Cheap Money As Panacea for Feeble Georgian Export
04 October, 2012
Cheap Money As Panacea for Feeble Georgian Export

The way-out to unfold Georgia’s agriculture export potential and replace the infesting import by local production is cheap and long-term money. Once we get it, Georgia may think of a bigger picture of exporting and re-exporting products between the East and the West too.

Georgian negative trade balance reached USD 3. 544 billion by August of 2012 that already covers 53% of the entire trade statistics figuring USD 6.649 billion. The import makes the overwhelming 76% accordingly and the major part

of it is the food including agriculture product that can be easily harvested in Georgia and even be exported if the sector had an access to cheap money.

Georgia been the shortest route between the East and West on the map is and has always been a natural hub in the region within the historical Silk Road corridor. This favorable geographical location doubled with the good climate and natural resources, especially hydro resources, as well as backgrounds in ancient agriculture technologies like wine, honey and wheat producing gives a chance to the country to act not just a mere transit corridor passing goods between the eastern and western markets as it already does, but be an exporter and re-exporter country itself.

Free trade with the countries of the Commonwealth of Independent States (CIS), also upcoming free trade prospects with the EU and the US markets makes Georgia unequal globe over with unfettered trade opportunities to that many big markets.

But to turn this natural priority into reality Georgia needs to develop its agriculture producing first so as to supplant the infesting import and go on export.

Georgian experts think the key issue Georgian agriculture potential lays untapped so long is simply money or lack of cheap and long-term money supply. If this issue is solved the dexterous business will handle with the rest. Georgian commercial banks shun crediting agriculture and offer credits at 35-45% while the maximum interest rate is 15% is the west,  Badri Ramishvili, an agriculture marketing expert, said. According to him, other three key points to boost agriculture producing is: the state support – not subsidizing the sector but creation of proper business environment; development of scientific infrastructure and setting up of consultation centers in the regions so as to bring the new skills and information to farmers; and strong self-governance in order to make rural population to define their own priorities and find solutions to problems.

“I do not believe in subsidizing of agriculture like a fostered child. The state should create a proper business environment, make credits cheaper, develop scientific infrastructure and leave the rest to the business – it will find its way of the profit,” Ramishvili elaborated.

Davit Shervashidze, Senior Advisor in Agribusiness Sector at Georgian Regional Development Fund of SEAF, agrees that the cheap financial resources are crucial but he does not see any prospects for Georgian agriculture export  if the quality, uninterrupted supply of due volumes of the product of similar sort and taste are not insured.

“Quality, securing due volumes of only similar kinds of the product is essential for the western market. If the EU opens up its market today we cannot meet all these demands. But all these are attainable if the credits get cheaper. If someone asks me what is the instant way-out for agriculture I would say cheap money, other problems can be solved simply,” he said. “But this money must be long-term and targeted at certain purpose. No farmer in the world has due business planning skills. The US financial institutions for example go to farmers and draft business plans for certain fee but this is affordable for farmers as the loan is so cheap. Private sector should do this. Georgian banking sector should revise its strategy of financing agriculture,” he said.

On the other hand, Shervashidze recommends the government to work out a clear strategy of agriculture development and set up an agro-bank with farmers as stake-holders like the Dutch Rabobank.  If quality and quantity problems are solved Shervashidze believes Georgian agriculture product especially sweet water, honey, wine, fruit and vegetables will easily find the export market for product in Georgia is biologically clean and demand on bio-product is high today.

“Georgia is the second richest country in Europe by sweet water resources running after Norway and the UN conclusion stipulates that there will be a serious problem in sweet water and food in the second half of this century. I think that even water has very strong potential for export, also many agriculture product like fruit, honey, cheese [very few knows that there are around 300 sorts of Georgian cheese] – these  products have an export potential to the EU if the cheap money problem is solved,” Shervashidze elaborated.

As the private business lacks financial to to resources the state decided this summer find a solution to dwindling export by setting up the State Fruit and Vegetables Export Company responsible for procurement of all the fruit-and-vegetable harvest and their exporting alike.  It will handle with both marketing and logistics of the harvest from the fields to the export markets - in Ukraine at the moment, Giorgi Jakhutashvili, head of this export company, assures. The company is expected to be kind of an ice-breaker to private business thanks to good marketing and management skills plus  sufficient financial resources that private sector lacks at the moment.

