17 BFC Georgia Agriculture Finance Bulletin

01/2014

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17 Ge o r g i a Agriculture Finance Bulletin Agriculture Ministry Starts Land-Poor Farmers’ Assistance Program Government and Parliament Cannot Agree on the Issue of Genetically Modified Products Georgia-Israel Inovations Forum to be Held in March Georgian Winemakers won’t fulfil the Quota for Exports to Turkey in 2014

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Georgian Agriculture Finance Bulletin Edition #17, January 2014

Contents State Initiatives ........................................................................................................... 2 1) 2) 3) 4) 5) 6) 7)

24 Agricultural Land Sites Changed their Status ............................................................................. 2 Agriculture Ministry Starts Land-Poor Farmers’ Assistance Program ............................................. 2 Land-poor Farmers’ Assistance Program to Last Three Years ......................................................... 2 Government and Parliament Cannot Agree on the Issue of Genetically Modified Products ......... 3 Agri-insurance Subsidizing Project Proposal to be Ready for Spring .............................................. 3 Cooperative Status Assignment to Launch from January 27........................................................... 3 Issues of Food Safety Discussed in Tbilisi ........................................................................................ 4

Foreign Aid ................................................................................................................. 4 8)

Georgia-Israel Inovations Forum to be Held in March .................................................................... 4

Private Sector.............................................................................................................. 4 9) Georgian Winemakers won’t fulfil the Quota for Exports to Turkey in 2014 ................................. 4 10) 2 out of 3 Dairy Products are Counterfeited in Georgia.................................................................. 5 11) EPRC: Multilevel Strategy of Agricultre should be Developed ........................................................ 5

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 #17, January 2014

State Initiatives 1)

24 Agricultural Land Sites Changed their Status

January 14th, 2014, http://sarke.com/cgi/search/news.asp?Code=10040023

Prime Minister Irakli Garibashvili has issued an order changing the “purpose” designation of 24 land sites from agriculture to non-agriculture. These sites cover a total area of 14,535 square meters.The largest site, located in Senaki and owned by LLC Sorta, has an area of 4,579 square meters.

This follows similar measures last December, where the Premier ordered the re-designation of 16 agricultural land sites with a total area of 59,280 ha.

2)

Agriculture Ministry Starts Land-Poor Farmers’ Assistance Program

January 14th, 2014, http://sarke.com/cgi/search/news.asp?Code=10040022

The Agriculture Ministry declared that this year’s program on assistance for land-poor farmers’ spring works will start from February 1st and will be completed in August. The budget for the 2014 program is 90 million Lari. 50 million Lari of which is allocated from the state budget, while 15 million lari will be provided by Rural and Agriculture Development Fund and the remaining sum will be provided from the funds of the Agriculture Projects Management Agency.

According to the Ministry, about 800,000 land-poor farmers will benefit from the program this year.

Beneficiaries will be those farmers who own or possess agricultural land sites with area of up to 1.25 ha and use these sites for cultivation of annual and perennial crops.

The level of state support provided to land-poor farmers will be based on plot size, with farmers divided into two categories; below 0.25 ha and between 0.25 ha and 1.25 ha.

Beneficiaries will receive support to help purchase agricultural goods and services. Farmers will receive two types of cards: an agriculture card which can be used to fund plowing works’ and a new “agrocard” (plastic banking card) which can be used to purchase farming goods.

State-owned LLC Mekanizatori and 117 approved contractors will conduct spring works for land-poor farmers, which include ploughing and other services with farming machinery.

The 2013 program applied to 710,000 farmers, with land sites of up to 5 ha.

3)

Land-poor Farmers’ Assistance Program to Last Three Years

January 20th, 2014, http://sarke.com/cgi/search/news.asp?Code=10040073

Giorgi Chkheidze, head of the Agriculture Projects Management Agency, says that land-poor farmers’ assistance program which was launched in 2013, will have a duration of 3 years, after which he hopes farmers will then gradually move to commercial sustainability.

The Agency has 10 subsidiaries, and according to Chkheidze they plan to privatize their assets in near future and use the revenue to help finance the program.

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BFC. Georgian Agriculture Finance Bulletin. Edition #17, January 2014

4)

Government and Parliament Cannot Agree on the Issue of Genetically Modified Products

January 21st, 2014, http://commersant.ge/eng/?page=news&id=2435

Parliament is not going to consider the Economy Ministry’s argument regarding mandatory labeling of genetically modified products. As Deputy Chairman of the Environment Committee in Parliament told “Commersant” , a bill that would ban the use of genetically modified seed products and provide for a compulsory labeling has not been submitted to Parliament. The issue of whether and how to allow genetically modified crops into the market is largely unresolved. Public discussion may take place in the spring session of Parliament. Read More »

5)

Agri-insurance Subsidizing Project Proposal to be Ready for Spring

January 22nd, 2014, http://commersant.ge/eng/?page=news&id=2447

The Chairman of the Agricultural Committee stated that the Ministry of Agriculture has been working on a project to subsidize agricultural insurance, which is expected to be presented in the beginning of the spring.

