#96 Georgia Agriculture Bulletin, BFC

08/2020

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96 Geo r g i a Agriculture Bulletin 112,000 farmers benefit under state diesel procurement program Fruit processing plant to be built in Lechkhumi

Snail farm to be created in Western Georgia

Grape harvest season under way in Kakheti

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Georgian Agriculture Finance Bulletin Edition #96, August 2020

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

Bank of Georgia provides funding for tea plantation rehabilitation in Tkibuli ............................... 2 112,000 farmers benefit under state diesel procurement program ............................................... 2 State to subsidize purchase of apples ............................................................................................. 2 Anti-crisis agricultural measures launched by Georgia ................................................................... 2 State to replace seedlings destroyed by natural disaster events .................................................... 2

Foreign Aid ................................................................................................................. 3 6) 7) 8) 9)

FAO announced new grant competition under ENPARD program ................................................. 3 UNFPA, FAO and Liberty Bank launch rural women empowerment initiative................................ 3 Fruit processing plant to be built in Lechkhumi .............................................................................. 3 Seedling nursery opened in Marneuli ............................................................................................. 4

Private Sector.............................................................................................................. 4 10) 11) 12) 13) 14) 15) 16) 17) 18) 19)

Bank of Georgia launches new loan product for almond, olive orchards ....................................... 4 Snail farm to be created in Western Georgia .................................................................................. 4 Plentiful and high-quality corn harvest expected ........................................................................... 4 More education needed for agricultural sector development........................................................ 5 Record-breaking hazelnut harvest expected this year .................................................................... 5 Almond processing plant to be built near Tbilisi ............................................................................. 5 Cattle, pig and chicken numbers increase ....................................................................................... 5 Grape harvest season under way in Kakheti ................................................................................... 5 More than 23,000 tons of peaches, nectarines exported so far this year ...................................... 6 Georgian wine quality still an issue ................................................................................................. 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 #96, August 2020

State Initiatives 1)

Bank of Georgia provides funding for tea plantation rehabilitation in Tkibuli

August 1st, 2020, https://cbw.ge/economy/tea-plantations-planted-in-tkibuli-with-the-support-of-the-bank-of-georgia

55 hectares of tea plantations have been rehabilitated in Tkibuli by Okriba Ltd. within the framework of the Agro Project and with funding from the Bank of Georgia. Bank of Georgia funding allowed the company to build a tea processing plant and purchase appropriate machine equipment for tea production. The machines also allow the company to produce dried fruit. The total cost of the Okriba Ltd. rehabilitation project was GEL 1,345,000.

2)

112,000 farmers benefit under state diesel procurement program

August 7th, 2020, https://sputnik-georgia.ru/economy/20200807/249157636/

Approximately 112,000 Georgian farmers have already received discount cards for the purchase of discounted diesel fuel within the Agrodiesel state program. So far under the program, farmers have received discount cards for the purchase of 29,000 tons of diesel fuel and have already saved an estimated GEL 3.6 million. The program gives farmers with registered agricultural land access to up to 300 liters of diesel fuel at cheaper than market value. Farmers can also use the cards to purchase fertilizers and plant protection products, chemical and biological plant protection products, seeds or seedlings and agricultural services.

3)

State to subsidize purchase of apples

August 13th, 2020, https://bm.ge/en/article/according-to-gakharia-the-government-will-subsidize-purchase-of-apple-/62085/

State subsidies will be provided for the purchase of apples as a way of supporting the sector. The amount of the subsidy has been set at GEL 0.10, meaning that the total purchase price for apples will be at least GEL 0.22. The subsidy is part of a government effort to provide sectoral assistance to different fields during times of economic crisis. Similar subsidies were also used this year to support grape procurement.

4)

Anti-crisis agricultural measures launched by Georgia

August 14th, 2020, https://cbw.ge/economy/state-to-cover-6-months-of-interest-on-agriculture-loans

The state is providing significant assistance to farmers and other agricultural entrepreneurs under its anti-crisis Care for the Village and Farmers program. In particular, the state is: providing more than Gel 23 million in subsidies, allocating 29,000 tons of diesel fuel at reduced prices, exempting amelioration fees in 2020, covering six months in interest on certain agricultural loans and partially-paying for agricultural insurance policies. More information on the Care for the Village and Farmers program and its sub-programs can be found at the arda.gov.ge website.

