Cheaper Credits for Agribusiness
04 April, 2013
Cheaper Credits for Agribusiness
Georgian government starts implementation of promised cheap agro-credits program through 11 banks and 2 micro-financing organizations while skeptics doubt its happy outcome once the profit-oriented commercial sector is involved in it.
The agro-credit program aimed to create an access to cheaper credit resources for farmers and entrepreneurs, involved in agriculture industry, officially took off on March 27, 2013 in frames of the Agriculture Development Fund, expected to attract and alleviate Georgian agriculture sector by GEL 1 billion. The program’s idea
is to cut down interest rates, fixed by commercial sector on agro-credits through co-financing it by the Fund. The program offers three kinds of credits, suggesting free of charge 6-month credits up to GEL 5 thousand for small farmers; 2-year credits within the range of GEL 5 thousand -100 thousand and charged by 8% as a cap, available for middle sized and big farmer; and 7-year credits within the scopes of USD 30 thousnad-600 thousand and 3% of ceiling interest, available to enterprises involved in agriculture product processing. The co-financing rate ranges within 9% and 12% for the second and third component respectively and will be covered by the Fund. Thus, the average interest rates fixed on agriculture credits normally by Georgian commercial banks and standing around 15-17% very likely can be available for 3% and 8% thanks to the underway project.

However, the program does not cover start-up businesses as expected inasmuch as banks, been fully responsible for the capital risks [or pay-back of credits] find it extremely risky. Approval of credits is completely at discretion of banks and micro-financial organizations in accordance with the criteria they normally use to assess a client’s solvency potential and credit-related risks. Involvement of banks in the Program makes sector pundits wary that small farmers will avail of the agro-credit program least of all.
“An ordinary farmer will not avail of this program for banks once fully responsible for pay-back of the credits will ask for similarly huge collaterals as they usually do and it will not be the agriculture product but some other business or liquid property by at least 3-5 times higher in price than the money the farmer asks,” Paata Koghuashvili, agriculture sector analyst, explains. “In the end banks will be at loss and poor farmers will go bankrupt.” Processing enterprises very likely will be a priority for it can provide by more valuable collaterals compared to farmers. “Some banks already said they will join the project only in the processing component while today our key problem is to fill the gap in product producing not processing,” Koghuashvili reminds. He believes the only solution to create an access to cheap credits to farmers is creation of non-commercial special banking system, as the best world experience suggests, founded by the state capital initially with the opportunity to be paid-off by farmers in the end. “All developed countries including Europe and the US created this kind of special credit systems and we should duplicate this example,” he said. “Banks who treat farmers as risky partners cannot solve this problem.” Minister of agriculture however accentuated during the agro-credit presentation that the crediting system suggested by MOA is the very way most countries including Eastern European countries adopted before they joined the EU.
Lia Eliava, a financier, assures only the state-based crediting institute may solve the cheap money problem in agriculture, which due to high risks, is subsidized even in the developed countries like the US and UK and all attempts to solve the problem through commercial sector, is destined to a failure. “Ukraine has also been trying to solve this problem through commercial sector but after many years of futile attempts, it set up a state-based agro-bank,” she said. On the other hand, she fears that targeted beneficiaries in regions who have no information access, no business planning skills and experience with banks, may be misled by the much touted cheap credits and fall victims of unpaid mortgages eventually. “This will be a disaster for farmers who live in rural area and have no alternative dwelling place; they will be impoverished completely,” Eliava elaborated.
Other Stories
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
Exchange Rates
GEL Exchange Rate
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
September 2018
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