Agro 2019 – Analysis by AGSO

Despite multiple support programs and hundreds of millions of GEL invested in the field, yet the Georgian agriculture sector suffers from various problems.

A significant number of Georgian citizens have engaged in agribusiness, and any moves and decisions in this sector affect our citizens, too. The Agro Solutions Consulting Company analyzes the most important developments of 2019 in the Georgian agriculture sector.

Law on Agriculture Land Ownership Adopted 

A two-year moratorium on the sale of agricultural lands to foreign citizens has passed. The Parliament of Georgia has adopted an organic act on ownership of agriculture lands, under which foreign citizens are entitled to own agriculture lands if: 

• A foreign citizen has inherited this land plot; 
• The dominant partner of a Georgia-incorporated legal entity according to private law is a foreign citizen or/and a legal entity registered abroad. In this case, this company is authorized to register the agricultural land ownership, if the government of Georgia passes the required resolution, based on an investment plan. 

It is noteworthy that the new law does not restrict domestic and international financial institutions, whoever owns them, from holding agriculture lands.

Under the organic act, a private Georgia-incorporated legal entity, if its dominant partner is a Georgian citizen, is authorized to register agriculture land in legal ownership.

Changes to Plant the Future Program

Launched by the Agriculture Projects Management Agency (currently, the Agricultural and Rural Development Agency - ARDA) in 2015, the Plant the Future program offers financial support to farmers, such as arranging perennial gardens and seedling farms. 

Under this project, the financial support increased in 2019.

Changes to the program for arranging gardens: 

• Legal space  has increased from 0.5 hectare to 50 hectares; 
• The Grant component has increased from 100,000 GEL to 250,000 GEL.   

Changes to the program for seedling farm:

• The 50% co-funding has increased to 70%. 
• A grant component has increased to 500,000 GEL from 150,000 GEL. 

Fighting Marmorated Stinkbug 

According to the world’s leading entomologists and plant protection specialists, Georgia has successfully implemented a program against the marmorated stinkbug,  and the country has received real benefits. 

Leading specialists from US universities, and European and Australian agriculture experts have arrived in Georgia, and appraised the measures that the Agriculture Ministry has carried out against marmorated stinkbugs. According to the experts, the effects that Georgia has achieved in 2 years cannot be attained by much more developed countries over a longer period, and Georgia’s experience is  valuable for the whole world. 

Strategy for 2021-2027 and Action Plan for 2021-2023

In 2019, the Georgian Ministry of Environment Protection and Agriculture prepared the 2021-2027 strategy and the 2021-2023 action plan for developing villages and agribusiness. These new documents have replaced the current agricultural strategy. 

The new plan complies with the government’s long-term visions and budget parameters. 

Key aspects of the new strategy:

• Improving the competitive capacity of the agriculture sector.
• Improving the social condition of village residents ; 
• Reasonable employment of natural resources; 
• Adaptation to climate changes ; 
• Improving food, veterinary and plant protection systems. 

Vintage 2019

The 2019 vintage was conducted in a well-organized environment.  The National Wine Agency has registered harvest volumes, and solved organizational issues. 

For the first time, in 2019, the vintage passed by use of vineyards cadastre program. Namely, In Kvareli and Gurjaani municipalities, grapes were due to vineyard cadastres. At the same time, the harvest volume of the Saperavi grape on 1 hectare was determined to be 10 tons for the production of wines designated by the names Kindzmarauli, Akhasheni, Kvareli and Mukuzani. The higher volumes were admitted for production of other wines. 

To protect the fidelity of grape varieties, ampelography specialists were involved in the vintage process. 

More than 267,000 tons of grapes were processed in Kakheti in 2019 and this is a record figure over the past 30 years. 

More than 20,000 winegrowers sold their products to winemaking companies in the Kakheti Region in 2019. 

Land Registration Problems

Unregistered lands dramatically frustrate the development of the agricultural field and the land market. Serious problems are seen in the agro insurance sector, too. 

Land ownership registration is one of the key preconditions to implement various programs, with the support of state programs or foreign donor organizations. To ensure the engagement of landowners in the agricultural development chain, their land plots must be officially registered. 

Under the Government-approved legislative amendments, land registration is simplified until January 1, 2022. Procedures are simplified, number of required documents for submission decreases and ordinary documents are issued free of charge.

It is noteworthy that the problem with unregistered land exists not only in the private sector. A lot of state-owned lands remain unregistered.

Hothouse Cluster in Imereti

The government of Georgia plans to arrange a hothouse cluster on a 125 hectare space in the Imereti AgroZone, in the village of Maghlaki, Tskaltubo Municipality. The project calls for arranging communication channels, a logistics center, storehouses and refrigerator complexes. Products from this complex will satisfy international quality standards, and increase Georgia’s exports potential. 

