Agri Review 2018

Sector at a Glance

2017 was a challenging year for Georgian agriculture. There is a decline in the level of sown areas, which decreased by 10.5% in 2017 compared to 2016. 214.9 thousand ha in 2017 is the lowest figure for the last four years. There is a decline in sown areas of both winter and spring crops, and both are at a four-year minimum. Average yields decreased for most crops, as well. The largest decreases were observed for sunflower (56%), potatoes (29%), maize (27%) and for the hay of annual grasses (25%), while other crops experienced relatively moderate declines, ranging from 3% to 15%. The only annual crops with increased production are oats (18%) and the hay of perennial grasses (3%).

According to the latest plant production data, in 2017 there was a decline in the production of major crops. The production of oats, maize, sunflower, potatoes and annual grasses in 2017 is lower than in the preceding three years. As to perennial crops, production of fruits other than grapes and citrus decreased by 40% on an annual basis, while grape production increased by 4% and citrus production decreased by 12%.

During last four years, production of wheat in 2017 almost doubled compared to 2014 (+95%), but it decreased by 26% compared to 2015, and by 27% compared to 2016. As for barley, the 2017 production amount is higher than in 2015 and 2014 by 5% and 60%, respectively, but lower by 9% compared to 2016.

Price Highlights

In March 2018, fruit and grapes became more expensive by 25.6% compared to March 2017. According to Geostat data, prices increased mostly for plums (60%), apples (41%), and tangerines (36%). Meanwhile, prices dropped for kiwi (-19%) and pears (-10%). In 2017, a spring frost followed by a summer drought created unfavorable weather conditions for deciduous fruit trees. The high prices of fruit and grapes might therefore be the result of a bad harvest and decreased production. Consequently, Georgia increased its imports of fruits and grapes to meet demand. According to trade data, in March 2018, imports of fruit and grapes sharply increased by 92%, from 5,045.96 tons to 9,692.69 tons compared to the previous year. In contrast, Georgia’s exports in this category decreased by 36%, compared to the same period, which also indicates a shortage in supply.

Trade Highlights

During March 2018, Georgia’s agricultural exports (including food) amounted to 55 mln USD, which is around 23% of total Georgian export value. While comparing this indicator to March 2017, it is 7.8% higher. As to imports, in March 2018, Georgia’s agro import stood at 137 mln USD, which constitutes 19% of total Georgian imports. Year over year (compared to March 2017), agricultural imports increased by 54%.

As to the country’s export/import diversification as measured by Herfindahl-Hirschman Index (HHI), which ranges from zero to one, Georgia’s agricultural exports by product and countries are diversified. Both indexes are low and range from 0.09 to 0.15. For the given period, the highest HHI for agricultural exports by product was observed in June 2017 (0.154), while the lowest (0.086) was observed in April 2017. HHI for agricultural exports by countries was the highest (0.154) in June 2017, and the lowest (0.08) in September 2017.