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Survival of the Fittest in Georgian Agriculture

From the ISET Economist news (http://www.iset.ge/news/?s=survival&lang=en)
By Nino Mosiashvili

The conclusion of the Association Agreement (AA) with the European Union was euphorically acclaimed by Georgian media as well as political and economic decision makers. Part of the AA is the Deep and Comprehensive Free Trade Agreement (DCFTA). The DCFTA is intended to liberalize trade between Georgia and the EU by lowering tariffs and reducing non-tariff barriers. For agriculture, the most relevant changes relate to food safety (bacterial contaminants, pesticides, inspection, and labeling) as well as animal and plant health (phytosanitation). For the manufacturing sector, the removal of so-called “technical barriers to trade” is similarly important, with the goal being to prevent the usage of technical standards as a means to protect domestic markets from foreign competition. “If regulations are set arbitrarily, they could be used as an excuse for protectionism”, states the World Trade Organization on its homepage.

             

It is clear that all these agreements require unilateral adjustment of Georgian regulations to European standards. Georgia is economically too small to impose its preferences on Europe. This is stated quite frankly in the AA, when it says that it aims to “support the efforts of Georgia to develop its economic potential via international cooperation, also through the approximation of its legislation to that of the European Union”.

Whether these unilateral adjustments are beneficial for Georgia is not generally clear. European regulations do not necessarily reflect “best international practice”. In democracies, laws and regulations come about through the lobbying efforts of political interest groups much more than through rational planning. In the future, internal political decisions made in the European Union will be relevant for Georgia much more than they were previously, and it will be more difficult to pursue policies tailored to the specific situation of Georgia.

Yet Georgia hopes that the convergence to European standards will make it easier for Georgian firms to access the European market. Most critical in this respect is Georgian agriculture, as it is the sector employing the bulk of the Georgian labor force, while it is at the same time dramatically lagging behind European productivity levels. In 2013, Georgia’s agriculture accounted for only 9.3% of the Georgian gross domestic product but employed about half of the labor force. Thus, one of the benchmarks for evaluating the usefulness of the DCFTA will be its impact on Georgian agriculture.

THROWN INTO THE WATER – WILL IT SWIM?

The impacts of the DCFTA for Georgia were assessed in a report with the lengthy title Trade Sustainability Impact Assessment in support of negotiations of a DCFTA between the EU and Georgia and the Republic of Moldova. It was written by a consortium consisting of the Dutch consulting company Ecorys and the The Center for Social and Economic Research (CASE)a Warsaw-based think tank. On a broad level, the report estimates that due to trade liberalization with the EU the national income of Georgia will increase by 291.9 million euro in the long run, corresponding to a GDP growth of 4.3%. This goes along with an increase in Georgian exports and imports by 12% and 7.5%, respectively, leading to an improvement of the Georgian trade balance. But what about agriculture?

According to the study, the DCFTA will have different effects on different agricultural products, and the overall picture is very ambivalent. The output of some product categories will increase, namely vegetable oils and fats (+6.7%), vegetables, fruits, nuts, and oilseeds(+3.4%), and animal products (+3.1%), while for many other products, the output is expected to shrink, e.g. livestock and meat products (-14.8%), other processed foods (-8.8%),beverages and tobacco (-4.0%), sugar (-2.4%), and other crops (-2.0%). The report attributes the increases to reductions of EU tariffs on Georgian exports and the decreases to the reduction of Georgian tariffs on goods imported from the EU. These numbers, if they say something about the true developments, suggest that parts of Georgia’s agricultural sector will get under severe pressure due to increased competition with European producers.

ECONOMIC DARWINISM

What are the implications for Georgian agricultural policy? Some of the producers will benefit from the integration into the European market, as they can stand the pressure and even expand in this highly competitive environment. Other producers are likely to run into essentially insoluble problems. One particularly beneficial category in this respect is vegetables, fruits, nuts, and oilseeds, because some of the products in that category (e.g. hazelnuts) are labor intensive and serve niche markets. This implies that more people can be employed in the production of these goods, making the transformation to a modern, efficient agriculture less painful, and it means that competition is lower and margins are higher. If policy recognizes these advantages, producers in that category might become “national champions”.

Currently, vegetables, fruits and nuts are in Georgia primarily produced by small and medium sized farmers. Due to lack of greenhouses the production is seasonal. Yet farms can be consolidated and technical equipment can be upgraded. In the end, it will be relevant that Georgia has fundamental advantages in the production of goods in that category, namely clean soils, little usage of chemicals, a relatively large amount of available land for cultivation, and a long tradition in vegetable and fruit production.

