16 BFC Georgia Agriculture Finance Bulletin

12/2013

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16 Ge o r g i a Agriculture Finance Bulletin Government to Begin Working on Agroinsurance Project Next Year Chinese Government to allocate USD 4.9 Million for Georgia EU to allocate EUR 15 Million to Assist Georgian Farmers Why is Georgia facing potato shortage?

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Georgian Agriculture Finance Bulletin 50B

Edition #16, December 2013

Contents 71B

State Initiatives ........................................................................................................... 2 51B

1) 2) 54B

5B

3) 4) 5) 6) 7) 8) 56B

57B

58B

59B

60B

61B

Government to Begin Working on Agro-insurance Project Next Year ............................................ 2 According to media reports, next year the government will stop plowing the land of poor farmers free of charge. .................................................................................................................... 2 All Projects for the Assistance of Land-Poor Farmers will Continue in 2014 .................................. 2 Exports of Citrus, Stalled by Poor Weather, will Resume................................................................ 3 Loans of 220.08 Million GEL have been issued through the Preferential Agrolending Program .... 3 The Creation of Agricultural Cooperatives to be Simplified from 2014 .......................................... 3 Agricultural Cooperation with China is being Discussed ................................................................. 3 Deputy Agriculture Minister doesn't exclude State Subsidizing of Agricultural Insurance ............. 4

Foreign Aid ................................................................................................................. 4 52B

9) Chinese Government to allocate USD 4.9 Million for Georgia ........................................................ 4 10) EU to allocate EUR 15 Million to Assist Georgian Farmers.............................................................. 4 11) Georgian Companies to Actively Enter the EU Market in 2015 ...................................................... 4 62B

63B

64B

Private Sector.............................................................................................................. 5 53B

12) 13) 14) 15) 16) 17) 65B

6B

67B

68B

69B

70B

Bad Weather Causes Problems for Citrus Farmers ......................................................................... 5 Russian Experts Examined Georgian Citrus Fruits for Export .......................................................... 5 Why is Georgia facing potato shortage? ......................................................................................... 5 Russian Market accounts for 48.8% of Georgian Wine Export ....................................................... 5 90% of Dairy Products made in Georgia use Vegetable Fat ............................................................ 6 Prices of Agricultural Goods have significantly Increased ............................................................... 6

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 #16, December 2013

State Initiatives 1)

Government to Begin Working on Agro-insurance Project Next Year

November 29th, 2013, http://commersant.ge/eng/?page=news&id=2074

The Minister of Agriculture, Shalva Pipia, told “Commersant” that the Ministry consulted with foreign and Georgian insurance companies regarding the development of an agro-insurance scheme. As part of this scheme, an inter-agency committee composed of representatives of agriculture, justice and economy has been working on the land inventory project. Once public and private lands are distinguished, the state will work on developing an agro-insurance project. Read More »

2)

According to media reports, next year the government will stop plowing the land of poor farmers free of charge.

December 6th, 2013, http://commersant.ge/eng/index.php?page=news&id=2134

The experts interviewed by “Commersant” recommend the government not to continue the free land treatment program. According to media reports, next year the government will not plow the land of poor farmers free of charge. However, the Ministry of Agriculture has not made a final decision yet.

Agriculture expert Shalva Melkadze, suggest the state aid could cause farmers to become idleness. In his words, the Ministry of Agriculture should spend the freed up funds on a variety of projects in order to encourage farming practices that will be more useful for the farmers than tilling the land for free.

Read More »

3)

All Projects for the Assistance of Land-Poor Farmers will Continue in 2014

December 12th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039780

In an interview with the newspaper, Agriculture Minister Shalva Pipia notes that all projects on assistance to land-poor farmers will be continued in the next year through “both budgetary and nonbudgetary funding”.

In 2013, the budget allocated 200 million GEL for that end. In 2014, budgetary share will amount to 50 million GEL, while the rest will be funded from non-budgetary sources, the Minister declares, but does not name exact amount of the sum at this stage.

