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44 Geo r g i a Agriculture Finance Bulletin Danelia Announces Plan to Export Agricultural Products to Saudi Arabia Agricultural Insurance Program Amended for the Current Year Georgian Dairy Sector Primed for Investment Georgian Wine and Brandy Exports Up in 2016
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Georgian Agriculture Finance Bulletin Edition #44, April 2016
Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6)
Danelia Announces Plan to Export Agricultural Products to Saudi Arabia ...................................... 2 Chinese Tea Company Interested in Georgian Tea Potential .......................................................... 2 New Hazelnut Regulations Approved by the Georgian Government.............................................. 2 Georgian Perennial Crops Expand in 2015 ...................................................................................... 3 Apiculture and Fisheries Set as a Priority for Agricultural Development ........................................ 3 Agricultural Insurance Program Amended for the Current Year ..................................................... 3
Foreign Aid ................................................................................................................. 3 7) 8) 9) 10)
Arab Fund Representatives Met with Minister Danelia .................................................................. 3 Georgian Dairy Sector Primed for Investment ................................................................................ 4 Research Training Seeks to Help Agricultural Development ........................................................... 4 Demonstration for Strawberry Growing in Household Greenhouses ............................................. 5
Private Sector.............................................................................................................. 5 11) 12) 13) 14) 15) 16) 17) 18) 19)
Georgian Wine and Brandy Exports Up in 2016 .............................................................................. 5 Hazelnut Producers and Exporters Struggle with Price and Demand Decreases ............................ 5 Georgian Dried Fruit Company to Enter the EU Market ................................................................. 5 Georgia Adding Cucumbers to its Expanding Export List ................................................................ 6 Georgian Wine Targeting Baltic Countries ...................................................................................... 6 Georgian Honey Unable to be Exported to the EU.......................................................................... 6 New Walnut Orchards for Racha ..................................................................................................... 7 Mashveli Irrigation System Rehabilitation Complete ...................................................................... 7 Kakheti Region Intends to Diversify Away from Just Vineyards ...................................................... 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 »
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BFC Georgian Agriculture Finance Bulletin
State Initiatives 1)
Danelia Announces Plan to Export Agricultural Products to Saudi Arabia
April 4th, 2016, http://georgiatoday.ge/news/3456/Plans-Announced-to-Export-Georgian-Agricultural-Products-to-Saudi-Arabia
Agriculture Minister Otar Danelia recently met with a delegation from Saudi Arabia’s Ministry of Agriculture to discuss the potential of agricultural trade and economic cooperation between the two countries. At the meeting, Minister Danelia presented the Saudi delegation with a plan to export 21 agricultural products (including fruit and vegetables, mineral water, fish and sheep) between 2015 and 2020 to Saudi Arabia. The Minister stated that diversification of export markets is a priority for Georgia, and Saudi Arabia, being one of the largest markets, would be significant for the Georgian economy and the promotion of Georgian agricultural products. The delegation is part of a preparatory visit leading to the Saudi Agriculture Minister’s arrival and the expected signing of a memorandum of understanding in terms of agriculture between the two countries.
2)
Chinese Tea Company Interested in Georgian Tea Potential
April 4th, 2016, http://moa.gov.ge/En/News/1084
Agriculture Minister Otar Danelia and Economic and Sustainable Development Minister Dimitri Kumsishvili met with Van Tian-Chiuan, president of one of the largest Chinese tea producing companies: Yunnan Dianhong Group. The sides discussed issues related to the rehabilitation of tea plantations and the cultivation of new varieties of tea plants in the Samegrelo and Adjara regions under the state program Georgian Tea. From the Georgian side, Minister Danelia noted that the rehabilitation of tea plantations as well as bringing in new high-yielding tea varieties from China will play an important role in the development and sustainability of the Georgian tea sector. Mr. Tian-Chiuan added that his company believes that Georgia has a great potential for tea production and that his company is planning to build a factory in Georgia and produce tea products for further export.