This is a model similar to a preferential agro-credit program, where the state will provide a subsidy to encourage activity in the sector an help it develop to a sustainable level.

"The agriculture sector will not develop without the introduction of the insurance system. It is such a complicated case and the insurance companies themselves won’t be able to deal with it without the government’s support,”—General Director of “Ardi”, Kartlos Koranashvili states. Read More »

6)

Cooperative Status Assignment to Launch from January 27

January 23rd, 2014, http://commersant.ge/eng/?page=news&id=2458

Agricultural cooperatives will be assigned a status from January 27. According to the Chairman of the Agency for Agricultural Cooperative Development, the interested applicants must apply to the Agency to obtain a special status and submit the required documentation.

Giorgi Misheladze claims that in the near future, the official website of cooperatives will be launched and farmers will be able to submit an application online.

Note: The cooperative’s property will be exempt from property tax until January 1, 2017 and income earned from agricultural activities will also not be taxed.

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BFC. Georgian Agriculture Finance Bulletin. Edition #17, January 2014

7)

Issues of Food Safety Discussed in Tbilisi

January 23rd, 2014, http://sarke.com/cgi/search/news.asp?Code=10040130

On January 23rd, Tbilisi hosted the “Food Safety in Georgia: Challenges and Opportunities” forum. The event was organized by EBRD, UN Food and Agriculture Organization (FAO) and Georgia’s Agriculture Ministry.

According to the Georgian Agriculture Ministry, the Code on Food Safety, Veterinary and Plant Protection will take effect in spring 2014. The aim of which is to facilitate the uptake of European standards by Georgian companies.

In a similar vein, the head of FAO’s department on regions’ infrastructure and agricultural production, Evgenia Serova, stressed the importance of establishing small-scale production associations in Georgia in order to protect and capitalize on geographic identification and production recipes.

The forum was attended by heads of 60 local agricultural companies and farmers’ associations, representatives of state agencies and the private sector.

Foreign Aid 8)

Georgia-Israel Inovations Forum to be Held in March

January 22nd, 2014, http://sarke.com/cgi/search/news.asp?Code=10040109

The Georgian Partnership Fund acnnunced that on March 12—13 Tbilisi will host the second GeorgiaIsrael forum on innovations.

According to the Fund, Israel expressed a particular interest towards agriculture, medical service and traditional industrial sectors.

According to 9-month data of Sakstat for 2013, imports from Israel to Georgia amounted to USD 26.75 million (0.5% of Georgia’s total import), while Georgian export to Israel made up USD 1.98 million (0.1% of total export of the country).

Private Sector 9)

Georgian Winemakers won’t fulfil the Quota for Exports to Turkey in 2014

January 8th, 2014, http://commersant.ge/eng/index.php?page=news&id=2338

In 2014, Georgian winemakers, as in 2013, will not make full use of the quota available to them to supply a million bottles of wine to Turkey.

According to Director of the National Wine Agency of Georgia, Levan Davitashvili, the quota exceeds the needs of Turkish demand, so exports to this country will not exceed 50 000 liters of wine.

The free trade agreement between Georgia and Turkey was signed in 2007, but Georgian winemakers have never fulfilled the quota, because the Turkish market is not a priority for them. Read More »

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BFC. Georgian Agriculture Finance Bulletin. Edition #17, January 2014

10) 2 out of 3 Dairy Products are Counterfeited in Georgia January 14th, 2014, http://sarke.com/cgi/search/news.asp?Code=10040016

According to Center of Strategic Research and Development, only 5 out of 15 dairy products on the local market, can be considered valid based on their ingredients.

As the article reports, the Agriculture Ministry created a working group, which started development of technical regulations for dairy products, based on international standards. According to international standards, the products, containing vegetable fat, could not be named dairy products.

11) EPRC: Multilevel Strategy of Agricultre should be Developed January 23rd, 2014, http://sarke.com/cgi/search/news.asp?Code=10040129

Economic Policy Research Center (EPRC) recommends the development of a multilevel strategy for agriculture.

The strategy should have 3 objectives—development of primary production, effective processing industry and trade infrastructure.

According to EPRC, there should be 3 levels of the program; basic—defining of mission and vision; sectoral—primary production, processing, development of production chain, improvement of resource base (including financial), integration in international markets, etc…; branch—competitiveness analysis, SWOT analysis, development of detailed action plans for each branch, where avoidance of subsidies is possible.

EPRC notes that primary production is hampered by land site fragmentation. “It is necessary to maintain farmers’ register and to establish formal land market”, the experts added that the government should assist development of farmers cooperatives or other forms of cooperation.

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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.

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