From the ISET Economist news (http://www.iset.ge/news/?s=survival&lang=en)
By Nino Mosiashvili
The conclusion of the Association Agreement (AA) with the European Union was euphorically acclaimed by Georgian media as well as political and economic decision makers. Part of the AA is the Deep and Comprehensive Free Trade Agreement (DCFTA). The DCFTA is intended to liberalize trade between Georgia and the EU by lowering tariffs and reducing non-tariff barriers. For agriculture, the most relevant changes relate to food safety (bacterial contaminants, pesticides, inspection, and labeling) as well as animal and plant health (phytosanitation). For the manufacturing sector, the removal of so-called “technical barriers to trade” is similarly important, with the goal being to prevent the usage of technical standards as a means to protect domestic markets from foreign competition. “If regulations are set arbitrarily, they could be used as an excuse for protectionism”, states the World Trade Organization on its homepage.
It is clear that all these agreements require unilateral adjustment of Georgian regulations to European standards. Georgia is economically too small to impose its preferences on Europe. This is stated quite frankly in the AA, when it says that it aims to “support the efforts of Georgia to develop its economic potential via international cooperation, also through the approximation of its legislation to that of the European Union”.
Whether these unilateral adjustments are beneficial for Georgia is not generally clear. European regulations do not necessarily reflect “best international practice”. In democracies, laws and regulations come about through the lobbying efforts of political interest groups much more than through rational planning. In the future, internal political decisions made in the European Union will be relevant for Georgia much more than they were previously, and it will be more difficult to pursue policies tailored to the specific situation of Georgia.
Yet Georgia hopes that the convergence to European standards will make it easier for Georgian firms to access the European market. Most critical in this respect is Georgian agriculture, as it is the sector employing the bulk of the Georgian labor force, while it is at the same time dramatically lagging behind European productivity levels. In 2013, Georgia’s agriculture accounted for only 9.3% of the Georgian gross domestic product but employed about half of the labor force. Thus, one of the benchmarks for evaluating the usefulness of the DCFTA will be its impact on Georgian agriculture.
THROWN INTO THE WATER – WILL IT SWIM?
The impacts of the DCFTA for Georgia were assessed in a report with the lengthy title Trade Sustainability Impact Assessment in support of negotiations of a DCFTA between the EU and Georgia and the Republic of Moldova. It was written by a consortium consisting of the Dutch consulting company Ecorys and the The Center for Social and Economic Research (CASE), a Warsaw-based think tank. On a broad level, the report estimates that due to trade liberalization with the EU the national income of Georgia will increase by 291.9 million euro in the long run, corresponding to a GDP growth of 4.3%. This goes along with an increase in Georgian exports and imports by 12% and 7.5%, respectively, leading to an improvement of the Georgian trade balance. But what about agriculture?
According to the study, the DCFTA will have different effects on different agricultural products, and the overall picture is very ambivalent. The output of some product categories will increase, namely vegetable oils and fats (+6.7%), vegetables, fruits, nuts, and oilseeds(+3.4%), and animal products (+3.1%), while for many other products, the output is expected to shrink, e.g. livestock and meat products (-14.8%), other processed foods (-8.8%),beverages and tobacco (-4.0%), sugar (-2.4%), and other crops (-2.0%). The report attributes the increases to reductions of EU tariffs on Georgian exports and the decreases to the reduction of Georgian tariffs on goods imported from the EU. These numbers, if they say something about the true developments, suggest that parts of Georgia’s agricultural sector will get under severe pressure due to increased competition with European producers.
ECONOMIC DARWINISM
What are the implications for Georgian agricultural policy? Some of the producers will benefit from the integration into the European market, as they can stand the pressure and even expand in this highly competitive environment. Other producers are likely to run into essentially insoluble problems. One particularly beneficial category in this respect is vegetables, fruits, nuts, and oilseeds, because some of the products in that category (e.g. hazelnuts) are labor intensive and serve niche markets. This implies that more people can be employed in the production of these goods, making the transformation to a modern, efficient agriculture less painful, and it means that competition is lower and margins are higher. If policy recognizes these advantages, producers in that category might become “national champions”.
Currently, vegetables, fruits and nuts are in Georgia primarily produced by small and medium sized farmers. Due to lack of greenhouses the production is seasonal. Yet farms can be consolidated and technical equipment can be upgraded. In the end, it will be relevant that Georgia has fundamental advantages in the production of goods in that category, namely clean soils, little usage of chemicals, a relatively large amount of available land for cultivation, and a long tradition in vegetable and fruit production.