Regarding other priorities of the next year, Pipia declares that special attention will be paid to the irrigation systems and food safety service.

Another priority of the Ministry is increase of financial resources’ accessibility to farmers. As of today, banks have issued 240 million GEL within frame of preferential agrolending program, which will be continued by the budget allocations in 2014 as well. Read More »

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BFC. Georgian Agriculture Finance Bulletin. Edition #16, December 2013

4)

Exports of Citrus, Stalled by Poor Weather, will Resume

December 13th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039795

Deputy Agriculture Minister, David Natroshvili, declared the government started preparation for citrus harvesting season 8 months ago and held negotiations with partner countries. As a result, Ukraine, Armenia and Azerbaijan has reduced the customs clearance cost.

The Deputy Minister assured that two processing plants (founded by Ukrainian and Turkish investments) are accepting low quality citruses as well. Natroshvili also pointed out that prices are low this year due to abundant harvest in key citrus-supplier countries (Turkey, Morocco and Spain). Bad weather is also causing issues, however exports should resume shorlty.

5)

Loans of 220.08 Million GEL have been issued through the Preferential Agrolending Program

December 16th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039817

The Agriculture Ministry reported that within the 6 components of preferential agrolending program, loans totaling to 220.08 million GEL were issued to 8,052 beneficiaries. Within the 1st component (interest-free credit against goods for small farmers)—1.106 million GEL; the 2nd component (loans to medium and large farmers)—98.59 million GEL; the 3rd component (agriculture enterprises)—USD 39.49 million GEL; the 5th component (promotion of grape purchase by wineries)—52.37 million GEL, and; within the 6th component (funding to tangerine-purchasing enterprises)—400,000 GEL. The Minsitry also noted, that no one has expressed interest toward the 4th component (leasing of farming machinery).

Next year’s budget for the preferential agrolending program is to be increased by 2.3 times, to 68.8 million GEL. One more component will be added to the program by the end of December, but details have not been disclosed.

6)

The Creation of Agricultural Cooperatives to be Simplified from 2014

December 17th, 2013, http://commersant.ge/eng/index.php?page=news&id=2208

The Agency for Management of Cooperatives is working to simplify procedures related to obtaining the status of a cooperative with the participation of the international organizations—the aim is to develop a single, standard form for everyone. Read More »

7)

Agricultural Cooperation with China is being Discussed

December 18th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039847

The Georgian Agriculture Ministry reported that Minister Shalva Pipia held a meeting with China’s ambassador Yue Bin. The meeting scoped discussion of cooperation prospects in greenhouse farming and vegetable cultivation technologies. The Ambassador noted that China will continue supplying Georgia with heavy machinery for irrigation and drainage activities. Read More »

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BFC. Georgian Agriculture Finance Bulletin. Edition #16, December 2013

8)

Deputy Agriculture Minister doesn't exclude State Subsidizing of Agricultural Insurance

December 19th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039860

State subsidizing of agricultural insurance is not excluded in the future. “However, it will take place not in 2014, but later years”, accords to the Deputy Agriculture Minister, Galegashvili.

He also declared that in several years, the state will gradually drop direct subsidies and in future it will fund directions such as risk management, accessibility of finances, leasing, etc. Read More »

Foreign Aid 9)

Chinese Government to allocate USD 4.9 Million for Georgia

December 16th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039813

Georgia and China have signed an agreement on economic and technical cooperation.

The Georgian Finance Ministry reported that the Chinese government will allocate a grant of 30 million CNY (about USD 4.9 million), which will be spent on economic and technical cooperation projects in Georgia.

According to the Ministry, the total volume of grants allocated to Georgia by Chinese government since 2005, has amounted to 220 million CNY (about USD 36.2 million), while 20-year interest-free credit against goods (with 10-year grace period) makes up 30 million CNY (USD 4.7 million). Read More »

10) EU to allocate EUR 15 Million to Assist Georgian Farmers December 19th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039859

The EU has signed 4 grants for Georgia within the European Neighborhood Program adding up to EUR 15 Million.

