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Levan Davitashvili addressed the participants of the International Regional Investment Forum "More Investment in Georgia’s Regions"
Economic development in the country, as well as, providing welfare to people are top priories for our government. Agricultural sector is one of the main economic drivers in Georgia. Our primary objective is to use economic growth potential effectively, moreover, apart from traditional agricultural fields, we should develop other directions as well. A number of agricultural projects have already been implemented by Georgian government and will be implemented in the future to promote rural and agricultural development in the country. Since 2013, positive and tangible results have been achieved in the agricultural sector through efforts and support of the Georgian Government, international / donor organizations and private sector.
According to preliminary data, the gross output of the agriculture sector in 2018 (including primary products, as well as food and agricultural products processing) was increased by 455 million gel (5.1%) compared to 2017 and increased by 2.8 billion gel (42.1%) amounted to 9.3 billion GEL compared to 2012. In 2012-2018, the average annual growth rate was 459 million GEL, (that is 6.0%) . In 2018, the annual household income per capita derived from agricultural products was increased by 18% compared to 2017. The increase in rural areas indicated to 26%. The revenue increase from the sale of farm products is especially important, while considering the dramatic decline observed in 2016-2017 due to adverse climatic conditions, pest and fungal diseases spread in the country. This indicator shows an increase of 93% (increase by 108 GEL) amounting 224 GEL in Kakheti region;
In 2017, the agriculture, hunting and forestry, fishing and fishery sectors gross domestic product (GDP), at prices of the current reporting period in Kakheti region was increased by 72 million gel (14.1%) compared to 2016 and by 293 million gel (102.3%) compared to 2012, ultimately amounting to 580 gel. In 2012-2017, the average annual growth rate was 15%. It is noteworthy, that, in 2017, the share of agriculture, hunting and forestry, fishing and fishery sectors in Kakheti’s gross domestic product (GDP) was 22%, however, in 2012 the indicator showed an increase of 15% .
Our approach is to put more private investment in the agricultural sector. However, we use certain type of co-financing mechanisms to alleviate the burden of investors. For that matter, we started to implement a universal preferential agro credit program, under which, the loans issued in Kakheti region amounted to half a billion gel; An additional $ 100 million loan is provided on basic means, about 400-500 million - on turnover; out of which, half a billion gel plus 100 million dollars is the credit resource, plus entrepreneurs own funds, various types of grants, which is an important source of investment put to promote the agricultural development in the country.
As a result, about 100 new factories were built, four hundred enterprises re-equipped and expanded by approved credit resources in Kakheti region. We have grant programs-as financial mechanisms, according to which, up to ten new enterprises mostly enterprises of processing industries were created in Kakheti region. Our approach is to promote the value chain; Consequently, this is not only a support for primary production, but also an opportunity to create housing facilities for storing primary production. Moreover, rehabilitation of the industry is very important and Georgia has great resources in this regard.
Although, Kakheti region is primarily associated with viticulture and winemaking. I would like to underline its potential in other agricultural areas as well.
Kakheti region has a favorable climatic conditions for olive production. The number of oil fruit trees is annually increased. More than 350 hectares of land were funded within the project "Plant the Future’’ to plant olive gardens in Kakheti region. We funded the construction of an enterprise in Sighnaghi district, which produces 35 tones of olive oil and 30 tones of marinated olive oil per year. Georgian olive oil has a competitive advantage over its competitors, the price for half liter olive oil ranges from 13 to 16 GEL.
This year, Georgia has applied to join the international fruit organization and expects to reach an agreement and become a chair country. Kakheti has long been recognized as a region with favorable soil condition for planting and growing nut trees, including, walnuts, hazelnuts and almonds. Furthermore, apart from wide range of experience, Kakheti has a huge potential as well as investment opportunities . However, due to the consumer demand and price of nuts, the nut planted area is annually increasing, whereby, the "Agricultural Project Management Agency" program "Plant the Future" plays a key role, under which, the nursery farms are arranged and co-financing is provided to purchase seedlings and install a drip irrigation system in the region.
Pistacio trees are new crops in Georgia, planted in relatively dry areas in Kakheti region, the
plant growth capacity is quite high and investments made in this area are quite interesting, therefore, the Association of Pistacio Growers has been established, which along with the Agricultural Project Management Agency" program "Plant the Future" support those farmers who wish to plant pistachio trees.
