#107 Georgia Agriculture Bulletin, BFC

07/2021

107 Geo r g i a

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Agriculture Bulletin Proposed Legislative Changes to Enhance Georgia’s Wine Sector USAID Project Aims to Boost Food Safety in Georgian Primary Products Georgian Wine Sector Forecast to Bring USD 1 Billion in Revenue by 2030 Growing Interest in Georgian Berries in Several Asian Markets

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Georgian Agriculture Finance Bulletin Edition #107, July 2021

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

Environmental Protection and Rural Development 2030 Program Under Development ............... 2 Two New Aquaculture Regulations Adopted .................................................................................. 2 Proposed Legislative Changes to Enhance Georgia’s Wine Sector ................................................. 2 Draft Budget Proposes Increase of GEL 100 Million in Wine Sector Subsidies ............................... 2 Subsidy Program for the Purchase of Non-Standard Apples........................................................... 2

Foreign Aid ................................................................................................................. 3 6) 7) 8) 9) 10) 11) 12) 13)

More Than 750 Registered for First-Ever Agricultural Olympiad in Georgia .................................. 3 USAID Project Aims to Boost Food Safety in Georgian Primary Products ....................................... 3 Six New Participants Selected for Young Agronomists’ Internship Program .................................. 3 Farmers to Receive Compensation for Cattle Losses Due to Anthrax............................................. 3 Field Day Held on Conservation Agricultural Technique ................................................................. 4 FAO Training on Modern, Environmentally-Friendly Irrigation Solutions ....................................... 4 First Berry Forum Held in Georgia ................................................................................................... 4 USAID, Adjara Group Launch New Partnership ............................................................................... 4

Private Sector.............................................................................................................. 5 14) 15) 16) 17) 18) 19)

Georgian Wine Sector Forecast to Bring USD 1 Billion in Revenue by 2030 ................................... 5 Growing Interest in Georgian Berries in Several Asian Markets ..................................................... 5 New Russian Import Regulations Have Blueberry Producers Concerned ....................................... 5 National Statistics Office Publishes Annual Agricultural Report ..................................................... 5 Wine Exports Up 13% in First Six Months of 2021 .......................................................................... 5 Peach and Nectarine Exports on the Rise........................................................................................ 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 #107, July 2021

State Initiatives 1)

Environmental Protection and Rural Development 2030 Program Under Development

July 1st, 2021, https://agenda.ge/en/news/2021/1809

The government of Georgia and the private sector plan on investing GEL 7 billion over the next nine years within the new Environmental Protection and Rural Development 2030 program. The program, which is still under development, aims to: increase engagement/employment in agriculture, further develop/empower Georgian regions, boost domestic production, increase Georgia’s export potential and replace imported products with domestically-produced ones. To accomplish this, the government considers it important to increase the amount of agricultural land and greenhouses (including through land reclamation projects) and support producers in the procurement of modern agricultural machinery.

2)

Two New Aquaculture Regulations Adopted

July 5th, 2021, https://mepa.gov.ge/En/News/Details/20448

Two new regulations have been adopted to enhance Georgia’s aquacultural sector. The first relates to the issuing of aquaculture permits, and the second will enable investors and incumbent industries to better sustain their development activities. The new regulations are part of a government plan to triple aquacultural production in ten years.

3)

Proposed Legislative Changes to Enhance Georgia’s Wine Sector

July 6th, 2021, https://wine.gov.ge/En/News/33798

The Committee on Sectoral Economics and Economic Policy supported the first reading of the draft Law on Amendments to the Law of Georgia on Vine and Wine and the draft Law on Amendments to the Code of Administrative Offenses of Georgia. If passed, new categories of wine (dealcoholized wine and winebased beverages) would be added to better help the wine sector meet international demands and ensure the quality of Georgian wine. The changes would also apply to brandy.

4)

Draft Budget Proposes Increase of GEL 100 Million in Wine Sector Subsidies

July 8th, 2021, https://commersant.ge/en/post/govt-increased-subsidies-for-wine-sector-by-gel-100-million

Draft amendments to the 2021 budget, if passed, will increase subsidies for the wine sector by GEL 100 million. The revised budget also increases funding for the Ministry of Agriculture by GEL 177 million overall. According to Finance Minister Lasha Khutsishvili, the proposed changes reflect a faster-thanexpected economic recovery from the COVID-19 pandemic as well as the need to further promote recovery measures while also ensuring the pandemic situation is properly managed.

5)

Subsidy Program for the Purchase of Non-Standard Apples

July 27th, 2021, https://sputnik-georgia.ru/economy/20210727/252424905/

The government of Georgia has launched a subsidy program for the purchase non-standard apples for a fixed price. The program will reimburse processors GEL 0.10 per kilogram of non-standard apple purchased for at least GEL 0.22.

