Analysis of the Agricultural Sector in Georgia: Value Chain and Export Potential

Abstract

Georgia’s climate allows for the production of many types of agricultural crops. However, most agricultural products produced in Georgia find it difficult to compete in both international and local markets. Low competitiveness is driven by many factors, including low yields, a weak agricultural value chain, high fragmentation of land and problems with land registration. In addition, the low quality of products, the lack of standardization, and the lack of relevant certifications leave only “familiar” markets (former Soviet Union countries, especially Russia) open, which are highly unpredictable. The preferred export alternative is the high-income and stable EU market, where certain barriers have been removed by the Deep and Comprehensive Free Trade Areas (DCFTA) agreement. Though this agreement gives Georgia a certain advantage over other external suppliers, the EU market expects any supplier to produce high-quality products that are certified as complying with the relevant standards. Meeting these standards increases the cost of production for Georgian farmers and negatively affects product competitiveness in the EU market. The purpose of this study is to provide the reader with key information on the competitiveness of Georgia’s agricultural sector. This includes the sector’s problematic areas and export potential, the agricultural value chain, and the internal and external factors affecting it. The paper is based on the analysis of the export potential and value chains of 7 products specifically selected from 7 regions of Georgia between 2017-18 and represents an extrapolation of the results to the whole agricultural sector.