ISET

The COVID-19 pandemic raised concerns about the food security of many countries, in particular import-dependent developing countries like Georgia. Trade restrictions imposed by Georgia’s trade partners tightened the supply of some cereals and vegetables, signalling the risk of an increase in food prices. While there is no formal evidence of food insecurity due to the pandemic, given that Georgia is a net importer of wheat the state subsidized wheat imports, and, according to Georgia’s Wheat and Flour Producers’ Association, Georgia and the USA agreed on imports of 30,000 tons of American wheat to Georgia. 14,000 tons have already been imported, while the rest is planned to be imported by the end of the year. While diversification of import markets is highly desirable, 30,000 tons represents a rather small share from Georgia’s total imports of wheat.

The National Statistics Office of Georgia (GeoStat) recently published its economic review for Quarter II 2020. The publication highlights that agricultural production increased by 4.7% in the second quarter of the year compared to the same period in 2019. Furthermore, agriculture contributed to 10.2% of the country’s total GDP during the same period. In the second quarter of 2020, Foreign Direct Investments (FDI) in agriculture also increased and were almost six times higher than the corresponding indicator in 2019. Notwithstanding, FDI in agriculture was relatively low compared to the other sectors of the Georgian economy and accounted for 3% of the total FDI.

On 15 June 2020, the National Statistics Office of Georgia published its annual publication for the agricultural sector - Agriculture of Georgia 2019. The publication shows that agriculture, forestry, and fishing comprised 7.2% of the nominal GDP in 2019, slightly lower than the 7.8% share in 2018, but in line with the general trend over the last five years (on average 7-8% of GDP). In nominal terms, the output of agriculture increased by 4% in 2019 compared to 2018. In real terms agriculture, forestry, and fishing contributed 7.4% to the GDP in 2019, lower than its contribution of 7.9% in 2018. Regarding changes in the output of the sector, the real output declined by 4% in 2019 compared to 2018. Though, the share of income from the sale of agricultural production in the total income of households did not change from 2018; which stood at 5.5% and amounted to a monthly average of 60.3 GEL.

On December 10, the parliament of Georgia approved the state budget for 2020. The budget includes allocations of around 14.4 billion GEL. Out of which, the Ministry of Environmental Protection and Agriculture (MEPA) will receive 353 mln. GEL (2.4% of the total budget allocation). MEPA will direct approximately 293 mln. GEL (2.0% of the total budget allocation) towards agricultural development and 60 mln. GEL (0.4%) will be spent on environmental protection.

Compared to 2019, the budget for agricultural development will increase by around 4%. More state funds will be allocated to the Scientific-Research Center (SRCA), the Agriculture and Rural Development Agency (ARDA) and Georgian Amelioration, while the budget will slightly decrease for the National Food Agency (NFA), the Agriculture Development Program (MEPA administration), and the National Wine Agency.

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