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BFC. Georgian Agriculture Finance Bulletin. Edition #107, July 2021

Foreign Aid 6)

More Than 750 Registered for First-Ever Agricultural Olympiad in Georgia

June 30th, 2021, http://www.fao.org/georgia/news/detail-events/en/c/1414263/

More than 750 farmers, agronomist students, schoolchildren and agricultural professionals have registered for the first-ever Agricultural Olympiad in Georgia. The Olympiad, which part of an Austriafunded project implemented by the Food and Agricultural Organization of the United Nations (FAO), will see contestants compete in one of four categories (farmer, student, schoolchildren and practitioner).

The top ten performers in an online test will move on to a final competition. Winners will receive internship opportunities, supply vouchers and/or research grants. The overall aim of the Olympiad is to promote the agricultural sector, strengthen formal and informal agrarian education and create a mechanism for evaluating professional knowledge.

7)

USAID Project Aims to Boost Food Safety in Georgian Primary Products

July 5th, 2021, https://georgiatoday.ge/geogap-setting-the-standards

Georgian farmers have a strong potential within European markets due to the special quality and taste of Georgian agricultural products. To do so however, Georgian producers must satisfy a growing demand from these consumers for increased food safety standards, something which many micro- and small-sized Georgian farmers have been unable to meet. To address this, the United States Agency for International Development (USAID), through its Zrda Project, is working to develop a local standard called GeoGAP for primary agricultural products. GeoGap, which is being tailored to specific local conditions, will then help farmers adopt sustainable agricultural practices that are in line with food safety requirements.

8)

Six New Participants Selected for Young Agronomists’ Internship Program

July 7th, 2021, http://www.fao.org/georgia/news/detail-events/en/c/1415095/

Six young agronomists have been selected to participate in the Young Agronomists’ Internship Program, which provides them with both theoretical sessions and practical exercises on the use of modern farming implements, including the use of modern agricultural machinery and mechanization. The six participants will spend several days per week on farms, working closely with farmers to learn more productive and sustainable methods of growing such crops as broccoli, lettuce, tomato, cucumbers, eggplant and cabbage both in the field and in greenhouses. They will also support farmers in setting up gardens and plots, installing drip irrigation systems and organizing field days.

The Young Agronomists’ Internship Program is organized by the Food and Agriculture Organization of the United Nations (FAO) under the European Union (EU)-financed European Neighborhood Program for Agriculture and Rural Development (ENPARD).

9)

Farmers to Receive Compensation for Cattle Losses Due to Anthrax

July 8th, 2021, https://agenda.ge/en/news/2021/1902

The Food and Agriculture Organization of the United Nations (FAO) has announced that farmers whose cattle die from anthrax will receive financial compensation through the state starting in January 2022.

To qualify for financial compensation, the deceased cattle must be identified with ear markings, be registered in the National Animal Identification and Tracing System and be vaccinated. Additionally, farmers must immediately notify the National Food Agency, and the case of anthrax must be confirmed with a laboratory test.

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BFC. Georgian Agriculture Finance Bulletin. Edition #107, July 2021

10) Field Day Held on Conservation Agricultural Technique July 9th, 2021, http://www.fao.org/georgia/news/detail-events/en/c/1415373/

A field day focused on conservation agriculture was recently organized by the Food and Agriculture Organization of the United Nations (FAO) under the European Union (EU)-financed European Neighborhood Program for Agriculture and Rural Development (ENPARD). The event introduced attracted more than 50 participants interested in improving agricultural production through environmentally-friendly agricultural practices to the no-till production approach. The participants were also able to see the results of plants grown in this way on FAOs demonstration plots, including how this approach has resulted in increased yields.

11) FAO Training on Modern, Environmentally-Friendly Irrigation Solutions July 16th, 2021, http://www.fao.org/georgia/news/detail-events/en/c/1416111/

The Food and Agriculture Organization of the United Nations (FAO), under the European Union (EU)financed European Neighborhood Program for Agriculture and Rural Development (ENPARD), organized a training for agricultural entrepreneurs and representatives of the Ministry of Agriculture on modern, environmentally-friendly irrigation solutions. In particular, the training focused on drip irrigation systems, which are a proven, eco-smart and cost-effective way of irrigation that allows farmers to use less water and be more sustainable. The training highlighted how such systems not only help the environment and reduce costs but also improve production quality.

