Innovation Starts Here And Now… In Lisi Lake Greenhouses

Nina Petrova-Dzneladze, a Swiss-trained interior designer, brought her innovative vision and great taste to Georgian family farming. Her organic produce is already popular with Georgian and expatriate consumers, proving that innovation pays off, even in agriculture.

Innovation is not necessarily about Silicon Valley Hi-Tech startups. It can happen here and now. In particular, contrary to what we have been hearing from our liberal politicians, there is plenty of scope for innovation in Georgia’s agriculture!

Owned and managed by Nina Petrova-Dzneladze, Lisi Lake Greenhouses is a family farm located on 0.6ha of land in Tbilisi. The complex consists of three medium size greenhouses producing fruit and vegetables. One might think that there are a lot of similar greenhouses in Georgia but this one is genuinely different from others. It is quite innovative both in terms of its produce and technology.

To begin with, some of the products (e.g. black cherry tomatoes, basil, and mangold) are not typically found in the Georgian kitchen, which may already explain the popularity of Ms. Petrova-Dzneladze’s small farm shop with expats and Georgian consumers who are willing to try new things, including many well-known bohemians, parliamentarians and government officials. Additionally, all Lisi Lake farm products (including apples, tomato and cucumber) are organic and will soon be officially certified as such, further differentiating them from whatever else may be available in the Tbilisi market. It goes without saying that this kind of product innovation pays off because having a better and different product implies clear advantages in marketing (and pricing!).

But, Ms. Petrova-Dzneladze’s innovation does not stop there. Her business model is not just about new products, but also about her greenhouses’ relationship with technology. Instead of expensive energy such as gas or electricity, Lisi Lake greenhouses are kept warm in winter using the natural heat of thermal waters, of which Georgia has plenty. Given the massive energy requirements of a greenhouse, the cost of heating is the break-it-or-make-it factor in greenhouse technology production. Nina’s ability to find an innovative and effective solution to the heating problem was certainly key to her commercial success.

Unfortunately, innovation is still the exception rather than the rule in Georgia’s agriculture (and economy, more generally). All in all, Georgia’s agriculture remains quite traditional in terms of its technology and products. Of course, traditional agriculture is also able to reinvent itself in some interesting ways. Recent examples are the synergetic use of sheep (not goats!) in peach and hazelnut plantations. (This turned out to be a great way to feed the animals while employing them as natural frost protection, fertilizing and de-weeding “machines”.) The majority of Georgian farmers, however, continue to be driven not by the zeal for innovation but more so by an old Georgian saying: “გაჭირვება მაჩვენე და გაქცევას გაჩვენებ“, which translates as “I will show you a solution once you show me the problem”. What Georgia needs is a more systematic approach to nurturing, commercializing and mainstreaming new ideas, ideas that play to Georgia’s strengths and tastes, and help overcome its weaknesses.

GEORGIA’S ABILITY TO INNOVATE ON A GLOBAL MAP

The Georgian nation prides itself on its creativity and artistic talent, however, we are not yet able to translate our talent into actual innovation, as reflected in Georgia’s international rankings. For instance, the 2015 Global Innovation Index (GII) ranked Georgia 73rd out of 141 countries. In particular, Georgia ranked 67th in the Innovation Input Sub-index and 86th on the Output Sub-Index. The gap between innovation input and output is a reflection of the fact that while Georgia has a developed tertiary education system, it invests relatively little in R&D – a key component to innovation culture.

Unfortunately, when it comes to innovation (which may be about adoption of existing technologies, better production processes and products that are new for Georgia, but not necessarily for the world), Georgia is still trailing behind many of its neighbors, behind Russia, Turkey and Armenia, but ahead of the oil rich Azerbaijan.

Table 1. Georgia’s ranking compared to neighboring countries

Georgia’s relatively low rankings signal the need for change. The establishment, in April 2014, of Georgia’s Innovation and Technology Agency (GITA) under the Ministry of Economy and Sustainable Development is one step in the right direction. This was followed in January 2015 by the creation of a national Research and Innovation Council, chaired by Georgia’s Prime Minister.

The challenge for Georgia is, of course, to move beyond these formal steps, and beyond one-off innovation activities such as “innovation camps” and glitzy “award competitions”. Of course, such events constitute important links in the innovation “value chain”, but we need the whole chain, including education (school readiness programs, schools, universities), labs in which new ideas can be tested, and links with venture capitalists and industry (to support commercialization).

For instance, the innovation camp organized by GITA in August 2015 provided 32 young inventors aged 16-23 with a fantastic opportunity to present their ideas, develop prototypes (with mentorship by local and international experts), to form networks and compete with each other. But whether or not these young inventors will be able to go on and achieve greatness will depend on the availability of training, funding and institutional support systems on which to rely in the future. Another major bottleneck is to make sure that Georgia’s education system produces many more young inventors – in Tbilisi as well as in other, underprivileged and underserved jurisdictions.

WHAT MAKES FARMERS INNOVATE?

Whether farmers innovate on their own or adopt existing technologies, the result is the same: improvement in agricultural productivity, incomes and the country’s economic development. But what makes farmers innovate? Why, when operating under similar conditions, some farmers innovate while others do not? What are the particular characteristics of innovative farmers? How critical are information and funding bottlenecks? Do farmers better innovate individually or together?

The development literature provides many important insights. Innovation is certainly related to farmers’ personal characteristics, available resources as well as the market and institutional environment. Innovation is very much about a process of trial and error, and hence is inherently risky. As may be expected, research shows that cash strapped farmers may be particularly risk averse, slowing down technology adoption in agriculture; the innovators among them tend to be younger and better educated. What follows is that farmers are more likely to adopt innovations that have proven successful in their immediate environment. In other words, a neighbor who has successfully introduced a new crop or an innovative production technology is the best agricultural extension worker!

Another important finding in the literature is that wealthier farmers – being better informed and having superior access to financial resources – are more likely to adopt new technology. However, even smallholders frequently come up with small changes in their production or marketing techniques. Such small changes might become game-changers for small poor farmers. The way to encourage such small scale innovation is to make the focus of donor/government aid and technical assistance on cheap and easy to adopt solutions. “Small change is beautiful change” might be a useful slogan for promoting bottom up innovation in Georgian smallholder agriculture.

Finally, research also suggests that farmers tend to innovate more if integrated into value chains and have secure market access. Moreover, studies show that most innovations come from groups of people rather than individual ‘geniuses’. Thus, research by Darr and Pretzsch (2006) confirms that intensive information exchange and collaboration among group members foster innovation and its diffusion. Similarly, Nwakwo et al (2009); Odoemenem and Obinne, (2010); Kolade and Harpman, (2014) find that membership in a cooperative is positively related to technology adoption by small farmers.

Both value chain integration and farmer cooperation are key objectives of the Georgian government’s agricultural policy. In the end, however, this policy will not lead to innovation and increased agricultural productivity without young, well-educated, and creative leaders, such as Nina Petrova-Dzneladze.

The article was produced with the assistance of the European Union through its European Neighbourhood Programme for Agriculture and Rural Development, Austrian Development Cooperation, CARE Austria or CARE International in the Caucasus. The contents are the sole responsibility of the authors and can in no way be taken to reflect the views of the European Union, Austrian Development Cooperation, CARE Austria or CARE International in the Caucasus.

Salome Gelashvili and Pati Mamardashvili