Investment Opportunity in the Georgian Agriculture Sector. September 2010

Transcription

1 Investment Opportunity in the Georgian Agriculture Sector September 2010

2 Agriculture Sector Overview Nominal GDP (GEL MLN) Agriculture Sector ,994 19,070 17, ,791 11, , Source: Department of Statistics of Georgia 1,611 1,716 1,544 1,563 1,704 1, Government of Georgia s Sector Presentation September

3 Dynamic of Import/Export of Agricultural Food Products According to the 2009 data, the export and import of agro food products were US$286 million and US$739 million. In 2009, main export commodities were: nuts, citruses, natural grape wines, spirits, soda, mineral & spring waters, sheep, cattle etc. Source: Statistics Department of Georgia, Ministry of Agriculture of Georgia Government of Georgia s Sector Presentation September

4 Agriculture Export-Import, 2009 Export by Products (US$ mln) Export by Countries Import by Products (US$ mln) Import by Countries Source: Ministry of Agriculture of Georgia Government of Georgia s Sector Presentation September

5 4 Reasons for Underdeveloped Agricultural Sector Government of Georgia s Sector Presentation September

6 Important Snap-Shots Main challenges are monocultures and low production per ha. With technology and knowhow average harvest could be tripled Agro product Average harvest per ha. Good precedents per ha. Wheat 1.8 tn. 4 tn. Tomato 10 tn. 65 tn. Potato 10 tn. 45 tn. During the Soviet Era, Georgia used to be main supplier of the Union s market with selected agro products, which pushed the country into monocultural agro production (ex. grape, citrus, tea etc) Product 1988 (thousand tons)* 2008 (thousand tons) Vegetables Fruit & berry Grape Citrus Tea * Data for 1988 is exaggerated to some extent due to reporting interests in the centralised system of planning Government of Georgia s Sector Presentation September

7 Advantages of Investing in Agricultural Sector of Georgia Wide-range of climatic zones Rich and pesticide-free soils - Ideal place for production of organic food Rich tradition of winery, growing citrus, grape, sunflower, tea, etc Legal provisions to own (i.a. for foreigners) agricultural land 0% VAT on primary production of agricultural products 0% export duty + 100% VAT refund 0% of import duty on agricultural and other equipment 100% depreciation allowance on investment Low-cost and skilled human resource base Liberal labor regulations Strategic link from East to high value Western markets Well developed transport sector including railway and sea ports essential for effective exports of agricultural goods Government of Georgia s Sector Presentation September

8 Agricultural Land Overview Agricultural land consist of approximately 3 mln hectares: Residential 1% Arable land 27% Perennials crops 9% Pastures 63% Perennials crops; 9% Residential; 1% Arable Land; 27% Source: Ministry of Agriculture of Georgia Pastures; 63% Government of Georgia s Sector Presentation September

9 Available Agricultural Land through Privatisation Lands Remaining State-owned, Ha (22%) Lands already privatised, Ha (78%) 80,000 Ha 22% 280,000 Ha 78% Government of Georgia s Sector Presentation September

10 Presidential Initiative 100 New Agricultural Enterprises Major Millstones: Selling off some 40,000 ha sizable lots of agricultural land fitting for commercial farming Transfer of agricultural land to interested investors based on specific investment proposals Entities willing to establish agricultural processing enterprises will be able to acquire agricultural lands only for 20% of the market price Georgian state, in case where appropriate, is ready to provide assistance in terms of infrastructure development (roads, electricity, etc) Supporting to establish new agricultural enterprises Government of Georgia s Sector Presentation September

11 Strong Integration Into the Global Economy FTA agreements with the CIS countries FTA with Turkey GSP+ with the EU GSP with the US Developments in the nearest future: FTA with EU FTA with USA Government of Georgia s Sector Presentation September

12 Investing in Georgian Agro Business GSP with US GSP products duty free Farming Processin g Storing Technology+Knowhow Potential extra input materials Government of Georgia s Sector Presentation September

13 Grape, Citrus & Apple (e.g.) Grape Citrus Apple Wine export 12.2 mln bottles The cost of local produced fruit juice is c.a USD per 1 L. Government of Georgia s Sector Presentation September

14 Import Substitution Opportunities (e.g.) Meat Fruits & Vegetables Juice Local Production Import Local Production Import Local Production Import Export Government of Georgia s Sector Presentation September

15 Import Substitution Opportunities (e.g.) Pasta Cacao, Chocolate and Sugar Pastry Cookies & Other Flour Pastry Local Production Import Local Production Import Local Production Import Government of Georgia s Sector Presentation September

16 Import Substitution Opportunities (e.g.) Vegetable Oils Processed Fish Animal Food Local Production Import Local Production Import Local Production Import Government of Georgia s Sector Presentation September

17 Consumption of Agro Products in Georgia (e.g.) Consumption Import Production Consumption Import Production Government of Georgia s Sector Presentation September

18 Consumption of Agro Products in Georgia (e.g.) Consumption Import Production Consumption Import Production Government of Georgia s Sector Presentation September

19 Wine Sector Investable Agricultural Industries Mineral and Portable Water Fishery Citrus Production Intensive Apple Production Fresh Culinary Herbs Off-Season Storage Georgian Beef Fattening Operation Fruit Jam and Sauce Processing Integrated Dairy Production Collection, Processing and Distribution Pedigree Poultry Hatching Eggs Government of Georgia s Sector Presentation September

20 Hipp Success Stories Ferrero Group - one of the leading confectionary producers in the world Nutella, Raffaello, Ferrero Rocher The Georgian subsidiary of Ferrero Trading Lux S.A., AgriGeorgia LTD, was set up in spring of 2007 At present AgriGeorgia LTD owns 1,215 ha. of agricultural land in Samegrelo area About EUR 4 mln investment within the next three-four years to install hazelnut drying facilities Nowadays AgriGeorgia LTD employs on average more than 400 employees US$ 6.5 mln investment in juice processing industry Fruit collection and processing Mainly producing apple juice; further plans to produce cherry and apricot juice YOU GONNA BE THE NEXT ONE! Government of Georgia s Sector Presentation September

21 Contacts Bakur Kvezereli Minister of Agriculture of Georgia David Koberidze Advisor to Prime Minister of Georgia Vakhtang Lejava Chief Advisor to Prime Minister of Georgia Head of Advisory Group Nodar Kereselidze Head of International Relations Department Ministry of Agriculture of Georgia Government of Georgia s Sector Presentation September