BAKU, Azerbaijan, April 28
By Tamilla Mammadova – Trend:
Agriculture has played an important role in Georgia’s economy since the Soviet era, Trend reports via the Asian Development Bank (ADB) Outlook 2021.
"It currently contributes 7.2 percent to GDP, a bit more than the 6.1 percent average in upper-middle-income countries, but employs nearly 40 percent of the labor force, nearly double the upper-middle-income average. Yet agriculture occupies a relatively small share of exports," the report said.
In 2020, nearly 70 percent of agricultural exports were confined to only a very few products - notably wine, mineral water, and nuts - and this has not changed much over the years. Even after having increased recently, foreign sales of fresh and processed fruit, vegetables, meat, and dairy products provided only about 3 percent of all exports.
Indeed, the country’s agricultural trade balance is a deficit of $1 billion annually, adding to the country’s already high trade deficit. Agriculture in Georgia faces many challenges, most importantly insufficient transportation infrastructure, supply chains, and cold storage facilities to allow produce to be shipped out of season, when prices are higher.
Other challenges are low brand recognition, small plot size, a lack of irrigation and drainage systems, and deficient information availability and financial literacy. Agriculture and the processing of agricultural commodities attract less than 1 percent of foreign direct investment in Georgia.
"Further, farmers cannot easily use machinery as bank loan collateral. The Agriculture and Rural Development Strategy of Georgia 2021–2027 aims to make agro business more competitive and includes government support for implementing a free trade area with the European Union by enabling compliance with food security and safety requirements," the report said.
The government’s United Agro Project to promote higher-value agriculture and agricultural exports includes support for loans to entrepreneurs who promote diversification into new crops. The Agricultural Cooperatives Development Agency promotes higher productivity and competitiveness by encouraging more cost effective methods in cooperatives.
"An agricultural insurance program has been launched, the Ministry of Environmental Protection and Agriculture runs a program to popularize Georgian agricultural products, and the government supports private investment in value chains and logistics facilities. As part of its COVID-19 response plan and efforts to promote domestic production, the government has boosted support to farmers by easing their access to finance, building greenhouses, and broadening insurance to cover perennial crops," the ADB added.
As reported, Georgia also needs to improve the quality of its agricultural exports and enhance product uniformity to conform with standardization requirements. Smart investment in agriculture and orienting trade flows to new markets could help achieve this. Higher agricultural productivity and stronger market linkages would help diversify Georgia’s economy, bringing benefits to a greater share of the population and increasing resilience in the face of future shocks.
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