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Georgia’s food & agricultural exports almost hit their 1 billion USD threshold, attaining a historic maximum since independence – and that certainly sounds like something to celebrate! However, the respective imports have also increased and broken records. As a result, the trade balance (the difference between export and import) remained virtually unchanged at (-394) million USD. Although, compared to 2017, export increased by 23.2% (181 million USD), while the respective imports grew by only 15.5% (179 million USD). Out of sharp increase of 181 million USD, only 26 million USD are attributed to wine, while the rest came from trade in tobacco and cigars. Since Georgia cultivates very little tobacco, the growth was instigated mostly from the import, slight processing and re-export of tobacco products. Consequently, the export of tobacco & cigars increased by 240% in 2018, and it currently holds second place (after wine) in Georgia’s total food & agricultural exportation (nearly 160 million USD). In 2018, it contributed staggeringly to over 100 million USD in export growth.
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On April 3, 2015 the Government of Georgia adopted a technical regulation in the dairy sector in order to define major principles for the production, processing, and distribution of dairy products. Later in 2017, the regulation was amended and the law now strictly regulates the labelling of dairy products and particularly the use of terms such as “cheese” and “butter”. According to the regulation, a product can be called “cheese” only if it is produced from raw milk, and the use of milk powder for cheese making is prohibited. As for butter, it can only be produced with milk fat and the use of vegetable oil is not allowed.
While the regulation has been in force for a couple of years now, there are significant challenges to its implementation. It is particularly difficult to control the usage of milk powder in cheese production given that most cheese producers are unregistered family holdings.
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The state budget for 2019 is currently being discussed in Parliament and must be approved by the end of the year. According to the revised version (second version), the total budget will be around 13 billion GEL. Out of which, the Ministry of Environmental Protection and Agriculture (MEPA) will get 332 million GEL (2.4% of the total budget). Approximately 285 million GEL will go to agriculture development and the remaining 47 million GEL will be spent on environmental protection.
Compared to 2018, the budget for agriculture development will increase by around 22% in 2019. More state funds will be allocated to most of the agricultural areas except for development of the wine & viticulture sector and development of agricultural cooperatives. In 2019, these two areas will have a lower budget than they had in 2018.
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Back in 2015 Georgian sheep market got into the spotlight due to the increased demand for sheep from Arabic countries. Prior to 2015, Azerbaijan was the most important export destination for live sheep, while in 2015, in addition to Azerbaijan, Georgian sheep was exported to United Arab Emirates, Jordan, Lebanon and Saudi Arabia. Current trends in the trade data show, that exports of live sheep decrease, while exports of sheep meat increase, which is the sign of sheep market development and increased potential for higher value added in the sheep value chain.
According to the data, meat export price is more than twice higher than live weight export price which motivates Georgian sheep exporters to focus on meat exports rather than export of live animals.
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