5)

State to replace seedlings destroyed by natural disaster events

August 20th, 2020, https://agenda.ge/en/news/2020/2588

Farmers in Georgia whose seedlings were damaged or destroyed due to natural disasters, including grapevines, will receive new, higher-quality young plants under a new measure of the Plant the Future program. Farmers impacted by natural disasters that took place in the country after July 15, 2020 will be prioritized under this measure. The government adopted the measure in response to the fact that the Page 2

BFC Georgian Agriculture Finance Bulletin. Edition #96, August 2020

state’s agriculture insurance project that was launched in 2014 only covers losses to harvests and not seedlings themselves.

In July 2020, a series of natural disaster events destroyed seedlings in several regions, including the Kakheti and Racha regions.

Foreign Aid 6)

FAO announced new grant competition under ENPARD program

August 5th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1301683/

The Food and Agriculture Organization of the United Nations (FAO), under the European Union (EU)funded European Neighborhood Program for Agriculture and Rural Development (ENPARD), has announced a third grant competition to support agricultural initiatives in Georgia. Accepted applications will receive amounts of up to 40% of the total cost of the investment, with the other 60% expected to be contributed by the beneficiary. Investments determined to have a high economic, social and environmental impact will be eligible for an amount of up to 60% of the total cost of investment.

The objectives of this grant initiative are to improve access to finance, services, equipment and inputs for farmers, rural households, cooperatives and other small- and medium-sized enterprises (SMEs) in rural areas. These improvements are expected to contribute to the increased competitiveness of the agricultural sector and better the livelihoods of people living in the rural areas. For this grant competition, applications requesting a matching grant to finance the purchase of a tractor will be prioritized. More details regarding the grant competition are available on the websites of ENPARD regional coordinators.

7)

UNFPA, FAO and Liberty Bank launch rural women empowerment initiative

August 17th, 2020, http://www.fao.org/georgia/news/detail-events/en/c/1304302/

The United Nations Population Fund (UNFPA) Georgia Country Office, the Food and Agriculture Organization of the United Nations (FAO) and Liberty Bank have announced a series of joint meetings in different regions of Georgia to empower rural women. The goal of the meetings is to increase awareness of rural women around issues like gender equality, reproductive health and rights, community participation and bank services that may be of use for women involved in agricultural activities. The meetings are scheduled to take place in August and September 2020 in Shida Kartli, Kakheti, Racha-Lechkhumi and Adjara. More than 300 women are expected to participate in the meetings.

Events like this are essential for getting rural women involved in social activities, for expansion of support networks and for increasing their ability to raise their voices.

8)

Fruit processing plant to be built in Lechkhumi

August 21st, 2020, https://cbw.ge/economy/fruit-processing-plant-will-be-built-in-lechkhumi-with-polish-investment

GEL 2 million in Polish investments are expected to be leveraged into the construction of a fruit and dried fruit processing plant in Lechkhumi. Currently, investors are examining two sites for the location of the plant, although they have already committed to procuring raw production materials from local sources to make dried fruit and juices.

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BFC Georgian Agriculture Finance Bulletin. Edition #96, August 2020

The project is expected to begin next year, once the situation surrounding the COVID-19 pandemic has relaxed.

9)

Seedling nursery opened in Marneuli

August 26th, 2020, https://cbw.ge/economy/agriculture-minister-and-usaid-mission-director-open-mza-chitili-seedling-nursery

A new seedling nursery, Mza Chitili, has opened in the village of Azizkedi (Marneuli district) thanks to financial and technical support from the United States Agency for International Development (USAID).

The nursery is important for the development of high-quality seedlings and cultures in the country, which is central to the further development of the agricultural sector as a whole. Mza Chitili also benefited from state financial assistance under the United Agro Project.

Total investments in the nursery amounted to GEL 2.8 million, including GEL 1 million in preferential agricultural credit and GEL 365,000 in grants.

Private Sector 10) Bank of Georgia launches new loan product for almond, olive orchards August 4th, 2020, https://netgazeti.ge/news/472086/

The Bank of Georgia is launching a new agro-loan for the cultivation of almond or olive groves. Loans are available for the purchase of fixed assets and for working capital required for the cultivation and maintenance of a garden for a period of four years. The maximum loan term is 120 months. The loan also includes assistance in contracting with local and international buyers in advance. It is also important to note that the loan is subject to preferential and grant conditions offered by the Implement the Future and Cheap Agro Credit programs.

11) Snail farm to be created in Western Georgia August 10th, 2020, http://bizzone.info/agriculture/2020/1597105120.php

The Bank of Georgia is financing an Icebergs LLC project to create a snail farm in the town of Abasha (Western Georgia). The farm is expected to be capable of producing up to seven tons of snails per year, which will then be sold for medicinal purposes as well as a delicacy.

