**[Georgia Agricultural/Agribusiness Sector Assessment]{.smallcaps}**

**[Prepared for USAID/Georgia]{.smallcaps}**

**[Office of Economic Reform]{.smallcaps}**

By

Lena Heron, G/EGAD/AFS

Robert Lee, Consultant

Marcus Winter, E&E/MT

**March, 2001**

GEORGIA AGRICULTURAL/AGRIBUSINESS

SECTOR ASSESSMENT

**TABLE OF CONTENTS**

> **Page**

###  {#section .unnumbered}

### I. Executive Summary 4  {#i.-executive-summary-4 .unnumbered}

## Key Findings 4

## B. Recommendation 5 {#b.-recommendation-5 .unnumbered}

### Purpose and Methodology 5

## Purpose 5

# B. Methodology 6  {#b.-methodology-6 .unnumbered}

**III. The Agriculture/Agribusiness Sector 6**

# Situation 6 

1.  **Introduction 6**

2.  **Agro-Production Levels and Trends 7**

3.  **Agro-Processing Levels and Trends 8**

4.  **Land Ownership 9**

5.  **Finance 10**

6.  **Investment 10**

7.  **Inputs and Technology Employed 11**

8.  **Marketing 12**

9.  **Transportation 13**

####### Summary of Principal Constraints 14

1.  **General Market Constraints 14**

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a)  **Corruption 14**

b)  **Taxation 15**

c)  **Customs 15**

d)  **Banking 15**

e)  **Energy Supplies 16**

f)  **Confidence in Government 16**

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2.  **Agricultural Specific Constraints 16**

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a)  **Marketing 16**

b)  **Finance 17**

c)  **Investment 18**

d)  **Input Supply 18**

e)  **VAT Taxation 19**

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A.  **Current and Upcoming Agricultural Support Efforts 20**

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1.  **Government of Georgia 20**

2.  **U.S. Assistance 20**

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a)  **Introduction 20**

b)  **Georgian Enterprise Support Project 21**

c)  **Seed Enterprise Enhancement and Development Project 22**

d)  **Ministry of Agriculture Restructuring 22**

e)  **Land Market Development 23**

f)  **Humanitarian and Other Programs 24**

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3.  **Other Donors 24**

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a)  **Introduction 24**

b)  **World Bank 25**

c)  **EU TACIS 25**

d)  **European Commission 25**

e)  **Germany 26**

f)  **Japan 26**

g)  **Other 26**

### V. Assistance Options for USAID 26 {#v.-assistance-options-for-usaid-26 .unnumbered}

1.  **No Additional Assistance (NAA) 26**

2.  **Targeted Infrastructure and Services (TIS) 28**

3.  **Value-Added Enterprise Growth (VAEG) 29**

### Recommendation 31 

###### Introduction 31

###### VAEG Program Elements 31

###### Market Niche Focus 32

###### Implementation Funding Options 35

####### E Illustrative Outputs 37 {#e-illustrative-outputs-37 .unnumbered}

F.  **Linkages 38**

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1.  **S.O. 1.3 38**

2.  **Other Mission Programs 39**

3.  **Other Donor Programs 40**

**Annexes**

I.  **Agriculture/Agribusiness Sector Background**

II. **Agricultural Sector Tables**

III. **Assessment Team Schedule**

IV. **References Consulted**

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I.  **Executive Summary**

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A.  **Key Findings**

The agricultural conditions of Georgia favor competitive
agriculture/agribusiness. The reasonably mild climate with adequate heat
units, day length, and growing days enables economic production of a
wide variety of crops. Soils are moderately fertile and easily tilled,
although the rainfall is marginal in many areas and supplementation by
irrigation water is required in many regions. Thus, the country of
Georgia is blessed with favorable conditions for the production of a
wide variety of annual and perennial crops, as well as livestock.

Marketing and finance were identified by most sector stakeholders as the
key constraints to expanding output from the economically dominant
agricultural sector in Georgia. Growth in production is taking place,
where a market exists or can be identified. Assuming they have access to
financing mechanisms when necessary, farmers respond with additional
production or changes in their production mix, when market demand is
present. Adding value to agricultural commodities via processing,
grading or packaging normally requires additional financing, and it is
often not available. Thus, financing is a major constraint and
additional financial support to both the farmer and value added producer
is necessary to facilitate agricultural development.

The availability of information about new markets remains very limited.
Only a few Georgians are aggressively seeking new markets, and
information about new marketing opportunities is not reaching Georgian
producers. The Russian market is still the first target, and all too
often, the only market being considered. Important international
requirements to enter the market place such as ISO 9000 [^1] and HACCP
[^2] are largely not being addressed.

In spite of a myriad of problems in the enabling environment for private
enterprise growth, some Georgians are making the system work. They are
dealing with tax, customs, corruption, power, input supply and other
constraints facing the private sector. Based on these examples, it does
not seem necessary or advisable to wait until the macro reform process
had achieved further results. Doing so would only slow or delay the
contribution the agricultural sector can make to Georgia's economic
growth. In fact, it was concluded that firm-level or value-adding
organization assistance would provide experienced-based information that
would be useful in further refining the reform process.

The options for USAID/Tbilisi of doing nothing additional in the
agricultural sector at this time or following a more ad hoc approach
seem much less desirable than taking positive action and implementing a
new program focused at the value added level of the agricultural/
agribusiness system. The current level of assistance to the agricultural
sector being provided by USAID is very modest compared to the importance
of the sector to Georgia in terms of employment and economic
contribution and much of the current assistance will end shortly. Nor do
current USAID or other donor programs systematically address the
problems to agricultural sector growth and development from a market
perspective. This is particularly true of World Bank and European
Commission Programs that largely support Government of Georgia needs
rather than focusing on the private sector which ultimately must be the
driver of economic development.

B.  **Recommendation**

The Assessment Team strongly recommends that USAID/Tbilisi initiate a
new three-year assistance activity to support value-adding enterprises
associated with selected agricultural commodities/ products for which a
specific market has been or can be identified. Programs to promote land
market development and to restructure the Ministry of Agriculture are
important elements of a wider objective to promote agricultural sector
development and should be continued.

The objective of the new activity is to significantly increase the
physical quantity and value of targeted crops or products that are being
demanded, primarily by export but also domestic markets. Technical
assistance, training and credit assistance would be supplied to
value-adding organizations in identifying products and markets and in
meeting the various quality and health safety requirements of those
markets. This will include assistance to Georgian firms in adopting and
utilizing ISO 9000 and HACCP procedures to enter international markets.
The specific crops and products and markets to be initially targeted
would be determined during an initial short-phase of the assistance
activity. However, it is most likely that they would be drawn from wine,
fruits and vegetables and/or organic products for export markets and
animal products or livestock industry inputs for domestic markets.

The recommended investment in the activity is estimated at \$9.0 million
over three years. From this investment USAID should expect to have: new
markets identified for Georgian agricultural products, increased sales
and/or exports of the identified products; established and operating
value-adding organizations and producer associations; and more income
reaching the rural farm population.

The focus of the recommended assistance on value-adding organizations
and firms in the agricultural sector is a very effective way of reaching
a large number of rural residents in locations outside of Tbilisi. In
addition to meeting USAID S.O. 1.3 objectives, the purchasing power that
can be supplied to rural residents via a market for their products has
major implications throughout the economy and for other community-based
efforts.

II. **Purpose and Methodology**

> **A. Purpose**

The purpose of the current (February 2001) Agricultural Sector
Assessment is to provide a documented basis and rationale for
sector-specific assistance program options to be considered by
USAID/Georgia. In August 2000, USAID Tbilisi invited a five-person team
from USAID Washington to assess the programs under its Economic Reform
(SO1.3) portfolio and related economic conditions in Georgia. The
concluding report (September 2000) included recommendations for current
programs, as well as areas to consider for possible future program
development. In the latter category, the Team recommended that the
Mission give serious consideration to a future program in the
agricultural/agribusiness sector. The scope of the broader market reform
assessment did not allow adequate analysis upon which the Mission could
reasonably base programming decisions.

Although the current assessment is a follow-up to the Market Reform
Assessment, the Agricultural Assessment report has been prepared with
two short-term and one longer-term objective in mind. First, by
distilling and summarizing available information from written materials
and earlier visits to Georgia by assessment Team members, it serves as a
concise background document. Second, the document reflects Team
consensus on what are the important issues and constraints to
agricultural sector growth in Georgia, the relative importance of
different constraints and possible roles USAID might want to play in
removing constraints. Finally, it is hoped that the document will become
the foundation for a more detailed activity design effort.

B.  **Methodology**

The methodology employed the use of primary & secondary source
information. The primary information came through direct contact and
discussions with agribusinesses, the Minister of Agriculture, donor
groups, non-governmental organizations (NGO\'s), contractors, and other
implementing agencies. In addition the Team was also fortunate to been
able to participate in the Mission S.O. review of programs in
preparation for the upcoming R-4 submission. Finally, the Team benefited
from substantial interaction with all levels of USADI/Tbilisi staff. As
for the review of secondary information, the Team obtained documents
from the various groups interviewed (NGO's, contractors, USAID, Ministry
of Agriculture, Georgian Department of Official Statistics, World Bank,
TACIS, EU Commission, etc.) and utilized this valuable resource material
in preparation of this assessment.

III. **The Agriculture/Agribusiness Sector**[^3]

##### Situation 

> **1. Introduction**

Agriculture plays an important role in the Georgian economy. In 2000,
the sector contributed over 25 percent of gross domestic product (GDP).
Employment in the sector accounts for just over 50 percent of total
employment in Georgia with agricultural exports ranking second only to
metals in 1999 providing over 17 percent of total exports [^4].

The importance of the sector to the Georgian economy, nevertheless,
belies a serious crisis of stagnancy. Agricultural/agribusiness
production is down 30 to 40 percent from the levels of the late 1980's.
Further, the value of food, drink and tobacco imports exceeded
agricultural sector exports in 1999.[^5] In sharp contrast, in the
1980\'s the value of Georgian food exports to the rest of the Former
Soviet Union exceeded by a factor of 1.7 the value of food imports from
other Soviet republics[^6]^.^ Over 50 percent of the grain and dairy
products consumed are now imported.

In recent years a number of changes have occurred that are helping
create a better enabling environment for agriculture/agribusiness. The
almost complete withdrawal of subsidies, a relatively liberal trade
regime, and the freeing of domestic prices for agricultural products are
good examples. The interest and commitment of the Minister of
Agriculture to restructuring and downsizing of the MOA to meet the needs
of a market-driven agricultural sector is another positive step forward.

> **2. Agro-Production Levels and Trends**[^7]

The country of Georgia is blessed with favorable conditions for the
production of a wide variety of annual and perennial crops - wheat,
corn, sunflower, grapes, fruits, tea, citrus, vegetables, tobacco,
essential oils and organic herbs and spices. With variations due to
weather, annual grain production of around 700,000 metric tons is close
to1990 levels with increases in areas planted offsetting lower yields.
The area planted to potatoes after slumping initially is now at 1990 or
higher levels with production seemingly reaching new highs, particularly
if home garden production is included. Vegetable production continues
well below 1990 levels, largely due to the decline in processing demand.
The area planted to seed (apples, pears) and stone (plum, cheery, peach,
apricot) fruits has declined by 65 percent since 1990. While the
production of seed fruit has continued to decline, the production of
stone fruit has stabilized since 1996 and actually rose 30 percent in
1999 over 1998. With respect to citrus the decline has been even more
dramatic, going down by 86 percent between 1990 and 1999. The production
of nuts (walnuts, and hazelnuts) has been a bright spot for the sector
as production rose from 9,000 tons in 1990 to 35,000 tons in 1999.

