Gurian-Consulting Press Office -

An interesting investment in Georgia: agriculture

pict_An interesting investment in Georgia: agriculture

Agricultural tradition is one of the key elements of cultural heritage and one of the fundamental elements of Georgian DNA (Etymologically, the word Georgia is derived from the Greek γεωργία (geōrgía), meaning agriculture). Benefiting from a favourable climate and very fertile soil, the agricultural sector is one of the most productive economic sectors in the country and allows the production of a wide variety of high-quality agricultural products, fruits, vegetables, cereals, etc. Those who have already come to Georgia to taste Georgian cuisine and its products can certify it: it is excellent!

After signing a deep and comprehensive free trade agreement with the European Union in 2014, which entered into force in 2018, Georgia is beginning to bring agricultural products to the world market that meet the required European standards, encouraging new European investors to enter this attractive market. On the other hand, consumption in the local market is rising steadily.

Georgia focuses on labour-intensive crops such as tea and grapes. In 2017, after a three-year study conducted by international experts, Georgia was officially recognized as the cradle of viticulture and also distinguished by a traditional and natural winemaking unique in the world in Qveris (i.e. in large clay jars).

Today, Georgian wine exports are growing very strongly and give very positive prospects for the sector. The data, published in the National Wine Agency of Georgia in February 2018, are 10.8 million bottles (+23% over the same period in 2017. In 2017, 50 million bottles were exported). Georgian wine is now present in 38 countries and recognized by oenologists around the world.

Competition, on the other hand, is intense for Georgian tea, local producers do not allow international players to take full ownership of tea culture, as Euromonitor International reveals. Tea consumers in Georgia remain very conservative and most Georgian brands produce only black or green tea. The government wishes to encourage the development of other varieties in this sector and attract new investment.

According to the Five-Year Plan for Agricultural Development in Georgia 2015-2020, it is estimated that 25% of the total area of Georgia is classified as permanent pasture and that about 70-80% of the pastures are self-regulated by local and nomadic farmers. Small farmers (95%) generally cultivate one hectare of land with low yields and are currently unable to compete with imported products, particularly from Turkey. Most dairy products, meat products, cereals and eggs are the products on which the Georgian government wishes to intensify its development and investment efforts. Georgia now imports 80% of its packaged food products, and this has a very negative impact on its trade balance.

The Georgian government, therefore, identifies agriculture as a priority for the country's development and has set up an Agricultural Investment Fund to support the sector by providing credit to farmers. Projects to build new agricultural processing plants can receive government subsidies worth USD 250,000. On the other hand, an investor can currently buy agricultural property belonging to the State for 1 symbolic GEL.

The Government of Georgia intends to create a favourable business environment as the optimisation of Georgia's agricultural potential is vital for the country's economy. In 2015, Parliament passed a law allowing foreigners to own land but with certain limitations. A foreigner can own agricultural land if he inherits it, he can own land in co-ownership following marriage with a Georgian citizen or by holding a residence permit.

Georgia has 22 micro-climates, ranging from cool and dry to hot and humid. These micro-climates allow a longer harvesting season than in many other regions of the world and allow a very varied range of products. The soils are of volcanic origin in the river valleys and are fertile and easy to cultivate.

The country also has easy and cheap access to water and enjoys low energy prices (oil, gas and electricity).

In recent years, thanks to effective international cooperation, positive trends have been observed in the expansion of the export market, the increase in production and the attraction of investment in the agricultural sector. Thus, in the coming years, local production will be strongly encouraged to increase and must be increased.