Georgian egg production suffers uneven competition
04 December, 2014
Georgian egg production suffers uneven competition
Georgian egg and poultry industry requires fair competition rules to compete with importers. The changes that streamline the competition rules had been worked out and slated for approval long ago, but the Georgian government is lingering on the decision, which could lead the local industry to bankruptcy.

Georgian egg production, the single national industry that managed to supplant imports completely, requires quick help to survive the so called damping policy preferred by its foreign competitors. The problem began in December
of 2012 after the power shift when the new government cancelled strict sanitary control of imported eggs.
Due to preventive regulation implemented as a response to Bird’s Flu in 2007, importers, apart of customs control had to pass a special sanitary inspection by Georgian National Food Agency (GNFA) plus FAO (the Food and Agriculture organization at the UN). Accredited paperwork was required as necessary. This intricate sanitary control had a kind of protective effect on Georgian local production. The egg and poultry industry flourished. The number of sizable poultry firms increased from 2 to 23 and they were able to meet Georgian market demand on eggs and chicken by 100 percent and 70 percent respectively in two years. In 2009 Georgian egg producers started to export their production to Syria and Iraq.
The new government saw said sophisticated sanitary control as opposing to the World Trade Organization (WTO) harmonization rules and made it void. As a result egg importers pay only a 12 percent customs fee when they import in Georgia but Georgian egg producers are taxed much more heavily when they take their product to neighboring co­untries like Turkey and Ukraine which are key competitors to Georgian producers. The point is that almost all countries except Georgia are subsidizing their agriculture. In order to put importers on equal competitive terms with local industries, all developed countries worldwide including EU countries, activate protective tools: if producers of subsidized sectors do go on to export their goods, then the receiving country charges the importers with fees equal to the amount of subsidies they received at home.
However, Georgia does not practice this toll system, though all its neighbor countries and key importers such as Ukraine, Turkey and Azerbaijan do. As a result, the import-related tax burden on Georgian producers is much higher than on their foreign competitors that enjoy subsidies in their domestic markets on the one hand, and on the other hand face no large import-related fees in Georgia. This enables importers to play the damping price game in Georgia.
“If we export to Turkey for example we are charged by 108 percent overall while Turkish egg producers pay only 12 percent customs duty,” Zurab Uchumbegashvili, Chairperson of Association of Georgian Poultry Enterprises, said in a interview with Georgian Journal. “This makes, importers able to sell their product at damping prices here in Georgia, while we have to lower prices below the actual price of the product. The sector faced huge losses in 2012 and 2013.”
The situation improved when sanitary control was restored again in the summer of 2013, but if all discriminating factors are not removed, Georgian industry will not be competitive in the future, Uchumbegashvili fears.
To remove all said inequalities, Georgian egg and poultry industry started working on legislative changes since fall of 2012 and Georgian parliament lobbied the draft bill. But the Georgian government still lingers on reviewing the changes and submitting the draft bill to parliament for final approval.

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