Investment Opportunity in the
Georgian Agriculture Sector
June 2011
Agriculture Sector Overview
Nominal GDP (GEL MLN)
Agriculture Sector
25000
19,070
20000
16,994
17,949
13,791
15000
11,621
10000
9,824
5000
1,611
1,716
1,544
1,563
1,704
1,417
0
2004
Source: Department of Statistics of Georgia
2005
2006
2007
2008
2009
Dynamic of Import/Export of Agricultural Food Products
• According to the 2010 data, the export and import of agro food products were US$304 million and US$928
million.
• In 2010, main export commodities were: nuts, citruses, natural grape wines, spirits, soda, mineral & spring
waters, sheep, cattle etc.
3
Agriculture Export-Import, 2010
Export by Products (304 US$ mln)
Soda,
mineral and
water
12%
Nonalcoholic
beverages
5%
Cattle
6%
Cattle
5%
Wines and
spirits
23%
Nuts
26%
Export by Countries
Citrus
4%
Bay Leaf
1%
Tobacco
9%
wheat
19%
others
43%
Turkey
4%
0thers
23%
Chekh Rep
2%
Lithauania
3%
Iraq
3%
Import by Countries
Turkey
8%
S ugar
8%
Poultry
5%
Chocolate
5%
Vegetable oill
4%
Margarine
2%
Belarus
4%
Ukraine
27%
Import by Products (928 US$ mln)
Armenia
6%
Kazakhstan
5%
Azerbaijan
16%
Anchovy
1%
other
Apple
16% concentrate
1%
Germany
7%
frozen fish
confectionary
3%
2%
Brazil
8%
Kakhstan
8%
Russia
14%
US A
4%
Azerbaijan
4%
Ukraine
25%
0thers
24%
Belarus
2%
Austria
2%
Germany
1%
Agriculture Export, 2010
Top 10 exported products
Top 10 export markets
Product
Value (US$ mln)
Quantity
Country
Value (US$ mln)
Nuts
75 .1
17 994 tons
Ukraine
84.1
Wines and spirits
71.5
24 .4 mln liters
Azerbaijan
47.2
Soda, mineral and water
36. 9
59.2 mln liters
Germany
21.1
Cattle
19.4
48 565 Head
Armenia
17.6
Non alcoholic beverages
14.4
26.4 mln liters
Kazakhstan
16.7
Sheep
13.8
178 011 head
Belarus
13.6
Mandarin
12.1
35 141 tons
Turkey
11.1
Black see Anchovy
4.1
19 965 tons
Lithuania
8.8
Bay leaf
3.7
3 112 tons
Iraq
7.8
Apple consentrate
3.6
4 377 tons
Chekh rep
7.1
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4 Reasons for Underdeveloped Agricultural Sector
Fragmented Agro Lands
• New law adapted in 2005 on Privatization of State Agro Land
• On sale - 40 000 ha agro-land in sizable lots
• Land registry simplified, new cadastre introduced by NAPR
Outdated Technology
• Presidential Program – Machinery for Rural Economy
• Agro sector is still craving for new technology
Absence of Storage Facilities
Not Diversified Market
• Concessional Credit Program for building storage
facilities in numerous regions
• Dependence on Russian market has been overcome
• FTAs and GSP+ with important markets
6
Important Snap-Shots
• Main challenges are monocultures and low production per ha.
• With technology and knowhow average harvest could be tripled
•
Agro product
Average harvest per ha.
Good precedents per ha.
Wheat
Tomato
Potato
1.8 tn.
10 tn.
10 tn.
4 tn.
65 tn.
45 tn.
During the Soviet Era, Georgia used to be main supplier of the Union’s market
with selected agro products, which pushed the country into monocultural agro
production (ex. grape, citrus, tea etc)
Product
1988 (thousand tons)* 2009 (thousand tons)
Vegetables
685.5
170.3
Fruit & berry
653.0
181.2
Grape
619.7
150.1
Citrus
436.9
93.6
Tea
458.7
5.8
* Data for 1988 is exaggerated to some extent due to reporting interests in the centralized system of planning
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Advantages of Investing in Agricultural Sector of Georgia
•
Wide-range of climatic zones
•
Rich and pesticide-free soils - Ideal place for production of organic food
•
Rich tradition of winery, growing citrus, grape, sunflower, tea, etc
•
Legal provisions to own (i.a. for foreigners) agricultural land
•
0% VAT on primary production of agricultural products
•
0% export duty + 100% VAT refund
•
0% of import duty on agricultural and other equipment
•
100% depreciation allowance on investment
•
Low-cost and skilled human resource base
•
Liberal labor regulations
•
Strategic link from East to high value Western markets
•
Well developed transport sector including railway and sea ports essential for effective exports of
agricultural goods
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Agricultural Land Overview
 Agricultural land consist of approximately
3 mln hectares:
• Residential - 1%
• Arable land - 27%
• Perennials crops - 9%
Perennials crops,
• Pastures - 63%
9%
Source: Ministry of Agriculture of Georgia
Residential, 1%
Arable Land, 27%
Pastures, 63%
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Available Agricultural Land through Privatisation
Lands Remaining State-owned, 80 000 Ha (22%)
Lands already privatised, 280 000 Ha (78%)
80,000 Ha
22%
280,000 Ha
78%
1
0
