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Georgia is one of the northernmost tea producing countries in the world. The humid and subtropical Black Sea climate creates ideal conditions for growing tea in five regions of Western Georgia: Adjara, Guria, Samegrelo, Imereti and Abkhazia. The favorable climatic conditions for growing tea in the country were first identified in the mid-19th century and the first tea plantations were planted shortly thereafter.
During the communist era, Georgia was the main tea producer in the Soviet Union. The volume of local tea production was sufficient to meet demand from all of the USSR. The tea harvest peaked in 1985 at 152,000 tons. During this period, nearly 70,000 hectares of land were allocated to tea cultivation. In many villages in western Georgia, tea cultivation was a way of life. Nearly 180,000 people were involved in the various production stages of the tea value chain. It should be noted, however, that between 1950 and 1990, the emphasis on meeting production quotas came at the expense of maintaining quality.
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The Government of Georgia (GoG) intends to create a national agricultural insurance program to achieve the following objectives: (i) developing the agricultural insurance market in Georgia; (ii) supporting agricultural production and increasing the competitiveness of farmers; and (iii) supporting the income of people involved in agricultural activities and minimizing their risks. Two pilot projects were implemented in 2014 and 2015, which on average subsidized 94% and 55% of insurance premiums, respectively. Along with these pilot projects, the government has initiated the development of a sustainable long-term crop insurance policy and regulatory framework. In the near future, it is expected that the government will decide on a model that will be used to manage the agricultural insurance process in Georgia.
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Georgia’s wine industry is heavily dependent on export to CIS countries and especially Russia. Two main short-run risks associated with the Russian market prevail for Georgian wine exports at present:
1. Russia might cancel its free trade agreement with Georgia. This would reduce the demand for Georgian wine in Russia by 18%, or USD 20 m based on 2014 exports.
2. The economic slowdown in Russia could lead to reduced demand for wine. We estimate that this could reduce demand for Georgian wine by 5%, and at most 10%, or USD 5.5 to 11 m.
These short run risks are substantial but manageable. Reduced demand due to the economic slowdown combined with a cancellation of free trade with Russia would reduce total Georgian wine exports by USD 28.5 m or 17%, but still leave them much higher than their average level in recent years.
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