Agro Insurance 

The aAgro-insurance business still suffers from various obstacles. The program was launched several years ago, but farmers’ awareness of this remains very low. 

The role of insurance companies also matters. There are problems with the description-calculation of losses. We have very few specialists in this respect, and their level of knowledge is very low. 

Raw Milk Problem

Raw milk production is related to some problems in this country. The Agricultural and Rural Development Agency (ARDA) launched “The State Program for the Promotion of Milk Production Agriculture Cooperatives”. However, this program enables us to purchase milk-processing machines, and this program cannot assist farmers in raw milk primary production. The country remains essentially dependent on milk powder imports. 

Beef Deficit

The price of beef has increased by several GEL in 2019. A lack of meat cattle farms remains Georgia’s key problem. Prices grow because of the beef deficit and there are two reasons: 

• Lack of cattle-breeding farms.
• Cattle is exported to foreign markets, mainly to Azerbaijan and Iraq. 

Wine Exports

The country has recorded dramatic progress in wine exports. 2019 will close with new, record indicators. In January-November 2019, Georgia exported about 86 million bottles of wine to 53 countries, up 10% compared to January-November 2018. The total value of wine exports constituted 220 million USD, up 20% compared to the same period of 2018. 

Wine exports have risen in strategic markets: Poland – up 24%  (3,746,092 bottles), China - 2% (6,323,463), USA - 48% (660,874 bottles) and Great Britain - 22% (126 493). 

Export growth was recorded to the following countries: Lithuania  - 48% (653,322 bottles), Germany - 40% (615,723), Belarus - 68% (2,505,617), Israel - 81% (287,023), Estonia - 27% (648,884), Russia - 11% (53,964,172), Moldova - 8551% (612 524), The Netherlands - 22% (88,114), Czech Republic - 17% (67,584), Sweden - 562% (78,390), Bulgaria- 23% (32,934), Mongolia  - 5% (224,652) and so on. 

According to the January-November indicators, Georgian wines were exported by 323 companies. 

Food Products Labeling
New technical regulations  came into effect on January 1, 2019 – The Rules on the Supply of Information on Food Products to Consumers – Labeling of Food Products. 

The new regulations have introduced additional requirements for labeling food products, with the aim of increasing the awareness of consumers. 

the new regulations: 

• Expand the list of mandatory information on labels. 

• Determine the sizes of letters on labels; 
•  Oblige the producer to provide accurate, clear, easily visible information on food products and it must not be misleading. 
• Determine  the Rules for placing information on some substances or products with ramifications for those who might be allergic or suffer from excessive sensitivity. 
• Change product validity standards;
• Oblige the producer to indicate the gross weight of food products on the label (excluding packing weight);
• And other requirements;’ 

New Tests on Honey Safety

The Agriculture Ministry’s laboratory has introduced tests on all qualitative and quantitative indicators of honey, based on technical regulations. It should be noted that, so far, beekeepers have had to hold laboratory tests abroad. At this stage, honey samples are tested for chlororganic and sulphur organic pesticides, various groups of antibiotics, heavy metals and so on. 

Tests are held only at the Tbilisi Laboratory, but those interested are able to submit honey samples to 10 various, regional laboratories. The transportation of samples to Tbilisi is free of charge, and applicants are able to receive the test results without problems locally. 

Logistics Centers

Significant investments are made in the primary production of agriculture sector. The space of perennial gardens are expanded every year. However, considerable loops must be hopped through, should it pass to deliver products to the final consumer. Without these stages, the field cannot be developed. 

It is noteworthy that logistics chains remain a poorly developed sector in Georgia. The chain is to give the form of a commodity to primary products. There are only several enterprises in Georgia that sort, standardize and pack fruits and vegetables. This means that the country still lacks refrigerator complexes and primary processing plants. 

Quality of Products 

There are products in Georgia that are exportable to the European market, but we cannot do this, because we cannot confirm the quality of these products. The introduction of international quality standards at gardens or fields has proceeded at a low pacs. State-run programs provide certain financial support to our farmers in this respect. Nevertheless, we face problems here, because big investments are required to introduce these standards on small-scale farms. Therefore, we should think of enhancing the role of cooperatives, to introduce these standards through united efforts. 

Vocational Education

It is impossible to develop agribusiness without the required knowledge and specialists. Neither an amount of investment, nor a space in the gardens matters – no results and benefits are available without knowledge. Vocational education, dual programs, practical knowledge remain undeveloped in Georgia. All segments of the agriculture sector lack the needed specialists.