The livestock sector, like the crop sector, has experienced substantial
declines. Production of meat and meat products is 40-45 percent below
levels of the mid-80\'s reflecting a substantial drop in animal numbers.
The largest declines have been in swine and sheep, although numbers have
stabilized at mid 1990 levels. Poultry numbers fell through 2000 to 1/3
of what they were in 1990, but egg production has recently shown an
upward trend. On the other hand, broiler production is still limited,
mainly due to a lack of good feed sources, and the importation of low
cost chicken parts. Total milk production is almost back to levels
achieved in the late 1980\'s, as is production per animal of 900-1000
liters per lactation or about 12-15 percent of average Western levels.
Wool production has dropped more than 70 percent since the 1980s. Budget
shortfalls have reduced the availability of government veterinary
services.

According to available statistical data, in recent years the household
sector (small farmers) has gained in importance as the primary
agricultural production sector in Georgia. In 1988 the household sector
produced 25 percent of all grain, and 95 percent by 1999. In the case of
potatoes, vegetables, and grapes household producers accounted for 45 to
-50 percent of production in 1988 and 98 percent in 1999. For fruits and
citrus, household producers have been the dominant sector for many
years, as in 1988 they accounted for 77-78 percent of production and in
1999 for nearly 99 percent. Data that disaggregates the small producer
sector is not available. However, the OSC survey conducted in summer
2000 suggests that there is a range of farm size and level of production
for market on those farms. The vast majority of households (84 percent)
only produce on land that they own, and consume 80 percent of their own
produce. The remaining 16 percent of agricultural producers rent land
from the state (2-5 ha. on average) and market at least a quarter of
their production.

In the past Georgian agriculture exports contributed positively to the
trade balance. During the Soviet period Georgia was one of the major
suppliers for fruit and vegetable products to the republics of the FSU,
exporting fruit of various kinds, tea, essential oils, citrus, wine,
alcoholic drinks, mineral waters, canned fruit and vegetable products.
These agricultural exports were 1.7 times more than the imports of
agricultural products from other republics within the FSU-grain, meat
products, dairy products and fodder. Recently, official data indicates
that Georgia has changed from a net exporting country to a net importing
country with respect to agricultural products. In fact, since 1996 the
imbalance in agricultural trade has become very substantial. In 1999,
agricultural imports (including tobacco) appear to have exceeded
agricultural exports by a ratio of 3 to 1.

> **3. Agro-Processing Levels and Trends**

Most small and medium sized enterprises in Georgia (including
agribusiness firms) have been privatized, but a substantial number of
the enterprises controlled by the MOA (reportedly over 130) remain to be
privatized. Many of these agricultural facilities are old, of a scale
that makes them inefficient and non‑competitive, and simply not
operating. A World Bank study concluded that production levels in the
agro-processing sector were at about 10 percent of 1980 levels[^8].

Amid this depressed picture some good, though limited, examples exist of
local and foreign companies operating effectively in a range of areas
including fruit processing, flour/bakery/macaroni processing, meat
processing, potato packing, and egg production and packing. While these
enterprises demonstrate the potential of Georgia agro-processing, it is
significant that some of these enterprises frequently import raw
materials and packaging.

Packers and processors are searching for new market opportunities in
western countries and, with assistance in grading, packing and handling
and in meeting export quality, sanitary and labeling requirements, good
market outlets for fresh packed fruit products are probably available.
Processors of juice, jams/jellies and wines have identified some market
outlets for their products in FSU countries as well as western and
Middle East markets. The Georgian Export Promotion Agency (GEPA)
supported by EU-TACIS is working to develop export initiatives from
Georgia and is helping with market identification and export support.
Another opportunity may soon arise if current plans, being implemented
through Elkana, the Biological Farming Association, are successful.
Under this initiative a Georgian organization would be authorized to
issue certification that Georgian products meet the international
requirements and can be labeled as organically grown.

Many of the newly privatized processors are beginning to revive
operations and as they do, assistance in marketing, equipment and
maintenance financing, and working capital provision for purchases of
raw materials from farmers will be needed. Equally important will be
assistance in meeting the quality, health, content, labeling and other
standards required by international markets. While some Georgian
producers may resent quality and health standards and see them as
non-tariff barriers, the reality of the developed country market place
is that such standards are likely to increase rather than decline.
Current Georgian manufacturing and processing standards, most especially
for food products, will not be acceptable in most markets.

In order to penetrate higher-value markets, Georgian products will have
to meet ISO 9000, HACCP [^9] or other international market or industry
specific standards for processed or fresh products. However, the
Assessment Team found little attention being given to these issues. The
introduction and initial implementation of such market standards will
likely require coordination and assistance from target market consulting
or certification firms. Eventually, Georgia should have credible,
indigenous and, whenever possible, preferably private sector capacity to
provide training certifications and periodic compliance inspection.

> **4. Land Ownership**

According to 1999 data from the National Department of Statistics, there
are close to 2.6 million hectares of agricultural land in Georgia[^10].
Of these roughly one third were privatized and distributed to rural
families according to the so-called "land privatization decree"
(Government Resolution 48, January 1992) and the subsequent Law on
Agricultural Land (March 1996). Of this land, nearly 70 percent was
arable or planted to perennials. Land associated with residential plots
was included in a total of up to 1.25 hectares distributed to each
family.

Ownership of the remaining two-thirds agricultural land in Georgia is
held by the state. Only little over one half of this state-held land is
leased (meaning that a little over one third of all agricultural land is
leased). The leased land is a mixture of arable, perennials, pasture and
hay land. The remaining unleased, unallocated land held by the state is
primarily pasture land, much of this in the alpine zone.

There are over one million farms that cultivate only their own privately
held land. According to the OSC survey, 84 percent of the rural
population is dependent on these subsistence farms, where approximately
80 percent of the produce is consumed by the farm families themselves.
The remaining 16 percent of the rural population have enlarged their
land holdings by leasing additional agricultural land from the state.

Lease agreements can be arranged for up to 50 years, however over 40
percent of respondents in the OSC survey hold leases of 1-3 years and
another 32 percent have leases for 4-6 years. Lease payments were
originally intended to cover both the land tax and an additional premium
that would vary according to the region and quality of the land leased.
However, the typical arrangement requires only the annual payment of
land tax. This amounts to 57 Lari per hectare per year for arable land
of good quality, including irrigated land.

Legislation to privatize the remaining state-held land is currently
being developed in the Parliament. The goal of this privatization is to
move arable land out of the public sector. Whatever distribution
strategy is adopted for privatization of this land, efforts should be
made to expand public understanding and build public support for this
program. USAID should use the Association of Land-owners' Rights (APLR)
to promote a transparent privatization of this land that promotes
commercially viable farms while acknowledging social equity
considerations. Specific recommendations for a USAID position on the
legislation were provided in the Market Reform Assessment Report of
September 2000.

The current pattern of private land holdings is highly fragmented. While
it is hoped that the privatization of state-held leased land will
promote the development of more commercially viable farms, the
development of a land market is necessary to promote the consolidation
and rationalization of land holdings among rural residents interested in
and capable of engaging in commercial agricultural activities. APLR data
on subsequent land transactions as of January 22, 2001 show that
approximately 2,600 land sales have been recorded through out Georgia.
Anecdotal evidence suggests that more transactions are occurring, but
are not being recorded. Recent policy changes have reduced registration
fees from 26 Lari to 7 Lari. It is anticipated that this reduction in
transaction fees will increase the incidence of transaction
registration.

Agricultural development in Georgia is dependent on a consolidation and
rationalization of land holdings. Privatization of the state-held leased
land should facilitate this process. The development of a land market
will further improve land utilization. USAID is supporting the
privatization process and development of land markets through its follow
on to the Land Market Project. While agricultural sector development in
Georgia will benefit from land market development, development of a land
market in Georgia is tied to an increased demand for agricultural
produce.

5.  **Finance**

Numerous credit programs are active in Georgia. Commercial banks, credit
unions and donor organizations are making loans to a variety of
borrowers. Generally the financial institutions provide short-term (one
year or less) medium and small size loans to mostly urban Georgian
businesses. Very little of the limited credit supply is directed to
agriculture, which is understandable when the risk of making a short
term loan to an urban business is compared with the risk of lending to
an agricultural business. However, these credit suppliers generally have
only limited funds. The 200+ credit unions are small with few having
more than \$50,000 in capitalization. The commercial banking system is
going through a period of consolidation and stabilization and has a
limited paid-in capitalization (less than \$90 million as of August
2000). Donor supported projects operate with about \$10 to \$15 million
in loan funds. Many of the donor assisted programs have only been
operating only three to four years, and very few, perhaps only the
Microfinance Bank and FINCA, have yet reached the stage of being
self‑financing or sustainable in the long term.

Among lenders the credit terms vary substantially, tending to reflect
market rates and averaging around 30 percent per annum. The best rates
for agricultural/agribusiness projects are 18 percent per annum with
collateral requirements of 150 to 200 percent of the loan value.
Institutions interviewed indicated that collection rates are good to
date, although many loans are relatively new and repayment is pending.

For medium or long-term capital for the agricultural/agribusiness
sector, the banking system with its limited capitalization is not
currently, and will also not be in the short run, a significant source
of financing. For some businesses, suppliers and buyers are meeting some
of the need for credit. Suppliers do provide some credit to the
agricultural sector for production inputs, but the amount is small and
will remain so until good repayment track records are established. Trade
financing and funds transfers by buyers are also a major problem. Very
few buyers are willing to advance funds for purchases because there is
still substantial uncertainty as to whether the producer will actually
deliver.

6.  **Investment**

As outlined above, the local banking system does not have the capacity
or willingness to finance the level of investment required to grow the
agribusiness sector. This means that new capital will need to come from
private domestic and foreign direct investment (FDI). Since the
availability of domestic capital is limited, FDI will need to be the
largest source. FDI has the added advantage that it is usually
accompanied by an injection of new/western management expertise.
Unfortunately, FDI in Georgia is very low - an estimated US \$731
million over the period 1989 to 2000. Further, on a per capita basis,
annual FDI fell from \$44 in 1998 to \$19 in 1999, below the Eurasian
annual per capita average of \$24, and well below CEE standards.
Unfortunately, the majority of foreign investors attracted to the
high-risk investment environment in Georgia are either unable or
unwilling to invest large sums of money in Georgia.

There are many reasons that investors, both domestic and foreign, do not
invest in Georgia. While both domestic and foreign investors are
discouraged by the realities of a volatile economy and uncertain rule of
law, foreign investors are also discouraged by perceptions of Georgian
business climate that may or may not be accurate. Based on discussions
with private sector investors in Georgia (both foreign and domestic) and
on information from donor sources familiar with local business, the
major constraints to investment in Georgia are as follows.

-   A perception of high political risk, including frequent changes in
    legislation and policies.

-   An uncertain macro-economic environment.

-   Perceived high levels of business risk resulting from observed
    failed joint ventures and broken business agreements where foreign
    investors believe they were treated unfairly. This leads to a lack
    of confidence in Georgians as trustworthy partners.

-   Legal businesses confront high levels of taxation and this, combined
    with widespread illegal evasion of taxes by small domestic firms,
    makes large-scale international businesses less competitive.

-   A small domestic market and insufficiently developed export market.

-   Excessive and non-transparent government regulations.

-   A weak and corrupt judicial system making contract enforcement
    difficult, and the protection of property rights uncertain.

-   Insufficient information from companies being privatized to permit
    adequate due diligence by serious foreign investors.

-   Finally, few Georgian companies are available for sale under
    conditions where foreign investors would be willing to invest. This
    is because of a general overvaluation of company assets by Georgian
    company owners and reluctance among them to sell a controlling share
    to foreign investors.

    **7. Inputs and Technology Employed**

With respect to input supplies, an organized system of input supply and
suppliers that reaches down to the village level has not fully developed
to replace the former command system. Many agricultural production
inputs (fertilizers, pesticides, herbicides) are difficult for the small
farmer to find in Georgia. The country does produce nitrogen fertilizer
at a plant in Rustavi, but is totally dependent on imports for
phosphorus, potassium, and crop protection chemicals.

