Agricultural traditions are the main part of Georgian cultural heritage and mentality, as long as favorable climate with fertile soil make it one of the most productive economic sectors for the country and support production of a variety of high-value agricultural products including wine, nuts, citrus fruits, peaches, apricots, etc.
After signing a Deep and Comprehensive Free Trade Area (DCFTA) with the European Union in 2014, Georgia can produce agricultural products meeting the required safety and security standards and that makes it even more favorable for new investors of European markets, as longs as they can benefit from rising consumption on the local market, which is complemented by the Duty-free access to 900 million foreign markets under this agreement.
Georgia has emphasis on labor-intensive crops such as tea and grapes. In 2017, after the three-year study conducted by experts from seven countries, Georgia officially acknowledged as the cradle of wine and was invited to be a host of solo exhibition illustrating its oldest traditional viticulture and wine-making in Bordeaux, Paris.
Nowadays, wine export growth gives positive prospects to the sector, for instance after the data published in National Wine Agency of Georgia in January-February (2018) 10,8 mil. bottles of wine have been exported to 38 countries worldwide, that is 23% higher than the similar data of the last year.
There is fierce competition connected to the tea in Georgia, because strong local manufacturers are not allowing the international players to take over tea entirely but as Euromonitor International reveals, consumers of tea in Georgia stay quite conservative and most brands produce only black or green tea.
According to the Strategy for Agricultural Development in Georgia for 2015-2020, it is estimated that 25% of Georgia’s total land area is classified as permanent pastureland and about 70-80% of pasturing is self-regulated among local and nomadic pasture users, which gives good grounds for stockbreeding, but without having strong supporting policies small farmers which make 95% of all farmers, typically cultivating around one hectare of land with low output aren’t able to compete with imported products, which except dairy food and beverages mostly relies on meat products, as well as grains and egg. Generally, Georgia imports 80% of its packaged food products which has a significant negative impact on its trade balance.
The Georgian government identifies agriculture as a priority for development and has also set up the Agriculture Investment Fund to support the sector by providing credits for farmers. The projects of building new agricultural products processing plants can get grant from the government with a total value of up to 250 000 USD. In addition to this, investor can symbolically buy state owned immovable non-agricultural property only for 1 GEL.
Government of Georgia intends to create a favorable business environment because full use of Georgian agriculture potential is vitally important for country’s economy, for this purpose, in 2015, Parliament passed a bill allowing foreigners to own the land but with certain limitations as long as foreigners now may own agricultural land if they inherit it, co-own the land through marriage to a Georgian citizen or by being a member of a Georgian citizen household or hold a residence permit.
Georgia has 22 micro-climates varying from cool and dry to warm and humid. These diversified micro-climates allow for a longer than normal harvesting season and a range of growing conditions. Soils are of volcanic origin in the river valleys, which tend to be quite fertile and reasonably easy to cultivate.
Country has easy and cheap access to water as well and the prices of other utilities such as energy and gas is low too, but on the other hand, according to the 2017 budget, by GEL 83,000,210 reduced agricultural financing resulted in decreased funding for financing programs like the agricultural development program, food safety, epizootic goodwill and plant protection, viticulture, implementation of scientific research activities and so on.
During the last years, as a result of good international cooperation, the positive tendencies are being observed in regard to expanding the export market, increase of production and attracting the investment in the agricultural sector. But local production is still under strong necessity of boosting as long as even though having rich resources, trade balance between import and export is still unenviable in Georgia.
Author: Tamar Devdariani © BUSINESS GEORGIA
Photo: Tamuna Ubiria © BUSINESS GEORGIA