12) First Berry Forum Held in Georgia July 17th, 2021, https://bm.ge/en/article/georgian-blueberry-growers

The United States Agency for International Development (USAID), in cooperation with TBC Bank, has organized the first berry forum in Georgia. The aim of the forum was to bring together berry producers to discuss the sale of berry products. Participants discussed the key challenges to sales for producers, especially challenges related to producing and delivering quality berry products to supermarket chains as well as the unrealistic price expectations some producers have. One company (Blueberry LLC) proposed cooperation with berry producers that will stabilize prices throughout the season, thereby allowing for production cycles to be properly planned.

13) USAID, Adjara Group Launch New Partnership July 22nd, 2021, https://georgiatoday.ge/usaid-and-adjara-group-launch-new-partnership/

The United States Agency for International Development (USAID) and Adjara Group have signed a memorandum of understanding regarding their joint commitment to advancing sustainable and inclusive economic development in Georgia. Under the memorandum, the two sides will collaborate on projects to strengthen the competitiveness of key sectors in Georgia’s economy, including agriculture. In particular, efforts will focus on building resilience to malign influence and achieving inclusive economic growth, especially through the development of workforce skills, local business development initiatives, investments in sustainable industries and encouraging consumption of locally-sources materials.

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BFC. Georgian Agriculture Finance Bulletin. Edition #107, July 2021

Private Sector 14) Georgian Wine Sector Forecast to Bring USD 1 Billion in Revenue by 2030 July 1st, 2021, https://mepa.gov.ge/En/News/Details/20439

Recent efforts to develop Georgia’s wine sector, including efforts to boost wine quality, increase international branding and expand markets, are expected to result in the revenues that will reach USD 1 billion by 2030. In particular, sector stakeholders are now working to diversify export markets to include Canada, South Korea and countries in Scandinavia as well as to grow in existing markets such as the Great Britain, China, Poland and the United States.

15) Growing Interest in Georgian Berries in Several Asian Markets July 2nd, 2021, https://bm.ge/en/article/several-asian-markets-are-interested

According to the Georgian Berry Growers’ Association, Georgian berry products are gaining in popularity in several Asian markets. Currently, Georgian berry producers are working to send sample batches to various Asian markets and understand how future trade relationships will work. For their part, Georgian berry producers are ready to expand into these new markets and have all the requisite equipment (e.g. refrigerators) to do so.

16) New Russian Import Regulations Have Blueberry Producers Concerned July 2nd, 2021, https://bm.ge/en/article/unexpected-development-of-blueberry-season-in-georgia/86354/

Georgian blueberry producers are cautiously optimistic following the imposition of new regulations on plant product imports into Russia. The new regulations, which were announced during the middle of the blueberry harvesting season, appear not to have caused many issues to this point as the National Food Agency of Georgia announced that plant produce export to Russia continues without any difficulties. At the same time, uncertainty does remain in the local market, with larger producers and aggregators either stopping their blueberry purchases or offering much lower prices.

The new regulations allow Russian phytosanitary control officers the right to request additional documentation regarding the use of pesticides and laboratory testing results.

17) National Statistics Office Publishes Annual Agricultural Report July 8th, 2021, https://georgiatoday.ge/iset-agri-review-the-agricultural-sector-in-2020/

The National Statistics Office of Georgia has published its annual report on the country’s agricultural sector. According to the report, agriculture, forestry and fishing comprised 8.4% of GDP in 2020, up from 7.2% in 2019. In nominal terms, agricultural GDP increased 13% in 2020. The report also highlighted an increase in both domestic prices (10.0% on average for food and non-alcoholic beverages) and international prices (39.7% as measured by the Food Price Index). In terms of trade, agricultural exports increased 30%, and agricultural imports increased 3%.

18) Wine Exports Up 13% in First Six Months of 2021 July 9th, 2021, https://wine.gov.ge/En/News/33799

Over the first six months of 2021, Georgia exported 46.4 million bottles of wine worth USD 104 million to 56 countries. This represents a year-on-year increase of 13% in terms of volume and 7% in terms of value. During the same period, Georgia also exported 16 million bottles of brandy (21% more) worth USD 30 million (11% more) and 398,000 bottles of chacha (77% more) worth USD 1 million (64% more).

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BFC. Georgian Agriculture Finance Bulletin. Edition #107, July 2021

Total revenue from the export of alcoholic beverages amounted to USD 170 million, a year-on-year increase of 13%.

19) Peach and Nectarine Exports on the Rise July 26th, 2021, https://agenda.ge/en/news/2021/2112

Between May 1 and July 25, 2021, Georgia exported USD 17 million (19,000 tons) worth of peaches and nectarines, a year-on-year increase of USD 5.9 million. The top five importing countries were Russia (11,935 tons), Armenia (5,872 tons), Ukraine (493 tons), Azerbaijan (269 tons) and Moldova (116 tons).

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