EPI for import-free Georgia
19 May, 2011
EPI for import-free Georgia

To help Georgia in attracting of investments and in job creation the US government implements a USD 40 million-worth Economic Prosperity Initiative project in Georgia. The project aims to encourage Georgian private sector and enhance competitive power of business so as to make Georgia less import-dependent. 

The four-year Economic Prosperity Initiative (EPI) of the US Agency for International Development (USAID) launched on May 13, 2011 is focused on five priorities as following: job creation, attraction of more Foreign Direct Investments (FDIs)

to Georgia, increase of export, creation of better access of local business to financial sources and improvement of economic productivity. Protection of intellectual property also falls under EPI focus as an essential part of free market principles.

Having researched Georgian agriculture the acutest problem of Georgian economy that by 80% depends on import, EPI experts came to conclusion that the country has a full potential not only replace the import by locally produced product but also go on export. Import became more alarming against the backdrop of the underway global price hike due to which inflation pressure in Georgia reached 14% and 90% of it is made by food.

To alleviate the import dependence the EPI is supposed to help operational business to become stronger and acquire better economic management skills [to become more competitive] on the one hand, and to replace the law quality import by locally produced high quality ones on the other. To achieve these targets EPI experts find it crucial to integrate petty farmers that makes easier certification of their product and hitting both local and oversea markets.

This will enhance export potential of Georgia that lags twice below its actual potential at the moment.

“We are to connect producers with processors and processers with the market,” Dennis Zeedyk, Agriculture Sectors Component Leader at the EPI, said on May 5, 2011 at the agriculture round-table. To this end EPI provides technical and consultation assistance to the priority sectors, it holds training seminars to the entrepreneurs involved in the target sectors as well as publishes guide-books for vegetables and fruits.

Out of 15 sectors of agriculture EPI chose four priorities including wine, nuts, fruits and vegetables as  having the most potential at the moment. Wine and hazelnuts make 25% and 24% of agriculture export respectively and EPI experts think there is an opportunity to increase either price or sales of these products. To achieve these goals Georgian nut business needs to adopt new technologies to enhance productive capacity of hazelnut plantations on the one hand, and to add as much value as possible to the nut through processing and exporting the processed product  instead of crude nut as it is practiced today, on the other Zurab Chekurashvili, Agriculture Sectors Deputy Component Leader at the EPI, said.

“Our nut goes to EU through Ukraine and German mainly and they take more profit, they sell it. Our task is to connect our producer to the final consumers like Brazil where confectionary industry is very developed and Costa Rica to enable our entrepreneurs to gain more profit,” he said. Iinternational market pundits advise Georgia to export hazelnuts to Asia, Korea, and Singapore too.

As for vegetables EPI is focused to help Georgia to solve the alarming tendency of importing product that grows in Georgia. Each year Georgia imports approximately the USD 35 million worth vegetables including 70 thousand tons of potato, 7 thousand tons of tomatoes , 24 thousand tons of onions, and 5 thousand tons of carrot, also beet, garlic and other vegetables all growing in Georgia.

“So there is a market for them if they will be produced in Georgia…and a plenty of price appreciation opportunity after harvest,” Zeedyk said. But only if green-house, cooling and storage infrastructure will be developed.

Based on EPI research, 73% of potato import comes on 4 months starting February till June that means Georgian potato production may meet local demand if stored after harvest for 6 months. Prices on vegetables almost double after 5 months of the harvest that means farmers may enjoy profit if produce or store the questioned product throughout a year.

The research shows producing tomatoes at 11 hectare of greenhouse may by 75% decrease import.

On wine side EPI project focuses on promotion of export and wine tourism. To enhance export they help to find new markets and the focus falls on promotion of Georgian wines under united brands umbrella at the US that is supposed to replace Russian market. To this end EPI experts advise to encourage internet sales that is very popular in the US.

Promotion of ancient Kakheti technologies based on producing wine in pottery that has no match throughout the world is the core issue. An international Forum on popularization of pot wine will be held soon in Georgia summoning wine market pundits and wine experts from the US and EU.

“Pot wine is two jokers in our hand if we use it properly,” Chekurashvili thinks.

On the other hand EPI experts think Georgia may enjoy bigger profit through wine tourism rather than through export that requires transportation, distribution and other costs. To this end a legend on Georgia as a country of wine origin should be worked out and special web-portals developed to raise awareness of wine culture of Georgia.

“The more tourists come the more wine is consumed and sold locally, and profit potential is much higher,” Zeedyk stated.

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