Back in the summer of 2021, the Government of Georgia (GoG) worked on a 10-year strategic framework for different sectors of the economy including agriculture. In July 2021, Georgia’s Prime Minister Irakli Garibashvili announced the targets for the Ministry of Environmental Protection and Agriculture (MEPA) under the government’s 10-year-strategic framework.
It lists many agricultural and environmental goals that should be achieved by 2030, including the following:
- Jointly investing up to 7 bln GEL in agriculture from the government and the private sector;
- Investing 1.7 bln. GEL in improving access to agricultural machinery;
- Increasing revenues from total agricultural exports to 3 bln. USD and wine exports specifically to 1 bln. USD;
- Increasing land area under annual and perennial crops to 500 thousand ha and production to 3.7 mln. tons, including the target of 600 thousand tons of grapes;
- Establishing greenhouses on 500 ha with spending of more than 124 mln. GEL in the form of co-financing;
- Devoting 50 thousand ha to orchards and vineyards (15 thousand ha) with 340 mln. GEL spending in the form of co-financing;
- Developing up to 400 modern livestock and poultry farms with a total investment of 560 mln. GEL;
- Reaching 227 thousand ha of irrigated land and almost completely restoring the reclamation system at a cost of 1 bln. GEL;
- Introducing the best European technologies to reduce air, water, and soil pollution;
- Increasing protected areas to 1 mln. ha so that they reach 17% of the country’s territory.
According to the framework, the GoG’s policy aims to increase local production and self-sufficiency in the agricultural sector in order to alleviate poverty and ensure regional development in the country.
ARE THESE TARGETS ACHIEVABLE?
In order to assess whether the announced targets are achievable or not, the average growth rates for these indicators were calculated when reliable data was available. The average annual growth rates for the given indicators were computed for the last 10-11 years with the exception of perennial crops, for which data was available only for the last three years.
Table 1 summarizes average annual growth rates, growth rate-based predictions, and announced targets for 2030. The comparison of predicted values and announced targets allows us to judge the potential to achieve those targets.
Table 1. Average growth rates, predicted values and announced targets for selected indicators by 2030
|INDICATORS||AVERAGE ANNUAL GROWTH RATE||GROWTH RATE-BASED PREDICTION||ANNOUNCED TARGET|
|Agricultural Exports||8.9%||2.2 bln USD||3 bln USD|
|Wine Exports||16.3%||951 mln USD||1 bln USD|
|Perennial Crops||3.0%||176 ths ha||500 ths ha|
|Annual Crops||-2.4%||166 ths ha||500 ths ha|
|Irrigated Areas||14.6%||525 ths ha||227 ths ha|
|Production of Permanent Crops||4.6%||944 ths tons||3.7 mln tons|
|Production of Annual Crops||-0.6%||882 ths tons||3.7 mln tons|
|Protected Areas||4.6%||1.2 mln ha||1 mln ha|
Source: Authors’ calculations
With the current average annual growth rates, some targets are likely to be easily achieved by 2030. Those are, for example, the targets for irrigated areas and protected areas. During the last decade irrigated area was increasing quite rapidly and the announced target of 227 thousand ha is much less than what it would be (525 thousand ha) if the current growth rate is preserved. Thus, the target is very likely to be reached. With irrigated and ameliorated areas, it should be taken into account that the more easily accessible lands are usually taken care of at the beginning of the amelioration projects, and there is a chance for a rapid decrease in the growth rate in the latter period, or it could be that the set targets are too low. As for protected areas, with the current growth rate, there will be 1.2 mln ha instead of the targeted 1 mln. ha.
For the rest of the indicators, the announced targets might not be achievable by 2030. For example, the growth rate-based prediction for revenues from agricultural exports is 2.2 bln. USD versus a target of 3 bln. USD. The same is true for revenues from wine exports, although the announced target of 1 bln. USD is very close to the predicted value of 951 mln. USD. The biggest discrepancy between the growth rate-based predictions and announced targets appears with permanent and annual crops, both in regards to the area- and production-related indicators. Given the negative growth rate for area and production of annual crops, the announced targets are not likely to be achieved if the declining trend is not reversed. The same applies to permanent crops, which have a positive but rather small average growth rate.
While most of the indicators have numerical targets, the indicator “reducing pollution with the help of European technologies” does not. Assigning a target value to all indicators in the framework is vital to assess the progress against targets in the future.
Yet another component of the strategy worth mentioning is related to increased access to mechanization, as this area is still underdeveloped and particularly challenging for small-scale farmers with fragmented land plots located far from each other. Timely access to machinery during the agricultural season is of critical importance for ensuring an increase in agricultural production as evidence suggests that mechanization has a major impact on the supply and demand of farm labor, agricultural profitability, and change in the rural landscape. Mechanization plays a key role in increasing productivity and cultivated land area and moving toward industrialization and ultimately improved livelihoods for farmers. The establishment of mechanization centers in 2009 did not result in any significant improvement in these areas because the supply of machinery did not meet the demand, the available machinery was not suitable for use on small plots of land, there were delays in repairing machinery and other issues. A modified program for mechanization was recently launched by the GoG, however, a small number of beneficiaries got co-financing from the state to purchase machinery as the beneficiaries were selected on a first-come, first-serve basis, and many purchased expensive machinery requiring high co-financing from the state resulting in a small number of beneficiaries obtaining relatively large financial support from the state.
The development of greenhouses will support the currently very limited and almost non-existent off-season agricultural production in Georgia. As the experience in recent years shows, high dependency on food imports, particularly in winter, results in high food prices and volatility. The framework does not provide details on the varieties of agricultural commodities to be produced in greenhouses, and while greenhouse production can reduce the pressure on prices from imports, one has to carefully consider the cost-efficiency of greenhouse production to ensure that the latter contributes to decreased food prices and therefore increased access to food.
During the last couple of years, decreasing trends were observed in livestock production. While supporting local livestock and poultry farms might improve the sector’s performance, this is not an easy task given the complexity of issues in the sector, which suffers from limited access to inputs (e.g., animal feed, veterinarians, and other human resources), poor food safety practices and underdeveloped infrastructure among other challenges. Therefore, it is vital to work on overcoming systemic (structural) challenges in this sector in collaboration with the local community and donor organizations.
To conclude, most of the targets in the framework will be hard to achieve by 2030 if current growth rates are preserved. Some of the indicators require setting a target and it is important to consider not only nominal values, but real ones as nominal growth in indicators is frequently driven by inflation and does not necessarily reflect real growth.
THE WAY FORWARD
While the framework suggests supporting many significant areas in the agricultural sector, it is vital to avoid “picking winners” by choosing particular sectors as this might lead to rent-seeking by vested interests who would lobby for particular sectors or their business to receive funding resulting in poor use of public funds. Therefore, support programs should focus on systemic or structural issues that limit most or all agricultural producers from obtaining higher output value per worker. Examples of such challenges are lack of cooperation between farmers, high levels of land fragmentation and small size of land plots, and limited knowledge of modern agricultural practices. Focusing on these challenges will lead to higher sustainability of the agricultural sector in the future and lower dependency on state programs.
In addition to this, it is important to conduct mid-term evaluations for state programs in order to assess the progress against targets and modify the interventions if required.