3)
New Hazelnut Regulations Approved by the Georgian Government
April 14th, 2016, http://moa.gov.ge/En/News/1090
The Georgian Government has approved new technical regulations on hazelnut products. The regulations, proposed by the Ministry of Agriculture, will regulate import, export, quality and labeling of the products. Hazelnut production has become a strategic direction in the agricultural sector, and the move is seen to ensure that Georgian hazelnut products continue to be in compliance with internationally accepted market standards. Hazelnut products are now subject to strict quality control measures that will affect laboratory testing as well as storage, packaging and transportation controls. The National Food Agency will oversee the inspection and quality control of the products. Sales of Georgian hazelnut products reached USD 184 million in European Union markets in 2014-2015 (nearly 30% of the total agricultural export sales figure). Page 2
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4)
Georgian Perennial Crops Expand in 2015
April 15th, 2016, http://cbw.ge/economy/agriculture-ministry-expands-perennial-crops-onto-additional-24-000-hectares/
The space of perennial crops (fruits, citrus, vine, and tea) made up 226,143 hectares in 2015, an increase of 24,000 hectares over 2014. The achievement came as part of the Plant the Future state program being implemented by the Agriculture Ministry’s projects management agency. The project aims at upgrading the efficiency of agricultural land plots by planting perennial crops to replace imports and maximize export potential. The Plant the Future project consists of two components: arranging gardens and co-financing seedling farms. Beneficiaries are able to obtain 70% co-financing for arranging gardens, 50% state co-financing for drip irrigation technologies, and 50% co-financing for arranging seedling farms.
5)
Apiculture and Fisheries Set as a Priority for Agricultural Development
April 22nd, 2016, http://georgien.ahk.de/georgien/newsletter/agro-food-news-georgia/agro-sv/artikel/development-ofapiculture-and-fishery-is-our-priority/?cHash=a9b9d56af2f78f22918a3533498a5aba
The Minister of Agriculture, Otar Danelia, has set beekeeping and fishery as a priority for Georgian agricultural development. The sectors are seen as having much potential for growth, and the Ministry is actively working to ensure the proper development of them in light of the standards and methodologies of the European Union as well as working to raise farmer knowledge and develop cooperations.
6)
Agricultural Insurance Program Amended for the Current Year
April 26th, 2016, http://www.sarke.com/cgi/search/news.asp?Code=10047398
The agricultural insurance program has been amended for the current year. In particular, the share of state subsidies for an agricultural insurance policy increased from 60% to 70% (or from 40% to 50% for vineyards). There is also a 10% bonus for land plots which are properly registered, a reduction of damage assessment time to a maximum of 30 days, and the ability of land owners of more than 5 hectares to participate in the program (although co-financing will only apply to 5 hectares). Currently, the program involves 29,000 beneficiaries and 5 insurance companies. In 2015, the state and farmers paid premiums of GEL 16 million while the volume of indemnified loss amounted to GEL 14.5 million.
Foreign Aid 7)
Arab Fund Representatives Met with Minister Danelia
April 5th, 2016, http://moa.gov.ge/En/News/1085
The heads of various Arab funds met with Agriculture Minister Danelia to discuss opportunities in the Georgian agricultural sector. The Minister introduced the group, representing many large, international funds, to Georgia’s agricultural development strategy, ongoing projects, agricultural export potential and investment opportunities. The overall goal of the funds is to stimulate economic growth and alleviate poverty in all disadvantaged regions of the world through ambitious projects which will pilot innovative ideas and improve competition dynamics in the domestic and international markets in which Georgia participates. Page 3
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The Arab delegation considers opportunities in the agrarian sector as a priority, but also has expressed interest in infrastructure, energy and trade projects. Under the frame of their visit to Georgia, the members of Arab delegation will meet with high rank officials of different Ministries of Georgia, including Regional Development and Infrastructure, Energy, Finance, Economy and Sustainable Development.
8)
Georgian Dairy Sector Primed for Investment
April 7th, 2016, http://www.sarke.com/cgi/search/news.asp?Code=10047221 http://www.investor.ge/article.php?art=1
A recent study conducted by the European Bank for Reconstruction and Development (EBRD) and the United Nations Food and Agriculture Organization (FAO) found that Georgia’s dairy industry has a huge, untapped investment potential. The study, part of the Improving Food Safety through Capacity Building in Georgia's Dairy Sector program, noted that Georgia’s unique dairy market — one where consumer demand is only met by domestically produced products —has led to some of the highest global milk prices, meaning that return on investment would be relatively quick. Other findings from the study relate to opportunities for improvement in the safety and quality as well as productivity of the sector. Currently, only about 5% of milk goes through formal processing (compared to nearly 100% in the European Union) with the rest being consumed fresh or processed in poor, antiquated conditions. Animal health is also a very serious issue in Georgia and has led to decreased production (1,300 liters per cow annually as compared to 8,000 liters in other countries). Despite the challenges, many believe that the biggest obstacle to overcome is not a technical one but rather instilling knowledge in Georgian dairy producers and processors, and the program seeks to do just that. With better feeding, improved keeping conditions, better health and herd management, and milking techniques, it is estimated that Georgia could increase its milk production by 35% to 40% in just two years and get significantly increased quality and safety as well.
