ISET

The Government of Georgia (GoG) intends to create a national agricultural insurance program to achieve the following objectives: (i) developing the agricultural insurance market in Georgia; (ii) supporting agricultural production and increasing the competitiveness of farmers; and (iii) supporting the income of people involved in agricultural activities and minimizing their risks. Two pilot projects were implemented in 2014 and 2015, which on average subsidized 94% and 55% of insurance premiums, respectively. Along with these pilot projects, the government has initiated the development of a sustainable long-term crop insurance policy and regulatory framework. In the near future, it is expected that the government will decide on a model that will be used to manage the agricultural insurance process in Georgia.

Georgia’s wine industry is heavily dependent on export to CIS countries and especially Russia. Two main short-run risks associated with the Russian market prevail for Georgian wine exports at present:

1. Russia might cancel its free trade agreement with Georgia. This would reduce the demand for Georgian wine in Russia by 18%, or USD 20 m based on 2014 exports.

2. The economic slowdown in Russia could lead to reduced demand for wine. We estimate that this could reduce demand for Georgian wine by 5%, and at most 10%, or USD 5.5 to 11 m.

These short run risks are substantial but manageable. Reduced demand due to the economic slowdown combined with a cancellation of free trade with Russia would reduce total Georgian wine exports by USD 28.5 m or 17%, but still leave them much higher than their average level in recent years.

The “Land-Poor-Farmers Assistance Spring Project” started in 2013. The project’s goal is to support rural residents in establishing sustainable farms.

The objective of the assistance program is the promotion of agro-technical activities (plowing) for cultivating annual crops and supplying the industrial inputs (fertilizers and/or seeds and/or plant protection products); and the promotion of the activities of those land-poor-farmers who only have perennial crops on their lands (the provision of fertilizers and/or plant protection products). This project gives farmers an opportunity to cultivate crops on lands that have not been plowed for years.

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