MOA_Investment Opportunities in Agriculture Sector

Create an environment that will increase agricultural competitiveness, promote stable growth of agricultural production, ensure food safety and eliminate rural poverty through the sustainable development of agriculture and rural areas

Agriculture: The National Priority

June, 2014

Ministry of Agriculture of Georgia

Agriculture in Figures - GDP

Agriculture 9,3%

Industry 17,2%

Construction 6,7%

Trade 17,3%

Transport and Communication

10,7%

Public Administration

10,1%

Other 28,7%

Agriculture Industry Construction Trade Transport and Communication Public

Administration Other

Agriculture 3%

Energy Sector 13%

Financial Sector 21%

Transport &

Communicatio n 6%

Consultancy 15%

Hotels &

Restaurants 16%

Construction 18%

Agriculture Mining and Manufacturing Energy Sector Financial Sector Transport &

Communication Other Sectors Consultancy

Agricultural Share in total GDP, % GDP by sectors, 2013*

Agricultural GDP at Current Prices (mln USD) Georgia, Inward FDI, cumulative 2013*

Source: GeoStat 8,4%

8,8%

8,6%

9,3%

2010 2011 2012 2013*

847,0

1100,2 1170,8 1303,5

2010 2011 2012 2013*

Agriculture in Figures - Trade

Export of Main Agro Products (mln USD) Agro Export-Import (mln USD)

Source: GeoStat

83,6 7,7

64,9 80,0 59,3 12,2

166,6 20,2

127,9 99,9

106,9 19,0

Nuts Citrus Wine Spirits Mineral Water

Fruits & Vegetables 2013

2012

349

437 513

774

-619

-757 -762

-517

2010 2011 2012 2013

Export Trade Balance

Untapped Potential

Although the production plummeted dramatically, the vast potential still remains

During the Soviet period Georgia was one of the major suppliers for fruit and vegetable products to the republics of the Soviet Union, exporting various kinds of fruits, tea, greens, nuts, essential oils, citruses, wine, alcoholic/nonalcoholic drinks, mineral waters, and canned fruit and vegetable products.

Thousand tons

Source: GeoStat

0 100 200 300 400 500 600 700 800

Wheat Potato Vegetables Fruit Grapes Citruses Tea meat

average (1980-1990) average (2011-2013)

Diversified high value cash crops:

Competitive Advantage of Georgia

• 49 types of soil and 22 microclimate zones;

• Climatic zones from subtropical to semi arid and arid;

• The Black Sea coastline 315km;

• Abundant renewable water resources 63.3cu km - 860 lakes, 45 reservoirs;

• Rich Tradition of Winery, Citrus, Grape, Tea, Nuts, Fruits and Vegetables, etc.;

• Extended growing seasons (both early and late).

Grapes with up to 500 endemic species;

Wide variety of Fruits and vegetable (both early and late);

Special tea for high margin markets;

Citruses;

Greenhouses;

Nuts;

Greens;

Dairy Products.

Markets With Preferential Trade Terms

DCFTA with Europe -

Russian Market - As a result of successful negotiations, Georgia has resumed exports of agricultural products to Russia.

FTA with CIS countries - Favorable trade regimes with 11 CIS countries;

FTA with Turkey;

GSP with - USA, Canada, Switzerland, Norway, and Japan.

• More than 60 Georgian companies (Wine & Mineral water), have been inspected and got an approval to export to Russia;

• First shipments of Georgian wine and mineral water have reached the shelves of Moscow's supermarkets and shortly will be available throughout Russia;

• In 2013, 20.7 million bottles of wine exported to Russia;

• Georgia has resumed export of fruits and vegetables to Russia from 14 October.

