By the end of June, food prices have increased by 8.1% y/y (that is, compared to June 2016) and decreased by 0.6% m/m (that is, compared to May 2017). During the last two weeks of the month, the biggest price increases were for milk (3.2%), cheese (2.4%) and garlic (1.9%). Eggplant, tomatoes and peaches, on the contrary, became cheaper by 26.2%, 24.1% and 17.3%, respectively.
ABOUT DAIRY SECTOR
Although milk prices increased on a biweekly basis, they exhibited a decreasing trend as summer began. As shown in the diagram, in 2017, prices are higher compared to the previous year. Most notably, they do not follow usual dynamics in milk supply. One would expect the highest prices in winter, when there is normally a shortage in milk supplies, and the lowest price in summer, when milk is abundant, but the diagram shows the highest prices in spring.
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| Source: https://comtrade.un.org/ |
This trend can be explained by the wide usage of imported milk powder. Import data shows quite a significant (35%) increase in milk and milk products’ imports in 2016, as compared to 2015. Since fresh milk products are less likely to be imported from abroad, one can assume that milk powder is the major product in this category. According to Geostat, in 2017, domestic production of milk and milk products decreased by 4.6%, whereas imports increased by 34.8%, compared to 2015. A decrease in domestic production and an increase in imports was observed in 2014-2015, as well. Moreover, the self-sufficiency ratio for milk and milk products also gradually decreased from 90% in 2014, to 87% in 2015, and an even lower 82% in 2016, which signals problems in the Georgian dairy sector.
The Deep and Comprehensive Free Trade Area (DCFTA) and the regulations that are to be adopted in its framework, might be contributing to structural change and modernizing of the dairy sector. The Government of Georgia has developed technical regulations for the dairy sector that among other things, forbid the usage of milk powder in cheese production. This regulation will come into force on the July, 1, 2017, and will affect the supply of milk and milk products and thus their prices.
Food Price Index Recent Publications
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JUNE 2021 | AGRI REVIEW
On 15 June 2021, the National Statistics Office of Georgia published its annual publication for the agricultural sector - Agriculture of Georgia 2020. According to the publication, agriculture, forestry, and fishing comprised 8.4% of GDP in 2020, higher than the 7.2% share in 2019, but in line with the general trend over the last five years (agricultural GDP comprising on average 7-8% of GDP). Agricultural GDP in nominal terms increased by 13% on an annual basis.… Read More
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MARCH 2021 | AGRI REVIEW
On 29 December 2020, the parliament of Georgia approved the state budget for 2021, which includes allocations of around 18.3 billion GEL. From which the Ministry of Environmental Protection and Agriculture (MEPA) will receive 451.6 million (2.5% of the total budget allocation). MEPA will direct 10 mln. GEL towards the Environmental Protection and Agriculture Development Program (2.2% of MEPA’s total budget), with around 389.6 mln. (86.3% of MEPA’s total budget) to be allocated to agricultural… Read More
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DECEMBER 2020 | AGRI REVIEW
The COVID-19 pandemic raised concerns about the food security of many countries, in particular import-dependent developing countries like Georgia. Trade restrictions imposed by Georgia’s trade partners tightened the supply of some cereals and vegetables, signalling the risk of an increase in food prices. While there is no formal evidence of food insecurity due to the pandemic, given that Georgia is a net importer of wheat the state subsidized wheat imports, and, according to Georgia’s Wheat… Read More
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OCTOBER 2020 | AGRI REVIEW
The National Statistics Office of Georgia (GeoStat) recently published its economic review for Quarter II 2020. The publication highlights that agricultural production increased by 4.7% in the second quarter of the year compared to the same period in 2019. Furthermore, agriculture contributed to 10.2% of the country’s total GDP during the same period. In the second quarter of 2020, Foreign Direct Investments (FDI) in agriculture also increased and were almost six times higher than the… Read More
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JUNE 2020 | AGRI REVIEW
On 15 June 2020, the National Statistics Office of Georgia published its annual publication for the agricultural sector - Agriculture of Georgia 2019. The publication shows that agriculture, forestry, and fishing comprised 7.2% of the nominal GDP in 2019, slightly lower than the 7.8% share in 2018, but in line with the general trend over the last five years (on average 7-8% of GDP). In nominal terms, the output of agriculture increased by 4% in 2019… Read More
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DECEMBER 2019 | AGRI REVIEW
On December 10, the parliament of Georgia approved the state budget for 2020. The budget includes allocations of around 14.4 billion GEL. Out of which, the Ministry of Environmental Protection and Agriculture (MEPA) will receive 353 mln. GEL (2.4% of the total budget allocation). MEPA will direct approximately 293 mln. GEL (2.0% of the total budget allocation) towards agricultural development and 60 mln. GEL (0.4%) will be spent on environmental protection. Compared to 2019, the… Read More
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OCTOBER 2019 | AGRI REVIEW
On 30 August 2019, a public hearing to discuss Georgia’s Rural and Agricultural Development Strategy for 2021-2027 was conducted at the Ministry of Environmental Protection and Agriculture (MEPA). The new strategy document represents a roadmap for Georgia’s rural and agricultural development for the next decade. The strategy outlines three major goals to be achieved by 2027: 1. Increasing the competitiveness of agricultural and non-agricultural sectors; 2. Sustainable management of natural resources, preservation of ecosystems, and… Read More
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