Agriculture in Georgia is progressing from its traditional strengths, bolstered by geographical riches and forward-looking policies.
Agriculture has flourished in Georgia owing to its rich, pesticide-free soil, inexpensive and skilled labour base and favourable climatic conditions. Almost all types of agricultural products—including grains, vegetables, tea and citrus fruits—as well as a variety of cattle and fish can be grown in the country, which spans nine climatic zones.
More than four-fifths of Georgia’s total land area is under cultivation or forest cover, and it is divided into 13 zones and six sub-zones by agricultural specialisation.
With substantial investment in technology and infrastructure, Georgia has developed the potential to export a wide variety of agricultural products. A world-class wine industry leads the way, even as other subsectors come up the ranks riding on reforms.
Viniculture is one of Georgia’s traditional export strongholds, owing much of its success to foreign investments funding modernisation. In fact, the history of viniculture is inseparable from the history of the Georgian people. The country is considered one of the world’s oldest wine production centres, with 450 local wine varieties as well as international varieties such as Pinot and Cabernet Sauvignon. In January-August 2008, Georgia’s wine exports amounted to USD22, 205, 900.
The major crops of Georgia include wheat, maize, barley, sunflower, potato, citrus fruits and tea. Among export crops, hazelnut comes on top, finding its way to Italy, Germany, the Czech Republic, Greece, etc.
Animal husbandry and fishery are other subsectors with growth potential. A new agricultural farm and dairy production plant is currently in the works at an investment of USD8m, and this will be the most enhanced vertically integrated supply chain facility in Georgia.
Reforms and Innovations
The agriculture sector has been one of the greatest beneficiaries of government reforms. Widespread structural changes in land ownership and registration have led to the creation of an efficient and increasingly privatised land market, whereas infrastructural provisions such as the leasing of agro technology have helped enhance productivity.
To promote agricultural enterprises in rural areas, the Georgian government has started an innovative, investor- friendly project titled “100 New Enterprises.” The state will help develop infrastructure, and local populations will gain employment from the creation of 100 new rural businesses.
Sweeping changes in taxation have made the sector particularly lucrative for foreign investors: property taxes on plots smaller than 5 hectares have been abolished, as have taxes on property transactions. Zero profit tax, zero VAT on primary supply of agricultural products, zero import duty on equipment and preferential and free- trade agreements with the U.S., EU, Turkey and CIS markets are the other key attractions for investors.
Further, Georgia’s accession to the WTO in 2000 has given it wider access to non-traditional markets, apart from insulating the domestic market against dumping and ensuring fair trade.