Strong Integration Into the Global Economy
•
•
•
•
FTA agreements with the CIS countries
FTA with Turkey
GSP+ with the EU
GSP with the Canada, Japan, Switzerland,
Norway
Developments in the nearest future:
• FTA with EU
• FTA with USA
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Investing in Georgian Agro Business
GSP with Canada Switzerland, Norway
GSP +
7200 products duty free
GSP with Japan
•Farming
•Processing
•Storing
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Grape, Citrus & Apple
DATA FOR 2009
Grape
Citrus
Apple
Total Production
Total Production
Total Production
• 120 thousand tons
• 93.6 thousand tons
• 80.7 thousand tons
0.2%
1%
6%
24%
48%
42%
52%
57%
70%
grape nutrition
Industry Processing
Household processing
Export
Food consumption
Export
Processing
Food consumption and stocs
prossesing
Wine export – 10.9 mln bottles
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Import Substitution Opportunities
Meat, 2009
Local Production
Meat
Import
Meat
•54 300 tons
•61 900 tons
Meat products
•5 816 tons
local production
import
Fruits & Vegetables, 2008
Local Production
Import
Juice, 2009
Local Production
Import
Canned vegetables
Canned vegetables
Fruit
Fruit
•231 tons
•11 505
•4 276 tons
•3 478 tons
Tomato paste
Tomato paste
Export
•1 500 tons
•4 369 tons
•3 302 tons
Canned fruits
Canned fruits
•1023
•1 052 tons
Local production
import
Local production
Import
14%
53%
45%
47%
55%
86%
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Import Substitution Opportunities
Vegetable Oils
DATA FOR 2009
Local Production
Processed Fish
Import
Local Production
Import
Vegetable oils
Vegetable oils
Processed fish
Processed fish
•7 451 tons
•32 065 tons
•943 tons
•2 505 tons
Local production
Import
Local Production
19%
81%
Im port
27%
73%
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Consumption of Agro Products in Georgia (e.g.)
DATA FOR 2009
Consumption
Import
Production
Consumption
Import
Production
Chicken meat
Chicken meat
Chicken meat
Butter
Butter
Butter
• 42 425 tons
• 30 025 tons
• 12 400 tons
• 3 071 tons
• 2 001 tons
• 1 070 tons
Beef
Beef
Beef
Fishery
(2007)
Fishery
(2007)
Fishery
(2007)
• 35 580 tons
• 6 380tons
• 29 200 tons
• 17 588 tons
• 17 131 tons
• Negligible
Eggs
Eggs
Eggs
Tomato
Tomato
Tomato
•437 mln units
• 6 mln units
• 431 mln units
• 58 367 tons
• 6 967 tons
• 51 400 tons
Fresh Milk
Fresh Milk
Fresh Milk
Garlic
Garlic
Garlic
• 552 378 tons
• 978 tons
• 551 400 tons
• 3 348 tons
• 948 tons
• 2 400 tons
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Consumption of Agro Products in Georgia (e.g.)
DATA FOR 2009
Consumption
Import
Production
Consumption
Import
Production
Sunflower oil
Sunflower oil
Sunflower oil
Pasta
Pasta
Pasta
• 36 332 tons
• 28 881 tons
• 7 451 tons
• 16 490 tons
• 7 303 tons
• 9 187 tons
Wheat
Wheat
Wheat
Salt
Salt
Salt
• 566 242 tons
• 512 242 tons
• 54 000 tons
• 38 371 tons
• 38 371 tons
•0
Wheat flour
Wheat flour
Wheat flour
Potato
Potato
Potato
• 438 311 tons
• 50 696 tons
• 382 833 tons
• 243 637 tons
• 17 637 tons
• 217 000 tons
Cheese , Yogurt
Sour cream
Cheese , Yogurt
Sour cream
Cheese , Yogurt
Sour cream
• 11 658 tons
• 1 684 tons
• 9 974 tons
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Investable Agricultural Industries
•
•
•
•
•
•
•
•
•
•
•
Wine Sector
Mineral and Portable Water
Fishery
Citrus Production
Intensive Apple Production
Fresh Culinary Herbs
Off-Season Storage
Georgian Beef Fattening Operation
Fruit Jam and Sauce Processing
Integrated Dairy Production – Collection, Processing and Distribution
Pedigree Poultry Hatching Eggs
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Success Stories
 Ferrero Group - one of the leading confectionary
producers in the world
•
Nutella, Raffaello, Ferrero Rocher
 The Georgian subsidiary of Ferrero Trading Lux S.A., AgriGeorgia LTD, was
set up in spring of 2007
 At present AgriGeorgia LTD owns more than 3,000 ha. of agricultural
land in Samegrelo area
 About EUR 21 mln investment
 Nowadays AgriGeorgia LTD employs on average more than 400 employees
• Hipp
•
•
•
US$ 11 mln investment in juice processing industry
Fruit collection and processing
Mainly producing apple juice; further plans to produce cherry and apricot juice
YOU GONNA BE THE NEXT ONE!
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Contacts
Nodar Kereselidze
Head of International Relations Department
Ministry of Agriculture of Georgia
nkereselidze@moa.gov.ge
Mariam Kasradze
Head of Marketing Research and Strategic
Development Division
Ministry of Agriculture of Georgia
m.kasradze@moa.gov.ge
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