The capital stock of farm machinery in Georgia has decreased by 40-70
percent over the past decade with only very small numbers of tractors,
combines and other pieces of modern equipment having been imported into
Georgia since 1990. International machinery suppliers have no or minimal
representation in the country. Domestic production of any agricultural
machinery is extremely limited. The equipment that remains in use is
generally in extremely poor condition, and kept working through salvage
of parts from inoperable machines. What equipment is available is
generally not suitable for small farms.

In part, the declines in production are a result of the decreased
productivity that has come from reduced fertilizer use. There are no
functioning government supply systems and fertilizer use is only about
10 percent of what it was in 1985. While fertilizer use in 1985 was not
likely optimal since soft budget constraints did not necessitate
efficient use of inputs, the current level of non-use clearly has very
negative consequences for soil fertility, and crop productivity.

The use of crop protection chemicals (CPC) has similarly plummeted from
levels of the 1980\'s. Fungicides for fruits and vegetables
traditionally comprised 70-85 percent of CPC usage. Current usage is
just over one percent of the quantity used in 1985. Almost no herbicides
are currently applied and insecticide applications are also very low.
Georgia has very limited pesticide production capacity and is almost
entirely dependent on imports. All herbicides are imported.

Since 1990 the government-operated seed supply system in Georgia has
largely collapsed. Annual seed needs in Georgia for grains and
vegetables (excluding potatoes) are estimated at over 50,000 tons with
requirements for \"high\" quality seed being about 25 percent of that
amount. Potato seed requirements are 70-90,000 tons annually. Actual
supplies are but a fraction of these levels. Some testing for
registration of new varieties continues through the Variety Testing
Commission, with interested parties covering the costs of testing. The
two seed production organizations, Gruzzernosemprom and
Gruzsortsemovaochch, were privatized in 1998, but almost all seed
production has ceased and these farms are trying to survive as normal
agricultural production units. The Research Institute for Crop
Production, but they are producing a very limited quantity of seed. The
Horizon Company, a Georgian seed company established with USAID
assistance, is producing limited quantities of maize, sunflower, wheat
and potato seed. This company produced over 450 metric tons of seed in
CY 2000 and plans to produce 600+ tons in CY 2001. The Bolnisi potato
seed growers, associated with the Dutch, are another group producing
potato seed for sale. Small quantities of seed potatoes also come from
other private farmers. Some vegetable seed is being imported through
legal channels. Demand is also being met by illegal imports, though
quantities are unknown.

The Assessment Team met with the two private sector organizations that
have emerged since the breakdown of the Soviet system. Both Farmers
Union and Analytica market and distribute inputs to small farmers; both
also provide some limited technical assistance on appropriate use of the
inputs they market. The Farmer's Union provides farmers with technical
information, seed, and CPCs through local peasant based distributors.
Analytica supplies seeds and CPCs to farmers on a basis very similar to
that of the Farmers Union. These firms cover a very small part of the
country needs and claim that the principal reason farmers do not use
inputs is because of cost.

Water is another important input for agricultural production in Georgia.
The irrigation system that was developed during the soviet period has
seriously deteriorated, both from neglect and uncertainty over
operational responsibility. The regional Water Operation and Management
Enterprises lack the resources to carryout the operation and maintenance
of the system, and as a result the area under irrigation has declined
from over 450,000 hectares in 1990 to less than 300,000 hectares by
1999. Only a few local Water User Associations have emerged.

**8. Marketing**

In the past, trade was coordinated through Moscow. With the break up of
the FSU this is no longer the case, and trade relations between the now
independent countries of the FSU are not yet fully operational.
Nevertheless, Russia remains one of Georgia's biggest trading partners
and, along with other countries of the FSU, will continue to be
Georgia's most likely target market for exports. However, exports to
Russia and other countries of the FSU have plummeted in recent years,
and in 1999 trade to the CIS countries was only 30 percent of the total
Georgian trade.

Georgian producers and processors have not been very successful in
developing new markets to replace those lost as the Soviet Union broke
apart. Sanitation, packaging and quality standards in Western Europe
make it difficult for Georgia to enter these potentially lucrative
markets in the near term. On a cost basis, low farm yields and high
processing costs result in high unit costs that make it difficult for
Georgian goods to compete with goods from West Europe, Poland or Turkey.
Poor packaging and inconsistent product quality and a general lack of
marketing expertise have added to the marketing difficulties.

However, there are many acclimated crops that in Georgia would have a
yield potential better than that in Western Europe or the CEE countries,
and equal to that of Turkey, Azerbaijan and other countries in the
region. With the proper inputs and technology, there is no reason that
Georgia cannot produce acclimated crops with equal quality at lower
costs, when compared to Europe and neighboring countries. Traditional
Georgian yields have the potential to increase by a factor of 3 or 4
times with proper management and technology. Georgia will clearly have a
seasonal advantage with earlier available production from the warmer
zones and a longer harvest season by using the various micro-climates.
This may allow Georgian exporters of fresh product to aim for niche
periods when the competitors do not have product available.

For a limited number of agricultural products, there already are market
outlets. Some milk producers are successfully marketing limited
quantities of raw milk in nearby settlements. Nuts are being sold for
export and grape juice can be sold to processors for use in the wine
industry. For the most part, however, surplus vegetables, fruit, and
milk is not being processed or being marketed beyond very local
channels. With this decline in market, farmers have less income and
little incentive to invest in inputs to increase productivity or improve
the quality of their output. Local consumers, processors and export
markets will only demand Georgian produce if and when the quality and
consistency of supply improve.

Finally, to the degree that there is demand for agricultural produce,
either domestically or for export, this information reaches producers
only sporadically or through informal sources. No source of market
information currently exists that would help farmers determine what to
produce. Further, very few farmers have contract relationships with
processors that could help orient their production program. Farmers with
vineyards are more likely to receive advice because wineries work
closely with them.

> **9. Transportation**

Georgia is an integral part of the East-West transport corridor linking
Caucasian and central Asian countries with the Black Sea. Georgia has a
long established rail network of 1,583km that is fully electrified. The
main route Baku-Tbilisi-Samtredia is largely double track. From
Samtredia single rail goes to the ports of Batumi and Poti and to Russia
via Sukhumi. The Armenian route is also important. To assist with the
refurbishing of the rail sector the EBRD supported a \$20 million rail
link project that aimed to provide small scale upgrading of the
Trans-Caucasian Railway.

Georgia's road network plays an important role in the
Europe-Caucasus-Asia transport corridor. Also, Georgia is an
intermediate link between Russia and the countries of the Middle East.
The road system in Georgia counts 20, 298kilometers -- international
roads 1,474, internal state roads 3,330, and rural roads of significance
15,494. This road system is important to the movement of agricultural
goods, and in 1998 15 million tons of product (all types) was reported
to have moved by road. In recent years, due to lack of financial
resources, the conditions of motor roads have declined. In addition to
the limited support by Government, the World Bank has been active in
providing assistance for the reconstruction of roads in Georgia. The
Bank has made, or plans to make available about \$52 million under
different loan programs for road rehabilitation.

Georgia's main seaports are Poti and Batumi. Poti's total port capacity
per annum is currently about 7 million metric tons, and Batumi's is
about 5 million metric tons. Poti is 9m deep and 30,000 BRT ships can
enter. Batumi is 11m deep and a maximum 50,000 BRT ship can enter.
Heavier ships are unloaded at sea. In addition to local transport
forwarding companies, there are several foreign transport/forwarding
companies successfully functioning in Georgia.

The transportation issues are not only related to the condition of the
rail and road systems, but to the harassment that truckers seem to face
as they travel the roads. It is very common for truckers to be stopped
and asked for papers, and to pay fees that are assessed for some
infraction that may not really exist. Also, when truckers cross borders
to another country customs officials may check the vehicles and levy a
fee. Therefore, not only do the poor conditions of the roads increase
costs to maintain trucks, but also the road fees add another significant
cost to transportation costs faced by groups trying to move agricultural
products.

######### B. Summary of Principal Constraints  {#b.-summary-of-principal-constraints .unnumbered}

Georgian entrepreneurs face multiple constraints to starting, owning and
operating a business, regardless of the size of that business. Some of
the constraints are general in nature and some are more specific to
individual sectors with some impacting producers for the local market
more than exporters, and vice versa. Each of the constraints is well
know and has been examined and described in detail in other documents.

Many of these constraints are being addressed by the Mission's
assistance programs in tax reform, land reform, accounting reform,
banking reform, capital markets, energy reform and enterprise
privatization. Significant contributions to establishing an enabling
environment for private enterprise growth have been made. Nevertheless,
as can be concluded from the discussion below, further work in these
areas remains.

The constraints below are divided into two categories -- general
constraints that affect all business and those constraints that are a
specific problem for agricultural/agribusiness development. For the
first category, the descriptions are quite brief with only a limited
discussion of how they impact the agricultural sector. For the second
category, the discussions are more detailed and relative priorities are
established.

1.  **General Market Constraints**

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a)  **Corruption**

As outlined in the September, 2000 Market Reform and Agricultural
Assessment Report, corruption is widespread and endemic in Georgia. The
1999 Corruption Perceptions Index by Transparency International ranked
Georgia 84^th^ out of 99 countries worldwide. Corruption flourishes in
part because the Georgian government is unwilling or unable to set and
enforce transparent rules and laws. Extremely low government salaries
also encourage corruption since they do not provide a living wage. Most
businessmen see the payoffs and charges for what should be free services
as a cost of doing business and not something they can do much about.
They also hope the situation will change in the not too distant future.

For the agricultural sector, the corruption ranges from road taxes
arbitrarily imposed by the police to extra payments that are necessary
to obtain operating permits or necessary licenses or certifications.
Even when the necessary documentation has been obtained, the police and
inspection agents are good at finding some reason to charge a fee.

b)  **Taxation**

There are two major issues related to taxation. First is the high rate
and multiplicity of taxes. There are VAT taxes, profit taxes, road
taxes, social fund taxes, land taxes, transfer taxes, entrepreneur
taxes, unemployment fund taxes, etc. Together, this combined tax rate
can be as high as 67 percent of a products\' cost structure.

Second is the administration of tax laws. The regular changes and
ambiguities allow corrupt tax officials to extract unofficial payments
and levy frequent and heavy fines for noncompliance. While most
businesses have learned to cope with the uncertain tax regime, most also
identify the amount of taxes they pay as a serious problem to the
establishment of business.

For farmers and small businessmen, ambiguities in the tax laws and very
frequent changes make understanding of the laws and what is required
very difficult, let alone compliance. Most producers indicate they would
prefer a single tax on land.

c)  **Customs**

Georgian customs collections are reportedly less than 50 percent of what
they should be. For Government budgets this is obviously a serious
problem. While there are some positive price effects for consumers and
well-connected businessmen, the porous borders also impact many local
businesses and processors in several negative ways. Cheap, untaxed
imports, particularly non-perishable or manufactured products, compete
with local manufacturers and producers.

For the agricultural sector, local flour millers who pay up to 34.7
percent taxes on imported wheat are unable to compete with smuggled and
untaxed flour. The import tax should protect the local miller and
producer of wheat, but when a drought occurs and local wheat production
is in short supply, it has the opposite effect, particularly when
products are smuggled and do not pay the tax. The largest tea processor
in Georgia does not supply the local market because untaxed imports are
more attractive to local consumers. Egg and milk processors face a
smaller market for much the same reason.

d)  **Banking**

Banks in Georgia play only a small role in savings mobilization and as a
source of financing for private sector businesses. Low capital bases,
high interest rates, insider deals taking place, inadequately trained
staff and difficulty in valuing collateral are just some of the
problems. The number of banks is expected to decline further as higher
capital requirements are enforced and banking regulation, training and
improved legislation will, over time, result in a better functioning
system. However, this is clearly a long-term process, and for the
agricultural sector, the current commercial banking system will probably
not be a dependable source of finance (see discussion below) in the next
few years.

e)  **Energy Supplies**

Current energy supplies are simply inadequate to meet needs with daily
supplies to most users ranging from a few minutes to a few hours. While
the impact on the general public of inadequate power is most often the
focus of concern, there are also serious impacts on producers and
processors. For some companies, energy costs are not a major production
cost. But in almost all cases there is a need for reliable power on a
regular basis. Without such supplies companies often face the choices of
shutting down, holding food products at temperatures that are not safe,
operating at an even lower level of capacity or seeking alternatives to
existing grid supplied energy, often at a much higher price.

