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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.

OTHER NEWS
29/10/2021
J is for Jara

Jara took an honorable place in the Tourism Alphabet of Ajara, a new campaign implemented by the Department of Tourism and Resorts of Ajara AR. The idea is to link all 33 letters of the Georgian alphabet with attractions, locations, food, and activities worth visiting during the whole year. Jara was selected for the letter J.

Letter J will take tourists to Medzibna Village, Keda, where tourists will feel immersed with Jara hives hidden in nature.

'Jara honey is a unique product, it adds cultural value to our region, so it should be a well-packaged tourism product. So far, nothing has been done by the Department of Tourism to promote Jara, travel agencies and guides do not know much about the product, so linking J with Jara will be the first step toward to Jara promotion and awareness raise from our side' -Tinatin Zoidze, chairwoman of the Department of Tourism and Resorts of Ajara.

To boost the promotion, the Department of Tourism and Resorts of Ajara also developed a short video about Jara that will be advertised through their Facebook pageVisit Batumi, tourism information centers and media channels.

05/10/2021
Bulk, Brand and Niche - Georgian Honey Export Begins to Flow

Rebounding in spite of the pandemic, export markets for Georgian honey are beginning to flow and the volume of honey is growing rapidly. In the first eight months of 2021, 117 tonnes of honey were exported to eleven countries; France, Bulgaria, USA, Canada, Hong Kong, Japan, Kazakhstan, Azerbaijan, UAE, Qatar, and Saudi Arabia. Five times more than the  21.7 tonnes of honey, exported to six countries in 2020.

A major recent development has been the establishment of a contract for wholesale bulk honey between Api Geo Ltd in Samtredia and Naturalim France Miel a large honey company in France. In September, forty-three tonnes of honey was shipped to France. A second order is now being prepared for shipment. Strict testing in France and Germany and a new factory and equipment capable of homogenizing 20t of honey at a time mean that the company is the first in Georgia to able to reliably service such a market.

This is just a start; we hope to export at least 100 tonnes of Georgian honey to France this year. We want to supply from smaller-scale beekeepers which will help them with selling their honey, which has been a problem for years in Georgia.’ - Gia Ioseliani, Founder of Api Geo Ltd.

September was also a fortunate month for Kakhetian Traditional Winemaking (KTW) producers of the Nena Honey brand which includes the first Bio-certified Jara honey in Georgia.  The company has just shipped a second large order of six types of Nena honey to Hong Kong, including chestnut, blossom, alpine, linden, Jara and honey with nuts including Bio Jara honey. Nena Bio Jara honey is also on its way to Doha, Qatar. Overall, since January 2021, the company has increased the volume of honey exported by 110%, compared to 2020, to markets in Canada, USA, Hong Kong, Japan, Azerbaijan and Qatar. 

Bio certification of Jara honey in Ajara is receiving considerable governmental backing.

We are proud that export markets for bio-certified Jara honey are growing and now it is being exported to countries like Japan, the USA, and Canada. We started to support Bio-certification of the Jara Beekeepers Association in 2021 to continue to supply diverse export markets for such a flagship product.’ - Giorgi Surmanidze, Minister of Agriculture of Ajara.  

The Jara Beekeepers Association is consolidating its entry into the Japanese market in partnership with MF Company Ltd. In September they exported honey to be shown at an exhibition in Tokyo in October, after which the next order will be placed.

Japanese consumers are loving Jara honey, some of them told us that it helps them with stomach problems. We believe that this exhibition in Tokyo will open up new opportunities for the Jara Beekeepers Association.’ - William Pratt, Co-founder of MF Company Ltd.  

24/08/2021
Fourth Georgian Milk Mark (GMM) Dairy Exports to the USA

Dairy Enterprise Leanka Ltd from Kakheti region sent 837 kg different types of cheese (Sulguni, Smoked Sulguni, Georgian cheese) via the exporter company Geoproduct Ltd for sale in New York and Philadelphia, USA. The dairy is a member of the Georgian Milk Mark the quality assurance label for Georgian natural milk and its products bare the GMM. The company expects further increased orders in the near future.