12) Plentiful and high-quality corn harvest expected August 10th, 2020, https://mepa.gov.ge/En/News/Details/19047

A high-quality and plentiful corn harvest is expected this year thanks to efforts undertaken by the National Food Agency, particularly measures to combat the Asian stink bug. In particular, the National Food Agency assisted corn farmers in implementing the cold spraying of expert-recommended pesticides. It is important to note that these treatments were all carried out in compliance with safety rules and procedures.

Georgia’s fight against invasive pests and diseases in recent years has been used as a worldwide example for how to eradicate such threats to agriculture.

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BFC Georgian Agriculture Finance Bulletin. Edition #96, August 2020

13) More education needed for agricultural sector development August 13th, 2020, http://georgiatoday.ge/news/22073/

The sustainable development of agriculture is one of the key factors to strengthening Georgia’s economy. However, good climatic conditions and rich natural resources alone are not enough for the development of agriculture. Rather, the agricultural sector also needs strong catalyzers to create more professionals with experience, energy and innovative ideas. This includes strong educational programs to advance new ideas and promote the sector as a whole as one that can provide a sustainable living.

Although other measures are also needed (i.e. better export opportunities), experts believe that strong and all-encompassing educational programs will give agricultural entrepreneurs the skills necessary to overcome other obstacles.

14) Record-breaking hazelnut harvest expected this year August 14th, 2020, https://mepa.gov.ge/En/News/Details/20054

The hazelnut harvest is under way, and Georgian producers are expecting a record-breaking harvest of between 50,000 tons and 55,000 tons this year, which is a significant improvement over last year’s harvest. In recent years, the hazelnut production chain has been organized in a smooth manner, resulting in better production. Several government officials commented that the hazelnut production chain should serve as a model for how agriculture should be developed in the country.

15) Almond processing plant to be built near Tbilisi August 19th, 2020, http://bizzone.info/agriculture/2020/1597881392.php

The Georgian-Israeli company Bar-Lev Management, which has been planting and cultivating almond orchards in Georgia since 2018, is planning to build an almond processing plant in Lilo, a suburb of Tbilisi. The capacity of the enterprise will be 3,000 tons of almonds per year, which corresponds to the harvest of a garden of 500 hectares. It is expected to employ 20-25 people.

The cost for the construction of the plant has been projected at EUR 1.5 million.

16) Cattle, pig and chicken numbers increase August 24th, 2020, http://bizzone.info/agriculture/2020/1598303768.php

The number of cattle in Georgia increased by 2.6% in the second quarter of 2020. At the same time, the number of chickens increased by 16.9%, and the number of pigs increased by 1.8%. The number of sheep and goats decreased by 12.1%.

Milk and meat production also increased in the second quarter, by 0.1% and 5.8% respectively. Egg production dropped 1.4%.

17) Grape harvest season under way in Kakheti August 26th, 2020, https://agenda.ge/en/news/2020/2640

The grape harvest season is picking up in the Kakheti region, where 200 tons of grapes have already been processed. This year’s harvest in the Kakheti region is expected to amount to approximately 300,000 tons of grapes. It is important to note that there are already 50 wine producing companies registered at a grape harvest coordination center that will be involved in different stages of the grape harvesting process.

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BFC Georgian Agriculture Finance Bulletin. Edition #96, August 2020

The volume of grapes processed during the 2019 harvest in Georgia reached 271,000 tons, which was the highest harvest volume over the last 30 years.

18) More than 23,000 tons of peaches, nectarines exported so far this year August 26th, 2020, https://agenda.ge/en/news/2020/2645

Georgia has exported 23,109 tons of peaches and nectarines so far this year, 85% more than at this same time last year. The main countries of export are Russia (14,906 tons), Armenia (7,202 tons), Azerbaijan (567 tons), Kazakhstan (113 tons), Ukraine (99 tons), Moldova (90 tons), Poland (74 tons) and Slovenia (57 tons).

19) Georgian wine quality still an issue August 27th, 2020, https://commersant.ge/en/post/companies-will-make-fake-wine

The quality of Georgian wine still remains a problem as many Georgian wines suffer from being made from bad grapes and/or being “falsified� to artificially increase quantities. In light of the pandemic, there are concerns that wine quality may drop further as some producers look for ways to cut prices and, therefore, be more marketable to populations with less disposable income. Moreover, there is a belief among some experts that the government is tacitly complicit in this as it is more interested in ensuring farmers can sell their harvest than controlling wine quality. Experts believe that this issue needs to be resolved for Georgia’s wine sector to further develop.

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