Trends in Georgia's Agriculture Sector in 2012-2019
12 March, 2020
Transparency International Georgia studied trends in Georgia's agriculture sector in 2012-2019 and revealed the following findings:
- In Georgia, 39% of all employees work in agriculture; 659,000 persons are employed in this sector, most of whom work in their own small farms.
- An agricultural household on average holds 1.4 hectares of land. The scarcity of land hinders the development of large-scale farming and taking advantage of economies of scale.
- Low labor productivity is the main reason of poverty for people employed in agriculture. In 2018, the average labor productivity of agricultural workers was GEL 407 per month, which is five times lower than the average productivity of the country's economy.
- In 2018, 33% (160,000 hectares) of arable land and the land for greenhouse and perennial were unused. Pasture and mowing land is 300,000 hectares. Georgia has 788,000 hectares of agricultural land, out of which 488,000 hectares were arable or for greenhouse and perennial plants.
- Georgia's agriculture is not attractive for foreign investment. This was partly stemmed from the ban on selling agricultural land to foreign nationals.
- In 2013-2019, GEL 1.5 billion was spent on agricultural development from the state budget of Georgia. In the same period, the average growth rate of agriculture was 1.5% and was three times lower than the average growth rate of the economy.
- Compared to 2012, in 2018, real agricultural output has increased by GEL 220 million. The real growth was only GEL 29 million, compared to 2013. In nominal terms, GEL 3 billion worth of agricultural output was produced in 2018 in Georgia.
- The share of agriculture in the economy tends to decline. In 2018, this figure stood at 7.8%.
- In 2018, wheat crop increased by 33% compared to 2012, while corn yield decreased by 27%. In 2012, Georgia's total crop yield was 370 thousand tonnes, which is 6 thousand tonnes more than in 2018.
- Harvest of main vegetables is declining. Only cucumber yield has a growth trend.
- Compared to 2012, in 2018, the crop area was reduced by 20%. The highest reduction was in corn areas.
- Despite a decline in total crop yields, there is a positive trend in almost every annual crop yield.
- 88% of Georgia's fruit crops come from five sorts: grapes, apples, tangerines, peaches and nuts. Grapes are 51% of the total fruit crops. Compared to 2012, in 2018, the tangerine and hazelnut crop declined, while the yield of grapes, apples and peaches increased.
- In 2018, farmers and households in Georgia had 8% less livestock than in 2012.
- The decline in the quantities of livestock did not have a clear impact on livestock production. Meat production had an upward trend. Unlike meat, milk production has decreased.
- Compared to 2012, in 2018, the number of poultry increased by 32%, but after 2015 this figure has been declining. In 2018, 635 million eggs were produced, which is 34% more than in 2012.
- In 2018, Georgia exported food and beverages worth USD 760 million, which is 57% more than in 2012
- Growth in food and beverage exports in 2013-2018 was mainly driven by a USD 132 million increase in wine exports, out of which USD 115 million was Russia’s share. In 2018, Russia's share of Georgian wine exports rose to 58%, which significantly increased the impact of the Russian market as a lever on Georgia.
- In contrast to exports, in 2018, the value of food and beverage imports has decreased by 6% from 2012. However, the imports was still USD 260 million more than exports.
- High dependence on imported Russian wheat raises certain concerns. In 2016-2017, almost 100% of imported wheat came from this country. In 2018, Russia's share fell to 84%. Such a high dependence on wheat imports from Russia poses a certain danger. Halting of wheat import from Russia to Georgia for political reasons, will lead to a shortage of wheat for a certain time and increase the price of bread.
- If we take specific countries, the largest export destination for Georgia’s food and beverages is Russia. More specifically, USD 244 million worth of Georgia’s agricultural products were exported to this country in 2018, while in 2012, this number stood at only USD 3.3 million. In 2018, Russia's share in Georgian exports of food and beverages was 32%.
- In 2018, USD 148 million worth of Georgian food and beverages were exported to the EU countries, representing 15% of total Georgian exports. This figure reached a maximum of USD 221 million in 2016.
- Given the decline in the quantities of basic crops and livestock products, the growth of the export of food and beverages and the replacement of imports has been driven by the development of the local processing industry. The share of processed products in exports has increased, the value of which is higher than that of raw materials.
- As the data show, government programs were mainly social in nature rather than aimed at increasing the economic efficiency of the sector. Many state programs have been implemented in the last 15 years to develop agriculture.