Many agricultural processors have already put in place generators to
provide most or all of their energy needs. Unfortunately, the cost of
such energy is often prohibitive. For example, a seed potato supplier
the Assessment Team interviewed could not afford to keep his warehouse
adequately cooled using a small generator, and has lost seed quality and
quantity.

f)  **Confidence in Government**

From the business perspective, government is generally viewed as
something to be avoided. Government has not been able to provide needed
services but has imposed additional costs on businesses. To make matters
worse, government is perceived to be the cause of many of the
constraints identified above. The Team found little confidence that the
government would be able to improve their performance in the short-run.
This same attitude holds true for the MOA, although people are not
blaming the new Minister who is being given an opportunity to
demonstrate results.

2.  **Agricultural Specific Constraints**

In addition to the general business constraints identified above, there
are a number of particular constraints impeding agricultural sector
growth and supporting a drift toward subsistence level production. In
some form or manner, some or all of these would logically be the focus
of any agricultural sector assistance effort. They are discussed below
in the order of priority.

> **a) Marketing**

For the Assessment Team the lack of marketing systems was identified by
Georgian producers and value-adding organizations as the number one
constraint being faced. Since the breakup of the FSU, the old system of
state marketing has ceased to function. Unfortunately, effective,
alternative systems have not yet emerged, constraining both domestic and
export marketing potential.

There are numerous aspects to the marketing problem. The identification
of realistically potential markets is seemingly the most serious
problem, but Georgian producers and processors also have difficulty
identifying and establishing trading relationships with distributors.
Successful exporters often depend on personal contacts in cities to
which they are exporting. Additional problems include a lack of reliable
market information, and the inability of Georgian producers and
value-adding organizations to meet the quality and food safety
requirements of both domestic and export markets.

This latter problem will become increasingly serious as Georgia seeks to
enter more sophisticated Western markets with higher standards. However,
the Assessment Team found only limited recognition of this problem.

The lack of market information system in Georgia is a constraint to
farmers as well as agribusiness. To make production and marketing
decisions farmers need information on commodity prices, as well as on
the market outlook for commodities at local, regional, national, and
world levels. Sources of this information are currently very limited in
Georgia. Since most farmers are small it is difficult for them to obtain
this information unless it is being provided by government or producer
organizations.

Output marketing is a problem at three inter-connected levels. At the
raw material or farmer production level, farmers can generally gain
access to inputs required if funds are available. However, most small
farmers do not produce sufficient volumes to permit effective marketing.
Farmers become locked into what they know how to produce to provide a
subsistence, or produce what they were able to sell on the open market
last year. Georgian farmers rarely produce to meet a pre-arranged
contract with packers or processors. Small farmers also need help in
organizing their production and marketing efforts. The Gori Apple
Growers Association is a hopeful example of how associations could
fulfill this role. Unfortunately, such examples are still rare.

At the village level, surpluses of many fruits, vegetables and milk are
simply not packed for the fresh market and/or processed. There is simply
no demand at any price and perishable products spoil. The lack of buyers
in turn reflects the decline in processing as a result of markets being
lost and the quality improvements necessary to recapture old or to
penetrate new markets. Unless the quality and consistency of supply of
domestically produced commodities improve, processors, local consumers
and export markets will not increase their demand for Georgian products.

At the export level, Georgian processors and value-adding organizations
lack information and the know-how to compete effectively. Certainly,
they are constrained by old equipment, inadequate operating and
investment capital and a sometimes unfriendly business environment.
However, the lack of experience in operating in a highly competitive
global market is equally large if not a larger constraint.

Finally, the small size of the domestic market is often a constraint.
For many crops, the domestic market is much smaller than current
production potential. Limited incomes and the fact that many households
produce and process at least part of their own food means that many
people do not buy commercially prepared foods. While there is potential
for development of import substitution in some products, expanding
export markets will be necessary to create adequate demand for
agricultural sector growth.

> **b) Finance**

The lack of finance is a serious constraint for agriculture/agribusiness
as it affects input suppliers, producers, and processors (value-adding
organizations). To gain an idea of just how limited agricultural
financing is in Georgia, the Team examined the difference in the volume
of agricultural credit in the U.S. and Georgia. Georgian agriculture\'s
contribution to GDP is about \$700 million annually. In the U.S. the
farm sector excluding food and fiber processing provides about \$70
billion to GDP or 100 times as much as in Georgia. In the U.S. annual
non-real estate farm debt is over \$80 billion while in Georgia
comparable agricultural credit amounts to an estimated \$10 -15 million.
If U.S. levels applied, the Georgian farm sector would need credit at a
level in excess of \$700 million annually. Obviously such an amount is
not going to be available anytime soon, but this comparison helps to
illustrate the magnitude of potential agricultural credit needs in
Georgia.

Large-scale agricultural processors are able to source limited credit
from commercial banks through the World Bank and IFC credit lines and
the AgroBusiness Bank (recently founded by the European Union). However,
volumes are small, collateral requirements high and interest rates
discouraging.

Nevertheless, while the situation is not good for agricultural
processors, it is even less favorable for small-scale agricultural
producers where the primary source of funds for agricultural/
agribusiness loans comes from special loan funds such as the rural
credit unions, ACDI/VOCA, WB/MOA fund, and the AgroBusiness Bank. The
ACDI/VOCA program with nearly \$2.0 million in loan capital (and over
700 loans) and the Agro-Business Bank with over \$2.5 million in loans
outstanding are apparently the two largest lenders and they reach only a
tiny percentage of potential borrowers.

With these realities it is not surprising that financing was the second
most serious problem mentioned by producers/processors. Without adequate
access to credit, it is difficult to see how a vibrant, export-oriented
system supplying markets with value-added products will emerge. The
problem must be addressed, as it is a major constraint to development of
the sector.

c)  **Investment**

The Georgian private sector has experienced very little investment, and
particularly very little FDI. Without increased levels of investment,
the agricultural/agribusiness sector, as well as many other sectors,
will remain stagnant. The necessary modernization and re-capitalization
requires millions of dollars that financial institutions alone will not
provide. As mentioned above, while FDI can be an important source of
this investment capital, foreign investors also often provide management
skills, technical know-how and linkages to new markets that can result
in increased agricultural/agribusiness exports, as well as favorable
international trade agreements. For example, the World Bank notes that
the agricultural commodity-processing sector in Hungary received a total
of US \$3 billion, or US \$300 per capita, in FDI between 1990 and 1999.

See Section III.A 6. above for reasons why investment is occurring only
slowly.

d)  **Input Supply**

As mentioned earlier, an organized system of input supply and suppliers
that reach down to the village level has not fully developed to replace
the former command system. The parastatals and privatized companies that
emerged from reorganization of the former agricultural input supply
system are not effectively operating and new systems suitable for a
market economy have not fully emerged. Therefore, the availability and
cost of inputs make access very difficult for farmers and organizations
and associations working with farmers. The limited access to inputs is
cited as a barrier to increased productivity.

A couple of private sector companies have been marketing inputs such as
as fertilizers and pesticides to farmers. They estimate, however, that
they are meeting only about 10 percent of the demand. Quality seed is
also in short supply in Georgia, and for grains and vegetables
(excluding potatoes) the need is estimated at over 50,000 tons with
requirements for \"high\" quality seed (purchased seed) being about 25
percent of that amount. Potato seed requirements are 70-90,000 tons
annually. Based information gathered by the Assessment Team, local seed
suppliers do not produce more than 400 tons of "high" quality grain
seed; and not more than 600 to 700 metric tons of potato seed.

At the farm or village level, the low grain, vegetable and fruit yields
realized suggest that technology being employed is not the latest
available. Dairy and poultry productivity, as mentioned earlier, is also
extremely low. There are very few, readily identifiable sources of new
technical and market information for farmers at the village level.
However, according to farmers interviewed in various regions, a lack of
information on better agricultural practices is not their key constraint
at the moment. Fruit and vegetable growers, grape growers and milk
producers all mentioned output markets, marketing, and finance at
reasonable rates to be more important constraints[^11]. If financing was
available at reasonable rates input supplies and technical information
could be obtained and go a long way toward removing this constraint.
Clearly improved practices need to be introduced, but in balance with
establishment of markets for their agricultural output.

The poor condition of machinery is having an impact because land and
seedbed preparation is a significant factor in productivity. Moreover,
increased demand and more efficient production, consistent with expanded
production and processing goals, will render the current equipment pool
inadequate without some replacement. Again, the primary barrier to use
of better equipment is the lack of financial resources to permit timely
and effective purchase. Often times to improve the farmers\' ability to
purchase equipment they will need to form associations that purchase
what they need.

It is expected that increased use of inputs of all types, including
seed, will be a gradual process based on farmers learning and seeing the
benefit of input use, and their improved ability to pay for the inputs.
Some government research efforts, and World Bank efforts to support
"adaptive research and information transfer to farmers" rather than just
basic research will help increase input use. EU-TACIS is planning a
limited program of assistance aimed at providing extension service
assistance to farmers, and this could help bring about some change in
input use. However, the private sector packer or processor interested in
obtaining raw materials from farmers will be one of the biggest engines
for teaching farmers changes in production practices, and use of inputs.
Through USAID assistance to these private sector entities benefits will
accrue to farmers.

e)  **VAT Taxation**

The general issues with taxes, tax levels and tax administration are
outlined above. However, the Minister of Agriculture and others have
identified the VAT tax as a particular problem for Georgia. In reality
few producers pay the VAT tax. Most producers benefit from a threshold
application level of 24,000 lari per year. However, it is argued that
such a level acts as a disincentive to combine plots or farms and may
actually encourage farming at a sub-optimal scale. For those smaller
farms under the threshold using inputs there is also no means to reclaim
taxes on inputs so they may actually be paying more VAT taxes than
larger farms. Further, since little VAT is actually collected from the
sector, there is a question of whether it is worth the effort.

From the viewpoint of the Minister of Agriculture, the VAT on
agriculture has two other negative effects. Since neither Armenia nor
Azerbaijan apply such a tax, it puts Georgian production at a
disadvantage in regional and international markets i.e. Georgian
products will cost more to produce and may be non-competitive. In turn,
this makes Georgia less attractive as a place to invest than these other
countries, particularly since foreign investors would not fall under the
threshold and would probably not be able to avoid the tax.

From a cost of production and investment perspective, the Assessment
Team believes the VAT tax does have a disincentive effect. It may also
be more efficient and less distorting to replace it with an increase in
the land tax. At a minimum this issue needs further examination in light
of costs of collection, amounts actually collected, impact on tax
consistency and IMF agreements and the degree the VAT tax is an
important consideration in investment decisions.

> **C. Current and Upcoming Agricultural Sector Support Efforts**

1.  **Government of Georgia (GOG)**

The transition in the agricultural sector from a Soviet system that
relied on the Government to provide services of all kinds to a
market-driven model with a more limited state role is underway, but
incomplete. The Georgian Ministry of Agriculture (MOA) reportedly still
has over 4,000 employees.[^12] According to official data, dozens of
state organizations also remain functional. Far fewer actually operate.
Some of this array has been fully or partially privatized with the
remainder providing no, minimal or limited services. The Departments of
Amelioration and Water Economy and Veterinary Services appear to be the
most active.

General Government of Georgia budget constraints will make the
inauguration of any new agricultural sector initiatives difficult
without external support. There may be some savings from downsizing and
the possible privatization of MOA assets, but at least in the short-run
these are likely to be needed to pay for actual downsizing costs. The
MOA would like to embark on the establishment of an extension system,
but the Assessment Team is not convinced that this is the highest
priority. Such a system would certainly not be financially sustainable
in the short run.

