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46 Geo r g i a Agriculture Finance Bulletin New State Program to Support Milk Producers Bavaria to Host Georgian and Armenian Entrepreneurs More than USD 1 Billion in Food Products Imported Annually Georgian Peach Exports Booming
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Georgian Agriculture Finance Bulletin Edition #46, June 2016
Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6)
Prime Minister Expresses Gratitude for CNFA Efforts in Georgia ................................................... 2 State Agricultural Programs to be Under United AgroProject ........................................................ 2 Agricultural Sector Tax Breaks Extended another Year ................................................................... 2 New State Program to Support Milk Producers .............................................................................. 2 Georgia Signs Agreement with EFTA ............................................................................................... 3 Swiss-Georgian Business Forum Held in Bern ................................................................................. 3
Foreign Aid ................................................................................................................. 3 7) 8)
International Food Security Conference Held in Tbilisi ................................................................... 3 Bavaria to Host Georgian and Armenian Entrepreneurs ................................................................. 3
Private Sector.............................................................................................................. 4 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19)
Second Farmers Congress of Georgia Held in Tbilisi ....................................................................... 4 51% of Georgians Define Agriculture as the Most Essential Sector ................................................ 4 New Licensing Terms for Georgian Black Sea Fishing Companies ................................................... 4 More than USD 1 Billion in Food Products Imported Annually ....................................................... 4 Wine Exports Up in 2016 ................................................................................................................. 5 Georgia Relies on Milk Powder for Domestic Dairy Products ......................................................... 5 New Beer Plant to Open in Teliani Valley ........................................................................................ 5 Google Developing Application to Help Georgian Farmers Maximize Profits ................................. 6 Wheat Harvest Under Way .............................................................................................................. 6 Agricultural Insurance Gaining in Popularity ................................................................................... 6 Georgian Peach Exports Booming ................................................................................................... 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
State Initiatives 1)
Prime Minister Expresses Gratitude for CNFA Efforts in Georgia
June 6th, 2016, http://www.interpressnews.ge/en/economics/78897-our-government-works-hard-to-turn-georgia-into-aleading-exporter-of-agricultural-products-pm.html?ar=A http://agenda.ge/news/59585/eng
Prime Minister Kvirikashvili spoke at a special event marking the 10th anniversary of Cultivating New Frontiers in Agriculture (CNFA), a Washington D.C.-based international non-profit organization, and thanked the organization for their support of thousands of Georgians involved in agricultural works. The Prime Minister called specific attention to CNFA’s efforts to give essential assistance to local farmers and help resettle internally displaced persons following 2008’s conflict with Russia. CNFA also operated an electronic voucher card system for orchards in partnership with Cartu Bank that enabled more than 17,000 farmers to purchase over USD 5.8 million in plant protection products. Altogether, it is estimated that the efforts of CNFA in Georgia have enabled more than USD 51 million in agribusiness production. Read More »
2)
State Agricultural Programs to be Under United AgroProject
June 22nd, 2016, http://agenda.ge/news/60481/eng http://www.commersant.ge/index.php?m=5&news_id=38343&cat_id=5
The Agricultural Projects Management Agency (APMA) has launched United AgroProject in order to have current and future projects in the agricultural sector under one umbrella, increasing efficiency and making it more accesible for farmers to easily learn about the agricultural services offered by the state. There are currently six ongoing agricultural programs that are being encompassed under United AgroProject: Preferential Agro Credit, Enterprise Co-financing, Agro Insurance, Plant the Future, Assist Smallholder Farmers to Conduct Spring Works, and Georgian Tea. Read More »
3)
Agricultural Sector Tax Breaks Extended another Year
June 23rd, 2016, http://www.commersant.ge/?m=5&news_id=38392&cat_id=5
Tax breaks for Georgia’s agriculture sector will be extended until January 1, 2018. Members of Parliament hope that the move will stimulate increased activities in agriculture as these often require large sums of financing and can be longer to generate profits.
4)
New State Program to Support Milk Producers
June 27th, 2016, http://agenda.ge/news/60823/eng
The Georgian government is increasing its support for agricultural cooperatives that produce milk with a new program that encourages cooperative dairy farms by making it easier for them to do business. Within the program, cooperatives will be supported in the purchase of special milk units that collect and process milk. The cooperatives will also be given various laboratory equipment and other tools that increase productivity and support the health of livestock. Technical assistance and trainings will also be offered as a part of the program to improve skills. Cooperatives wanting to participate in the program have until July 10, 2016 to register. Page 2
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5)
Georgia Signs Agreement with EFTA
June 27th, 2016, http://eng.ghn.ge/news-11065.html
Georgia signed an agreement on free trade with the European Free Trade Association (EFTA) in Bern this month. As a result, EFTA markets will open to Georgian goods. The move is expected to give new opportunities for employment, manufacturing, and processing in Georgia as well as increase investment opportunities in the country. EFTA unites four countries (Switzerland, Iceland, Norway and Lichtenstein) and more than 13 million consumers.