Hazelnut is an endemic crop in Georgia; The problems related to the diseases spread in Western Georgia show that Kakheti retained Georgia's position on the international market. Due to the climate diversity, we can produce both subtropical and drought-tolerant plants in Kakheti region. Kakheti is a mini model of Georgia.
Stonecrops
As for traditional local crops, Kakheti is well known with traditional stone crops, including peach and nectarine. The difficulties were mostly related to the failures in value chain. Although, with the implementation of the principle of single window, support provided by exporters and well-organized campaign we managed to return positions and Georgia is now in the list of exporter countries, including peach export as well.
The results achieved in 2018 - 2019 years show clearly, that reforms implemented in recent years in the wine industry have been successful and led us to obtain more favorable outcomes.
In 2018, Georgia exported a record number of wine, the trend of export growth continues in 2019 as well;
Since 2008, for the first time in Georgia, grape harvest has been conducted without state subsidies; awareness of Georgian wine, as well as its quality was increased, new wine cellars were established and opened, wine tourism has been developed in the country;
The number of grape growers has increased, new vineyards developed - the demand for unique and rare grape species has been increased;
Georgian wine is presented in all important wine exhibitions and forums around the world.
Two new wines "Khashmi Saperavi" and "Bolnisi" have been added to the list of 18 appellations of origin of Georgian wine. At this stage, the overall goal of the private sector and relevant state structures is to include Georgian wine in the premium wines segment.
Specific Indicators:
Export - In 2018, 86,2 million bottles (0,75 l) of wine were exported from Georgia to 53 countries, which is the record-breaking number for a period of almost 30 year. The growth has reached 13% compared with 2017. Exported wine worth 203 million US dollars, which is 20% higher than the same indicator in 2017.
The volume of wine export shows growth in value that indicates an increase in average export price.
In 2018, 284 companies exported different volumes of wines. The number of exporter companies increased by 34 compared to 2017.
Grape Harvest - in 2013-2018, grape growers received revenues of GEL 950 million in Kakheti and Racha-Lechkhumi regions within the accounting period, moreover, farmers didn’t face problems, regarding delivering of grapes to storage warehouses, not a single kilogram of grapes were left behind; The unified electronic program for recycling grapes were introduced successfully;
In 2018, positive indicators in the wine sector gave rise to the opportunities to conduct grape harvest without subsidies. The price of grape was set under the terms of the market economy, without government intervention. More than 235 thousand tons of grapes were processed in Kakheti region and farmers received a record breaking income 308 million gel.
In 2018, grape was delivered to wine companies by 22 thousand grape growers, which is also a record breaking number, which means that, the number of vineyards has been increased and new cultivators have emerged in the country. In recent years, the total area of new vineyards exceeded 7,000 hectares. Georgia is proud of its vine, wine is our business card. Our wine sector had to deal with many difficulties, (difficulties related to wine sector arose in Kakheti region as well), although we have developed systematic and consistent approaches to move forward and we have a successful dynamic in terms of the cultivation of vineyards.
Vineyard Cadastre - in 2014, the large scale and very important vineyards cadastre program was launched to support the development of viticulture and wine industry in the country. In 2014 the project was implemented in Racha-Lechkhumi region, in 2015 - Kvareli, in 2016 - Telavi, in 2017 - Akhmeta and in 2018 - in Gurjaani municipality.
In 2019, the National Wine Agency continued to implement the vineyards cadastre program in Gurjaani municipality, which shows the quantitative and qualitative characteristics and conditions of vineyards and wine. In 2019, winemakers and wine companies will be able to deliver grapes registered as the appellation of origin " Kindzmarauli", "Akhasheni", "Kvareli" and "Mukuzani" on the basis of submitting the extract of vineyards cadastre program in Kvareli and Gurjaani municipalities.
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Quality control and certification - electronic systems for accounting, registration and certification were introduced to improve the quality of wine and alcoholic beverages, legislative amendments were introduced in the Law of Georgia on Vine and Wine in 2017.