Wine as Georgia’s National Treasure

QVEVRI – Georgian Wine making Method

 The world’s oldest wine producing country

 8000 years of wine-making tradition

 More than 500 endemic wine grape varieties Export Trend

 Wine export geography - 48 countries

 Registered 18 appellations of origin

0 20.000 40.000 60.000 80.000 100.000 120.000 140.000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

000 litres 000 USD

Fruits

Snapshot

 Excellent nutritional characteristics

 Favorable climate and soil conditions

 Increasing area under new orchards

 Proximity to main export destinations

 Awareness and positive attitude to Georgian products in CIS markets

 Growing fresh exports to CIS and EU markets

Opportunities

 Development of post-harvest handling infrastructure

 Upgrade of processing capacity

 Value addition

 Export demand for fresh and value added larger than supplies

 Exports to EU markets

35%

26%

16%

14%

9%

Structure of fruit production

Citruses Pome fruit Nuts Stone fruit Subtropical fruit 65.471

42.800 42.675

79.163 92.703

139.088

96.986

193.251

2010 2011 2012 2013

Export tons Export 1000 USD

27.840

45.955

38.236

50.382 25.483

37.644 36.281

47.565

2010 2011 2012 2013

Import tons Import 1000 USD

Hazelnut

Snapshot

 Favorable climate and soil condition

 Increasing area under new orchards

 Proximity to main export destinations

 Growing exports to EU and CIS markets

 Fifth hazelnut producer in the World

Opportunities

 Improved post handling and processing

 Emerging producers in processors associations

 Exports to EU and South Asian markets

 Production opportunity for other nuts: walnut, almond, pecan nut

75.109

129.920

83.588

166.630

2010 2011 2012 2013

Export of Huzelnut (1000 USD)

Production Regions: Samegrelo, Imereti and Guria

29%

17%

11%

5%

5%

33%

Export of Nuts by Markets, 2013

Germany Kazakhstan Italy

Czech Republic Ukraine Other Countries

Access to Affordable Finance

Goal

• Improve access to financial resources for agricultural activities

Key Objectives:

• Increase competitive agricultural production

• Support creation of primary and processing enterprises

• Increase export-oriented production

• Increase rural employment

Total Beneficiaries - 17 421

Total Credit Amount - 368 mln GEL

10% 40% 50%

Co-Investment Project for Agro Processing Companies

Structure of Funding:

• Co-Investment from beneficiary – 10 %;

• Grant component – 40 %;

• Cheap agro credit or leasing – 50 %.

Key Objectives of Project:

• Creation of 50 new or rehabilitation of inactive agro processing companies in low economic activity regions;

• Geographic diversification of agro processing companies.

Financing criteria:

• Total budget of project must not exceed US$

1,000,000;

• Up to US$ 500,000 cheap agro credit with 1- 2 % interest rate;

• Loan duration – 120 months;

• Grace period – at least 18 months.

Total investment of Project - USD 30 million

Cheap agro credit or leasing Grant component

Beneficiary

Program starting date: June 1, 2014

Goal: Support and development production oriented industries

Program directions & budget – GEL 46 mln:

 Agricultural production & processing – GEL 30 mln

 Industrial production – GEL 16 mln

Program components:

 Financial assistance

 Infrastructural support

 Technical assistance

Financial assistance:

 Co-financing of collateral - at most 30% of total loan (first 2-4 years, up to USD 600 000)

 At least 80% of the loan - purchase of fixed assets

 Grace period – 24 months - on fixed assets 18 months - on working capital

Produce in Georgia

Program directions in Agriculture:

 High-tech greenhouses: vegetables, berries, greens

 High-tech, intensive cattle farming (dairy, meat)

 Cattle, poultry, fish feed factory

 High-tech, intensive poultry factory (meat, hatching)

 Fruit, berries, vegetable, citrus processing

 Nuts processing

 Wool, leather processing

 Laurel, tea, tobacco processing

Loan Amount Bank Subsidy

USD 600 000 - 1 000 000 12% 10%

USD 1 000 001 - 2 000 000 11% 10%

Thank You

Ministry of Agriculture of Georgia

www.moa.gov.ge