12/07/2021
Jara Teaching Ready to Go

Eleven Vet colleges with beekeeping programmes have already received Jara equipment from the Georgian Beekeepers Union (GBU) and Jara Beekeepers Association (JBA). These eleven colleges are ready to integrate the Jara materials into their beekeeping programmes some from September this year and others in the spring semester next year.  The Deputy Minister of Education of Georgia, the Minister of Education of Ajara, and the Mayor of Keda visited the Keda VET College and expressed their support to Jara teaching.

‘We received the package of equipment for Jara teaching. The beekeeper students, enrolled last year, are looking forward to getting lessons related to Jara producing; officially, we are starting teaching from a new semester’ – Ilia Kharazishvili, the head of the beekeeping programme at Kachreti College.

The handover of Jara equipment is a follow-up activity of the Training of Trainers in Jara Honey Production for VET Colleges, which was held on May 18th-19th  hosted by the Georgian Beekeepers Union (GBU) and the Jara Beekeepers Association (JBA) in Keda, Medzibna Village. The National Center for Educational Quality Enhancement and sectoral skills organization Agro Duo are supporting the GBU and JBA with Jara teaching integration in the VET colleges.

We started cooperating with the Georgian Beekeepers Union and Jara Beekeepers Association for integrating Jara into our beekeeping programme, however, we are going to involve them in updating the whole beekeeping programme. We need their consultancy to share with us all standards to improve the programme’ - Bela Avalishvili, the head of Opizari VET College in Akhaltsikhe.

These colleges are  VET College at Batumi Shota Rustaveli State University; Black Sea Keda VET College; Black Sea Shuakhevi VET College; VET College Opizari in Akhaltsikhe; VET College Gantiadi in Gori; VET College Aisi in Kachreti; Training Center Farmers' House in Sagarejo, a brunch of Public College Aisi; VET college Iberia in Bagdati; VET College at Shota Meskhia Zugdidi State Teaching University; VET College at Georgian Technical University - Didi Jikhaishi in Imereti; and VET College Horizonti in Guria. 

Last year Akhali Talga VET College in Kobuleti and Khulo integrated the Jara materials into their one-year beekeeping programme, which is attended by twenty-eight beekeeper students. The GBU and JBA also delivered the Jara equipment to these colleges in 2020.

09/07/2021
Georgian Milk Day

On Friday, July 9th, from 10 am until 2 pm, the Business Institute of Georgia (BIG) who manages the Georgian Milk Mark, and the Georgian Milk Federation held a Georgian Milk Day. 

The Georgian Milk Mark which started in 2019 now has twenty one dairies currently using the mark. This B2B (Business to Business) event was to bring together the twenty one dairies who presented their products for show and tasting with invited hospitality and retail sector guests. COVID-19 has taken a toll on both sectors and it is hoped that bringing them together will be advantage to them both, in terms of sales for the dairies and supplying quality Georgian products for the HoReCa and retail sectors.

The Minister of Environmental Protection and Agriculture of Georgia, the Head of the Agrarian Committee of the Parliament, First Deputy Head of Environmental Protection and Natural Resources Committee of the Parliament gave a speech at the opening of the event. The National Food Agency, the State Laboratory of Agriculture, the Rural Development Agency and the Georgian National Tourism Administration participated in the event.  From June 1st 2021 a new regulation requires HoReCa sector actors to become HACCP certified. The NFA had an information desk at the event to answer questions and provide information.Everyone visited the GMM dairies and viewed and tasted their products.

 The event was supported by Alliances Caucasus Programme (ALCP) which is co-financed by the Swiss Agency for Development and Cooperation (SDC) and the Austrian Development Cooperation (ADA) implemented by Mercy Corps Georgia.

Here you can see photos of the event Gallery .

You can see here media reports:

https://bm.ge;

https://www.interpressnews.ge;

https://www.palitranews.ge;

https://mepa.gov.ge;

MEPAGeorgia

https://formula.ge

Businesspartner

07/07/2021
Georgian Honey Export Expands

Georgian Honey under Nena brand has successfully entered the Hong Kong market with a repeat order received soon after the first one. Hong Kong is the new market for Nena honey following USA, Canada, Japan and UAE.

