#80 Georgia Agriculture Bulletin, BFC

04/2019

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80 Geo r g i a Agriculture Bulletin State-run agricultural insurance program to continue in 2019 EU-supported aquaculture events held in Adjara

Wine exports up 10%

Grape production up 44.8%

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Contents State Initiatives ........................................................................................................... 2 1) 2) 3)

Agricultural co-financing program sees strong interest .................................................................. 2 State-run agricultural insurance program to continue in 2019....................................................... 2 Draft law on excluding dairy products from VAT lacks support ...................................................... 2

Foreign Aid ................................................................................................................. 3 4) 5) 6)

Rural development conference held in Tbilisi ................................................................................. 3 EU-supported aquaculture events held in Adjara ........................................................................... 3 FAO, Ministry of Agriculture launch new project to develop nurseries .......................................... 3

Private Sector.............................................................................................................. 4 7) 8) 9) 10) 11) 12) 13) 14) 15) 16)

Georgian nut harvest expected to rebound .................................................................................... 4 Live animal imports bolster meat product exports ......................................................................... 4 Wine exports up 10%....................................................................................................................... 4 DCFTA helps increase trade turnover with EU in 2018 ................................................................... 4 Incomplete land registration holding back Georgian agriculture ................................................... 5 Potato and carrot prices up 12% ..................................................................................................... 5 Increases in crop, vegetable and fruit production .......................................................................... 5 Grape production up 44.8% ............................................................................................................ 5 Special agricultural loan available ................................................................................................... 6 Fruit exports down as vegetable exports grow ............................................................................... 6

Note: The Georgia Agriculture Bulletin presents a monthly roundup of headlines and news stories related 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. Read more »

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BFC Agriculture Bulletin

State Initiatives 1)

Agricultural co-financing program sees strong interest

April 4th, 2019, https://kalo.ge/news/view?id=6055

The Ministry of Agriculture’s program for co-financing agricultural equipment has been extended to the whole territory of Georgia. Within the framework of the program, co-financing is offered for up to 50% of the cost of procuring agricultural equipment, up to GEL 150,000. Eligible participants include registered individual entrepreneurs and commercial legal entities in which the state does not have a stake; this includes agricultural cooperatives. High interest in the program has been observed, and a second call for applications is planned for the near future.

The program is being implemented within the Uniform AgroProject, which aims at the long-term development and competitiveness of the agricultural sector as well as ensuring adequate food safety and security.

2)

State-run agricultural insurance program to continue in 2019

April 15th, 2019, https://kalo.ge/news/view?id=6126

The state-run agricultural insurance program will continue in 2019. Under the program, the state will support the purchase of insurance policies for crops that cover damages resulting from hail, flooding, storms and autumn frosts. Subsidy amounts for the purchase of policies will remain the same as in previous years: 50% for vineyards and 70% for other crops. The program is available to all registered natural or legal entities that own agricultural land and can be used to cover up to 5 hectares of land growing registered crops (30 hectares for growing wheat).

Since its inception in 2014, the agricultural insurance program has helped in the issuance of 81,453 policies, which covered 71,413 hectares. In total, the state has paid out GEL 33.85 million in subsidies to farmers under the program.

3)

Draft law on excluding dairy products from VAT lacks support

April 16th, 2019, https://agroface.ge/news/5f66a815-6082-412c-8432-044a5650c424

Parliament’s Committee on Agrarian Issues is not supporting a draft law to exclude of milk and dairy products from value added tax (VAT). The draft law proposed excluding natural milk and dairy products from VAT, which would have meant GEL 35 million in lost revenue for the state. In their decision to not support the draft law, the Committee on Agrarian Issues noted that the government is already supporting the modernization and marketing of the dairy sector via a EUR 16 million agreement with the Agricultural Development Fund.

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BFC Agriculture Bulletin

Foreign Aid 4)

Rural development conference held in Tbilisi

April 8th, 2019, http://enpard.ge/en/georgia-harnesses-european-expertise-rural-development/

Leading experts and policymakers from Georgia and European Union (EU) member states gathered in Tbilisi to take part in the Rural Development Policy 2020+: Translating European Practice into Georgian Reality international conference. Discussions at the conference centered around rural development policies and institutional arrangements as well as ways of adapting successful European practices into the Georgian context. The conference will help guide the development of Georgia’s Rural Development Strategy for 2020-2027.