“For example we can pay GEL 30 million in 25 thousand tons of citrus to insure due volumes and quality and wait for 10 years to pay back the money since it is a matter of macro-economy and strategy to us to develop export but private sector cannot do this. If it finds GEL 30 million it will build up a skyscraper and enjoy quick profit.  But later they can also take their place in exporting agriculture product after the state builds up smooth sale chain,” Jakhutashvili elaborated.

Ramishvili doubts the commercialized state-venture may pose monopoly risks and thinks it’s better for the state to take care of proper business environment, first of all making credits affordable and leaving the rest to the business.

Print
Other Stories
Business Positive – Successful radio program from Radio Positive
Starting point of radio program Business Positive is to meet interesting people, communicate with them and deliver information that is interesting for the audience.
A factory of electric vehicles to be built in Kutaisi
Prime Minister Mamuka Bakhtadze stated that a factory of electric vehicles will be built in Kutaisi at the presentation of the Aigroup business group.
Qvevri-shaped hotel complex to be built in Telavi
A Qvevri-shaped hotel complex is scheduled to be built in the village of Shalauri in Telavi, Kakheti (east part of Georgia).
Georgian designers presented at Fashion World Tokyo 2019
The products of 11 Georgian designers are showcased at Fashion World Tokyo 2019,
Silknet raises $200 million in Eurobond issue
27 March 2019 - JSC Silknet (“Silknet”), one of Georgia’s leading telecommunications operators, has successfully priced a debut $200 million 5-year 11% senior unsecured bonds issue (the “Notes”).
Pistachio trees will be planted in Georgia
Dozens of hectares of Pistachio are planned to be planted in Georgia this year.
Toyota Safety Sense and Hybrid Technology
Toyota Caucasus, has presented two new models the 5th generation RAV4 and the 12th generation Corolla at Rustavi International Motorpark, several days ago.
Bidzina Ivanishvili “became number one oppressor of businesses in Georgia” - ICC Georgia chairman Fady Asly
Mr. Ivanishvili promised the business community to protect them from harassment and pressure, unfortunately his words died with the sunset of that day
The best brands of Belarus will be exhibited on a large-scale exposition in Tbilisi
"The Belarusians like to come to Georgia to relax near the sea in Batumi as well as to stay in sunny Kakhetia."
Don’t treat business like a hooker! - Georgian businessman Vasil Soprpmadze addresses politicians
Businessman Vasil Sopromadze, founder of the company "Fresco", addresses politicians
RAV4 No Compromise and Corolla Set to Impress – Two New Cars Presented by Toyota
Toyota Caucasus, the company constantly aspiring to greatness, has presented two new models the 5th generation RAV4 and the 12th generation Corolla.
Mamuka Khazaradze quits TBC bank, does not sell the TBC Bank share
I made a decision to leave TBC bank where I spent 27 years of my life
10 Reasons to buy an apartment in the suburbs
There is a tendency for Tbilisi dwellers to move from central parts of the capital to the suburbs.
Georgian citizens are granted the right to work in France
The French Embassy in Georgia made remarks on granting Georgian citizens the right to work in France
The New York Times: Bitcoin declines but Georgia still bet on it
The New York Times has recently published an article about reasons, challenges and causes of generating Bitcoin in the former Soviet country Georgia.
EU to allocate € 13 billion for Eastern Partnership countries, including Georgia
The European Union together with the World Bank plans to allocate investment worth € 13 billion for infrastructure projects in the Eastern Partnership countries.
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
19.04.2019
20.04.2019
USD
1
USD
2.6939
2.6939
EUR
1
EUR
3.0323
3.0323
GBP
1
GBP
3.5053
3.5053
RUB
100
RUB
4.2087
4.2087
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6939
EUR
1
EUR
3.0323
GBP
1
GBP
3.5053
RUB
100
RUB
4.2087
April 2019
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30