Economics

The Myth that EU is Destroying Georgian Agriculture is Baseless

18 August, 2015

The myths that Association Agreement with the EU will cause destruction of the Georgian agriculture are baseless. In fact, the EU supports development of Georgian agriculture, improvement of employment level in villages, promotion of farming, production of high-quality goods, and their export to the European market. Two main projects exist for this purpose - ENPARD (European Neighborhood Programme for Agriculture and Rural Development and CIB (Comprehensive Institution Building).

ENPARD

The budget of the ENPARD programme, launched in March 2013, is 52 million Euros. The goals of the programme are improvement of the capabilities and efficiency of the Ministry of Agriculture and development of the farmers initiatives and capabilities through consulting and information district centers; strengthening of cooperation with farmers and between farmers for the increase of productivity; improvement of employment and living conditions in villages.

Figure 1. ENPARD support by sphere

Financial support for the Georgian government (24.5 million Euros).This support includes implementation of the agriculture development strategy for 2014-2020 (7 mln), establishment of consulting services for farmers in at least 30 districts (5.5 mln), support through government programmes to at least 350 farmer cooperatives (8.5 mln), creation of policy division in the Ministry of Agriculture (2 mln), and improvement of the agricultural statistics (1.5 mln).

Technical support to the agricultural institutions (7 million Euros).The programme envision expert support to the Ministry of Agriculture (2.5 mln),technical support to the cooperatives development agency (2.5 mln), also technical support to Adjara Ministry of Agriculture and Adjara Agro-service Center (2 mln, UNDP).

Grants for NGOs (19.75 million Euros).4 grants envision financial and technical support for 160 cooperatives (16 mln), for pilot projects in 2districts (3 mln)and for helping higher education and research (0.75 mln).

Cooperatives. As of today, within the ENPARD project 1092 cooperatives have the status of agricultural cooperatives, with 7341 shareholders, including1635 women. The capital mobilized in these cooperatives is 14,286 990 lari.

The largest number of cooperatives is registered in the spheres of livestock (Samtskhe-Javakheti, Kvemo Kartli) and potatoes (Samtskhe-Javakheti, Kvemo Kartli). The breakdown of cooperatives by region is as follows: Kakheti-83; Kvemo Kartli-168; Mtskheta-Mtianeti-51; Shida Kartli-75; Samegrelo-Zemo Svaneti-92; Guria-65; Adjara-125;Samtskhe-Javakheti-211; Racha-Lechkhumi-89; Tbilisi-35. At this stage there are 4 second level cooperatives in Guria, Imereti, Racha and Kvemo Kartli.

There are several ongoing programmes with EU support in the Agricultural Cooperatives Development Agency:

„Provision of agricultural cooperatives with equipment and sowers programme" envisions provision of cooperatives with agricultural equipment for favorable price – 900 lari, which is 24% of its value. Each package includes a motoblok, mower, plough, cultivator and sower. Cooperatives created by refugees and ecological migrants, also in the highland, border or occupation line area villages also get another sower for a symbolic price of 1 lari. By now, 490 cooperatives have received1275 agricultural packages and 194 sowers.

Through these programme agricultural cooperatives have been equipped with small-size agricultural equipment which helps with working farms with difficult relief and small size, and supports engaging in economic activity, decreasing the costs of working the land for cooperatives.

State programme „Development of nuts production by supporting agricultural cooperatives" includes construction of infrastructure in village Darcheli, Zugdidi District, which will be capable to dry up to 24 tons of unshelled nuts daily, and to warehouse 500 tons of nuts. In order to provide for the implementation of international standards, the programme envisions free provision of consulting services for the agricultural cooperatives.

The programme helps creation of the comprehensive cycle of nuts’ production, processing and sales, decrease of the net cost and improvement of the nuts’ export potential.

Support to the agricultural cooperatives includes practical training in the tax law for 400 representatives of about 30 cooperatives.

Consulting Centers for Farmers.The second important part of the ENPARD project is development of the extension service. With active support from the EU, consulting centers for farmers have been activated in 54 municipalities instead of 30.

ENPARD 2. After the end of the 52-million programme, launching ENPARD 2is planned, the budget of which will be grown to 60 million Euros. The new programme will be oriented on development of villages in Georgia and support to the rise of employment of people living in villages.