9)
Research Training Seeks to Help Agricultural Development
April 19th, 2016, http://www.pmcg-i.com/all-news/item/1118-empowering-modern-research-practices-of-regional-agriculturerelated-institutions-in-georgia
Between April 13 and April 25, 2016, PMC Research conducted trainings for regional education and research institutions on modern tools in research with a focus on agricultural fields. PMC Research trained university researchers in the Samtskhe-Javakheti and Kakheti regions in topics related to value chain analysis and the frameworks for conducting research (from data collection and results reporting to project management and effective communication of research findings). As a result of the trainings, the project hopes to support regional institutions in becoming fully operational, improving methodologies and innovative approaches to modernize agricultural practices, and increasing fundraising opportunities and the role of institutions as policy advisors for regional policy makers. The trainings were part of ENPARD’s Empowering Modern Research Practices of the Regional Agriculture-Related Institutions project and were in partnership with the Georgian Institute of Public Affairs (GIPA) and the Caucasus Environmental NGO Network (CENN).
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10) Demonstration for Strawberry Growing in Household Greenhouses April 26th, 2016, http://enpard.ge/en/demo-day/
On April 28, 2016, the Biological Farming Association Elkana hosted a demonstration day in the village of Mantani (Akhmeta municipality) as part of the Supporting Agricultural Co-operation in Georgia project. The demonstration showed a model of strawberry growing in household greenhouse conditions. The aim of the demo day is to introduce interested farmers and other stakeholders to modern methods of strawberry growing in the 100 square-meter greenhouse. Guests had the opportunity to taste the produced strawberries and become acquainted with strawberry growing practices in greenhouse conditions.
Private Sector 11) Georgian Wine and Brandy Exports Up in 2016 April 5th, 2016, http://agenda.ge/news/55568/eng
Georgia is continuing to penetrate world markets with its traditionally-made wine and brandy. Georgia has exported more than seven million bottles of wine to 26 countries already this year, generating USD 18.14 million in income for the country and representing a 51% increase over the same period of 2015. The top five importers of Georgian wine so far this year are: Russia (4.07 million bottles), Ukraine (1.07 million bottles), Kazakhstan (784 thousand bottles), Poland (443 thousand bottles), and China (371 thousand bottles. Georgia has also seen a 116% increase in brandy exports this year with 2.19 million bottles exported to ten countries and valued at USD 5.04 million.
12) Hazelnut Producers and Exporters Struggle with Price and Demand Decreases April 5th, 2016, http://www.sarke.com/cgi/search/news.asp?Code=10047206
The Hazelnut Producers and Exporters Union of Georgia is worried about the risk that hazelnut realization will fail as Turkey had abundant harvest of hazelnut this year, making it difficult to sell the Georgian counterpart. The Georgian hazelnut is also not widely trusted in foreign markets and often viewed as being of insufficient quality. Currently, only a part of the collection outlets are operating in hazelnut-producing regions of Western Georgia, and the hazelnut price has dropped to GEL 4 per kilogram within a week (a 20% decrease). Last year, January and February saw hazelnut exports amount to USD 40.6 million; the same period this year only saw USD 20.7 million.
13) Georgian Dried Fruit Company to Enter the EU Market April 6th, 2016, http://cbw.ge/business/georgia-to-export-plum-dried-fruit-to-eu-market/
Kareli Agro Industrial Company has begun production of dried black plums under the brand name Kareli Fruit. The company, founded in 2015, is located in the Kareli District and places an emphasis on using Page 5
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100% natural and ecologically clean raw materials for its dried fruit products. The Kareli-made dried plums will be exported to the EU market in the near future, and negotiations are currently ongoing with several other countries such as Ukraine and Israel. The company has invested GEL 1 million in their enterprise arrangement, including GEL 650,000 for machinery and plants. The company drew 40% of their financial resources as a government grant and another 50% as preferential agro credit.
