BUSINESS
Subsidizing Notes to Small Farmers
21 February, 2013
Spring farming and gardening works will be subsided by more than GEL 184 thousand

Three kinds of subsidizing notes will be disbursed to small farmers who own arable and gardening lands up to 5 hectares to finance the upcoming spring works. Some agriculture analysts find that it’s unfair to subsidize petty household farms encompassing less than 1.25 hectares that have no value in the agriculture economy in fact and urge to subsidize only those farmers who bear the status of
farmers and earn their living by agriculture.
Redistribution of subsidizing notes estimated to provide three sorts of financial aid to small farmers, has already started in mid-February and will last until August 1, 2013, the Agriculture Ministry of Georgia informs. The initiative will be financed by over GEL 184 thousand in frames of the Village and Agriculture Development Fund and be managed by Agriculture Projects Management Agency. Around 640 thousand small farmers were shortlisted as target beneficiaries of the project after implementing a large-scale registration of landowners throughout the country based on door-to-door principle in November-December of 2012. Three categories of beneficiary small-landowners were defined based on the size of the owned agriculture lands and three packages of subsidizing called as Agriculture Notes were worked out.
Landowners who possess less than 0.25 hectares (ha) of land spot that are extremely difficult to be available for special techniques will get GEL 100-worth Note enabling beneficiaries to acquire agriculture inventory and goods.
The second and biggest group of beneficiaries incorporates landowners with 0.25 ha to 1.25 ha arable lands in possession get a combined GEL 510 worth agriculture-notes based per hectare evaluation of aid-packages that include precisely prescribed targets and breaks down as following: farmers who own 1 ha get GEL 140 for financing ploughing works, GEL 70 is designed for further powdering of the ploughed soil, GEL 300 is for acquisition goods and inventory necessary for agriculture. Farmers who own 1 ha of multi-year gardening land plots also get GEL 510 for procurement of due agriculture goods and inventory.
The third group of beneficiaries owning from 1.25 ha to 5 ha of arable lands and multi-year plantations get GEL 640 for acquisition of agriculture goods and inventory alone.
Paata Koghuashvili, an agriculture analyst, professor and former MP, finds the agriculture note-distribution as a completely unreasonable action that resembles the agriculture-oriented vouchers redistributed by ex-power for several times to farmers to purchase 20 liter of diesel and 20 kilogram of fertilizers. The only difference is that vouchers might be sold and 60% of beneficiaries did really sell them out as the practice showed while this here notes dictate the using terms and cannot be sold. Koghuashvili disapproves of any kind of free charge assistance and recommends assisting farmers through cheaper diesel and preferential credits for farming works as the best world practice suggests.
“Nothing should be handed out for free to farmers. Instead, let’s exempt the diesel and loans taken for financing land cultivating works from taxes as all developed countries do, agriculture diesel is exempted from the excise and Value Added Tax (VAT) globe over,” Koghuashvili said in the interview to Georgian Journal. “This will be a real relief to farmers who need to pay around GEL1.45 per kilometer to tractors they hire as some have quite a long distance run from the tractor owners’ home to the farmer’s land.”
But preferences should be given only to beneficiaries who have a status of farmer that is not clearly defined in Georgia as of yet. Koghuashvili finds elaboration of the farmer’s status of the paramount importance and disapproves the initiative of Georgian government to call farmers everyone who have land spots less than 0.25 and use them for small private needs in fact and do not create an economic value.
“Those who bear a status of farmer must earn around 50% of their living by agriculture, gardening, cattle-breeding etc and that can only be available if one owns at least 0.5 ha, 0.25 is too insignificant figure, even most part of urban population have land spots of 0.25 and less and can they all be called farmers?” Koghuashvili wonders. Based on his statistics there are no more than 400 thousand farmers in Georgia at the moment while government defined 640 thousand beneficiaries of its agriculture-note project.
Assisting farmers by granted money was necessary at the moment to finance the spring works, Ditrikh Muller, a cofounder of Georgian Investment Group, believes.
“We should discuss the situation as the emergency case like either we support petty farmers or they will not survive, these agriculture-notes are substantially right now,” he said.
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