The conference was organized by the Ministry of Agriculture, with assistance from the EU and United Nations Development Program (UNDP). It is part of the EUR 179.5 million in EU assistance allocated for Georgia under the ENPARD program, which aims to promote rural development policies and create nonagriculture economic opportunities for rural populations.

5)

EU-supported aquaculture events held in Adjara

April 12th, 2019, http://enpard.ge/en/eu-supported-conference-fisheries-economic-development-country-fish-festival-held

A series of EU-supported events concerning aquaculture were held in Adjara, including an international conference and a fish festival. The Fisheries for the Economic Development of the Country international conference was held in Batumi with the aim of connecting organizations and individuals engaged in the fishing industry from various countries. It is part of a Ministry of Agriculture strategy to develop aquaculture in the country. Conference participants, which included representatives from governmental and non-governmental organizations from Georgia, Armenia, Azerbaijan, Norway, Turkey and Ukraine, were invited to visit fish farmers in the Keda municipality as well as exchange knowledge and experience and plan future activities of mutual cooperation.

A fish festival was also held in Batumi and featured a number of fish and sea products from different countries. In addition, local fish restaurants, colleges and wine and beer companies participated in the festival. The event was organized by Phoreji, an organic aquaculture development association, with support provided by the ENPARD-funded Keda LEADER project.

6)

FAO, Ministry of Agriculture launch new project to develop nurseries

April 19th, 2019, https://kalo.ge/news/view?id=6187

The Food and Agriculture Organization of the United Nations (FAO) and Georgia’s Ministry of Agriculture are launching a new project to strengthen nursery opportunities and training as well as promote the establishment of a seed producer association. The project will focus on helping Georgia develop a comprehensive system for certifying planting materials and developing nurseries. To this end, nursery representative emphasized to project stakeholders their existing shortcomings and needs.

It is worth noting that voluntary certification of planting material started this year and is being run by the state’s Agricultural Research Center. It is hoped that increasing the quality of planting material will increase the availability of high-quality inputs, resulting in increased agricultural production and quality.

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BFC Agriculture Bulletin

Private Sector 7)

Georgian nut harvest expected to rebound

April 5th, 2019, https://commersant.ge/en/post/georgia-nut-harvest-expected-to-be-good-in-2019

This year’s nut harvest is expected to be better than in previous years as nut plantations are in much better condition and nut producers are much more determined. This is expected to bolster both nut quantity and quality. Improvements to nut production have been made thanks to a number of government efforts.

In 2018, the export of nuts from Georgia decreased 30.5% year-on-year, resulting in nuts not a top-ten export good for the first time in many years. Earning from nut exports in 2018 were USD 57.6 million, 1.7% of the total export value.

8)

Live animal imports bolster meat product exports

April 5th, 2019, https://agroface.ge/news/e7a0ba65-d7bc-4a7c-a0c5-4e836fdfcd1c

The import of live animals has drastically increased over the past three years, especially that of poultry and sheep. At the same time, Georgia’s exports of meat products have also increased, with fresh/chilled meat exports more than doubling from USD 14 million in 2017 to USD 31 million in 2018. Moreover, preliminary 2019 data indicates likely continued growth in this regard.

9)

Wine exports up 10%

April 5th, 2019, http://georgianwine.gov.ge/En/News/26631

Georgia exported 19.4 million bottles of wine to 37 countries in the first quarter of 2019, a year-on-year increase of 10%. This represents USD 47 million in value, a year-on-year increase of 16%. The top five importing countries of Georgian wine were: Russia (13.8 million bottles), Ukraine (1.4 million bottles), China (1.3 million bottles), Poland (1.0 million bottles) and Kazakhstan (560 thousand bottles).

In addition to wine, Georgia exported 6 million bottles (up 74% year-on-year) of brandy to 14 countries, amounting to USD 12.4 million in value (up 71% year-on-year). 188,000 bottles of Chacha (up 170% year-on-year) were also exported to 15 countries, amounting to USD 323,000 in value (up 153% year-onyear). In total, Georgia exported USD 67.73 million worth of alcoholic beverages in the first quarter of 2019, a year-on-year growth of 4%.

10) DCFTA helps increase trade turnover with EU in 2018 April 12th, 2019, http://cbw.ge/economy/number-of-companies-exporting-to-eu-increased-by-37/

The Deep and Comprehensive Free Trade Area (DCFTA) agreement with the European Union (EU) has resulted in increased trade with the EU in 2018. Specifically, trade turnover increased 17.7% and amounted to USD 3.36 billion, with exports increasing 11.5% (USD 730.30 million) and imports increasing 19.5% (USD 2.63 billion). Moreover, the number of exporter companies to the EU grew 37% in 2018 and now amounts to 789 entities. The most significant increases in Georgia exports to the EU were seen in kiwi, dried lemon, persimmon, black currant, apple, quince, fruit jam, furniture and glass bottles.