14) Georgia Adding Cucumbers to its Expanding Export List April 7th, 2016, http://agenda.ge/news/55701/eng
Georgia is increasing its export potential by adding more agriculture products to its export list. Following the success in exporting blueberries, kiwifruit, nuts, wine, honey and herbs, Georgia is now planning to offer locally grown cucumbers to consumers all over the world. Negotiations are underway between Planta (a brand within the Georgian Greenhouse Company) and Russian distribution companies for the trade of the popular cucumbers. Russia is considered a top market for the cucumbers as Georgian products tend to be well-received there. In one year, Planta has produced 2,000 tons of cucumbers and expects to double that number in 2016. Planta is also planning to start production of high quality and exceptionally flavorful tomatoes in order to continue expanding its market.
15) Georgian Wine Targeting Baltic Countries April 7th, 2016, http://agenda.ge/news/55680/eng
Georgian wine is continuing its reach to new markets around the world. Recently, Georgia’s National Wine Agency announced a number of events designed to raise awareness of Georgian wine in countries across the Baltic Sea, starting with Lithuania, Latvia, and Estonia. The Agency reported that Georgian red wine will be showcased in Latvia's capital Riga and nine Georgian wine companies presented their red wines in Vilnius and in Kaunas (Lithuania). At the events, guests were encouraged to discover the rich history of Georgian winemaking and to taste unique wines from Georgia. Export figures released by Georgia’s National Wine Agency suggest that there is a receptive audience for Georgian wine in the area as wine exports increased to Poland (3% increase), Lithuania (4% increase) and Estonia (54% increase) last year.
16) Georgian Honey Unable to be Exported to the EU April 11th, 2016, http://cbw.ge/economy/georgia-unable-export-honey-eu-2016-2017/
Georgian honey hit a bump in the road on its planned export to the European Union (EU) markets. Honey exports require qualitative monitoring by a laboratory that issues international certificates. Unfortunately, there are no honey quality control laboratories in Georgia, and the country will not be able to export honey to the EU markets this year or, most likely, 2017.
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Currently, honey samples must be sent off for testing, and, so far, test results have not been sufficient enough to satisfy EU quality standards. New samples will be sent to a Riga-based laboratory in the second half of 2016, but the process will take at least 3 months. A beekeeping development strategy has been developed in Georgia by the Georgian Guild of Beekeepers, but strategy visions are slow to be adopted around the country. The government has also stepped up its support for beekeeping by introducing a beekeeping cooperative support state program under which beekeepers are able to buy hives through the co-financing component of the program. More than 7,000 hives have been or will be delivered to cooperatives all over Georgia.
17) New Walnut Orchards for Racha April 11th, 2016, http://agenda.ge/news/55827/eng
A new walnut orchard will be planted in Georgia’s Racha region. Approximately GEL 29,400 has been allocated to the Velishiori agriculture cooperative within the Plant the Future project to plant walnut trees and establish an irrigation system in Khotevi village. The Agricultural Projects Management Agency (APMA) said the Plant the Future program will provide 70% co-participation in buying plants and 50% co-financing for establishing irrigation systems. The state program will finance 50% of the cost of creating new seedling farms.
18) Mashveli Irrigation System Rehabilitation Complete April 21st, 2016, http://moa.gov.ge/En/News/1094
The rehabilitation of the Mashveli irrigation system (Tskaltubo Municipality, Imereti region) has been completed. The rehabilitation included the main irrigation channel as well as a 96 kilometer section of switchgears in a secondary row. 4,750 hectares of land and 12 rural villages will benefit from the rehabilitation. The cost of the rehabilitation project amounted to GEL 3,491,548. 14 rehabilitation projects for irrigation infrastructure have been implemented since 2012 in the Imereti region.
19) Kakheti Region Intends to Diversify Away from Just Vineyards April 22nd, 2016, http://www.commersant.ge/?m=5&news_id=35987&cat_id=5
The governor of the Kakheti region announced that many people in the wine producing region are actively reducing their dependence vineyards and, instead, planting nuts, olives and peaches, which are seen as easier to sell. The population began shifting its production to remain competitive and manufacture products that are in high demand, especially once the Plant the Future program offered state financing at 70%. The governor further explained that grapes are not unprofitable, but the region sees the need to diversify to other successfully export markets, opening greater success to the region as a whole.
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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.