This report covers the process and results from the value chain analysis conducted on the hazelnut sector in West Georgia. The study presents a basis to shape interventions of the forthcoming ‘Phase II: Fairtrade & Organic Hazelnut Value Chain Development for Small Farmers in Western Georgia’ project, which is to be implemented by the Consortium (ELKANA, HEKS/EPER, ANKA and PAKKA) with the financial support of DANIDA.

Agricultural production has decreased by 0.8% in the second quarter of 2018 compared to the same period in 2017. In spite of decline in agricultural production, FDI in agriculture has increased. While FDI in agriculture is relatively low compared to the other sectors of Georgian economy, it should be noted that, agricultural FDI in the second quarter of 2018 reaches its maximum for the last three years.

After three consecutive quarters of improvement, BCI in the third quarter of 2018 has worsened, dropping to 35.4 index points, which is a 4.2 index point loss over the previous quarter. The BCI drop is based on lowering expectations and worsening of past performance in many business sectors. Compared to other sectors, manufacturing assessed their past performance and expectations the most pessimistically. In contrast, the agriculture sector is the most positive, reflecting a high season in production.

There was 2.1% decrease in agricultural production in 2017 compared to the previous year. Production in the plant-growing sector declined by 0.4%, while animal production experienced a decrease of 3.8%. Lower production resulted in lower self-sufficiency ratios for most agricultural products.

According to the data for the first quarter of 2018, the number of livestock has increased in Georgia. The biggest increase was observed for the number of sheep and goats, which increased by 35.9%. Such a sharp rise might be explained by the increased demand from East Asian countries.