CIB

There is another project financed by European Union and implemented in the National Food Agency – CIB (Comprehensive Institution Building). On the first stage the goal of the CIB programme (3.4 million Euros, 80% financed by the EU) is to equip the National Food Agency, increase its capabilities and increase qualification of the Agency’s employees through trainings.

On the second stage the agricultural laboratory and Revenue Service joined the project (4.5 million Euros), since phytosanitary and other control on the imported production is conducted by the Revenue Service on the border. The money granted on the third stage (4.5 million Euros) will be used for the institutional strengthening of the National Food Agency.

With support of theCIB project several border checkpoints were supplied with equipment necessary for compliance with the DCFTA requirements and implementation of effective control.

DCFTA Facility

Another EU project DCFTA Facility can also be considered as indirect support to the agriculture. Its budget on the first stage is 37.5 million Euros. One of the components of this programme envisions preferential credits for the producers and farmers that will work in accordance with the European standards. The project begins in 2016.

Besides this help, some EU countries are Georgia’s individual donors. For instance: Austria’s Development Agency, German government development bank KFW, German international cooperation society GIZ. Netherlands help Georgia with melioration development project.

EU is the main donor and stable partner from the points of view of both institutional development and strategic development of agriculture. After inclusion of the EU in the planning of agriculture development in Georgia, growth dynamics has been created:

Agriculture in numbers. During 2014 the value of the agriculture products produced in Georgia reached 3.4 billion lari. As a result of processing agricultural products, production with the total value of 4.5 billion lari was produced. The total value of production in the agricultural business sector is more than in 2013 by 10%, which is mainly caused by the growth of the processing sector, where the growth is 13.8%.The crude production value has grown by 5.2% in comparison with the previous year.

Investments: According to the preliminary data from 2014, foreign direct investments with the total value of 19 090 600 mln USD have been put into the agriculture sector, which is more than in the previous year by 38%. In 2012 the total value of investments was 16 119 300 lari, which is 15.6% less compared to the 2014 data.

Examples of success

The positive tendency of Georgian products entering European market is demonstrated by various examples of success:

Kiwi.Kiwi produced by Georgian company Nergeta in village Ingiri, Zugdidi District is being sold in the supermarkets of one of the Europe’s largest trading networks LIDL. This network is buying 1 kg of kiwi from the Georgian producers for 1.20 Euro.

Bio wine . The first batch of Iago Bitarishvili bio wine Chardakhi has been exported since 2006 to the following countries: Italy, France, USA, Japan, Britain, Sweden, Denmark, Slovenia, Finland, Belgium. Mr Bitarishvili’s wine is sold in such famous European restaurants as: Chateau Brianne – Paris and Terroir – London.

Blueberry.12 tons of blueberry produced in Georgia has gone to the British market for the first time this year. Its price on the European market ranges from 4 to 10 Euros. Vanrik Agro Groupcompany began cultivating blueberries in village Laituri, Ozurgeti District in the end of 2012. The company’s management plans to increase its land to 400 hectares in  the nearest future.

Perspectives of export

European anchovy.Georgian fishing enterprises are preparing to begins export to the EU. European anchovy from the Georgian waters of the Black Sea can go to the European market. EU mission DG SANCO (Directorate General Health and Consumers Affairs) visited Georgia on two occasions in order to assess the fishing companies. Exports of the flour and oil of the fish from the Georgian waters to the EU depend on the positive assessment by this mission.

Honey.Export of the Georgian honey to the EU has been actively discussed along with the work on the DCFTA agreement. In order for the Georgian honey to get to the EU market it must be found free of the antibiotic particles and other pollutants as a result of laboratory studies. The Ministry of Agriculture is working on equipping its laboratory, where the honey samples will be studied. This will allow the honey-producing farmers improve their products and give them an opportunity to enter EU market. 

 The source of the myth 

Dimitry Lortkipanidze, Burjanadze-United Democrats: „What our government has signed with such delight [Association Agreement] is a state crime. Indeed, this means "European” destruction of the Georgian village and economy!" („Asaval-Dasavali", 21-27 July 2014).

 Saqinform: „Joining EU causes destruction of producers, slaughtering the cattle, cutting down gardens and vineyards – EU turns its new members into markets for its exports, it decreases industry there, as well as agriculture!" (4 April, 2014).


Zurab Modebadze

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