15 BFC Georgia Agriculture Finance Bulletin

11/2013

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15 Ge o r g i a Agriculture Finance Bulletin Preferential Agricultural Loans Project to be Extended to Western Georgia World Bank Representatives Discuss Reforms in Georgian Agriculture Georgian Wine Occupies Middle Sector of Russian Market Georgian Sheep Export has failed

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Georgian Agriculture Finance Bulletin Edition #15, November 1—30, 2013

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

Preferential Agricultural Loans Project to be Extended to Western Georgia ................................. 2 Development of Agricultural Cooperatives is the Future of ........................................................... 2 Georgian Agriculture ....................................................................................................................... 2 2014 Agricultral Budget Rises 20% on 2013 .................................................................................... 2 13th International Food and Agricultural Goods Exhibition ........................................................... 3 Citrus Packaging Facility Opened in Kobuleti .................................................................................. 3 48 Wine Companies Benefitted from the 5th Component of the Preferential Agrolending Program ........................................................................................................................................... 3

Foreign Aid ................................................................................................................. 4 7) 8) 9)

Swiss Investments in Georgia reach USD 16 million in first two quarters ...................................... 4 of 2013 ............................................................................................................................................. 4 World Bank Representatives Discuss Reforms in Georgian Agriculture ......................................... 4 IFC to Assist Georgian Agribusiness in Adopting International Standards ...................................... 4

Private Sector.............................................................................................................. 5 10) 11) 12) 13) 14) 15) 16) 17) 18) 19)

Georgian Wine Occupies Middle Sector of Russian Market............................................................ 5 Record Amount of Wheat to be Harvested in Georgia ................................................................... 5 Export of Citrus Fruits in Adjara Faces Delay that May Lead to Spoiling......................................... 5 10 Georgian Companies take part in Hong Kong Wine Exhibition .................................................. 6 Rice processing facility might be opened in Georgia ...................................................................... 6 Georgian Sheep Export has failed ................................................................................................... 6 Russian Experts are Discussing Export of Georgian Herbs .............................................................. 6 Will Increases in Agricultural Productivity Cause further Rural Unemployment? .......................... 7 Companies Are Invited to Pass Food Safety Inspection in Order to Hasten Export to the EU ........ 7 ProCredit Bank Launches Agricultural Journal ................................................................................ 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 »

BFC Max-Högger-Strasse 6 CH-8048 Zurich, Switzerland

Phone: +41 44 784 22 22 Fax: +41 44 784 23 23

info@bfconsulting.com www.bfconsulting.com

BFC. Georgian Agriculture Finance Bulletin. Edition #15, November 2013

State Initiatives 1)

Preferential Agricultural Loans Project to be Extended to Western Georgia

November 7th, 2013, http://bizzone.info/agriculture/2013/1383868001.php

David Galegashvili, the Deputy Minister for Agriculture, announced that in 2014 the Preferential Agricultural Loans (APL) project will be extended to Western regions of Georgia, including Samegrelo, Imereti and Mountainious Adjara. In 2013, the APL project was carried out in the regions of Kakheti, KvemoKartli, Samtskhe-Javakheti. It was also announced that the APL project will be more oriented towards developing processing facilities. Read More »

2)

Development of Agricultural Cooperatives is the Future of Georgian Agriculture

November 11th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039448

David Tkemaladze, head of the PR department at the Ministry for Agriculture, stated that the development and assistance of agricultural cooperatives is going to be one of the main priorities for the Ministry in 2014.

He went on to highlight, that these cooperatives are not an analog of Soviet style cooperatives (Kolkhoz). Membership of these institutions will be entirely voluntary, with expected benefits including reducing the cost of cultivation for farmers and increasing the financial resources available to farmers.

To aid the development of farming cooperatives, a new agency, the Agency for Agricultural Cooperative Development, has been established and will start working from December. The Agency will have the responsibility of status assignment and cancelation of cooperatives, as well as for monitoring and implementation of the state programs.

Registration will start in two months. Foreign citizens will not be allowed to join these cooperatives.

Read More »

3)

2014 Agricultral Budget Rises 20% on 2013

November 14th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039516

The recently released draft state budget for 2014, indicates that GEL 290 million will be allocated to the Ministry for Agriculture. This represents a 20% increase from 2013.

Within this allocation; GEL 130 million is designated for melioration systems’ arrangement (97% increase on 2013); GEL 69 million for the Preferential Agrolending programme; GEL 25 million for leasing of farming machinery; GEL 7 million for research activities in the agriculture sector, and; GEL 5 million for promotion of Georgian wine.

