Cost of the project is 15 million USD. Its implementation will begin in fall 2013... Read More »

17) European Union will help Georgia with 20 million Euros February 12th, 2013, Geotimes.ge

The treaty concerning this financial agreement will be signed today by Alex Petriashvili, Minister of European and Euroatlantic structural integration, and Stefan Fule, the European Commissioner for Enlargement and European Neighbourhood Policy... Read More »

Private Sector 18) Cartu Fund Maintains Insurance Program for Sachkhere Residents, will Finance Agribusiness Sector January 30th, 2013, News.boom.ge

Tbilisi (GBC)—Sachkhere residents will not receive salary bonuses from Cartu Fund.

The Fund will only continue insurance program for 46 000 individuals. The program is valued at 7.5 million GEL for a year.

The Fund director Nikoloz Chkhetiani says the Government has enlarged social allowances and the government program should not be duplicated in the Fund. Cartu Fund used to issue salaries to over 1000 residents of the District for 5 years… Read More »

19) Head of National Wine Agency: Georgian Companies will return to Russian Market on Equal Terms February 1st, 2013, Commersant.ge

National Wine Agency denies the information that at the first stage companies based on Russian capital will enter the Russian market. The head of the agency informs “Commersant” that various details were discussed with the Russian side, however, Levan Davitashvili claims that Moscow has not divided companies and defined stages of the return to the Russian market… Read More »

Page 6

BFC. Georgian Agriculture Finance Bulletin. Edition #4, February 1—15 2013

20) Wine and water from Georgia should soon begin flowing back to Russia, after Moscow agreed in principle on Monday to lift an embargo in a step towards rebuilding relations shattered by their August 2008 war th

February 4 , 2013, Reuters.com

Imports of Georgian mineral water and wine could resume this spring, officials from both countries said, seven years after Russia banned two of its small southern neighbor’s prized products as tension mounted before the five-day war.

Prospects of a thaw in ties between the former Soviet republics have improved since Bidzina Ivanishvili, who made his fortune doing business in Russia, became Georgia’s prime minister after a parliamentary election last October... Read More »

21) Onishchenko: Georgian wine could control some 4% of Russian alcohol market February 5, 2013, Kyiv Post

Georgian wine imports will account for an insignificant part of the Russian market for alcoholic beverages after these deliveries are resumed, Gennady Onishchenko, head of the consumer rights watchdog Rospotrebnadzor and Russia’s chief epidemiologist, told Interfax on Tuesday. "”This step could be crucial for them [Georgia], but it is not the most important thing for us. [Georgian wine imports] will account for around 4% of the market. They used to control 4% of our market at the most. But these 4% do not mean that much to us,” he said… Read More »

22) French “Carrefour” Plans to Reduce Share of Imported Fruit and Vegetables in the Georgian Market February 7th, 2013, Commersant.ge

Economics expert: In 5 years, Georgia may become an agribusiness country If the government’s conception and steps are specific and rightly worked out, Georgia could become agricultural and agribusiness country in 5 years—an economics expert Levan Kalandadze states. He notes it is necessary imported food products will be gradually replaced by local production and the country not to be dependent only on imports... Read More »

23) Georgian canned food might return to Russian market following wine February 7th, 2013, Commersant.ge

The Russian side agreed to return Georgian products to the market. The head of the Georgian delegation Levan Davitashvili said that any company that makes Georgian wine can take their products to the Russian market, and the company will just be required to prepare the necessary registration documents in the Russian market, which includes a description of the technological process… Read More »

Page 7

BFC. Georgian Agriculture Finance Bulletin. Edition #4, February 1—15 2013

24) “VTB Bank” is ready to cooperate with the Billion fund of agriculture February 8th, 2013, Bizzone.info

“The bank will be happy to join in a new initiative fund, which provides low-interest loans for farmers.

This sector is a priority for the bank and we intend to take an active part in the financing of the agricultural sector.”—said heads of the bank… Read More »

25) Russian Media: “Borjomi” Returns in Russia as a Rich Man’s Drink February 12th, 2013, RBC Daily

“Borjomi” plans to return to Russian market as premium class drink. The Russian edition RBCdaily writes.

Experts believe that this is a deliberate marketing strategy. In other countries, the mineral water is represented in a relatively lower price segment. For example, in Belarus it costs about USD 1, and in the UK—1.9 USD. In Russia, this niche is occupied by the competitors… Read More »

Page 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.