What will Georgia bring to EU market?
03 July, 2014
What will Georgia bring to EU market?
Georgia signed the associated agreement with the EU on 27 June and the Deep and Comprehensive Free Trade Agreement enters into effect soon between the two sides. This means a huge market of 500 million people with high purchase power becomes open to Georgian export. However, this huge market also challenges small and poorly developed Georgian production.

To have a deeper insight of opportunities and challenges the free trade with the EU holds for Georgian agriculture Georgian Journal interviewed Shalva
Pipia, Minister of Agriculture of Georgia.

Q: Mr. Minister, what prospects does the DCFTA hold for Georgian agriculture?

A: I believe this DCFTA offers the best paragraphs to Georgia: it allows Georgian entrepreneurs to export all our key products to the market with around 500 million consumers free from customs barriers. Accordingly, more competitive prices become available to our entrepreneurs.

Q: But the DCFTA still implies quotas and restrictions like the ad valorem component of the import duty to almost all products except the garlic.

A: In fact, garlic is the only product we have a quota at 220 tons while all other products are free in volumes and exempted from duties. That said, there are fixed volumes for some other products too but it means no restrictions. We just assume obligation that we will inform the EU if we exceed those volumes and then go ahead. The Ad Valorem component is built in the deal but it is so low that implies no risk to Georgian producers. It simply means that if the sale price of the export is lower of ad valorem price - that is a price fixed at the EU market - the producer must pay the difference between its sales price and the ad valorem price. The trick is that the ad valorem prices are so low in the EU that it is quite unimaginable that we will be selling any of our products cheaper. For example, the ad valorem price for citrus is between 45-50 cents while it is impossible to sell Georgian product below this if we take into account the production cost plus logistic and storage expenses. It will be higher at any rate. So, Georgian entrepreneurs face no ad valorem price risk in fact.

Q: Which products do you think have greater potential to be exported to the EU?

A: All the products that are already exported today like wine, mineral water, alcohol drinks, hazelnut, dry and frozen fruits, chestnut, will be exported free of customs duties now. In nearest future we expect to start exporting fresh fruits and citrus while honey and product subject to the veterinary product will go in the middle-term prospect.

Q: How long will this middle-term take?

A: We are the meat and dairy product importers as yet. Besides, we have number of regulations to approve. We have already approved changes to the national food code which is an umbrella document and a national program has already been approved. Within the next 7 years we have to change around 90 enactments from both veterinary and phytosanitary points of view. We already strengthened the National Food Agency, added 180 employees and four-fold increased the number of inspectors. The goal is to meet the EU standards on those products that we do not meet today and export them in near future. Now we are building the phytosanitary lab in order to have high quality referral lab on the herbal product. Besides, we have a plan to make the honey diagnostic and international certification available at our lab by the end of the year. Accordingly, in the first phase we will start honey production and then the fish and other product of animal origins will follow.

Q: The volumes have always been the problem of Georgian export. Do you think there is sufficient production of honey, wine or citrus to be exported to the EU?

A: But I believe there is a great potential for export. Georgian honey is in great demand in Turkey and, to my information, in the EU too, especially the chestnut honey. As of wine, I cannot say there is a volume problem. Wine export exceeded 50 million bottles last year and there is a potential for 100 million bottles as new vine-yards were deployed within last 2 years. Georgia is already an important player at the global hazelnut market. It was the third largest exporter and fifth largest producer of hazelnut last year and the production will only increase with new plantations.

Q: Some analysts fear that the huge EU agriculture goods supported by subsidies and modern know-how may kill the local production. What are the plans of Georgian government to increase the competitive power of Georgian agriculture?

A: Georgian export to the EU was 23% past year whereas the EU import was just 12% and I do not expect the figure to change much. The point is that in spite of high subsidizing of the EU agriculture its production price is too high first of all due to high salaries and high expenses on production and I do not expect this trend to change. We should not expect the EU production to suffocate us.

Q: Tangerines for example could not get a strong foothold even at the Ukrainian market due to low standards of package and logistic. How can they get this produce in the EU?

A: I can not agree with that, honestly. Tangerines were properly packed and we exported around 60 million tons of tangerine to many countries including the Ukraine past year that is an unprecedented statistic of the last 10 year. Logistic and standards are settled. As to effective production, we have some problems and are working on this. There was no scientific-research in the country, no new specimen were made and adopted. We set up a scientific-research center that will be focused on the transfer of technologies and new specimen.

Q: But the credits still remain unavailable and expensive to farmers, beside no alternative financial instruments like leasing or agriculture insurance is developed.

A: We are working on an agriculture insurance project together with the KFW that carries on a research and will offer certain projects soon. The cheap agro-credits [implying the state co-financing of banking loans] are on and will be continued, Produce in Georgia project focused on reprocessing industry has been added recently. We boost cooperatives by special consultancy and financial support programmes, provide consultation to farmers and entrepreneurs. As we have problems of professionals at every level in agriculture there is a project to raise due specialists. Besides, the Technical University together with the Iowa University launches training courses on agriculture direction.

Print
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.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
25.09.2018
26.09.2018
USD
1
USD
2.6226
2.6226
EUR
1
EUR
3.0868
3.0868
GBP
1
GBP
3.4416
3.4416
RUB
100
RUB
3.9814
3.9814
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
2.6226
EUR
1
EUR
3.0868
GBP
1
GBP
3.4416
RUB
100
RUB
3.9814