These funds seek to assist in the creation of a minimum of 50 cooperatives, uniting at least 3,000 members. ENPARD reported that this project will be implemented by consortium, uniting Oxfam, CARE, Mercy Corps and Scottish People in Need. Read More »

11) Georgian Companies to Actively Enter the EU Market in 2015 December 20th, 2013, http://commersant.ge/eng/index.php?page=news&id=2249

The Head of the International Chamber of Commerce suggests that a deep and comprehensive free trade agreement with the EU will open a stable market for Georgian business. According to Fadi Asli, the provisional applications of the trade agreements should come into force in the early months of 2015. At this point all companies that meet the EU requirements will be able to start exporting into the EU market. Read More »

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BFC. Georgian Agriculture Finance Bulletin. Edition #16, December 2013

Private Sector 12) Bad Weather Causes Problems for Citrus Farmers December 10th, 2013, http://commersant.ge/eng/index.php?page=news&id=2163

Bad weather conditions have caused a lot of problems for citrus growers. Because of the heavy snowfall transportation of citrus has been suspended. Farmers lost big parts of their harvest.

Media group “Adjara PS” reports that tens of tons of tangerines are locked in a basements or are rotting on trees while farmers are waiting for the promised assistance from the government.

Weather forecasters say the weather will not clear up in the next few days. Farmers fear that the season has failed. Read More »

13) Russian Experts Examined Georgian Citrus Fruits for Export December 11th, 2013, http://commersant.ge/eng/index.php?page=news&id=2167

According to the Ministry of Agriculture of Adjara Autonomous Republic, the main goal of the visit of Russian experts was to check citruses and to issue a relevant act.

Zaur Putkaradze says that Turkish and Iranian citrus are infected with pest and Russia wanted to make sure the quality of Georgian product was good. In his words, Georgian citrus are not infected and experts have not blocked any exporting party. Read More »

14) Why is Georgia facing potato shortage?

December 16th, 2013, http://commersant.ge/eng/index.php?page=news&id=2201

Georgia is facing a potato shortage. Due to the unfavorable weather conditions, harvest is approximately half of what was expected. As confirmed by the Director of Farmers and Seed Growing Association.

According to reports, a low potato crop was harvested in neighboring countries as well and Turkish, Iranian and Azerbaijani importers tried to fill domestic demand in by buying potatoes in large quantities from Georgia. As a result, the standard potato price rose to 1.2 GEL on the domestic wholesale and retail markets. Read More »

15) Russian Market accounts for 48.8% of Georgian Wine Export December 16th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039823

Agriculture Minister, Shalva Pipia, declared that wine was exported to 48 countries in 2013, amounting to 44.65 million bottles. Volume increased by 96% year-on-year. The Russian market accounted for 48.8% of total export of Georgian wine (i.e. for 21.78 million bottles). Additionally, GeoStat reported that in the first 9 months of the year, wine export amounted to USD 74.16 million, increasing by 73.9% year-on-year.

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BFC. Georgian Agriculture Finance Bulletin. Edition #16, December 2013

16) 90% of Dairy Products made in Georgia use Vegetable Fat December 20th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039870

90% of dairy products in Georgia are made from vegetable fat. According to European standards, such kind of production does not belong to dairy category and should not be sold under label of dairy products, the newspaper points.

Georgian Strategic Research and Development Center initiated a petition against falsification of dairy products, which is already signed by 4,000 persons. The organization plans to submit the petition to the Parliament.

17) Prices of Agricultural Goods have significantly Increased December 24th, 2013, http://sarke.com/cgi/search/news.asp?Code=10039901

Prices of agricultural goods have greatly increased on the local market. The potato price has almost tripled, while beans are 50% more expensive. Prices of Dairy products are also growing. The key factors causing these price rises are; GEL depreciation, harvest failures, seasonality and up-coming new year festivities.

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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.