Policy Paper 01/2017

Unlocking the export potential of Georgian agriculture

Georgia’s agri-food export is concentrated in few products and few undemanding markets, making it highly vulnerable to shocks on a small number of commodity and geographical markets. At the same time, the diversity of climatic conditions and ample water resources create significant growth and diversification potential for Georgian agriculture. Georgian conditions appear especially suitable for the production and export of high-value niche products as the land mass is small and fragmented, both due to topographic conditions and present ownership patterns.

Two main constraints limit Georgia’s agri-food exports at present. Firstly, a shortage of raw materials because of low agricultural productivity limits the quantity of goods available for export. Secondly, most export chains are poorly organized. This results in bad preparation of export consignments and prevents export transactions from generating repeat clients or long-term contracts with predictable contract prices.

Producers should aim at gradually moving towards more demanding export markets. The selforganisation of producers in value chains through agricultural clusters or “Productive Alliances” (PAs) would further help strengthen the linkages between actors in agriculture value chains, permitting better coordination of actors as well as improved quality control and documentation of products. Cooperation on marketing efforts should be a part of cluster activity or complement PAs.

The government needs to work both on long term and short term constraints in order to boost the growth and diversification of agricultural exports. In the long term, consolidation of the highly fragmented agricultural land is essential to provide Georgia with a competitive agricultural sector. In the short run, the government should encourage and support the foundation of agricultural clusters or PAs, potentially in the context of a wider agricultural and industry cluster initiative. PAs as well as
selected, high-potential “leader” companies in specific products should both be the addressee of and multiplier for government and donor programmes for value chain development. Furthermore, the government should modernise agricultural education and provide some information services to bridge knowledge gaps of individual farmers.

Download Policy Paper 01/2017