6)
Swiss-Georgian Business Forum Held in Bern
June 29th, 2016, http://sarke.com/cgi/search/news.asp?Code=10047955
Approximately 60 businessmen attended a Swiss-Georgian business forum in Bern this month. Georgian Prime Minister Giorgi Kvirikashvili addressed the forum by reminding the attendees of the tremendous business opportunities that exist in Georgia, especially in clean energy, tourism, manufacturing, regional services, logistics, and agribusiness. The Prime Minister pointed to several success stories of Swiss ventures into Georgia including Blauenstein Georgia, owner of a number of cattle farms, and Margebeli, a company which operates in various sectors of the economy. Swiss direct investments to Georgia amounted to USD 8.83 million in 2015.
Foreign Aid 7)
International Food Security Conference Held in Tbilisi
June 23rd, 2016, http://www.finchannel.com/index.php/world/georgia/58121-eu-assists-food-security
An international conference on food security and the development of nutrition policy was held in Tbilisi in mid-June. The event, organized within the framework of a European Union-funded project on improving regional food security through national strategies and smallholder production in the South Caucasus, gathered European and regional experts to give an overview of international models on developing inclusive policies and programs for smallholder farmers as well as local approaches to developing healthy nutrition and food systems. Food security is an important part of agricultural policy and is an important part of social and economic policies that guarantee local food production and people's access to healthy, diverse food products.
8)
Bavaria to Host Georgian and Armenian Entrepreneurs
June 30th, 2016, http://georgien.ahk.de/events/events-detailansicht/events
Approximately 15 Georgian and Armenian entrepreneurs will visit Bavaria in September to see companies involved in fruit and vegetable processing and explore partnership potential with a special focus on growing and harvesting technologies, filling and packaging techniques, and processing and process controls. The visit is being funded by the Bavarian Ministry of Economic Affairs and the Bayern International program “Bayern-Fit for Partnership� and is aimed at small and medium enterprises seeking to enter international markets. Page 3
BFC Georgian Agriculture Finance Bulletin
Private Sector 9)
Second Farmers Congress of Georgia Held in Tbilisi
June 1st, 2016, http://eng.ghn.ge/news-10915.html
150 farmer delegates from 9 regions were selected from regional meetings in April to participate in the second Farmers’ Congress of Georgia on June 2, 2016 in Tbilisi. The congress was held to facilitate communication between farmers and government representatives and was attended by the farmer delegates and representatives from the Parliament of Georgia as well as representatives from other government ministries and agencies. Issues brought up by farmers included the influence of food safety reforms on smallholder farmers, the challenges of smallholder farmers face in accessing markets, investment availability, loan and subsidy mechanisms for smallholder farmers, and cooperatives. The congress was held within the framework of the European Union-funded project “Improving National Food Security Strategy and Support of Smallholder Farmers" which is being implemented by Oxfam Georgia in a partnership with the biological farming association Elkana.
10) 51% of Georgians Define Agriculture as the Most Essential Sector June 3rd, 2016, http://cbw.ge/economy/ti-51-population-considers-agriculture-essential-economy/
In a recent survey from Transparency International Georgia, 51% of Georgians regarded the development of the agriculture sector as the most essential for the Georgian economy, followed by manufacturing (23%) and tourism (9%). The survey also found that 17% of the population wished to be employed in the agricultural sector. Currently, the agricultural sector garners 83% of self-employed persons and 48% of total employment in the country.
11) New Licensing Terms for Georgian Black Sea Fishing Companies June 3rd, 2016, http://www.sarke.com/cgi/search/news.asp?Code=10047725
Companies engaged in fishing in the Black Sea will have to pay GEL 20 million and fulfill specific conditions in order to have their licenses extended. Conditions for extension include the construction of new processing plants, the purchase/maintenance of company-owned fishing vessels, and the processing of at least 70% of caught resources within Georgia (including the processing of at least 10% into mixed fish feed and at least 5% into canned food products). The extension fees and requirements are an effort to match European standards, ensure sustainable fishing in the future, and ensure the production of certain products. The Environment Protection Agency currently will extend licenses by 10 years; however, they are considering a request from companies to lengthen the extension time to 15 years due to the complexities of licensing requirements.