One area where the MOA might be advised to devote some additional
resources is to the provision of market information. This is a
legitimate government function with important benefits to all segments
of the agricultural production and agricultural consuming/exporting
community. The Team would support a modest initiative in this area.

1.  **U.S. Assistance**

    0.  **a) Introduction**

Since the beginning of USAID assistance to Georgia in 1992, support to
the agricultural sector, excluding land reform, has been relatively
modest. Earliest assistance was largely in the context of humanitarian
aid and included provision of maize, wheat and potato seed, training and
farmer‑to‑farmer volunteers. Internally Displaced Persons (IDPs) and
small farmers in selected geographic areas were particular targets for
inputs, credit, training and technical assistance.[^13] A U.S. investor
in wine processing also received a small grant to cover a portion of the
technical assistance, management and initial operating costs involved in
the establishment of a joint venture.

More recently, agricultural sector specific assistance via humanitarian
and other USAID programs has been provided. Business development
programs have also begun to focus on the agricultural sector. The
currently on-going programs are described below.

> **b) Georgian Enterprise Support Project (GESP)**

The primary goal of GESP is to stimulate economic growth by improving
efficiency, enhancing production, improving market channels and
providing better access to capital for Georgian enterprises. Focused
primarily on providing assistance to small and medium enterprises
(SMEs), this three year project is being implemented by Sibley
International. The project is active in Tbilisi and has established
regional offices in Kutaisi and Telavi with a third location under
consideration. The current Project Activity Completion Date is February
2003.

Within the project four program areas are being emphasized. The first is
legal/regulatory reform. By supporting business advocacy groups, linking
advocacy groups to policy makers, expediting changes to appropriate
Georgian laws, promulgating and enforcing laws and regulations that
uphold shareholder rights and enacting the audit law, the Project seeks
to establish a better policy environment for business. The project will
also help create systems that can continue this process after project
completion.

The second emphasis area is developing the capacity in Business Support
Organizations to provide services for which the private sector will pay.
The project will also develop the market for such services by
establishing appropriate associations or other business groupings and
helping these groups and individual firms establish links with support
providers. This involves selecting entrepreneurial business service
providers, identifying suitable enterprises for assistance, helping
create market-demanded business services and building the capacity of
business service providers to deliver training and services.

Assisting firms with gaining access to capital is the third project
emphasis area. By supporting existing credit institutions, helping with
the privatization of some remaining enterprises and promoting corporate
governance and shareholders rights, the project expects to increase
loans and promote the use of the Georgia Stock Exchange as two sources
of capital.

Finally, the project supports a public education campaign to increase
public awareness of important private enterprise issues. Ensuring press
and media coverage, educating local officials, educating business owners
and managers and general public education are import aspects of this
component.

Though GESP does not specifically focus on the agricultural sector, the
Project has already helped establish a Wine Growers and Processors
Association in Eastern Georgia. They will be providing specialized
technical and business training to members of the organization.
Consideration is being given to helping establish a similar agribusiness
focused association in Kutaisi -- perhaps an association of agricultural
processors.

> **c) Seed Enterprise Enhancement and Development Project (SEED)**

Through funding provided to Agricultural Cooperative Development
International/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA),
USAID is supporting the development of the agricultural seed industry,
and the establishment and operation of agricultural production credit
associations. The seed industry assistance established a private seed
company (Horizon Ltd.) that is currently producing and marketing potato,
maize, wheat and sunflower seed. Production in CY 2000 totaled about 460
tons of seed with a target of over 700 tons in CY 2001. Limited
continuing assistance to the company aimed at increasing its financial
viability will end on September 30, 2001.

With USAID assistance, six production credit associations have been
successfully established in six regions by ACDI/VOCA and over
\$1,500,000 in loans is currently outstanding. The repayment rate is
almost 100 percent. USAID support for this activity via the SEED Project
ended on September 30, 2000. However, for the purpose of assisting
drought affected farmers additional USAID-supplied funding for the
credit program was provided in September 2000 via a sub-grant from Save
The Children. This grant will end September 30, 2001.

From July 1999 to September 30, 2000, the ACDI/VOCA program made almost
350 loans benefiting nearly 3,000 individuals. For these production and
processing loans, the interest rates averaged 18 percent with most loans
of one year or less but a few of up to three years. Loan sizes ranged
from a few hundred dollars to one loan to the Gori Fruit Farmers
Association of \$80,000. About 250 loans will be made in three regions
under the drought program at 18 percent for one year.

> **d) Ministry of Agriculture Restructuring**

The USAID Mission in Georgia currently supports an effort to restructure
the Georgian MOA. The MOA is structured, organized and staffed to
carryout Soviet style command and control activities throughout the
agricultural sector. Severe budget constraints over the past several
years have resulted in some down-sizing (recently another 10 percent) in
the MOA and many previous functions and activities are no longer being
carried out. However, an inappropriate structure remains, overstaffing
continues, and clear lines of responsibility, transparent practices, and
fund accountability are lacking.

The new Minister of Agriculture is determined to privatize many of the
functions that are a carry-over from the Soviet era. These include the
operation of state farms for various purposes (livestock breeding, seed
production, etc), the provision of equipment and services, the conduct
of a full range of research and marketing services, and rural community
support. This implies further down-sizing of the MOA in terms of
personnel, assumed responsibilities and budget, as well as restructuring
to enable the MOA to implement policy-making, regulatory, monitoring and
other appropriate responsibilities effectively.

The MOA restructuring project was developed in response to a direct
request from the Minister for assistance in this effort. The project was
designed for implementation in two phases - a 3-4 month initial phase
for assessment and plan development, and an implementation phase that
could last up to one year. The project team consists of one expatriate
senior resident advisor and a small Georgian professional and
administrative staff. Short-term expatriate specialists in agricultural
administration and other topics will be brought in as necessary. Phase I
began on February 5, 2001.

The resident advisor will be a liaison to other donors such as World
Bank and EU. The World Bank has expressed interest in funding activities
that will coordinate with and support the USAID restructuring effort.
They intend to fund an inventory/audit of MOA assets, the salaries of a
small policy staff to advise the Minister, and possibly some training
for re-assigned MOA staff. The EU has been supporting the MOA
operational budget and has already begun work on restructuring
activities.

The beginning of the MOA restructuring project has coincided well with
the completion of the Barents Group review of the MOA's expenditures
under the auspices of the USAID fiscal reform project. This review
provides an excellent starting point for the restructuring effort by
providing an initial overview of department functions, assets, budgets
and expenditures. The restructuring project will also be able to utilize
the program capacity of the Overseas Consulting Services to conduct the
necessary public relations for the MOA. The Minister has already
received assistance in conducting public meetings regarding changes in
tax policy. [^14]

> **e) Land Market Development**

USAID/Georgia has made a significant contribution to enabling the policy
and business environment through its support to the land market
development project. Work on this project was completed under two
successive task orders with Booz, Allen Hamilton (BAH) from late 1997 to
fall 2000. Working in 38 of the 65 raions, the land market project
surveyed, registered and titled over 1.2 million agricultural parcels.
The project also assisted in the privatization of enterprise land for
approximately 6,500 of the estimated 10,000 privatized and newly-formed
private enterprises throughout Georgia. Of the remaining enterprises,
many are not operating or viable and therefore do not have the resources
of incentive to privatize their land. The land project team estimates
that fewer than 2 million agricultural parcels still need to be titled
and registered.

In order to enable development of the land market, the land team
identified technical and bureaucratic impediments to land titling,
registration and the full range of private ownership. In addressing
these impediments, the team used various methods, including public
education efforts; training for staff of State Department of Land
Management (SDLM); establishment and training of surveyor-subcontractors
and real estate agents and advising key officials in the Georgian
Parliament and Chancellery on land policy. To promote the longer term
sustainability of land market institutions, the project supported the
establishment of 35 independent surveying companies with approximately
1,200 contractors and 5 independent real estate companies with
approximately 75 contractors. The team's real estate contractors
facilitate and track secondary transactions---sales and leasing---of
both agricultural and enterprise land. The project also supported the
development of a Georgian NGO---the Association for the Protection of
Landowners' Rights (APLR). The relationship between the BAH land project
team and APLR was symbiotic, and by summer 2000 responsibility for many
activities, such as public advocacy and education, had been transferred
to APLR.

The last task order with BAH ended in fall 2000. USAID/Georgia decided
to continue its support of land market development, but using a
different approach and contracting mechanism. The Mission decided that
APLR had achieved a sufficient level of technical proficiency be the
primary implementer of the land market project. APLR, however, is not
evolved enough organizationally to receive a grant directly from USAID.
To address this weakness, the Mission considered a model by which a
Western NGO would provide financial oversight to APLR, as well as assist
in the development of professional associations and an umbrella SRO
associated with land issues. Terra Institute, an American NGO that
specialized in land tenure issues, submitted a proposal that meets the
needs of the Mission from a technical perspective. Complications with
contracting have delayed in the finalization of the new Cooperative
Agreement, however, and this has led to the cessation of work on titling
and registration. While a short-term purchase order with APLR has
enabled retention of the core land team, the cessation of subcontracting
work puts the completion of this highly successful project at risk.

> **f) Humanitarian and Other Programs**

Under both its economic reform and its humanitarian response programs,
USAID/Georgia has been managing a series of US dollar and local currency
grants to a wide range of non‑profit agencies. Several of these programs
provide credit and business advisory services to micro, small and medium
scale entrepreneurs and farmers throughout Georgia. Others provide
extension information to specific groups in targeted geographic areas,
while a number or grantees have been actively engaged in seed and credit
provision as part of drought relief efforts. There are currently many
such initiatives under way. Implementers include: ACDI/VOCA, SCF (Save
the Children Federation), IOCC (International Orthodox Christian
Charities), UMCOR (United Methodist Committee on Relief), World Vision,
IFRC (Red Cross), CARE (Council for Assistance and Relief Everywhere),
IRC (International Rescue Committee), Shore Bank, FINCA (Foundation for
International Community Assistance), Constanta (Save the Children), and
ADRA (Adventist Development and Relief Agency).

The degree to which these organizations work in the agricultural sector
varies greatly. ACDI/VOCA, IRC, UMCOR, CARE, and IOCC have specific
agricultural assistance activities. All are focused geographically
within Georgia and on identified communities in their selected regions.
The other organizations may reach agricultural producers with small
amounts of credit or sub-elements of their programs dealing with food
security, community development, income-generating activities, etc.
Because some activities in these areas will undoubtedly be continued and
are largely developmental in nature, it will be important for
USAID/Tbilisi to ensure that there is coordination between any
larger-scale agricultural activity that might be undertaken and these
other NGO-implemented activities. Possible linkages with these
activities if a larger scale agricultural program were undertaken will
be discussed as part of the options section below.

> **3. Other Donors**
>
> **a) Introduction**

A number of other donors, including the World Bank, EU-TACIS, the
British DFID, IFC, Germany, the European Commission, Japan and the Dutch
also provide assistance in the agricultural sector. The European
Commission, EU-TACIS, Japan and the World Bank have been the most
active.

> **b) The World Bank**

Through the \$26.8 million Agricultural Development Project the World
Bank is currently involved, in cooperation with the International Fund
for Agricultural Development (IFAD), in providing financial support for
credit unions (\$6.5 million) and in financing land registration in two
raions (\$6.0 million). The Project also includes supplying credit
through Georgian Banks for agro-processing (\$10.4 million) and in
miscellaneous activities including training, project preparation and
small farmer activities (\$3.9 million). Another \$7.0 million is being
provided under a competitive grants program for applied research and
extension, and training. A new irrigation and drainage project is under
appraisal. The first phase of four years will cost between \$14-20
million. Implementation could start as soon as January, 2002 or, if the
project is not submitted to the World Bank Board before June 30, 2001,
it may be delayed until 2003 or even later because of other
(non-agricultural) projects in the pipeline.