Moreover, about half of Georgia’s current export of vegetables, fruits, and nuts already goes to the EU, which means that Georgian producers already have “a foot in the door”. Currently, the exports almost entirely consist of hazelnuts (there are no tariffs, as hazelnuts are already covered by the GSP+ regime, and hazelnuts easily satisfy sanitary and phyto-sanitary standards). Thus, while the DCFTA may not change Georgia’s hazelnuts export to the EU significantly, there may be other niche products in this category, like berries and other kinds of nuts, which may benefit from the DCFTA, for example through adjustments of Georgian regulations regarding product packaging.

It will be important that policy will subscribe to what one might call “Economic Darwinism” – do not try to keep those producers alive that are incapable of surviving, but instead create good circumstances for those that have a future in Georgia.

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16/02/2021
Georgian Honey Export Expands

Nena a honey export company has been exporting since 2019. Chestnut and Jara honey have been sold in twenty shops in New York, Pennsylvania and New Jersey from January, 2021. Nena also exported Jara honey to Japan. And by the end of February, Bio Jara honey, a new product will be exported to the USA. Canada is a promising market and has repeated its order for the fourth time.

05/02/2021
Jara Beekeeping a National Treasure

Producing honey in Jara hives has officially been granted Intangible Cultural Heritage status by the National Agency for Cultural Heritage Preservation of Georgia. The Jara Beekeepers Association (JBA) applied to the Agency back in 2020.

Jara is traditional wild beekeeping, a practice which almost died out but which has since 2014 begun a slow revival with the facilitation of the ALCP. The ancient tradition with strong roots in traditional agriculture, culture represents a unique way of life. The status recognizes Jara’s need to be preserved for future generations earning a place amongst other honourable Georgian traditions, including, Qvevri wine-making and Georgian song and dances. This status and will contribute to its further preservation and promotion.

It also brings hope and feeling of pride to those beekeepers who are continuing or are now taking Jara beekeeping up.

Jara has been on a fascinating journey since 2014. This journey includes The first commercial harvesting, registering the Jara honey mark, being promoted at the international exhibitionsfirst Bio certification, being taught at the VET college and reaching export markets in the US and Canada. And we can be sure, more things are on their way.  

21/01/2021
Power of Christmas Spirit Shown by Municipal Women’s Rooms

Christmas is a magical time awakening the holiday spirit in us. They say, Christmas is the spirit of giving without a thought of getting.

Before Christmas this year, the managers of the municipal Women’s Rooms in Kakheti, who like everyone else have adapted themselves to remote working due to the COVID-19 pandemic, established an online Christmas Charity Auction on Facebook to help families in need affected by the pandemic. The managers selected seven families in need for help. Their stories are heartbreaking; of a single mother, a victim of domestic violence, raising her children by herself, grandparents raising orphans, a child with disabilities and families with many children living in extreme poverty. Up to five hundred people joined in the auction donating or buying things in the auction with the money raised going for donation. The auction raised more than two thousand Gel over two weeks and besides money, the families received sweets, books, gifts; and special food for a girl with Celiac Disease.

The Christmas of the seven families was changed for the better. The Christmas Charity Auction finished on the 7th of January, though the online group on Facebook remains active, as the Women’s Rooms are planning to continue sharing the act of kindness with families in need and are open to anyone willing to contribute to any future auctions.

There are twenty-eight Women's Rooms in twenty-seven municipalities of four regions of Georgia. Find more about Women’s Rooms here.

30/12/2020
Woman Entrepreneur on Overcoming Challenges during the Pandemic

An article Challenges Emerge for Women Entrepreneurs as a Result of the Covid-19 Pandemic  has been published on Civil Society Portal in Georgia as part of an essay competition. The woman entrepreneur-Zeinab in the article is the Director of the dairy enterprise Tsintskaro+Ltd in Tetritskaro, Georgia. The Alliances Programme, an SDC and ADA project implemented by Mercy Corps Georgia, has been facilitating this dairy since 2016. Zeinab wrote this article by herself and won the Civil Society Portal essay competition. The article comes at the right time. We all need this kind of encouraging information during the pandemic period.

You might be interested in information on how businesses in Georgia are dealing with challenges caused by COVID-19 and can check our report COVID-19 Effects on the ALCP Clients Businesses.

14/12/2020
Jara Honey Bio Production Grabs Newly Appointed Minister’s Interest

The Jara Beekeepers Association (JBA) hosted the new Minister of Agriculture of Ajara Autonomous Republic. One Bio certified Jara beekeeper invited the Minister to Namonastrevi village in Keda to watch the Jara harvest. He also visited the Agro-Keda factory where KTW produce the Nena honey brandto see the Bio honey production and packaging process following strict Bio standards. The JBA together with its members talked about their work, education materials they have disseminated among their members, results and planned activities.

