Georgia aims to become second largest hazelnut exporter
17 May, 2015
Georgia aims to become second largest hazelnut exporter
Georgian government has hatched an ambitious plan to become a number two hazelnut exporter on the globe within 5 years. It is already in the top three with 40 thousand tons of export per year, right behind Turkey and Italy. Government has already prioritized the hazelnut industry and worked out a special plan to give impetus to hazelnut export. The special presentation will be held on May 15 in Anaklia, a Western Georgian region that is remarkable for its climate
being ideal for hazelnut farming.

According to statistics for the first quarter of 2015, hazelnut export has more than doubled - from 22 million USD in January-March of 2014 to 52 million this year. Commensurately, the hazelnut’s share in the total export has more than tripled - from 3 to 10 percent. It is now the third top export product in Georgia.

Georgian government started thinking of developing the hazelnut industry after it exceeded Georgian wine and mineral water exports last year - the two key export agriculture products of the country.
“Hazelnut export exceeded wine export last year, which made us take it more seriously. We have already worked out the hazelnut development state program that will be presented at the business forum on May 15. It will allow us to double our exports in 2-3 years,” said Otar Danelia, Minister of Agriculture, in his last week’s speech at the joint committee meeting held at the parliament. “We have an ambition to become a second largest exporter within 5 years. Last year we got 183 million USD from hazelnut export, while the wine export brought in 180. That’s why the former gets prioritized.”

“Georgia is the third largest nut exporter as of now, after Turkey and Italy. But we have full potential to overtake Italy’s export, which currently equals 120 thousand tons per year. We export 40 thousand tons right now but can easily triple this figure if the state program is implemented”geotv.ge

The trend has continued this year. According to statistics for the first quarter of 2015, hazelnut export has more than doubled - from 22 million USD in January-March of 2014 to 52 million this year. Commensurately, the hazelnut’s share in the total export has more than tripled - from 3 to 10 percent. It is now the third top export product in Georgia. Wine, on the other hand, has dwindled from 7 to 3 percent on the quarter-to-quarter basis from 2014 to 2015. The reason for that was (and still is) the economic and political crisis in its key wine export markets of Russia and Ukraine. Hazelnuts, on the other hand, are oriented towards the EU market.

“Hazelnuts have full potential to enhance our export geography. The key export market at the moment is Western Europe, and the free trade agreement with the EU is very important to this end”

“We have researched the global hazelnut market and it is only expected to grow in the nearest ten years,” Levan Davitashvili, Deputy Minister of Agriculture, told Georgian Journal. “The demand on hazelnuts is increasing not only in the region, but in the U.S., Europe and Asia. This is important, because Georgian agriculture exports largely remain confined to the region, while we need to diversify our export markets. And hazelnuts have full potential to enhance our export geography. The key market at the moment is Western Europe, and the free trade agreement with the EU is very important to this end. However, the demand in Asia is obviously on rise as the confectionery industry is stepping up. Georgia is the third largest exporter as of now, after Turkey and Italy. But we have full potential to overtake Italy’s export, which currently equals 120 thousand tons per year. We export 40 thousand tons right now but can easily triple this figure if the state program is implemented. We have excellent climate for that in Western Georgia and in some parts of Kakheti [Eastern Georgia].”
geotv.geAccording to him, the success is directly linked to the new technologies, know-how and new species of the hazelnut, all of which are envisaged by the state program. It also implies development of storage infrastructure and offers new financial instruments. According to this new financial tool, hazelnuts will be deposited and used as collaterals for banking loans, which may cut the credit prices close to zero. The state program is also oriented towards streamlining legislation and administration that regulates the hazelnut industry. The program will begin this summer and will first and foremost develop the storage infrastructure through cooperatives. However, the government thinks it is essential to make sure that about 40 thousand of our small farmers who grow nuts for a living are not put out of business.
“If this state support program is implemented, I believe we will be well-positioned in nut industry at the international level,” Davitashvili said.
Some sector pundits are a little skeptical towards the new governmental ambition, however. Natia Gargulia, who ran the hazelnut business for 5 years but quit two years ago because of financial problems, is doubtful that Georgian hazelnut potential is so gorgeous. She thinks that Georgia lacks plantation space to grow enough of the product to fulfill its ambition. Besides, she warns that nut farming is risky, since frosts in February and March can completely devastate the plantations.
“Things might go smoother with state support, but I do not think we have enough space in Georgia for new plantations that we need to boost our production. Besides, the climate is not as favorable as in Turkey. Even with its drier weather conditions, it is difficult to predict harvest results. That’s why banks find our business risky. In Turkey’s case, risks are compensated by huge governmental subsidies. Besides, they have huge reserves of hazelnuts. In case of bad harvest, the government simply opens up reserves and balances prices to compensate the loss to farmers. We cannot afford that or grow enough hazelnuts to create our own reserves,” Gargulia explained to GJ.

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