Government is Increasing Vintage Subsidy Budget to a Record 138 Million
Adjustments will be made to the 2021 budget, which will increase the total expenditures of the government by 1.1 billion GEL.
The budget of the Ministry of Environment and Agriculture will be increased by 177 million GEL. According to the document published by the Ministry of Finance, the state funding for the vintage will increase by 100 million GEL and the volume of this program will reach a record 138.4 million GEL. Accordingly, Kakhetian and Rachvelian viticulturists will receive a significant amount of budget assistance before the elections.
The government has been funding the vintage subsidy program for years. Under the terms of the subsidy, the government instructs its wineries (Akura and Crop Management Company) to purchase grapes and finances the process with a state subsidy. The state-owned wineries then process the grapes and produce alcohol and wine materials from it, which are then sold at auction and used by private wine and cognac producers in their own products. According to the government, the existing model of subsidy is needed to "leave no undelivered grapes" on the market.
According to public information requested by BMG from the Ministry of Environment and Agriculture, in 2015-2020 the state spent 212 million GEL on subsidizing growers, thus purchasing 285 thousand tons of grapes. The largest of them - the purchase of 87.1 million GEL was made in 2020, with which the government purchased 95 thousand tons of grapes.
The government-owned and state-owned company produces alcohol and wine from grapes purchased under the subsidy program, which it then sells to the wholesale market.
According to information requested by BMG, state-owned companies produced alcohol and wine worth GEL 239 million from grapes donated by the government. The volume and carrying amount of each are as follows:
• The volume of wine material made in 2015-2020 is 92.8 thousand liters, cost 108.6 million GEL;
• The volume of cognac alcohol produced in 2015-2020 is 12.1 thousand liters (absolute alcohol), cost 130.4 million GEL.
BMG requested information about the alcohol and wine sold by the state during 2015-2021. In total, the state sold 114.1 million GEL worth of alcoholic beverages during this period.