Moreover, about half of Georgia’s current export of vegetables, fruits, and nuts already goes to the EU, which means that Georgian producers already have “a foot in the door”. Currently, the exports almost entirely consist of hazelnuts (there are no tariffs, as hazelnuts are already covered by the GSP+ regime, and hazelnuts easily satisfy sanitary and phyto-sanitary standards). Thus, while the DCFTA may not change Georgia’s hazelnuts export to the EU significantly, there may be other niche products in this category, like berries and other kinds of nuts, which may benefit from the DCFTA, for example through adjustments of Georgian regulations regarding product packaging.
It will be important that policy will subscribe to what one might call “Economic Darwinism” – do not try to keep those producers alive that are incapable of surviving, but instead create good circumstances for those that have a future in Georgia.
The Georgian documentary Jara was named as the Best Feature Film at the Wolves Independent International Film Festival 2018. Nature, heritage, environment, history, culture, ethnography, adventure, wildlife, indigenous cultures and social issues are the main themes of the festival which takes place in Lithuania.
It is the second award for Jara following Golden Green Award 2018 at the Deauville Green Awards International Film Festival, for the best production in the category of Sustainable Agriculture
Jara was premiered by EcoFilms in Tbilisi in 2017. The main backer of Jara was the Swiss Agency for Development and Cooperation (SDC) through the Mercy Corps Georgia implemented Alliances Caucasus Programme (ALCP) within a consortium of public bodies and conservation organizations including World Wildlife Fund and Caucasus Nature Fund.
The annual Honey Festival was opened for the fourth time on August 11th on Batumi Boulevard and closed on August 12th in Batumi Botanical Garden. Up to 45 beekeepers from across Georgia once again presented their honey and by products for the festival visitors. Honey themed activities were held for children’s entertainment; visitors could see the ancient beehive at the special corner for jara beekeepers from Ajara and could taste different kind of honey from different parts of Georgia. Batumi Botanical Garden promoted Goderdzi Alpine Garden; live music kept the celebration spirit all day.
“Beekeeping is our family business. We started participating in the festival from the very beginning and it became a tradition. Each year we promote our products and each year we find new clients. This annual festival helps us to make our products more visible and popular” - Shorena Kezheradze, Khelvachauri municipality, Ajara.
The Georgian documentary Jara has just won the Golden Green Award 2018 at the Deauville Green Awards International Film Festival, for the best production in the category of Sustainable Agriculture, the International jury selected the finalists in fourteen categories from four hundred and fifteen films produced worldwide. Jara was screened during the festival in Deauville in the presence of the professionals and the press.
The Deauville Green Awards is one of the most prestigious festivals in Green Film Production worldwide launched in 2012. For the last seven years, the festival’s mission has been to enhance information films, spots and documentaries on sustainability, eco-innovations and social responsibility. Furthering public understanding and education. Each year the festival draws five hundred films from five continents, with four hundred professionals of film in attendance.
On Saturday, June 9 representatives of the ALCP team (www.alcp.ge) and a wool processor Tamar Tsikarishvili from Akhaltsikhe, Georgia attended the Sheep
Shearing Festival after being invited by SDC sister project SDA Armenia which took place in Syunik Animal Market, Syunik region. The festival aimed to promote sheep, local produce, traditions and culture of Syunik and Vayots Dzor regions (Please see the Link).
The festival included guest sheep shearer Danny Wilson from Great Britain who conducted master classes for festival participants and visitors.
Knowledge is a power and the ALCP is committed to facilitating high quality agri information transfer to rural farmers strengthening the field of journalism in Georgia and Armenia.
On 25th-29th of April an international agricultural journalist was commissioned to deliver trainings to 11 Armenian TV and press journalists and 2 heads of the Department of Journalism of Armenian universities in the Caucasus International University in Tbilisi.
Follow the link of Imedi TV news on the event.
On April 16th-20th, 2018 the Alliances Caucasus Programme (www.alcp.ge) funded by the Swiss Agency for Development and Cooperation SDC and implemented by Mercy Corps in Georgia, hosted a study tour from the Arab Women’s Enterprise Fund (AWEF). The tour included Jordan Municipality Mayors, WEE coordinators and representatives from the Ministry of Agriculture of Jordan to share ALCP’s experience on Women Economic Empowerment integration through M4P approach and best practices used.
