The ISET Policy Institute, under the European Union-funded ENPARD project“ Cooperation for Rural Prosperity in Georgia" implemented by CARE, has collaborated with the Ministry of Agriculture of Georgia and the Food and Agriculture Organization of the United Nations in Georgia (FAO Georgia) on the establishment of a mechanism for providing real time market price data for agricultural products. The regional representatives of Ministry of Agriculture of Georgia collect price data for more than 100 primary agriculture products across up to 60 Georgian municipalities on a weekly basis and to mark the second anniversary of the data collection process, we present you with the very first publication of the AGRIndex.
The AGRIndex emphasizes domestic products, and its key advantage is that it can provide operative price data, disaggregated on regional and municipal levels. The AGRIndex is a combination of four sub-indices, focused on respective types/groups of agriculture products: vegetables (VPI), fruits (FPI), meat (MPI), and dairy (DPI). Each sub-index is calculated on a monthly basis, and has its own weight in the AGRIndex. The calculation methodology for each sub-index is similar to the one employed by GeoStat to calculate the Consumer Price Index (CPI), while the idea of combining sub-indices in one aggregated index is borrowed from the FAO Food Price Index (FFPI). Another similarity between the AGRIndex and the FFPI is that both of them feature a “Meat Price Index” and “Dairy Price Index”.
Unlike the aforementioned two indices, AGRIndex provides information exclusively for domestically- produced products, which makes it especially insightful for some stakeholders:
- Georgian farmers, who sell their products domestically;
- Consumers, who are interested in tracking the prices of Georgian agro products;
- Other individuals, who need a tool to analyze price dynamics on the national market.
With CARE’s support, AGRIndex was developed in close collaboration with the Georgian Farmers’ Association (GFA). The index itself, related sub-indices, detailed methodology, and analytical publications, will be available on theISET (www.iset-pi.ge) as well as the GFA (www.gfa.org.ge) websites. GFA and ISET-PI will collaborate on this activity (within the EU-funded ENPARD project) and provide jointly-branded GFA-ISET Analytics about market price trends produced as a result of this price data.
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| Data source: Ministry of Agriculture of Georgia |
Although AGRIndex has similarities with both GeoStat’s and FAO’s indices, historic data reveal that it is more closely related to CPI (see Graph#1). GeoStat’s monthly CPI for Food and Non-alcoholic Beverages and AGRIndex have similar dynamics and follow similar seasonal patterns, but AGRIndex changes with higher margins. This is due to the fact that domestically-produced primary agricultural products are in short supply during winter periods and their prices increase sharply, while in summer time, the situation is the opposite. The exclusion of Tbilisi and some other self-governing cities from the data coverage might also serve as an explanation.
The comparison of the CPI and AGRIndex show how important these imports are for Georgian consumers, and how they indicate a lucrative possibility for Georgian farmers, who can store their products during harvest season, postpone sales while prices are low, and enjoy higher incomes during off-season.
In February, the AGRIndex stood at +1.22%, which is a modest increase compared to its corresponding value in the previous month — (+7.06%) in January 2017 (see Graph#2). Each sub-index, except the DPI, was on the rise in February 2017, but their variation did not cross the +5% margin. The highest increase was observed in the meat price index (MPI=3.6%), while the dairy price index (DPI) dropped by (-7.3%).
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| Data source: Ministry of Agriculture of Georgia |
HIGHLIGHTS
Highest increase in February 2017: After long-stable price figures, during the last months the AGRIndex shows a steadily increasing price trend for MEAT. This is mainly caused by increase in exports of Georgian livestock (cattle and sheep) and meat.
Highest drop in February 2017: As the winter months are gone and grass-feeding cows are producing more milk after having their calves in recent months, dairy prices have declined sharply in last month.
The basket of products included in AGRIndex was 4.12% more expensive in February 2017 than in February 2016, which means that the prices of domestically-produced agricultural products increased by 4.12% (see Graph #3). This is in-line with GeoStat’s CPI, which increased by 5.5% over the same period of time.