The World Bank is also interested in funding activities that will
contribute to the restructuring of the MOA. They expect to fund an audit
for the MOA shortly, follow that with an inventory of MOA property, and
are seeking to provide two years of funding (approximately \$300,000)
for a policy reform advisory unit in the MOA.

> **c) EU-TACIS**

At an earlier stage EU-TACIS funded numerous programs focused on the
agricultural sector. These included programs to establish four regional
agribusiness training and consultancy centers, the utilization of
monetized food aid for agricultural credit through Georgian Banks,
regional agricultural reform and training and short-term technical
assistance to specific enterprises. These activities have all ended.

Currently, EU-TACIS is supporting the Georgian Export Promotion Agency
(GEPA) which includes agricultural products in its program of
assistance. GEPA provides export information, training, market profiles,
supports exhibitions overseas, organizes overseas study tours, publishes
a newsletter, operates a website and has published a directory of
exporters. They have also helped form an Association of Georgian
Exporters.

Some reflows from the monetized food aid mentioned above (about \$7.0
million) have also been used to capitalize the AgroBusiness Bank that is
now operating in Tbilisi with branches in Gori , Tsnori, Telavi and
Marneuli. The main functions of the bank are to provide credit in
various forms to the agricultural sector and to accept deposits. The
Bank eventually plans to have 25 branches throughout Georgia. Over the
past 12 months they have made over 160 loans totaling \$2.8 million to
including agricultural producers, processors and retailers/traders.

> **d) European Commission**

The European Commission\'s Food Security Program in Georgia is the
largest program of donor assistance to Georgian agriculture. The program
funds most of the MOA operational budget, excluding salaries and social
costs, on a reimbursement basis. Disbursements of funds are conditioned
on the fulfillment of an agreed upon set of conditions. The program
started in 1996 and was originally budgeted at about \$15 million per
year for four years. However, actual reimbursements have been lower. A
decision on whether or not to continue the program will be made later
this year.

Under the program a technical advisor has set up a budgeting system for
the MOA and has recently established a monitoring unit. He is also
engaged in some MOA restructuring activities as part of the
conditionality for disbursements.

> **e) Germany**

In years past Germany through GTZ and KfW provided a considerable amount
of assistance to the agricultural sector. These included activities in
seed supply, technical assistance, farmer organization development,
credit lines for privatized enterprises and training. However, nearly
all of these activities have been completed with only an activity in
cadastral system development and land management continuing.

> **f) Japan**

Since 1997 Japan has provided about \$9.1 million in grants to Georgia
for fertilizer, agricultural machinery and related transportation costs.
With these funds over 100 combine harvesters, 75 tractors and 7,300
metric tons of fertilizer have been imported.

> **g) Other**

IFAD, the FAO, The Netherlands, the United Nations World Food Program
(WFP) and the United Nations Development Program (UNDP) also provide
assistance directly or indirectly to the agricultural sector. As
indicated above, IFAD has supported credit union development and land
registration in collaboration with World Bank. They will soon begin
implementing a project focused on the development of mountainous regions
in Georgia. The Netherlands has supported dairy development in a
highland area of Imereti Region and the development of a potato seed
enterprise in Bolnisi. The FAO has provided technical assistance and/or
training in a number of areas such as seed protection, grasshopper
control, agricultural training, food security and viticulture
rehabilitation. The WFP has supported several food for work programs
that targeted irrigation canals, rehabilitation of tea and citrus
plantations, land reclamation, drainage and feeder road rehabilitation.
UNDP has provided support to the Georgia Investment Center (GIC). This
project, however will be transferred to EU/Tacis next year. The GIC has
already begun working collaboratively with the EU/Tacis-supported
Georgian Export Promotion Agency, described above.

### Assistance Options

In this section, three agricultural sector assistance options are
outlined. They represent what the Assessment Team believes are real
alternatives along a spectrum of possibilities. For analytic and clarity
purposes each is presented as a "stand-alone" option, although numerous
permutations are clearly possible. The Assessment Team also considered
numerous other alternatives before deciding on those presented below.

**A. No Additional Assistance (NAA)**

The NAA option is in effect a holding action that postpones any expanded
agricultural sector assistance efforts. Under this alternative, the
ACDI/VOCA SEED and Credit programs would end September 30, 2001 as
currently scheduled. Humanitarian programs focused on agricultural
development, such as the UMCOR Agricultural Development Activity in West
Georgia and the IOCC Credit Program in Eastern Georgia, would continue
as would on-going activities under GESP that include or specifically
target the agricultural sector. The work underway related to
restructuring of the MOA and the planned support for land market
development would also continue, but no new initiative expanding the
level of support for the agricultural sector would be initiated.

The Team identified four reasons Mission management might conclude that
this is the best current option. The first would be a judgement that the
current program of USAID assistance to the agricultural sector is
sufficient given budget constraints and in recognition of competing
demands for resources. A second reason would be the belief that reform
of the policy environment necessary for meaningful agricultural business
development to occur is not yet completed. Third, would be the
conclusion that other donors are providing assistance to address
constraints to agricultural sector growth with no unfulfilled need for
additional assistance to the sector. Finally, a new activity would add a
new management unit at a time when the Mission wants to reduce
management units.

While there may be validity to some of these points, the Team found
compelling evidence that counters these arguments and supports greater
engagement by the Mission at this time.

First, considering the Mission's objective of assisting the private
sector, the current level of USAID assistance does not represent a
program of support commensurate with the importance of
agriculture/agribusiness to the Georgian private sector now and in the
near future. Nor does it capitalize on the potential of the
agricultural/agribusiness sector to be an engine for broader economic
growth and as an effective means of having people level impact. Further,
many of the current agricultural sector assistance activities (i.e.,
ACDI/VOCA and drought relief activities) are soon ending. Design of a
new activity needs to be begun soon in order to avoid a significant gap
in USAID assistance to the sector. If the USAID/Tbilisi waits for
programming directions to be indicated by its MOA restructuring project
or GESP, the Mission runs the risk of losing credibility when it
expresses an intent/interest in supporting agricultural/agribusiness
sector development.

Second, there are indications that the current policy and economic
environment will support expanded business activity. In many instances,
people have found ways around tax, customs and other administrative
constraints, and are initiating successful business activities. The
emerging private sector entrepreneurs in the agricultural/agribusiness
sector are setting an example for their neighbors and fellow
businessmen. These entrepreneurs should be assisted in these efforts for
growth reasons and to increase the input/impact they can have in
influencing policy change. Also, for USAID and other donors, active
engagement with enterprises can often be one of the best ways to
understand the nature and extent of the problems constraining business
activity, particularly at the local level but also at the national
level. This understanding, in turn, can further inform the Mission's
other policy reform efforts.

Third, serious gaps still remain in the donor assistance directed at key
constraints in the sector. USAID and other donor programs have made a
significant contribution to improving the policy and economic
environment in which agricultural sector development will take place.
However, completed and current programs do not adequately address the
range of constraints that limit growth in the agricultural sector. Many
are short-term or narrowly focused. They are not comprehensive and most
are not focused on meeting private sector needs.

Further, the recent World Bank Agricultural Sector Update identifies
exports as the most likely source of increased demand for agricultural
products and therefore a key driver for broader economic growth. A
successful export-oriented development strategy, however, will be
dependent on the Georgian agricultural sector's ability to produce and
market high quality, well-packaged goods that meet international
standards. At the moment, no donor program is focused on agricultural
market development, food safety and standards, or commodity packing and
processing, all critical elements in being able to export value-added
agricultural products.

Finally, following an NAA strategy reduces the role USAID/Tbilisi could
play in facilitating private sector initiatives to overcome barriers to
production, trade and investment, and takes away a significant portion
of the leadership USAID might provide. It also does not recognize that
the agriculture/agribusiness sector is an effective means of achieving
people-level impact - something the Mission has indicated should be a
priority for new activities.

**B. Targeted Infrastructure and Services (TIS)**

A second option that USAID/Tbilisi might reasonably consider would be to
continue the on-going agricultural sector activities outlined above and
to provide additional resources to a recent, current or planned
agricultural sector related activity in the USAID/Georgia or other donor
portfolio. For example, additional support to the ACDI/VOCA Seed
Development and Credit Activity could be provided. Limited additional
support for one-two years would allow an expansion of geographic area or
sub-sector coverage. An extension to this activity would also allow more
time for institutional development and establishment of the credit
associations, which would increase the likelihood of the associations'
sustainability. Another program that might be built upon is the very
effective irrigation rehabilitation activity undertaken in three
districts of Georgia by CARE. Since the model has been developed, it
should be fairly simple to expand the program to new districts and
regions. Such assistance would address, at least on a limited scale, the
serious problems associated with the deteriorating irrigation system.
The Mission could also choose to reorient or expand current programs to
better promote agricultural development. For example, GESP could be
asked to concentrate their business and associations development
assistance on agriculture.

Other bi-lateral or multi-lateral organizations such as the World Bank
would probably also welcome the addition of USAID grant funds to support
some of their activities. For example, if the planned WB irrigation
project is undertaken, on a parallel basis USAID funds could be added
and used for the development of water user associations and other
technical assistance. Similarly, USAID funds could be used to accelerate
or expand WB efforts to restructure the agricultural research and
extension system in Georgia.

The rationale for the TIS approach is that it builds on existing
knowledge and experience, and potentially provides quick and tangible
impacts on rural residents. Such an approach could be expected to
address at least one concrete constraint to longer-term agricultural
development. TIS would also be fairly easy to establish and manage since
existing implementers would be used and a new management unit would not
be necessary. Finally, such a program could be tailored to the amount of
funding available. Certainly this option could provide needed and
helpful assistance to the agricultural sector.

The Assessment Team does not recommend this approach, however, for
several reasons.

First, the TIS option is largely reactive rather than proactive, in that
any program would be built around what other assistance implementers are
already doing rather than on a strategic approach to promoting growth in
the sector. It does not offer very much opportunity to be innovative and
almost certainly limits USAID involvement to a smaller range of
alternative assistance activities. Nor does the option necessarily take
significant advantage of USAID knowledge and experience. USAID in effect
relinquishes leadership in promoting development of the sector. [^15]

Second, the selective and limited nature of this option would not
address the constraints to agricultural sector growth on any kind of an
integrated basis. Even if several elements are supported, the TIS option
is not comprehensive but a piecemeal approach. It would only support
selected elements of what is needed to improve sector performance rather
than attempting to simultaneously reform and develop several elements of
agricultural/agribusiness sector. Synergies and complimentarities would
be reduced.

Third, if programming is accomplished through existing NGOs, targets and
expectations for activity impacts would probably be limited to a
regional or restricted geographic area rather than a national level
since that is where they are working. Certainly assistance at this level
is important, but a program that uses activities with local level impact
to provide input into national level policy reform would seem to be more
effective. In this way, the project contributes more broadly to
USAID/Tbilisi's efforts to shape national policy reform and to develop,
demonstrate and apply broader development models.

Fourth, \"buying into\" activities led by other donors such as the World
Bank is often fraught with delays, requiring extensive negotiation and
management to ensure that USAID development objectives are met.
Developing water user associations for the World Bank\'s irrigation
project means waiting until the infrastructure work has been started,
but the project itself is at risk of being delayed by a year or two. The
objectives of the WB agricultural research and extension program may not
be fully consistent with USAID/Georgia objectives in assisting the
downsizing of the MOA.

Finally, the TIS option really does not build on the improved policy
environment that the Assessment Team believes exists and that will
permit the effective use of additional resources. Nor will TIS,
depending on the activity supported, necessarily reinforce or inform
further policy work.

**C. Value-Added Enterprise Growth (VAEG)**

Another programming option that was considered was the development of a
new activity to support agricultural sector development. While
acknowledging that further policy reform needs to take place, this
program approach would not wait for completion of all policy work or
perfection of the business climate before engaging with the enterprises.
Instead, it utilizes engagement at the enterprise level to inform and
leverage further policy reform.