‘Jara honey is an amazing product it’s tradition and now Bio certification. It has great export potential. Even though, the pandemic has significantly limited our budget, we will support the JBA to help ensure the sustainability of the Jara honey production and Bio certification.’ – Giorgi Surmanidze, Minister of Agriculture of Ajara.

In a country first, there are now twenty four Bio certified Jara beekeepers, including the Jara apiary in the Goderdzi Alpine Garden. The Agro-Keda Factorythe only company commercially harvesting Jara honey, received Bio certification in October 2020, thus the company is eligible to sell the Bio certified Jara honey crop with a Bio label soon available in the supermarket chains throughout Georgia.

The JBA is due to start selling the honey of its members under its own label from December this year. The Agroservice Center of the Ministry has already allocated a room in Keda municipality center for the JBA for the compliant packaging and labeling of its products.

More details on Jara honey to be found on www.jarahoney.com.

Photo source: The Ministry of Agriculture of Ajara Autonomous Republic

17/11/2020
Georgian Milk Mark in Ministry Magazine

Our Village, the Ministry of Environmental Protection and Agriculture of Georgia (MEPA) magazine with a circulation of 10,000 copies a month is publishing an article about the Georgian Milk Mark (GMM) in its October issue. The article provides comprehensive information about the GMM, a list of the GMM dairies and their products. Rural farmers across Georgia will receive the magazine through fifty-four MEPA Information Consultation Centers (ICCs) for free.

Currently, sixty-seven types of GMM dairy products from eighteen GMM  dairy companies are being sold  in Madagoni, Spar, Ori Nabiji, Nikora, Zgapari, Fresco, Foodmart, Carrefour, Goodwill, Willmart, Libre, Deili, Bilion supermarket chains. Details on www.georgianmilk.ge.


LATEST NEWS
Georgian Honey Export Expands
16/02/2021
Nena a honey export company has been exporting since 2019. Chestnut and Jara honey have been sold in twenty shops in New York, Pennsylvania and New Jersey from January, 2021. Nena also exported Jara honey to Japan. And by the end of February, Bio Jara honey, a new product will be exported to the USA. Canada is a promising market and has repeated its order for the fourth time.
Jara Beekeeping a National Treasure
05/02/2021
Producing honey in Jara hives has officially been granted Intangible Cultural Heritage status by the National Agency for Cultural Heritage Preservation of Georgia. The Jara Beekeepers Association (JBA) applied to the Agency back in 2020. Jara is traditional wild beekeeping, a practice which almost died out but which has since 2014 begun a slow revival with the facilitation of the ALCP. The ancient tradition with strong roots in traditional agriculture, culture represents a unique way of life. The status recognizes Jara’s need to be preserved for future generations earning a place amongst other honourable Georgian traditions, including, Qvevri wine-making and Georgian song and dances. This status and will contribute to its further preservation and promotion. It also brings hope and feeling of pride to those beekeepers who are continuing or are now taking Jara beekeeping up. Jara has been on a fascinating journey since 2014. This journey includes The first commercial harvesting, registering the Jara honey mark, being promoted at the international exhibitions, first Bio certification, being taught at the VET college and reaching export markets in the US and Canada. And we can be sure, more things are on their way.  
Power of Christmas Spirit Shown by Municipal Women’s Rooms
21/01/2021
Christmas is a magical time awakening the holiday spirit in us. They say, Christmas is the spirit of giving without a thought of getting. Before Christmas this year, the managers of the municipal Women’s Rooms in Kakheti, who like everyone else have adapted themselves to remote working due to the COVID-19 pandemic, established an online Christmas Charity Auction on Facebook to help families in need affected by the pandemic. The managers selected seven families in need for help. Their stories are heartbreaking; of a single mother, a victim of domestic violence, raising her children by herself, grandparents raising orphans, a child with disabilities and families with many children living in extreme poverty. Up to five hundred people joined in the auction donating or buying things in the auction with the money raised going for donation. The auction raised more than two thousand Gel over two weeks and besides money, the families received sweets, books, gifts; and special food for a girl with Celiac Disease. The Christmas of the seven families was changed for the better. The Christmas Charity Auction finished on the 7th of January, though the online group on Facebook remains active, as the Women’s Rooms are planning to continue sharing the act of kindness with families in need and are open to anyone willing to contribute to any future auctions. There are twenty-eight Women's Rooms in twenty-seven municipalities of four regions of Georgia. Find more about Women’s Rooms here.
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