agriculture

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Georgian National Investment Agency 2013

AGRICULTUREAGRICULTURE


IN IN GEO

AGRICULTURE

OVERVIEW:OVERVIEW:

• Over 21 micro-climates - a wide range of grain, vegetables, hard and soft fruits, meat and dairy could be farmed

• Agriculture accounts for 9% of GDP. It contributes ~53% of employment mostly in subsistence farming (average farm size of 1.22 ha)

• Traditi onally Georgia has strengths in wine, nuts, fruits which account for more than 60% of agriculture exports

• The average gross monthly salary in the agricultural sector in Georgia is USD 220

OPPORTUNITIES:OPPORTUNITIES:

• Import substi tuti on opportuniti es - meat, dairy products, onions, potatoes etc

• Export opportuniti es - traditi onal strong sub-sectors, like wine, walnuts, hazelnuts, sheep meat, etc

• Producti vity gain opportuniti es – tomatoes, apples, cucumbers, stone fruits, citrus etc

VESTORGIA


OVERVIEW OF GEORGIA’S AGRICULTURE SECTOR

• Agriculture and agribusiness accounts for 9% of GDP, 53% of employment, 1.3% of FDI and 16% of trade volume

– Employment driver is subsistence farming in rural areas– Georgia is reliant on processed food imports (12.1% of total

imports) while export is balanced between fresh and processed (9.4% and 10.5% respecti vely)

– Consumer food accounts for 30% and 24% of total agriculture commoditi es/processed food imports and exports respecti vely

• Sector trade balance was -762 million in 2012 and defi cit is widening

• Low value add per hectare (only $1,220/ha of arable land)

• Producti vity level lags most regional and more developed economies in all crops

• Four major hurdles are root-causes for underperformance and lie in fragmented industry structure, lack of investment, obsolete producti on and lack of market access

• Given relati ve low starti ng points, producti vity gain potenti als are signifi cant across a broad range of crops/livestock

• Based on competi ti veness and producti vity gain potenti als, Georgia can select priority crops/livestock to exploit exports and import substi tuti on potenti als

MAJOR EMPLOYMENT YET MODEST GDP, INVESTMENT AND TRADE SHARE

VALUE ADD AND PRODUCTIVITY

LATENT POTENTIALS TO CAPTURE GROWING DOMESTIC DEMAND AND EXPORTS


IN IN GEO

TRADE IS MAINLY REGIONAL AND DEFICIT HAS BEEN WIDENING

IN2005

235

2006

299

2007

250

2010

316

2009

349

2011

437

2012

513

Agriculture tradeAgriculture tradeUSD mln

Share of top exportsShare of top exports2011, USD mn, percent

Exports by countryExports by country2010, percent

Exports by countryExports by country2010, percent

Share of top exportsShare of top exports2011, USD mn, percent

Nuts

Nuts

Alcoholic bev.

Alcoholic bev.

Wine

Wine

Water

Water

Live animals

Live animals

Sugar water

Sugar water

Net trade Import Export

30

16

12

11

6

3

15

9

9

8

8

4

36361616

OthersOthers

OthersOthersAzerbaijanAzerbaijan

USAUSA

KazakhstanKazakhstan

BrazilBrazil

TurkeyTurkey

TurkeyTurkey

KazakhstanKazakhstan

ArmeniaArmenia

GermanyGermanyAzerbaijanAzerbaijan

RussiaRussia

UkraineUkraine

UkraineUkraine577

9 2020

3232

755

1010

11111111 1919

VESTORGIA


THE SECTOR IS WELL DIVERSIFIED WITH EXPORT STRENGTHS IN NUTS, FRUITS, WINE AND LIVE ANIMALS

Share of fresh

Share of processed

1 Including meat (14%), oil and fat (8%), dairy products (5%) and other food products (24%); 2 Import-export data for 2010