12) More than USD 1 Billion in Food Products Imported Annually June 7th, 2016, http://www.sarke.com/cgi/search/news.asp?Code=10047739
More than USD 1 billion worth of food products are imported into Georgia annually to meet people’s nutritional needs, including between USD 130 million and USD 230 million per year for wheat and flour. Georgia has the capacity for a food self-sufficiency ratio of an estimated 80%; however, the actual ratios are much lower. For wheat, the self-sufficiency ratio is roughly 10% while the self-sufficiency ratio for Page 4
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meat as a whole is 41%. If Georgia were to increase labor productivity in agriculture, experts believe this picture would change drastically as labor productivity is estimated to be 10 times lower in agriculture than in other branches of the economy.
13) Wine Exports Up in 2016 June 13th, 2016, http://georgiatoday.ge/news/4019/Wine-Export-Increases-by-44-Percent http://cbw.ge/economy/revenues-wine-export-increased-16/
15,053,106 bottles of Georgian wine have been exported to 34 countries from January through May of this year, a 44% increase over the same period in 2015; however, revenues from the exports are only up 16% (to USD 35.04 million). Exports to China rose by 106% and by 73% and 59% to Ukraine and Russia, respectively. The top four importers of Georgian wine during the period are Russia (7.5 million bottles), Ukraine (1.8 million bottles), Kazakhstan (1.6 million bottles), and China (1.2 million bottles). In addition, over 3 million bottles of brandy were exported to 13 countries worldwide (a 69% increase over 2015), representing USD 7.7 million. Read More »
14) Georgia Relies on Milk Powder for Domestic Dairy Products June 14th, 2016, http://www.sarke.com/cgi/search/news.asp?Code=10047803
Due to the low productivity of dairy cows, the import of milk powder in Georgia is constantly growing and makes up about 80% of Georgia’s dairy production. From January 2016 through April 2016, USD 5.7 million in milk powder was imported, an increase of 28% over 2015. Milk powder is primarily imported from Ukraine, Lithuania, Iran and Belgium. There are concerns over how the industry will handle a change in the country’s regulation on trans-fats scheduled to go into effect on August 1, 2017. Trans-fat (from vegetable fat) is added to many domestically produced dairy products to attain the desired fat content level; however, the new regulation will limit that amount to 2 grams per every 100 in most foods and completely eliminate it in all baby foods.
15) New Beer Plant to Open in Teliani Valley June 15th, 2016, http://cbw.ge/business/ebrd-plans-finance-beer-plant-project-teliani-valley/
Global Beer Georgia is planning the construction of a beer plant in the Teliani Valley with a projected cost of USD 37 million. USD 13 million will be raised through the issuance of new shares, and a total of EUR 18.5 million will come in the form of three loans funded by the European Bank for Reconstruction and Development. The new plant will produce Heineken, Amstel and Krushovitse beer as well as a domestic beer and lemonade for Georgian, Azerbaijani and Armenian markets. Production is expected to begin in December 2016.
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16) Google Developing Application to Help Georgian Farmers Maximize Profits June 21st, 2016, http://cbw.ge/business/google-develop-georgian-farmers-innovative-application/
Google developers are working with the Georgian platform “Tractor” to develop a marketplace application that will allow farmers to see what the prices are for their products in different Georgian markets. This will help farmers to be able to sell their products at a place and time that will maximize their profits. In addition to providing information about market prices, farmers will also have access to free training videos, agro-consultations, a crop calendar and a weather forecast. The application is expected to go live at the end of 2016.
17) Wheat Harvest Under Way June 24th, 2016, http://www.finchannel.com/index.php/world/georgia/58338-georgia-started-harvesting-wheat
The wheat harvest has begun on the country’s 80,000 hectares of land where wheat was planted. The yield this year is expected to double last year’s 160,000 tons, which was, itself, three times more than the yield of 2014.
18) Agricultural Insurance Gaining in Popularity June 28th, 2016, http://www.commersant.ge/?m=5&news_id=38593&cat_id=5
An agricultural insurance program launched in 2014 has insured more than 28,000 farmers in two years. Agricultural insurance is a relatively new concept in Georgia, and insurers are encouraged by issuance of insurance to cover 23,000 hectares of land.
19) Georgian Peach Exports Booming June 30th, 2016, http://cbw.ge/business/georgian-peach-exports-extremely-grow/
Between June 1 and June 28 of this year, Georgia exported 492 tons of peaches, up from 52 tons over last year. An additional 5,000 tons of peach have been sold on the domestic market. Peach harvesting has entered its active phase, and the Kakheti region alone expects a harvest of more than 30,000 tons this year. Peaches are mainly being exported to the Russian Federation (61%), Azerbaijan (25%) and Kazakhstan (11%).
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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.