The primary target for the assistance would be the agricultural
value-added packer/processor system and the upward and downward linkages
critical to the system\'s success. Such a multi‑level approach
recognizes that improving any single element of the
agricultural/agribusiness system often requires parallel improvements in
other elements. The objective is to help create product to market
systems that will increase demand for agricultural commodities and
increase the return on those commodities through value-adding
activities. These systems facilitate the flow of information, financing
(i.e., credit, payments, etc) and product between producers, producer
associations, value-adding packers/processors and consumers.

This option has three advantages. First, the approach takes an
integrated approach in dealing with constraints facing agricultural
sector growth of specific products or groups of products. In so doing it
recognizes the inter-related nature of the value-added, input and output
market constraints of the agricultural/agribusiness system and enables a
coordinated effort with activities to bolster competitiveness and the
systems needed to maintain competitiveness. It acknowledges that
assisting agricultural producers increase output through new technology,
training or increased input-use only makes sense if markets for the
agricultural output exist, i.e. Georgia is competitive. Moreover, it
helps make the processing industries more attractive to investors since
problems of an adequate supply of high quality raw materials along with
needed systems to support and facilitate market access are addressed.

Second, it removes as a constraint the limited size of the Georgia
market for agricultural and food commodities/ products. The domestic
market alone can only absorb limited quantities of value-added products
and will therefore not support very much growth in output. At the same
time, Georgia\'s geographic location at some distance from most larger
markets, and the higher transportation costs implied, make products with
considerable value-added more attractive. The VAEG option recognizes
these realities and emphasizes assistance activities that will boost
exports of value-added products with more limited attention to import
substitution products such as milk or eggs or livestock feed enhancing
products such as soy meal.

Third, the option builds on U.S. expertise and the comparative advantage
this gives USAID in providing assistance in this area. The U.S. has the
full range of experience needed to succeed with assistance to
agricultural value-added activities and in developing the systems that
are part of such systems. As the world\'s largest agricultural exporter
with the lowest domestic food prices of all OECD countries, the U.S.
agricultural system produces cheaply and knows how to supply export
demand. The support system of private agricultural organizations in the
U.S. - including producer associations, credit institutions, processor
associations, grades and standards monitoring groups, trade development
bodies - that facilitate production and exports is also unmatched around
the world. This option would make use of this expertise and
organizations that have already successfully transferred this experience
in developing associations, establishing grades and standards
mechanisms, and building markets to other countries of E&E.

Disadvantages of this option vis-à-vis other alternatives are the likely
higher cost, the higher management demands and remaining uncertainties
over Georgia\'s ability to be competitive in world markets. The Mission
may also see such an integrated approach to mitigating constraints as
too broad or consuming of limited resources. However, the team believes
that important synergies could be cultivated between a well-designed
VAEG project and ongoing projects in the USAID and other donor
portfolios. Moreover, a phased implementation approach would mitigate
some of the possible risks inherent in the option.

### Recommendation

A.  **Introduction**

Based on the information collected, an assessment of the pros and cons
of the alternatives and informed judgements on what can be achieved, the
Assessment Team recommends the VAEG option.

Summarizing from the discussion above, such a programming alternative
would entail targeted assistance to agricultural processors and other
enterprises that carryout value-adding activities such as sorting,
grading, packaging and marketing produce and assistance in establishing
the institutional and support systems needed to make the
processors/enterprises competitive. It would facilitate the development
of upstream linkages between processors/value-adders and producers and
downstream links between processors/value-adders and potential markets.
Through this systems approach, primary constraints to agricultural
sector development, namely insufficient demand (both export and domestic
markets) for agricultural produce and lack of credit or working capital
for producers would be addressed. While the primary focus would be on
export market development, opportunities for increasing the share of
Georgian products on their own domestic market would also be explored.

The goals of such a project would be twofold. First, to increase market
demand in Georgia for agricultural produce by facilitating links between
producers and processors/value-adders and by increasing marketing
opportunities for agricultural products. Second, to increase incomes and
the agriculture/agribusiness sector\'s contribution to broader economic
growth by expanding the percent of agricultural products that enters the
marketed, value-added agricultural sector. By focusing the assistance on
value-adding enterprises and associations, a VAEG program actually
expands the potential impact of programming assistance on small
agricultural producers. With increased market opportunity, many of these
small producers will be able to move past subsistence level production
and may even grow in such a way that promotes further land market and
agricultural sector development. Moreover, by increasing the quality and
value of agricultural produce that is marketed, the VAEG has a greater
impact on contribution to economic growth and rural incomes.

Success of a VAEG would be measured by increases in marketed, higher
value production of targeted commodities/products and by the development
of profitable and sustainable enterprises and business groupings such as
farmer/processor associations. The focus of the assistance is not on the
establishment of sustainable public or private institution to continue
the assistance activities, but to provide a timely and necessary
infusion of support to private sector business initiatives. However,
sustainability does require systems to ensure quality, food safety,
etc., and this may require the formation of new institutions or
self-regulating organizations.

Below, the elements of a possible VAEG program are explored in greater
detail. The discussion provides further context for such a program,
suggests options for implementing VAEG-type programs at different
funding levels and shows possible synergies with existing USAID and
other donor programs.

B.  **VAEG Program Elements**

***Focus on Value-Added Enterprise Growth***

The recommended VAEG option is an activity focused at value-adding
levels of the agricultural system for selected commodities/products for
which a specific market has been identified. The approach builds on the
already demonstrated supply response in Georgia whereby production
follows demand. It is a demand-pull rather than a supply-push approach.
In order to expand the marketing options available to producers, and
thus increase demand for agricultural products, the assistance will
focus on value-adding enterprises and associations. Enterprises and
associations will be considered value-adding if they engage in
processing, sorting, grading, packaging and/or other such activities or
services that increase the price that consumers are willing to pay for
particular products.

***Export vs. Domestic Market Focus***

The domestic market is small, both in terms of numbers of people, and in
buying power. Therefore, the primary focus of the program should be on
the development of enterprises that process or otherwise package and
market agricultural commodities outside Georgia\'s borders. An important
selection criterion for firms and/or products for assistance would be
that effective marketing and not absolute demand volume is the
constraint to effective and expanded operations. Though the primary
focus of the assistance program would be the development of markets for
export-oriented agricultural products, there are some commodities that
may be promoted for their import substitution potential. These
commodities include feed grains, oilseeds, high value fruits and
vegetable, dairy and eggs.

***Illustrative Activities***

The components of a VAEG activity would have to be developed during
actual project design. The number and breadth of activities included
would vary depending on the funding level for the project. Adjustments
could also be made to project activities depending on the status of
USAID and other donor projects at the time of project design. Below,
however, is a list of illustrative project activities.

-   Develop producer associations and value-adding enterprise
    associations;

-   Identify potential markets and niche commodities;

-   Provide training and consultation on food quality and safety
    standards, including information on brand development and product
    design, equipment needs, production techniques/efficiency and
    packaging;

-   Develop ability of Georgian enterprises to meet ISO 9000 and HACCP
    standards;

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-   Manage a loan fund that will facilitate enterprise development
    suggested in consultations, or facilitate producer/processor
    linkages;

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-   Develop credit and contractual mechanisms that facilitate
    credit/product/payment flows between producers and value-adding
    enterprises;

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-   Develop prototype for market information system that includes price
    information and situation outlooks. (It is advised that this
    component could be transferred to a restructured MOA.)

C.  **Market-Niche Focus**

For reasons outlined earlier, priority VAEG attention should be on
labor-intensive, high-value agriculture. Given the weak level of
domestic demand, this implies a focus on fruits, vegetables, herbs,
flowers, and other specialty niche crops, primarily for the export
market. In addition, the selection of more extensive crops for attention
may be appropriate in some regions where the conditions do not favor the
high value crops, and where competitive prices for domestic goods can
lead to adequate demand from import substitution.

Georgia produces a number of agricultural commodities/products that have
been able to penetrate various international markets. These include
wine, tea, hazelnuts, fruits and processed juices for markets in Western
Europe, Eastern Europe and the CIS countries. As the trade data
indicates, however, the volumes and values have generally been small. At
the same time, the domestic market in terms of population and buying
power is too small to absorb the quantities necessary to achieve
scale-of-production economies and benefits. The issue is how best to
direct limited resources to buttress and expand revival in the sector.

Locating markets will not be simple. There is no agricultural commodity
that is not provided on the international market by some other supplier
from some other country. Therefore, Georgian products will have to find
their niche among other competitors. To find the niches means satisfying
world quality and health standards and locating market windows not met
by other suppliers of a particular commodity or product. In turn,
meeting world standards requires understanding what buyers in a target
market really want, growing the right varieties, packing them properly,
and getting them to markets in a very timely and efficient manner.

Marketing is easier for storable commodities like hazelnuts, than for
perishable products like flowers or strawberries. Converting perishables
into more storable products also facilitates marketing. For example,
apples, peaches, pears and other fruits can be processed into preserves
and juices. Several Georgia processors have begun to target the large
global market for apple juice concentrate. International beverage
companies like Ocean Spray, Very Fine and Minute Maid, as wells as firms
in Europe and Asia, are seeking new, reliable suppliers of various juice
concentrates to meet growing demand. If the Georgian producer/processor
can identify commodities for which both fresh and processed markets
exist this will reduce their risk in the market place. A full
exploration of all commodities/products in which Georgia is or might be
competitive is beyond the scope of this paper. Such an examination of
the possibilities would be designed into the first stage of a VAEG
project in order to inform the selection of sub-sectors for priority
assistance. That said, there are several commodities that are likely
candidates. Information on these commodities and their potential for
contributing to agricultural sector growth is explored briefly below.

-   World tea production levels in 1998 were at 2,962,600 metric tons or
    nearly 296,000 metric ton more than in 1997, the highest world
    production in the last decade. In 1999 tea supply moved well ahead
    of demand for the first time since 1993 with the normally expected
    impact on prices. In early 2001, it appeared that the emphasis had
    shifted and demand rather than supply seems to be driving the
    market. However, there is no shortage of tea and the current
    situation could quickly change again. The leading export countries
    are Sri Lanka, Kenya, India, and China. Large importers are United
    Kingdom, United States, and Russia.

> In 1999, Georgia tea production was 60,000 metric tons, or about 2
> percent of world production. The Georgian tea industry is also nearly
> 50 percent controlled by Martin Bauer giving the industry a mechanism
> for entry into the world market. Quality is adequate. However, Georgia
> is a relatively high-cost producer and low-priced imports reduce
> domestic demand. Given these realities, tea is not likely to be a high
> priority sector for USAID assistance.

-   Hazelnut production in major producing countries in 1999/2000 was
    about 770,000 metric tons. Marginal production decreases in Turkey
    and Italy, the world's first and second largest producers
    respectively, did not offset significant production increases in
    Spain and the United States. Total hazelnut supplies increased 15
    percent from the 1998/1999 season, mainly due to carryover stocks.
    These large carryover stocks have put downward pressure on prices.
    To remove some of the downward pressure the Turkish group
    FISKOBIRLIK is planning to crush for oil much of the stocks they
    hold, rather than sell them as kernels. Total exports in 1999/2000
    were about 465,000 metric tons, due to expanded exports from all
    countries accept Italy. Turkey is by far the leading exporter with
    400,000 metric tons, followed by Italy. Eighty percent of the
    Turkish exports go to the EU, the largest import group of countries.
    Efforts are underway to expand exports to Asia and FSU countries.

> Hazelnuts can seemingly be grown competitively in Georgia and for
> Georgia in recent years, hazelnuts have become a very significant
> agricultural export - ranking first or second in value. According to
> official statistics, 1999 hazelnut production in Georgia was 17,000
> metric tons, or about 2 percent of the production by major production
> countries. In CY 2000 Georgian hazelnut exports were reportedly valued
> to at \$15.5 million (about 10,000 metric tons). Thus, while Georgia
> is not a large player in the industry, there may be niches in world
> markets either selling directly to selected small traders or via
> contract arrangements with large buyers. Also, being next door to the
> world\'s largest producer and exporter of hazelnuts (Turkey), Georgia
> should be able to build strong business relationships in this sector.
>
> Because of their storable nature and Georgia\'s apparent competitive
> advantage in production, hazelnuts appear to be a good product for
> Georgia at this time and one that should be considered for support
> from USAID programs in the agricultural/ agribusiness sector.