Processed Fresh


IN IN GEO

WATER AND LAND RESOURCES

30, 393

28,03713,179

8504

31602223 2113

1157 1153 917

IN

WATER RESOURCESWATER RESOURCES

LAND RESOURCESLAND RESOURCES

Renewable internal fresh water resources per capitaCubic meter, 2010

Breakdown of agricultural landThousand ha, 2010

Arable land rati oArable/Total land (%)N GEO

802264 143

1797

3006

3694

6700

Total land Non-agri-cultureland

Total agri-cultural land

Pastureand meadows

Land underper-manentcrops

Mowed landsfor hay

Arable land

GEOGEGEGEGEGEGEGEArable/Total land (%)GEOSources: World Bank, Georgia Ministry of Economy and Sustainable Development

VESTORGIA


AGRICULTURE LANDS AND FARMS

Average farm sizeAverage farm size2010, Ha

Subsistence

Semi-commercial

2010, percent

Number Number of farmsof farms

Agricultural Agricultural land useland use

Commercialfarms

Sources: FAOSTAT, USDA Foreign Agricultural Service, European Commission, USAID

182.0

68.0

54.0

52.0

46.0

24.0

13.0

6.5

1.7

1.6

1.6

0.7


IN IN GEO

Source: World Bank

PRODUCTION MODE IS ON PAR WITH REGIONAL BENCHMARKS YET TRAILS ADVANCED AGRICULTURE

Other hurdles in producti on mode• Intermitt ent (and counterfeit) supply of high quality seeds/saplings• Deteriorati on of obsolete irrigati on now covers ~15% of arable land• Lack of post-harvest handling faciliti es (e.g., cold storage, packing, sorti ng) and

distributi on infrastructure

Ferti lizer useFerti lizer use2010, kg/ha

Machinery, tractors useMachinery, tractors use2010, per 100 sq. km of arable land

VESTORGIA


GEORGIA CAN PRIORITIZE DEVELOPMENT OF CROPS/LIVESTOCK WITH HIGH PRODUCTIVITY GAIN POTENTIAL AND SIZABLE VOLUME

Import-oriented Trade neutral

Trade balance, 2011, USD mn

Export-led

Producti vity gain potenti alsProducti vity gain potenti alsTo-be to current rati o

Potenti al priority crops Import substi tuti on Import reliant

High High producti vity producti vity potenti alpotenti alExport Export

opportuniti esopportuniti es

Producti vity gain Producti vity gain opportuniti esopportuniti es

Import substi tuti on Import substi tuti on opportuniti esopportuniti es

Medium Medium producti vity producti vity potenti alpotenti al

Average Average producti vity producti vity potenti alpotenti al

Export-led Neutral

Gross producti on value (2010, USD mn)


IN IN GEO

14 POTENTIAL PRIORITIES CROPS/LIVESTOCK TO FOCUS DEVELOPMENT EFFORTS

HIGH POTENTIAL PROJECTS GEORGIA’S COMPETITIVENESS HIGH POTENTIAL PROJECTS GEORGIA’S COMPETITIVENESS

IN IN GEO

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VESTORGIA


REGIONAL COMPETITIVENESS AND POTENTIALS MAP

CROP POTENTIALS BY REGION

BASED ON REGIONAL SPECIALIZATION (NATURAL ENDOWMENTS, CULTIVATION HISTORY), PRODUCTIVITY AND SEASONALITY

VESTORGIA

C O O S G OC O O S G O

INVESTIN GEORGIA

GEORGIAN NATIONALGEORGIAN NATIONALINVESTMENT AGENCYINVESTMENT AGENCY

www.investingeorgia.orgwww.investingeorgia.org

E-mail: enquiry@investi ngeorgia.orgPortf olio Manager: Kristi ne MeparishviliE-mail: kristi nem@investi ngeorgia.orgPortf olio Manager: Nino Tsetskhladze

E-mail: ninot@investi ngeorgia.org

agriculture

Documents

trade share agriculture

agriculture lands

substitution potentials

sector trade balance

export strengths

farmed agriculture accounts

total imports

trade volume employment