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BFC. Georgian Agriculture Finance Bulletin. Edition #15, November 2013

4)

13th International Food and Agricultural Goods Exhibition

November 20th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039572

From the 20th—23rd November the 13th International Exhibition of Agriculture, Food Industry, Processing and Packing Technologies was held in Tbilisi at the exhibition center ExpoGeorgia.

The Georgian Agriculture Ministry confirmed that more than 70 companies participated in the exhibition. As well as Georgian companies, participants attending from Germany, Israel, Poland, Russia, Spain, Sri Lanka, Turkey, Ukraine and the United Arab Emirates. According to Deputy Agriculture Minister, David Galegashvili, more than 2,000 farmers were brought by the Ministry from regions with assistance of regional informational-consulting services to attend the event.

5)

Citrus Packaging Facility Opened in Kobuleti

November 25th, 2013, http://bizzone.info/agriculture/2013/1385428638.php

In Akhalsopeli area, Kobuleti, a new citrus packaging facility has been opened. Using new technology the plant can process 20 tons of fruit per hour. The product is then packed in boxes of wood, plastic and corrugated cardboard with a capacity of 12—16 Kilograms. As of today, facility employs 200 locals, with need for additional labour capacity for peak processing periods. Read More »

6)

48 Wine Companies Benefitted from the 5th Component of the Preferential Agrolending Program

November 28th, 2013, http://www.sarke.com/cgi/search/news.asp?Code=10039640

The Ministry for Agriculture reported that 48 companies have benefited from the 5th component of preferential agrolending program (funding of grape purchase by wine companies). The Ministry stated that total lending to these companies amounted to GEL 52.37 million. This component accounted for 15.9% of total loans issued within the preferential agrolending program.

Eligible beneficiaries of this component of the state subsidy program are given loans issued in lari, with a duration of 15 months and interest rates of 12—15%. Of that

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BFC. Georgian Agriculture Finance Bulletin. Edition #15, November 2013

Foreign Aid 7)

Swiss Investments in Georgia reach USD 16 million in first two quarters of 2013

November 4th, 2013, http://finchannel.com/Main_News/Geo/128879_Swiss_Investments_are_Close_to_USD_200_Millions_in_Georgia__/

Following the first ever Georgian-Swiss Business Forum the State Secretariat of Switzerland has expressed interest in investing in Georgia.

The amount of FDI in Georgia from Switzerland has more than doubled in 2013 in comparison with the same period of last year. The number for the first two quarters of 2013 was circa. USD 16 million, while for the same period of last year it was circa. USD 6 million. According to the Swiss Ambassador to Georgia, Guenther Baechler, “For the next few years FDI is estimated to be USD 500 million”. Read More »

8)

World Bank Representatives Discuss Reforms in Georgian Agriculture

November 12th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039491

Georgian Agriculture Minister, Shalva Pipia, met representatives of World Bank to discuss existing and planned projects in Georgia including; assistance for land-poor farmers in terms of spring works, preferential agrolending, rehabilitation of irrigation and drainage channels and the as export strategy of the government.

9)

IFC to Assist Georgian Agribusiness in Adopting International Standards

November 28th, 2013, http://www.sarke.com/cgi/search/news.asp?Code=10039637

The International Finance Corporation (IFC, member of the World Bank group) announced plans for a new consulting program to be implemented in Georgia, aiming to provide assistance to local agricultural companies in the adoption of international standards. The program will be funded by Austrian Finance Ministry.

According to IFC regional manager Thomas Lubeck, the Georgian agriculture sector has significant potential, but its development is hampered by insufficient levels of standards.

To note, Georgia became a member of the IFC in 1995. Since then, the IFC implemented 51 projects across various sectors worth of USD 656 million. Read More »

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BFC. Georgian Agriculture Finance Bulletin. Edition #15, November 2013

Private Sector 10) Georgian Wine Occupies Middle Sector of Russian Market November 1st, 2013, http://sarke.com/cgi/search/news.asp?Code=10039394

Deputy Minister for Agriculture, David Sharvashidze, intimated to Sarke that Georgian wine mainly holds the middle segment in the Russian market. Shervashidze noted that the average price for Georgian wine isn’t lower than USD 15 and that companies should be allowed to produce wine that is more inexpensive if it is part of their strategy to enter the lower segment of the market. Read More »

11) Record Amount of Wheat to be Harvested in Georgia November 6th, 2013, http://bizzone.info/agriculture/2013/1383792846.php

According to the Ministry of Agriculture, wheat has been planted on 80,000 hectares, which should give an approximated harvest of 210,000 tons. 250% growth on 2013.

A program spreading and testing wheat breeds across different regions has also been restarted, after it was halted in 2004. Farmers in 6 regions are testing 32 breeds from all over the world. The program will last for three 3 years and determine which sort of wheat is the best fit for regions.