Development of wine tourism might be achieved by arranging hospitality facilities and wine cellars in small-scale hotels, as well as providing tourists with the opportunities to get closely acquainted with the traditional wine-making process and taste Georgian wine made of different varieties of grapes. This in turn, will increase the number of employees in the agricultural sector, will contribute to the development of agro-tourism, sale of products and promotion of Georgian wine.
Since 2015, the project "Plant the Future" has been implemented. The project aims to use agricultural land more effectively through cultivation of perennial crops, also to replace imported products with locally produced ones, as a result, the export of Georgian products will be increased, as well as the possibility to provide processing enterprises with raw material , that will further improve socio economic condition of rural population. The Project ‘’ Plant the Future’’ is comprised of two components: co-financing of perennial gardens and co-financing of nurseries.
The agency finances: 70% of the cost of seedlings under the perennial gardens component
, 50% of the cost of drip irrigation system, and 70% of the cost of nursery farming component.
Kakheti is one of the leading regions in planting of perennial gardens, 322 applications are already approved under the project. At present the planted area covers 2 881 hectares. The amount of financing by the agency amounted to 13 471 069 GEL.
Kakheti has a development potential for livestock ; Under the frame of the state project, 137 farms were re equipped and 5 new farms were built in the region.
Small and medium-sized milk and meat producing livestock farms
Georgia has to implement certain commitments in the agricultural sector under the EU –Georgia Association Agreement. The Ministry carries out a number of activities and provides a support to farmers and companies to produce high-quality dairy products in the country. Today, the demand for organic milk makes necessary to create milk producing dairy farms throughout the world, including Georgia.
This will contribute to the growth of the volume of dairy products and increase competition of meat and dairy products in the market.
Georgian sheep as a product of remarkable properties has already established its place on the international market. We have tangible results - more than 30 million dollars worth of Georgian sheep is exported annually from Georgia. However, it gains even more importance considering livestock routes as a part of traditional farming in Georgia, although this practice is unique in Europe. With the appropriate management, we definitely have potential for sustainable development of livestock and tourism in Tusheti, Dedoplistskaro and other regions as well. We believe in creating a biosphere region in Georgia and the first biosphere region will be established in Kakheti region, where the elements of natural resources and landscape are preserved, as well as elements of traditional farming .
Development of cattle: the project " A study conducted for highly productive breeds brought in Georgia and elaboration of recommendations for livestock breeding" aims to study highly productive breeds in Georgia, as well as elaboration of recommendations. The works on the project is initiated and carried out in LTD "Green Rancho" and "Dorani" farms in Akhmeta municipality Kakheti region,.
Pig farming: project " promoting restoration of Kakhetsian pig population, intensification of swine breeding intensive model". The pig farm reproduces oldest and rarest Kaketian pig breeds. The sows and boars chosen from high-yield piglet production should be delivered to pig farmers, pigs will be allowed to forage for natural food in the southern slopes of the Caucasus fruit-bearing forests, this will enable to increase the weight of a pig with low costs.
Cereal crops
The certification system is already created for cereal crops. The seed market is free from mixed, or impure varieties of wheat. Farmers are able to produce and sell seed material. Investors can create an environmentally friendly infrastructure that meets international standards .
In Dedoplistskaro (Shavchreli) and Telavi (Gulgula) wheat varieties are planted on 2,2 ha , old local varieties are widely spread in Kakheti region. Wheat crop produced primarily by 8 species of seed will be distributed after harvesting.
Perennial crops
Under the International donor organizations support project, the certification system will be introduced for planting material (saplings for fruit and vines) .Preliminary tests are applied in 25 nurseries in Kakheti region. Interested farmers will be able to plant amazing range of high quality garden plants. I address to investors, while making an investment plan, to consider Kakheti – a region which has a great potential to attract investments. The Ministry is ready to provide more information, research and technical assistance to all interested parties.
Kakheti region is remarkable and gaining even more importance with its protected areas and biodiversity. Lagodekhi is the first nature reserve in Georgia, which has the longest continuous history, as it was originally protected under the Russian Empire. Lagodekhi preserves a variety of rare local flora and fauna, these unique protected sites highly valued in Europe attract a great number of tourists. However, we need to develop tourism infrastructure, thereby, development of ecological tourism will further lead us to reach our full potential.