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Georgia Agribusiness

Endowed with fertile soils, clean water and favourable climate, Georgia produces a broad range of agricultural products and provided up to 10% of inter-republic food trade under the Soviet Union. In 2010, agriculture represented 8.4% of total GDP. The main products include: wine, fruits, nuts, live cattle, tea, mineral water, dairy products, juices, sugar, grains, fish, flour and chickens. The main export markets are: Ukraine, EU countries, Kazakhstan, Azerbaijan, Belarus, Turkey, USA, and more recently Middle Eastern countries.

Strategic direction/ Specific schemes and incentives

Georgia, which became a net importing country of agricultural products, has launched significant reforms since 2004. A law on agricultural land privatization was passed in 2005 and opened 40,000 ha of State-owned agricultural land for sale. The land registry was simplified and a new cadastre introduced. More recently, the government included agriculture development in its Strategic “10-Point Plan” for Modernization and Employment 2011-2015.

Adopted in 2012, the agriculture development strategy provides for:

• Equipments aiming at increasing the sector’s productivity and competitiveness: training resources, mechanisation centres, irrigation systems, grain drying and storage infrastructure, vegetable greenhouse farming (Bulgarian pepper, tomato, cucumber), modern laboratories to support animal product exports (fish, honey) to the EU markets;  
• An electronic governance system (Agro-clever) to improve processes and controls;  
• Registration of Georgian products of geographic indications (wines, mineral waters, dairy products);  
• Action plans for export diversification and promotion of Georgian agro-products, especially of wine.

Besides, the following incentives are offered to investors as part of the initiative “100 New Enterprises in Rural Areas”:

• Acquisition of State-owned agricultural land (75% of total agricultural land) at 20% of the market price for agricultural processing projects; 
• 0% tax burden for primary agricultural processing;  
• 100% depreciation allowance on investments.

Undergoing major transformation, the agribusiness sector offers a wide range of investable areas:

• Wine (25% of total agricultural exports) and spirits, notably in Imereti and Racha-Lechkhumi  
• Mineral and table water; 
• Nuts (5th largest exporter of in-shell hazelnuts and 3rd largest for shelled hazelnuts);
• Grains (wheat, barley, corn), flour products and animal feeds; 
• Organic farming, tea, aromatic and medicinal plants; 
• Green house growing of vegetables (tomatoes, onions, peppers, cucumbers);  
• Fresh, dry and canned fruits (grapes, citrus, clementine, apple, pear, blueberry), juices, jams, honey;  
• Fresh, frozen and canned fish (anchovy, trout) and sea products (mussels, oysters); 
• Pedigree poultry, hatching eggs, snail farming, live cattle, meat, integrated dairy production.

Ferrero (Italy), a leading confectionary producer (Nutella, Raffaello, Ferrero Rocher), established AgriGeorgia as a local subsidiary in 2007. It acquired 1,215 ha of agricultural land in Samegrelo province to grow hazelnuts and launched a EUR 4 million investment plan to install drying facilities. AgriGeorgia employs about 400 people.

Hipp (Germany) is operating in Georgia since 2007. It purchased land in the Khashuri region and built a plant for processing wild apples into baby food and other products. It acquired and renovated a second fruit processing plant in Ajara. Both projects required a total USD 8 million investment. Hipp employs between 40 and 200 people, depending on the season. It is currently developing a bio farm to supply its existing plant with milk. Future plans include apple, red carrot, bit root and strawberry production.

Eco-Food (Georgia), founded in 2004, is a leading milk processing company, applying European quality standards. In 2011, Eco Food and an Austrian investment group established Cheeseco at the Lilo Industrial Zone and started the construction of a huge cheese factory, which will include modern packaging machines. The EUR 6 million-project will first produce Georgian national cheeses, and foreign cheese varieties in a second phase.

Martin Bauer (Germany) started operating in Georgia in 1996 and invested about EUR 25 million in tea production since then. It has a lease on about 9 000 hectares of tea plantation and holds controlling interests in 15 companies engaged in primary and secondary tealeaf processing.

Castel was founded in 1997 by French manufacturer of alcoholic drinks Pierre Castel, who invested USD 37 million in the construction of a modern brewery in Lilo. In 2006, US Citigroup’s subsidiary B.I.H. Eastern, took over all breweries and bottling units of the Castel Group in Georgia, Azerbaijan, Armenia, Uzbekistan and Kurdistan.

Useful links and contacts

Georgian Chamber of Commerce and Industry

Georgian National Investment Agency

Georgia.gov.ge

Ministry of Agriculture of Georgia