Thursday, January 31, 2013

Agriculture in Georgia


Endowed with a rich natural abundance of fertile soil, clean water and favourable climate, Georgia has traditionally produced a wide diversity of crops native to temperate zones. With this abundance, Georgia has been producing a broad scope of agricultural products for more than 3,000 years, ranging from the oldest wine to regional varieties of cereals and fruits.
Georgia offers major potential for agricultural development. During the Soviet era it was a leading agricultural country, providing up to 10% of inter-republic trade in the highest quality food. As in all transition countries, gross agricultural output (GAO) suffered after the end of the Soviet system, but the situation changed dramatically after the Rose Revolution, fuelled by efforts to promote new modes of economic development based on dynamic integration of the country into the global exchange of goods, services and financial flows.
It is starkly clear that demand for agricultural commodities is rapidly growing. Global population growth, urbanisation and loss of arable land are leading to dramatic decreases in available land per capita. What is more, changes in dietary habits towards higher meat consumption, increased production for biofuel and speculation are driving the sharp rise in prices for agricultural land and water.
While many other countries have become nervous about the future outlook of their agricultural production and started restricting access to land for foreign investors, Georgia is actively inviting investors to develop the agricultural potential of its land. Georgia offers a number of investable agricultural industries, such as its wine sector, mineral and table water, fisheries, citrus and apple production, and fresh culinary herbs.
The Georgian Government has taken bold steps forward towards greater integration into the global economy by establishing international accords such as free trade agreements (FTA) with Turkey and the nations of the Commonwealth of Independent States (CIS), and good safety practice (GSP) agreements with the European Union and the United States. In addition, Georgia is poised to establish FTAs with the EU and US.
Investors specifically interested in developing agricultural products are most welcome. Together with such investors, the Georgian Government understands the long-term and ever renewing value of crop systems that avoid depleting the natural resources that made the harvest possible.
The agricultural sector is important to the Georgian economy. Recent years have seen agriculture gain greater prominence in the Georgian political agenda. One vivid example of government support can be found in the state budget law for 2011, which earmarks a 78% increase for the Ministry of Agriculture.
Huge steps have been made in terms of attracting foreign direct investment (FDI) to this specific sector. Entities willing to establish agricultural processing enterprises will be able to acquire agricultural land for only 20% of the market price.
Investors in agricultural projects can rely on the following support provided by the Georgian Government, its Ministry of Agriculture and the Georgian National Investment Agency:
  • 0% property tax on small plots of land (less than 5 ha)
  • 0% property tax on property transactions
  • 0% VAT on primary supply of agricultural products
  • 0% import duty on agricultural and other equipment
  • Opportunity for privatising agricultural land (75% of all agricultural land is state-owned).
  • 100% depreciation allowance on investments
  • Liberal labour regulations