amcham presentation

USDA Trade and Investment Mission to Georgia 2010

David Lee

President American Chamber of Commerce

CEO Magticom

An Amcham supported by the highest levels of Government, Multinational Organizations such as the IMF and the US Embassy

Minister of the Economy US Ambassador to Georgia Prime Mister and Head of the IMF

American Chamber of Commerce

•Established in 1998

•150 + members

•2 member’s meeting per month: Embassy Briefing and Luncheon

•Excellent relationship with the Georgia Government

•Ability to lobby and influence legislation

•Magazine “Investor.ge”, published every two months.

•Full time staff

“At your service at all times!”

Agribusiness

Jim Rogers: “Farming is one of the few areas I am optimistic about.”

Policymakers are looking more closely at how the private sector – from

agribusinesses to supermarkets – can help ensure food security. In July last

year, when world leaders pledged to devote $20bn over three years to a “food

security initiative”, part of the commitment reflected a move away from reliance

on aid models to a broader approach that includes fostering the growth of the

agricultural sector in developing countries.

(http://media.ft.com/cms/62017148-0b29-11df-9109-00144feabdc0.pdf)

The Georgian Opportunity

Agro Food Products Exports 2008 US$228

Agro Food Products Imports 2008 US$913

2008 FDI US$1.6 billion

2008 FDI agriculture US$7.8 million, (0.5% of the total)

Since 1991 939,000 hectares has been transferred to 1.4

million people, 0.66 hectare average. 75% remains under state

control.

Historically a major exporter of agricultural produce to the

Soviet Union – Soils and climate are excellent for many crops,

excellent Brand in local and post-soviet space.

GSM/HSDPA/fixed CDMA Coverage – World ClassMagticom Provides High Speed Internet to all farming areas

Universal Internet AccessGeorgia covers a territory of 69,700 km² and its population is 4.436 million -63 people per square kilometre.

(India 324, UK 254, China 137, Congo, Tanzania, Uganda, Malawi 25 to 60, USA 32).

Positive Developments

• Georgia ranks 11 on the World Bank list of “Ease of Doing

Business

• Registration of business, licenses and agricultural land is

not a problem

• The tax regime is low with many incentives to farms

• The Government is accessible and supportive

• There are many free trade agreements

• Infrastructure has been massively improved since the Rose

Revolution – Roads, Airports, Telecommunications, (internet

is available everywhere).

• You have an AMCHAM!

Opportunity– Increase plot sizes

Most local farming is on small plots of 1 to 5 hectares

which is not economic for many crops. Animals are

often grazed on common ground. But large plots are

available to investors. Farm shown is 220 acres, (600

acres).

Opportunity– Improve training, knowledge – skills

The agricultural institutes are not functioning and land and crops are not being

optimized. The number of graduates from agricultural colleges in minimal leading to

the use of traditional rather that modern farming techniques. Herbicide and fertilizer

use is low.

Opportunity– Modernize Equipment

There is a shortage of equipment, particularly in the west. Modern

seed drills, sprayers and harvesters would materially improve yields.

Innovative financing is required if local market is to be maximized.

Opportunity- Local testing and correction of soil

There is no source of local lime for the acid soil in the

west and testing laboratories are underutilized.

Opportunity- Improve seeds quality

No government testing of seed quality is performed and the use of

imported seed is limited. (Seed shown is American cecilia hybrid).

Opportunity– Introduce Irrigation

There are 26,000 rivers but most of the soviet era irrigation systems have

been destroyed. Modern systems can be deployed but are rare. System

shown is Turkish and capable of irrigation at 100 tonnes per hour

Opportunity– Upgrade Infrastructure and storage

Many storage and greenhouse facilities are destroyed or in

poor repair and need renovation. There are insufficient cold

storage and drying facilities.

Opportunity– Improve animal husbandry

Local breeds of cattle and buffalo can be improved through breeding. The

introduction of foreign breeds has proven difficult but possible. Better land

management and scientific feeding methods would have immediate results.

Use of fencing is limited.

Getting it right - Hybrid Corn Trial on 220 hectare farm using US Pioneer (5 varieties), Spanish (5) Georgian (2) as at 9 July 2010.

Opportunity - Test the theory

Chief Agronomist Zurab Iakobashvili

In August 2010, a test of 6 hectares in Imereti harvested 7.8 metric tons of corn cob per hectare using American Pioneer seed

despite the drought

The Opportunity

All the main macro requirements for profitable agribusiness are now in

place:

•Good climate, soils and access to water

•Good roads, airports, telecommunications and ports

•Good free trade agreements with the Mega Markets of Turkey, Europe

and the USA

•Good local demand

•Good country brand

•Good land registry and licensing environment

Industry leaders with expertise and experience can solve the existing

sector problems faced by local farmers quickly and economically,

substantially improving yields.

A US$40 million RFP primarily dedicated to agriculture was issued by

USAID in July 2010

Thank youThe first movers – Ferrero and HiPP are already here,

You should be too!

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