Hard Times for Greengrocery in Georgia
05 June, 2015
Hard Times for Greengrocery in Georgia
The once-profitable greengrocery business is going through hard times in Georgia. Although several months ago even the Russian market was officially open for Georgian greens, the producers cannot take their product there – mainly due to the fact that they still haven’t bounced back from the 2008 war. Consequences of the war resulted in Georgian greens being substituted by Azerbaijani and Iranian greens, despite them being of much lower quality. For obvious reasons, the export of Georgian greens has decreased
in Ukraine as well. Traders who still remain at the market struggle to profit due to devaluation of hryvnia. Farmers who produce greens ask the authorities for help; in turn, powers that be see the panacea in entering the European market.

“Many farmers don’t even harvest their crops, choosing to simply plough the fields with ripe greens instead.”

There are about a thousand greenhouses in the Imereti region alone, with 5,500 small and medium entrepreneurs yielding about 25,000 tons of greens annually. According to the recent years’ figures, more than 40 percent of Georgia-produced greens are exported to Ukraine. A comparatively lesser amount goes to Belarus, Azerbaijan, Latvia, Bulgaria, Moldova, Estonia, Romania and Lithuania. Export volume is decreasing, though: If in 2013 Georgia exported 2,200 tons of greens, in 2014 the volume decreased to 1,900 tons.

Archil Lomidze, farmer and greengrocer:

“Let me put it plainly: One trailer can carry 13 tons of greens. Last year, 1 kg of greens cost 2 USD, this year nobody pays even 70 cents. You do the math. The greens taken to Ukraine were sold for 30 hryvnias per kilogram, which roughly amoungeotv.geted to 4 USD, but this year these 30 hryvnias devaluated to 1 USD. The prices have never been so low, and this is true for Georgia as well. When 1 USD cost 1.70 GEL, the local price for greens was always within the range of 3.5-4 USD. Now the exchange rate has worsened and people sell greens for less than it takes to produce them. Many farmers don’t even harvest their crops, choosing to simply plough the fields with ripe greens instead. Return to the Russian market is not yet feasible and nobody knows what the prospects are. Russia imports spices from India and greens from Iran, Azerbaijan and North Ossetia. Nobody knows when the situation in Ukraine is going to be sorted out, and the European market is a distant dream.
Most European countries get their greens from countries such as Israel, Spain, Turkey and Iran, whose supply is steady and stable. We can’t even secure that, and don’t get me started on quality. I doubt you’d be able to put together even 100 kg of greens that would look and taste the same. The only likely way out of this is unification of small enterprises and creation of bigger ones that will satisfy the European demand in quality as well as stability and volume. But this cannot be achieved without state support.”

“Europe consumes more and more greens annually, and if Georgia manages to carve out a niche for itself in the ever-increasing demand, it would greatly assist with development of Imereti region.”

The project aimed to facilitate the export of greens to the European market is being carried out by Industrial Development Group together with the Ministry of Economy. To this end, a Dutch company was invited to Georgia in order to investigate the situation and prepare the initial action plan. After its work was complete, a memorandum on mutual understanding was signed between entrepreneurs and Industrial Development Group; according to it, the entrepreneurs took upon themselves the responsibility to set up annexes that would increase their greenhouses’ output by 50 percent. These annexes, if established properly, will ensure attainment of European certification, signifying the producers’ adherence to a unified standard of agricultural production. The standard embraces the whole cycle of agricultural production (location selection, soil preparation, sorting and packaging of the product). For the European consumer, this standard means that the foodstuff is produced with strict observance of the production rules and any dangerous environmental influence as well as use of chemicals is brought to minimum. The standard includes 234 demands. On its part, Industrial Development Group will assist with attracting finances and preparing specialists, as well as establishing contacts with Dutch trade houses to ensure a stable export of Georgian greens to the European market for many years forward.

Paata Charakashvili, Head of Industrial Development Group:

“Georgia’s main exports in this field are dill, coriander and parsley. Now the producers are starting to grow new crops, such as broccoli, salad leaves and oregano. It is obligatory to diversify the market, but the European market places very strict demands on those who want to enter it. Still, Europe consumes more and more greens annually, and if Georgia manages to carve out a niche for itself in the ever-increasing demand, it would greatly assist with development of Imereti region.
In Europe, there are established rules of play. A signed agreement specifies a definite price and it is not liable for variation within the period of time stipulated by the contract. We think the price of Georgian greens on the European market will be within 4-5 EUR per 1 kg. This integration of the greens producers can serve as an example for other producers. In this case, a merger of enterprises will be decisive because with our small volume of production we can’t hit big markets, be they Europe or China, where we plan to take our agricultural products as well.”

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