Georgian Egg Production Faces Bankruptcy
28 March, 2013
Georgian Egg Production Faces Bankruptcy
Georgian egg production may face bankruptcy in a month if it will not be put in equal competitive conditions with the import.
Georgian egg production, the only national industry that managed to supplant import completely, is on the brim of bankruptcy since December of last year since the new government cancelled strict sanitary control on the imported egg adopted from 2007 as a preventive remedy against the poultry flue. According to Zurab Uchumbegashvili, Chairperson of Association of Georgian Poultry Enterprises
as well as stakeholder of Kumisi poultry, the preventive rules were aimed on blocking egg and poultry import globe over in pursuance with the internationally agreed consensus so as to combat the poultry flue. Due to this preventive rule importers apart of customs control had to get a special permission of Georgian National Food Agency (GNFA) with the agriculture ministry that included on-spot sanitary inspection of egg producing enterprises [by GNFA] product of which were slated for import. Plus FAO [the Food and Agriculture organization at the UN] accredited paper-work was to be attached. This kind of intricate sanitary control turned out boring to importers so that they gave up importing in Georgia. On the other hand, the said control proved itself as a protecting tool to Georgian local producers so much that the number of poultries increased from 2 to 23 and they became able to meet Georgian market demand on egg and chicken by 100% and 70% respectively in two years. Consequently, egg industry became the single national field in the 80%-import-dependent Georgia that supplanted egg import completely and started exporting product since 2009 to Iraq.
However the new government found the said sophisticated sanitary control opposing to the World Trade Organization (WTO) rules and made it void starting this past December. As a result imported egg pays only 12% of customs toll like all other agriculture product import in Georgia. Removal of protection umbrella left local poultries vulnerable against the cheaper Turkish and Ukrainian import so that in a quarter Georgian egg producers were led to the brim of bankruptcy and all of the 23 enterprises are put on sale. They expect bankruptcy in a month if government does not put them in equal competitive conditions with the import.
Georgian agriculture ministry swears it together with the finance ministry works on the tax code to alleviate the problem to egg producers. However, government assures no sanitary procedures were revoked but the rule of law restored.
“Georgia as a WTO member has agreements with Turkey and Ukraine [both WTO members] that were violated by ex-power to block the egg import artificially. Now the law is restored and egg import increased obviously however we work to increase competitive power of our product through targeted programs so as to preserve the right of consumers without artificial market-protection,” agriculture ministry commented to Georgian Journal.
Georgian poultry claims government lingers with the decision while the Turkish and Ukrainian approach discriminates Georgian import notwithstanding the WTO rules so diligently observed by new government.
“All we ask for is fair competition. As a matter of fact, all imported eggs in Georgia are cheaper as producers enjoy the state support; on the other hand, Georgia taxes their import less than they tax import to their country. Turkey for instance, imposes 80% of customs toll on egg import plus 20% of internal taxes while they pay just 12% of customs toll in Georgia. Besides, Turkish egg producers are exempted from Value Added Tax (VAT) and enjoy state subsidies. As to Ukraine it is such a huge corn exporter globe over and the corn feeding for poultry is so cheap there that we can never compete with them without exemptions. Let us export to Turkey and Ukraine under similar conditions they enjoy in Georgia, or exempt us from 18% of VAT like all agriculture products except eggs are exempted. Otherwise we will not survive,” Uchumbegashvili said.
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