This program is being implemented for two main reasons. First, the amount of imported wheat is much higher than local production and secondly, the area of wheat fields has shrank during recent years. The aim is to increase yield. Currently, harvest of 1,5 tons per hectare is considered success. This is low by international standards. Read More »

12) Export of Citrus Fruits in Adjara Faces Delay that May Lead to Spoiling November 8th, 2013, http://commersant.ge/eng/?page=news&id=1901#

Export of Citrus Fruits in Adjara Faces Challenges According to the Government of Adjara , the first batch of citrus fruits collected in the region will be exported to Russia in early December. Permission from the Russian side has already been received.

Georgian products will reach GEL 0.50—0.80 per kilogram depending on the quality. A record harvest of 110,000 tones is expected this year.

Tangerines will be exported to Russia, Ukraine, Belarus, Moldova, Armenia and Azerbaijan. Read More »

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BFC. Georgian Agriculture Finance Bulletin. Edition #15, November 2013

13) 10 Georgian Companies take part in Hong Kong Wine Exhibition November 8th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039466

The Georgian Ministry for Agriculture reported that 10 Georgian companies took part in the Hong Kong International Wine & Spirits Fair 2013.

The international wine and spirits exhibition, organized by HKTDC (Hong Kong Trade Development Council), was hosted on November 6—9. Among these Georgian companies were Bagrationi-1882, Besini, and Chateau Mukhrani, corporation Georgian Wine, GWS, Kakheti Traditional Winemaking, Sarajishvili, Schuchmann Wines Georgia, Tbilgvino and Winery Khareba.

According to the Ministry’s latest data, 781,108 bottles of Georgian wine and brandy have been exported to China, of that, 103,399 bottles to Hong Kong. Read More »

14) Rice processing facility might be opened in Georgia November 13th, 2013, http://bizzone.info/agriculture/2013/1384366680.php

According to “Zana Agro”, the only rice producer in Georgia, they harvested 80 tons of rice this year and are willing to increase the sowing by six times for next year.

The CEO of the company noted that they are going to increase the area of land from 11 hectares to 60 if next harvest is as fruitful as the current one and for 2015 they will build a processing facility.

As of today, company is not able to process rice and is planning to use the current harvest as seed for next year. The Company does not exclude the possibility of taking a loan with the Preferential Agricultural Loan Program. Read More »

15) Georgian Sheep Export has failed November 18th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039541

that during 2013 sheep were only exported to Azerbaijan. 60,000 heads were sent to the neighbouring country.

According to Gonashvili, sheep export started in 2009 when 266,244 heads were exported. Since then numbers have been decreasing. In 2012, 120,000 heads were exported and 80,000 were exported last years to Arabic countries. However this year these export channels have closed due to cheaper competition from Romania and Moldova. The price of sheep In Georgia has tripled since 2009, mainly due to high pasture fees. Read More »

16) Russian Experts are Discussing Export of Georgian Herbs November 19th, 2013, http://commersant.ge/eng/?page=news&id=1984

Five specialists form the Russian Rosselkhoznadzor agency; will work in Adjara until December 10th to conduct monitoring of Georgian herbs. The delegation will also discuss the export of Georgian greens to Russia. Read More »

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BFC. Georgian Agriculture Finance Bulletin. Edition #15, November 2013

17) Will Increases in Agricultural Productivity Cause further Rural Unemployment?

November 28th, 2013, http://finchannel.com/Main_News/Op-Ed/129111_Rural_Unemployment_Through_Productivity_Gains/

The Financial, considers the case for productivity gains causes further rural unemployment and a such poverty. Read More »

18) Companies Are Invited to Pass Food Safety Inspection in Order to Hasten Export to the EU November 28th, 2013, http://finchannel.com/news_flash/Health%26Beauty/129021_Companies_Are_Invited_to_Pass_Food_Safety_Inspection_in_Or der_to_Hasten_Export_to_the_EU/

To encourage Georgian companies to produce safe food, the Eurasia Partnership Foundation in partnership with Golden Brand Awards has formally invited food producers to participate in the Best Food Enterprise of the Year (2014).

Enterprises registered in Georgia are invited to fill out the application and submit it by 26 December, 2013. After laboratory testing qualified specialists will reveal the best enterprise in March 2015. The winning company will be awarded at the Golden Brand Awards Ceremony. Read More »

19) ProCredit Bank Launches Agricultural Journal November 28th, 2013, http://finchannel.com/Main_News/Press_Releases/128896_New_ProCredit_Bank_initiative_– ProAgroJournal/

ProCredit Bank has launched a new journal to support agriculture—the first bank in Georgia to do so.

The bank’s new initiative—the ProAgroJournal—is a quarterly publication covering a wide range of issues which farmers will find both interesting and useful. Read More »

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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.