LATEST NEWS
J is for Jara
29/10/2021
Jara took an honorable place in the Tourism Alphabet of Ajara, a new campaign implemented by the Department of Tourism and Resorts of Ajara AR. The idea is to link all 33 letters of the Georgian alphabet with attractions, locations, food, and activities worth visiting during the whole year. Jara was selected for the letter J. Letter J will take tourists to Medzibna Village, Keda, where tourists will feel immersed with Jara hives hidden in nature. 'Jara honey is a unique product, it adds cultural value to our region, so it should be a well-packaged tourism product. So far, nothing has been done by the Department of Tourism to promote Jara, travel agencies and guides do not know much about the product, so linking J with Jara will be the first step toward to Jara promotion and awareness raise from our side' -Tinatin Zoidze, chairwoman of the Department of Tourism and Resorts of Ajara. To boost the promotion, the Department of Tourism and Resorts of Ajara also developed a short video about Jara that will be advertised through their Facebook pageVisit Batumi, tourism information centers and media channels.
Bulk, Brand and Niche - Georgian Honey Export Begins to Flow
05/10/2021
Rebounding in spite of the pandemic, export markets for Georgian honey are beginning to flow and the volume of honey is growing rapidly. In the first eight months of 2021, 117 tonnes of honey were exported to eleven countries; France, Bulgaria, USA, Canada, Hong Kong, Japan, Kazakhstan, Azerbaijan, UAE, Qatar, and Saudi Arabia. Five times more than the  21.7 tonnes of honey, exported to six countries in 2020. A major recent development has been the establishment of a contract for wholesale bulk honey between Api Geo Ltd in Samtredia and Naturalim France Miel a large honey company in France. In September, forty-three tonnes of honey was shipped to France. A second order is now being prepared for shipment. Strict testing in France and Germany and a new factory and equipment capable of homogenizing 20t of honey at a time mean that the company is the first in Georgia to able to reliably service such a market. ‘This is just a start; we hope to export at least 100 tonnes of Georgian honey to France this year. We want to supply from smaller-scale beekeepers which will help them with selling their honey, which has been a problem for years in Georgia.’ - Gia Ioseliani, Founder of Api Geo Ltd. September was also a fortunate month for Kakhetian Traditional Winemaking (KTW) producers of the Nena Honey brand which includes the first Bio-certified Jara honey in Georgia.  The company has just shipped a second large order of six types of Nena honey to Hong Kong, including chestnut, blossom, alpine, linden, Jara and honey with nuts including Bio Jara honey. Nena Bio Jara honey is also on its way to Doha, Qatar. Overall, since January 2021, the company has increased the volume of honey exported by 110%, compared to 2020, to markets in Canada, USA, Hong Kong, Japan, Azerbaijan and Qatar.  Bio certification of Jara honey in Ajara is receiving considerable governmental backing. ‘We are proud that export markets for bio-certified Jara honey are growing and now it is being exported to countries like Japan, the USA, and Canada. We started to support Bio-certification of the Jara Beekeepers Association in 2021 to continue to supply diverse export markets for such a flagship product.’ - Giorgi Surmanidze, Minister of Agriculture of Ajara.   The Jara Beekeepers Association is consolidating its entry into the Japanese market in partnership with MF Company Ltd. In September they exported honey to be shown at an exhibition in Tokyo in October, after which the next order will be placed. ‘Japanese consumers are loving Jara honey, some of them told us that it helps them with stomach problems. We believe that this exhibition in Tokyo will open up new opportunities for the Jara Beekeepers Association.’ - William Pratt, Co-founder of MF Company Ltd.  
Fourth Georgian Milk Mark (GMM) Dairy Exports to the USA
24/08/2021
Dairy Enterprise Leanka Ltd from Kakheti region sent 837 kg different types of cheese (Sulguni, Smoked Sulguni, Georgian cheese) via the exporter company Geoproduct Ltd for sale in New York and Philadelphia, USA. The dairy is a member of the Georgian Milk Mark the quality assurance label for Georgian natural milk and its products bare the GMM. The company expects further increased orders in the near future.
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