An export strategy is also being developed with the help of the German International Cooperation Society (GIZ) to address export opportunities for Georgia’s textile, furniture and communication technologies sectors.

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BFC Agriculture Bulletin

11) Incomplete land registration holding back Georgian agriculture April 15th, 2019, http://georgiatoday.ge/news/15253/The-%E2%80%9CAchilles%E2%80%99-Heel

77% of Georgia’s 574,000 agricultural holdings have less than one hectare of land. Moreover, many land parcels are either uncultivated or are cultivated using outdated methods. Such small plots lead to most farmers being only subsistence farmers, a waste of potential within Georgia’s agricultural sector. The end result of this is Georgian agriculture being characterized by very low productivity and contributing only 7.7% to overall GDP despite being responsible for 40% of employment.

To improve this situation, the government has made agriculture a priority since 2012, with many programs having been developed and implemented to transform the sector. So far however, the results are less than promising, with real growth in agriculture a modest +0.7% in 2018 and a -3.8% in 2017. Not surprisingly, one of the fundamental problems holding back the development of agriculture in Georgia is the incompleteness of land registration. In fact, only 45% of agricultural land in Georgia is registered despite numerous registration initiatives in the past three decades. To correct this, Georgia needs to adopt a systematic approach to land registration; moreover, stakeholders need to demand this as completing land registration and developing a modern land system will not only support the land consolidation process but will also benefit Georgia’s economic and social situation as a whole.

12) Potato and carrot prices up 12% April 16th, 2019, http://cbw.ge/economy/price-of-carrot-and-potato-rise-by-12-in-georgia/

The prices of potatoes and carrots have increased in many countries across the region. In Georgia, potato and carrot prices have risen by 12%. The reason for the increase is thought to be due to it being an offseason at the moment.

13) Increases in crop, vegetable and fruit production April 17th, 2019, http://agenda.ge/en/news/2019/1041

The production of crops, vegetables and fruits increased in 2018. This includes increases in wheat production (106,000 tons – an 8.5% year-on-year increase), barley production (58,500 tons – a 33.3% year-on-year increase), maize production (190,300 tons – a 33.5% year-on-year increase) and potato production (218,100 tons – a 21.1% year-on-year increase). Additionally, total vegetable production amounted to 138,300 tons (9.8% more year-on-year), and pome fruit production amounted to 86,200 tons (3.3 times higher year-on-year).

14) Grape production up 44.8% April 18th, 2019, https://commersant.ge/en/post/grape-production-increased-by-448-in-2018

In 2018, 261,800 tons of grapes were produced, 44.8% more than in the previous year. 2018 also saw the production of 46,000 tons of kernel fruit (2.4% less than the previous year), 21,900 tons of nuts (12.2% less than the previous year), 15,500 tons of subtropical fruits (19.3% more than the previous year) and 67,400 tons of citrus (15.8% more than the previous year).

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BFC Agriculture Bulletin

15) Special agricultural loan available April 19th, 2019, https://kalo.ge/news/view?id=6185

exclusive agricultural loan that has an interest rate of 2%. The loan will allow farmers to purchase from the full assortment of agricultural products available at Agroferop shops, including plant protection products, fertilizers, seed materials and equipment. Loans will be issued in amounts between GEL 4,501 and GEL 60,000 for a term of 6-15 months. Additionally, there is a 0% loan approval and issuance commission.

Loans under this cooperation are expected to be available this spring.

16) Fruit exports down as vegetable exports grow April 25th, 2019, https://commersant.ge/en/post/georgias-fruit-exports-slumped-22-vegetables-export-increased-by-10-3

Georgia’s fruit and nut exports for the first quarter of 2019 showed a 22% year-on-year decline. In terms of value, nut exports amounted to USD 8 million; apple exports amounted to USD 4 million; citrus exports amounted to USD 1.9 million; banana and walnut exports amounted to USD 1 million each; and pistachio exports amounted to USD 0.1 million. At the same time, vegetable exports increased by 10.3% year-on-year and amounted to USD 4.3 million in total, including USD 0.6 million for both potatoes and cucumbers as well as USD 0.4 million for tomatoes.

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