ISET

ISET Economist Blog

A blog about economics in the South Caucasus.

COVID-19 in Georgia's Agriculture: a challenge, an opportunity or both?

The COVID-19 pandemic has led to widespread economic distress in many countries around the world. For the first time since 2009, the world’s gross domestic product (GDP) is expected to have declined in 2020. Alongside other sectors of the economy, such impacts are also being felt by the food and agricultural sector. The pandemic has affected food security and nutrition, supply chains, food and livestock production, and food safety. The pandemic consequently poses a serious threat to livelihoods in poor countries, those where agricultural production systems are often more labor-intensive and there is less capacity to withstand severe economic shocks.


COVID-19 AND THE GEORGIAN AGRICULTURAL SECTOR

The current crisis and worldwide lockdowns have equally affected Georgian food supply chains and markets. The closure of restaurants, hotels, schools, and disruptions in logistics and poor infrastructure have resulted in a vast amount of wasted agricultural output. Moreover, the sector is also experiencing a substantial shift in the composition of demand.

Georgian agriculture provides employment opportunities to a significant part of the population. Most people employed in agriculture are subsistence farmers who regularly face risks related to price volatility, inflation, weak infrastructure, climate change, and limited finances. The COVID-19 pandemic is therefore a further challenge for those working within the agricultural sector. Nevertheless, the severity of the impact of COVID-19 largely depends on policy responses over both the short and long-term.

The pandemic has halted many economic activities, however agriculture and connected sectoral activities have been permitted by the government. In March 2020, as a short-term action in order to weaken the impact of the pandemic on the agricultural sector, the Georgian government responded with its Agricultural Anti-Crisis Plan. The state offered two forms of aid: direct assistance and sectorial support. Direct assistance, supposedly, aimed to solve the short-terms challenges faced by farmers. Whereas sectorial support which can be considered as longer run strategy, represents an extension of older programs that attempt to resolve fundamental problems within the sector. However, there are still many systemic problems which need to be addressed.

Surprisingly, regardless of the challenges faced by the sector, in the first three quarters of 2020 agricultural GDP increased by 3%. This positive trend can also be observed in live animal and poultry production, while the fruit and nut harvest is also expected to increase (Geostat, 2020).

Table 1. Economic Indicators in Agriculture

  2019 2020 % Change
Real GDP in Agriculture in the first three quarters (mln. GEL) 2,140 2,205 3
Bovine animals in the first three quarters (th. heads) 2,861 2,931 2.4
Poultry in the first three quarters 29,540 34,356 16

 Source: Geostat, 2020

Several factors may help explain the positive changes in agricultural GDP. Firstly, favorable weather conditions might have had a positive impact on the harvest of various crops (apples, nuts) in 2020. Secondly, governmental support programs, implemented by the Rural Development Agency (RDA) over the last eight years, could have, partially, contributed to this increase. Together with other support projects, RDA programs cover the co-financing component of perennial gardens, which started in 2015. It is also worth mentioning that between 2015-2019, the RDA’s average spending on programs accounted to 84 mln. GEL (MoF, 2020). Finally, individuals involved in the agricultural sector had less fear that the sector would be heavily impacted by the pandemic, which may translate into increased investment and growth in the sector. In the first two quarters of 2020, FDI in agriculture increased by 137% in comparison to the same value in 2019. In general, FDI in agriculture is minimal compared to other sectors, and on average constituted just 1.1% of the total FDI in Georgia between 2009-2019.

It is extremely difficult to assess whether this pattern will be sustained into the future, however there are certain key opportunities brought on by the COVID-19 pandemic which have to be pursued.


OPPORTUNITIES IN AGRICULTURE DUE TO COVID-19

Although the pandemic posed serious challenges to agricultural and food systems, it is also an opportunity to accelerate transformations in the sector and to build its resilience to a range of challenges. Due to the constant need for food and changes in consumer spending patterns (more people are cooking at home instead of going to restaurants or cafes), agriculture might outperform other sectors of the economy hit by the pandemic. Additionally, simple gardening, like growing flowers and vegetables, has also become popular, with more families engaging in this type of farming.

In order to ensure that all the opportunities are captured, and to unlock additional growth, existing market systems could be improved. The present crisis has highlighted the need for agricultural market reforms and digital solutions to connect farmers to markets, to create safety nets, to ensure reasonable working conditions, and to decentralize agri food systems in order to make them more resilient.

Digitalization – In agriculture, the digitalization process was slow prior to the pandemic. Nevertheless, since the pandemic, the speed of adopting digital tools is likely to accelerate, providing such tools are readily available for the sector and the necessary infrastructure is developed. Digital extension services can also be used to raise awareness about food safety risks and agricultural technologies in general. While online transaction platforms can link producers with consumers; with several platforms (agroface.ge, agronavti) currently working on this direction. Moreover, prior to the pandemic, the general public was simply not interested in knowing where food was derived from, yet COVID-19 has strengthened general interest in the origins of food. Finally, the blockchain can be used to track food production in a chain and increase its transparency;

Development of urban and peri-urban agriculture – Movement restrictions disrupt connections between urban and rural areas, which creates opportunities for urban and peri-urban agriculture. The concept has been practiced in East Africa, where urban agriculture supported the food supply chain and filled the supply gap during lockdowns. Peri-urban and urban agriculture can, furthermore, be a viable youth employment opportunity;

Returning migrants in agriculture – Many migrants have lost employment and have had to return to their home countries, where they can become involved in agriculture. Although the pandemic has caused higher unemployment, the agri sector, with its labor-intensive activities, represents a potential income source for those having to return to their homelands.

Therefore, moving forward it will be vital to capitalize on these opportunities and learn from the experience of the pandemic.

* * *

This blog has been produced within CARE Caucasus “COVID19 response and adaptation project”, funded by CARE International Emergency Relief Fund. The document has been created in close cooperation of ISET and CARE Caucasus teams. However, its contents are the sole responsibility of the authors and do not necessarily reflect the views of CARE International.


See our article usage guidelines

Rate this blog entry:
0 Comments

Related Posts

Comments

 
No comments yet
Already Registered? Login Here
Register
Guest
Friday, 16 April 2021

Captcha Image

Our Partners