This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/27/2019

Overview

Georgia’s fertile soil and favorable climate support production of a wide variety of high‐value agricultural products including grapes and wine, nuts (hazelnuts, almonds, walnuts, and chestnuts), citrus fruits, apples, peaches, and apricots.  Russia traditionally received most of Georgia’s exports but, since 2014 when Georgia signed a DCFTA with the EU, new European markets have been developing.  Georgia also grows an increasing quantity of crops, including vegetables and corn, for domestic consumption.  Georgia relies on imported powdered milk, meat products, and wheat imports, but does produce some fresh milk domestically.

For Georgia, agriculture remains an important sector in terms of GDP contribution.  In 2018, agriculture accounted for 7 percent of GDP, down from 9.4 in 2013.  The sector also provides an important safety net for the rural population, considering that over 40 percent of Georgia’s population lives in rural areas.     According to the most recent agricultural census conducted in 2014, the share of commercial farms in agricultural production remained low.  A majority (77 percent) of farms were represented by small-sized plots of less than 1 ha area each, constituting 21.5 percent of total agricultural land of the country.

As a result of land reform, the Georgian government has privatized over 45 percent and leased about 30 percent of the country’s agricultural land.  The law on Privatization of State‐owned Agricultural Land was passed in July 2005, which increased efficiency and output in the agricultural sector.  In June 2017, the Parliament adopted a legislative amendment that placed a moratorium on the sale of agricultural land to foreign citizens and stateless persons.  Furthermore, the new Constitution that came into force in December 2018 imposed restrictions on the sale of agricultural land.  Currently the parliament is considering a draft law, which would allow foreigners to purchase land under an investment plan and other preconditions.   

The Georgian government identified agriculture as a priority for development and increased funding for the given sector considerably.  It has also set up the Agriculture Investment Fund to support the sector by providing credit to farmers. Governmental programs implemented through the Agriculture Project Management Agency (APMA - http://apma.ge/projects), such as Plant the Future, cheap credit programs, etc.,  may create additional demand among farmers  for equipment and inputs supplied from abroad, including from the United States.

Leading Sub-Sector: Food Processing and Packaging
Georgia’s location positions it to be an ideal exporter to markets in Russia and the EU, offering high-quality raw materials and a good location for food processing.  The sector has suffered from the collapse of traditional links among post-Soviet states, decades of negligence towards state‐owned enterprises in the sector, obsolete equipment, lack of investment, and lack of current technical knowledge.  Georgia imports 80 percent of its packaged food products which has a significant negative impact on its trade balance.  However, the food processing industry is growing steadily but slowly following the privatization of state enterprises and an increasing demand for locally produced goods.  In addition, a number of foreign aid programs, including USAID, target agricultural development and provide financial or material support to individual farmers or bigger enterprises to enable them to meet the requirements of international markets.  Opportunities for growth in the sector are ripe, as natural conditions (climate, soil, and available labor) enable Georgia to become an exporter of agricultural goods to the broader region, including Europe, Asia, and the Middle East.  This sector is growing steadily with a proliferation of Georgian‐brand products ‐- wine, beer, dairy, nut, sausages, fruit juices and mineral waters ‐- filling local stores and beginning to find new export markets.  Several years ago Georgia imported the majority of such products.  Georgian wines and spirits have long enjoyed an excellent reputation in Russia and Commonwealth of Independent States countries, and improved bottling and packaging now allows Georgian firms to sell across a wider export market.

There are opportunities for U.S. exporters of food processing and packaging equipment for fruits, nuts (particularly hazelnuts), vegetables, citrus, and meat and dairy products.  Currently, many of the existing processing plants use old Soviet equipment that do not provide for high productivity or technical safety.  Existing alternatives mostly include Turkish technologies or second‐hand lines from Europe.  Based on information provided by local authorities and managers, the best sales prospects are for small and medium capacity bottling lines, production plants for wine and juices, and machinery for tea processing and packaging.  Additional prospects involve seed crushing and oil refining machinery.  There is also demand for mini‐bakeries and machinery for the manufacture of confections.  Price and payment terms are important factors affecting customers’ purchasing decisions.  In many cases, the lease or purchase of used equipment may be a means by which local enterprises can acquire plant machinery and equipment for restarting production.

Web Resources
Ministry of Agriculture


 

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