Policy Briefs

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The Sustainable Development of Tea Cooperatives and the Tea Value Chain: The Case of Georgia
02 May 2016

Unless its glorious past during the Soviet Union, the Georgian tea sector rebounded in the late 1990s and early 2000s, yet only partially as the economic and political stability of the post-independence period left a mark on the overall productivity of the sector. Today, the sector could play a role in alleviating rural poverty in western Georgia by providing families with steady jobs and livelihoods if it will be revived. The Georgian government and donor communities aim to support this sector and the tea cooperative development is one of the ways chosen by them. According to this study, the cooperatives could benefit the most if they focus on the high quality tea production (e.g., organic tea). Also, tea cooperatives (and their members) could benefit more if they invest in proper branding, marketing and promotion at the second level of cooperation.

Price Transmission on Wheat Flour Market in Georgia
02 May 2016

Between August 2014 and May 2015, international wheat prices declined by 18%, rice prices dropped by 14% and maize prices declined by 6% (World Bank, 2015). This decreased prices are expected to be transmitted from international to domestic consumer prices of food items (e.g., wheat flour, bread). However, there are many factors that hinder this transmission process. Several studies analyzed price transmission from international to domestic markets (e.g., Acharya et al. 2012; Götz 2008). In particular, after so called food crises of 2007–2008 and 2010–2011 many studies were focusing on the role of integration of domestic markets to international markets, the price transmission of food prices between large markets and small ones. These crises made interesting to understand and investigate the price relationships in a main food products more thoroughly. Also, to study the implications for food security and livelihoods in food-insecure countries (IFPRI, 2016).

Measuring Food Price Volatility in Georgia
02 May 2016

An average Georgian household spends more than 40% of its budget on food. Food prices are important determinants of access to food and stability of food security. In order to assess the stability of prices the paper looks at food price volatility for major commodities (not restricted to primary commodities only) consumed by Georgian households. Price volatility is important because both low and high prices affect different stakeholder groups (producers, consumers, exporters etc.) in different ways. The aim of this paper is to study food price volatility and identify its main drivers keeping in mind that not all types of volatility are problematic. Seasonal volatility for example might not be an issue, whereas unpredictable volatilities not driven by fundamental market forces are usually problematic (FAO et al. 2011). Another objective of the paper is to identify the most risky and less risky crops for producers to invest in and contribute to the policy on food security of Georgia as well as agricultural policy in general.

Georgia's Input Subsidy Program
02 May 2016

Agricultural input subsidy programs are meant to increase crop production, contributing in this way to improved food security and rise of incomes of stallholder farmers. An important goal of such programs is to develop efficient input supply systems, improving farmers’ access to inputs and adoption of new technologies (e.g., use of new seed varieties, fertilizers, and pesticides). Nevertheless, because of high opportunity cost of subsidies for other public goods and social transfers, these programs are widely debated in the literature. Georgia has been implementing the Agricultural Card Program since February 2013. Farmers received vouchers for plowing and purchasing agricultural inputs. The budget of the program was 290 million GEL in 2013. It was reduced to 90 million GEL in 2014 and to 50 million GEL in 2015 and 2016.

Georgia and Armenia: Not Trading Anymore?
22 April 2016

A dramatic y/y decline (44%) in Georgia’s 2015 exports to Armenia was the subject of a study by ISET-PI and the German Economic Team (GET). Our goal was to understand the extent to which this slump resulted from Armenia’s agreement to join the Eurasian Economic Union in 2014 (as part of this agreement, Armenia applied new trade barriers on imports from non-EEU countries in 2015). An alternative explanation concerns the change in the terms of trade with Russia and Armenia. With the Russian ruble sharply depreciating in the course of 2015, Russian non-oil products became much more competitive in international markets, including Armenia. The study overviews Georgia’s export structure and the key changes it undergone in 2014-15. The lion’s share of the decline in Georgian export to Armenia is found to be caused by a sharp contraction in car re-exports (-69% y/y). The paper goes on to analyze possible future changes in the trade regime between the two countries and their effect on Georgian exports.

Avoiding the insolvency of Georgia`s Insolvency Law
16 March 2016

Georgia’s Insolvency law of 2007 is primarily oriented towards a rapid liquidation of insolvent corporate entities and private entrepreneurs’ businesses with subsequent distribution of remaining assets amongst the creditors. The number of insolvency cases dealt with by the local courts of Tbilisi and Kutaisi is fairly limited most probably due to insufficient assets in the insolvent entities to cover the costs of the insolvency procedure. The law is relatively short and leaves relevant aspects of insolvency procedures either unclear or unregulated. Areas with significant shortcomings and deficiencies are e.g. regulations on avoidance of transactions concluded prior to insolvency, the monopolistic position of the National Enforcement Bureau as trustee, the Conciliation Council, the rehabilitation procedure, the role and function of Insolvency Office Holders, the ranking of claims in the distribution process etc.