Georgia Tries to Reverse Farm Decline

The Georgian government is to quadruple spending on agriculture this year in a bid to make the country less reliant on food imports.

The main focus will be on increasing grain yields, though some say what the farming sector needs is technology.

The farming sector has been in decline for many years, and now produces only 12 per cent of the food consumed in Georgia, and accounts for only eight per cent of gross domestic product, GDP.

For years, experts have been calling for action to boost farm production, especially since Georgian exports enjoy preferential access to European Union markets under the GSP+ trade arrangement.

As rising world food prices have made imports more costly, the Georgian government has finally been prodded into action.

President Mikhail Saakashvili told a recent cabinet meeting that agriculture’s contribution to GDP could easily be doubled in the next three or four years.

This year’s spending will go largely towards introducing higher-yield wheat strains and building silos to store the grain. The target is to grow between 35 and 40 per cent of the wheat needed for domestic consumption by 2013 or the year after.

Agriculture Minister Bakur Kvezereli says the government wants to apply “assistance, not interference” to make Georgia less reliant on imported food.

In the past, most investment has gone into wine production. But that went into steep decline from 2006, when Russia – which accounted for three-quarters of Georgian wine exports the previous year – banned food purchases from the country.

After that, the Georgian authorities were forced to subsidise farmers to avoid complete collapse of the sector. Despite this assistance, grape prices have fallen year by year, while fuel costs have risen, squeezing farmers’ earnings.

The sector remains badly short of modern machinery. Many farmers still turn over their land with mattocks and old-fashioned ploughs. Since farmers cannot afford to buy equipment, the government and donor organisations have provided 970 tractors and 200 combine harvesters since 1996, but that is still far short of what is needed.

Some economists are sceptical about the wisdom of pumping state money into the private sector.

Gia Jandieri, deputy head of the New Economic School, said subsidies would make farmers more, not less dependent.

“Instead of subsidies, the government and specifically the agriculture ministry should be thinking about finding new markets for our products; this is one of the main problems,” he said.

Nikoloz Zazashvili, head of the Agro-Development Group, an association of farming-sector organisations, said the government still lacked a long-term strategy for improving agriculture.

It remains to be seen whether commercial investors will be encouraged to follow the government’s lead.

Magda Kajaia, who heads the Georgian office SJS USA, an American food-trading firm, said the company was currently holding off on plans to invest four million US dollars in a cold storage facility.

“In order to justify such a large investment, we’d have to be able to buy the products to store in it. That production does not exist. Developing agricultural logistics has to happen in parallel with a rise in production,” she said. “What’s the point of developing the logistics if there isn’t the production?”

Nana Kurashvili is a freelance journalist in Georgia.