-   Worldwide table grape production in 1998 was dominated by Turkey\'s
    3.7 million metric tons, followed by Italy, with 1.55 million metric
    tons. Other major Northern Hemisphere producers are the US (750,000
    metric tons), Spain, (350,000 metric tons), Greece, (304,000 metric
    tons), Japan, (246,700 metric tons), Mexico, (117,000 metric tons),
    and France, (107,000 metric tons). Significant Southern Hemisphere
    producers are Chile (850,000 metric tons), Republic of South Africa
    (165,000 metric tons) and Argentina (110,000 metric tons). Table
    grape exports from key Northern Hemisphere countries in 1998 were
    1.15 million metric tons, 3 percent above 1997 shipments. Exports
    from Southern Hemisphere countries were just over 600,000 metric
    tons in 1998, and the leading export country was Chile with 80
    percent of the total. The leading importing country is the US
    followed by countries of the EU - France, Germany, and the United
    Kingdom.

> Only small quantities of table grapes are produced in Georgia, almost
> all for domestic consumption. On a larger international scale, table
> grapes would be a new product area where Georgia may be able
> participate, particularly if Thompson Seedless, Flames, and other
> leading seedless varieties can be grafted to existing Georgian
> rootstock. Georgia will not likely become a major player in the table
> grape sub-sector, but the country does have good potential for
> producing the crop. With markets to the north (Russia, Ukraine, other
> former FSU countries), west (Western and Central Europe), and east
> (China), Georgia should be able to sell much of whatever quantities
> can be produced. This is particularly true if Georgia's window of
> opportunity comes when other suppliers are absent. Georgia has
> established a good reputation for its fruit crops and should be able
> to build on this reputation.
>
> This is a crop that likely should be considered for support under a
> USAID program in the agricultural/agribusiness sector.

-   In March 2000 projections indicated that worldwide wine production
    was likely to outstrip demand during the next five years, forcing
    down prices and increasing competition for the various world
    producers. The market for ordinary table wines is loosing ground to
    higher quality wines, and the production of everyday wines is large.
    Market growth in red wines also tends to be stronger than growth in
    white wines.

> Wine production in 1999 in the leading Northern Hemisphere producer
> countries of France, Italy, Spain, Portugal and the United States was
> 170 million hectoliters. France maintained its position as the world's
> largest wine producer with 62 million hectoliters followed by Italy
> with 57 million hectoliters, Spain with 33 million hectoliters and
> Portugal with 5 million hectoliters. The United States produced 21
> million hectoliters. Exports from these countries were about 50
> million hectoliters. Southern Hemisphere wine production in the
> leading producer countries of Argentina, Australia, Chile, and South
> Africa was 37 million hectoliters in 1999. Exports from these
> countries were 7.4 million hectoliters.
>
> Georgia\'s current wine production is less than 500,000 hectoliters,
> with exports of less than 50 percent of that level. The largest
> markets remain in the countries of the former FSU although small
> quantities are reaching Western European and even the U.S. market.
>
> A CERMA review of the Georgian wine industry indicated it was unlikely
> that Georgia can develop a competitive advantage over established
> exporting countries for the production and processing of international
> grape varieties (Chardonnay, Cabernet, Sauvignon, Pinot Noir, and the
> like).[^16] Georgia may be able to develop a more unique competitive
> advantage from wines made to "international standards" from typical
> Georgian or Caucasian varieties, such as saperavi.
>
> The Assessment Team agrees with the CERMA analysis, a national vine
> rehabilitation strategy should be oriented toward production of
> high-quality/high-value grapes that are in demand. Careful market
> analysis needs to be undertaken as part of any wine production
> strategy.
>
> Note: Wine may be a sensitive area for USAID to promote as legislative
> restrictions may apply, but it is a potentially profitable value-added
> crop.

As illustrated above, for a few high-value commodities that Georgia
produces, there may be windows of opportunity for value-added products.
More work to identify specific markets and to implement production and
packing/processing of the high value niche commodities that will grow
well in Georgia is needed. This work should be designed into the initial
stage of any VAEG project.

D.  **Implementation Funding Options**

Recognizing that USAID/Tbilisi may face funding constraints, the
following funding alternatives are briefly discussed.

**1.** **\$3.0 Million/Year for Three Years**

This is the recommended funding option. The proposed level of funding
would allow a range of value-adding activities aimed at boosting exports
or domestic consumption of several competitive commodities/products. It
also covers a period of time sufficiently long to allow multi-tiered
activities to be developed and implemented that can demonstrate
measurable results.

In input terms, a minimum of three person years (long term) of
expatriate advisors per year with expertise in market development,
value-added processing and credit/finance is recommended. These advisors
would work out of offices in Tbilisi and two regions staffed with
appropriate local staff. A modest amount of capital for a loan fund
specifically targeting value added activities should be provided.
Supplementing these resources would be a short-term technical assistance
and training element to leverage and support lending to value-adding
organizations by the financial component of this project and other
financing organizations such as AgroBusiness Bank and/or ACDI/VOCA. Such
a component would also provide short-term technical experts who would
address problems that may constrain the production, processing and
marketing of targeted commodities/products.

Because markets are dynamic and constantly changing, it is suggested
that a final decision on commodities/products and markets to be targeted
should be a first priority of the project implementation team. However,
it is also suggested that fruits/vegetables, hazelnuts, wine and other
specialty crops are the most likely export candidates with oilseeds and
livestock feed crops the most probable domestic market commodities.
While USAID should have a preference for working with associations to
maximize the spread of benefits and efficiency in providing assistance,
firm-level assistance in promising commodity/product areas should also
be acceptable.

Within three months of arrival of the technical assistance team, the
first targeted market/ competitive opportunities should be identified.
The selection should be closely linked with work underway through GEPA,
the USAID GEMA Project, ACDI/VOCA and local financing institutions. It
must also take into account the capabilities of local value-adding
groups to meet those markets. The selection may be based on new market
research or the confirmation of existing market research conducted by an
individual company or association or another donor-assisted organization
such as GEPA.

Once a market for a cost competitive product is identified, a
comprehensive approach to meeting the needs of that market and Georgian
value-adding organizations should be developed. Within six months a
second targeted market/competitive opportunity should be launched with a
target of adding two more target launchings in the second year of the
project.

> **2. \$2.0 Million/Year for Three Years**

Under this intermediate option, a modest but effective program could be
undertaken. Decisions would need to be taken at the design stage on
whether financing or technical assistance should be emphasized. The
Assessment Team would recommend that roughly two-thirds of the funding
be set aside to provide technical assistance, market investigation and
training services. The remaining one-third would be used for lending to
organizations providing value-added services. In this option, three
person years of short and long-term advisory assistance is envisioned
along with a greater emphasis on marketing studies.

In conclusion, the exact detail of the project content would be spelled
out during final design of the project. It is important that the final
design be oriented toward a proper balance between the long and short
term expatriate assistance and the effective financial and business
support of the target client value-adding organizations.

**3. \$1.0 Million/Year for Three Years**

While this minimal level funding alternative would not allow a
comprehensive or integrated program of support to value-adding
organizations, it could be used as a bridge or pilot program. The focus
would be on market identification and financing. Only limited results
for 2-3 commodities should be expected.

Under this option, no more than one-person year of expatriate assistance
would be provided annually with roughly fifty percent of the funding
directed toward the provision of loan financing for value-adding
enterprises or organizations that have identified export or domestic
markets. One possible mechanism would be to simply establish a new
credit line in the ACDI/VOCA program exclusively for value-added
processing/marketing activities. In parallel with the credit, a small
technical assistance and training fund would be implemented. It would
perhaps be most efficient to target the activity in one or two regions.

E.  **Illustrative Outputs**

A well designed activity at the full, recommended funding level (\$3
million per year for three years) could be expected to result in the
following:

-   The identification of at least 10 target commodity/product markets
    offering cost competitiveness for agricultural/agribusiness
    value-adding investors in Georgia;

-   Establishment of at least 15 producer associations that add-value
    through sorting, grading, packaging and marketing members' produce;

-   Consultation or other assistance to at least 15 processors or other
    value-adding enterprises;

-   Establishment of up to 3 associations of value-adding enterprises;

-   Regular market information reports;

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-   Additional sales of targeted commodities/products in quantity and
    value terms;

-   Approximately 300 members of producer associations, value-adding
    firms and organizations, and value-adding associations will receive
    technical, and market/marketing training;

-   Training and/or consultation for leaders of established producer
    associations, value-adding enterprises and associations on such
    things as brand recognition, grading, food safety standards and
    techniques;

-   ISO 9000 registration procedures completed by a minimum of five
    enterprises;

-   The introduction of HACCP principles in the Georgian food industry;

-   Facilitation of loans or lending to a minimum of 50 value-adding
    enterprises or associations for their activities;

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-   150 members of producer associations, value-adding firms and
    organizations, and value-adding associations will have attended
    business/management training offered by others;

-   Facilitation of at least 8 relationships between value-adding firms
    or organizations and producer associations;

-   Organized credit mechanisms that work through value-adding firms and
    organizations to reach down to approximately 100 small farm
    producers per firm and organization;

-   Improve export promotion and domestic marketing techniques used by
    value-adding firms and organizations;

-   Increased income for employees and members of the value-adding firms
    and organizations and farmers.

These outputs are indicative. More detailed project outputs, benchmarks
and indicators would be fleshed out in detail during project design.

## Linkages

## S.O. 1.3

The recommended activity directly and clearly supports the Mission
Assistance Strategy. Under Strategic Objective 1.3, Accelerated
Development and Growth of Private Enterprises, USAID/Georgia has been
pursuing two fundamental avenues in encouraging the transition from a
centrally planned economy to broad-based economic growth in a relatively
free-market economy. The first is to reform the enabling environment to
create the conditions under which private enterprise can grow and
flourish. Support for the MOA restructuring is directly targeted to this
objective.

The second avenue of Mission assistance is to work directly with firms,
producer groups and individual entrepreneurs to stimulate production,
marketing, processing and service provision that provide employment and
income opportunities for Georgians. It is this second thrust that is the
focus of the recommended agribusiness assistance program. In particular
the proposed assistance is directed at Intermediate Result 1.3.4,
Selected Agribusiness Opportunities Identified and Facilitated. The
emphasis on locating markets, assistance in meeting market demands and
helping solve financial constraints for value-adding firms and
organizations necessarily means \"identifying\"
agricultural/agribusiness opportunities that will be \"facilitated\" in
growth and development terms. In addition, USAID/Tbilisi has overall
objectives of directly impacting people with assistance programs and
undertaking enterprise-level interventions in selected geographic
regions outside Tbilisi. The proposed agricultural/agribusiness
assistance initiative provides an effective means of supporting the
achievement of both of these objectives.

The Team also notes the obvious synergy between S.O. 1.3 market reform
activities and those at the firm level. Success at the firm level is
heavily dependent on progress on achieving an enabling environment with
experience from firm level assistance feeding back to provide direction
for additional modifications in the enabling environment that may be
needed. Consequently, as noted earlier, additional and continued
assistance in reforming the enabling environment is also important and
it will be likewise important that information exchange and coordination
among the various implementers in the S.O. 1.3 area takes place easily
and often.

***Specific Linkages to GESP***

Of all S.O. 3.1 current projects, the linkages to GESP have the most
potential. VAEG will need to collaborate closely with GESP and should
compliment GESP activities. A VAEG project could identify policy reform
and business climate issues needing resolution, and feed this
information to the policy arm of GESP. Potentially competitive
value-adding firms that become targets of assistance under VAEG should
be candidates to take advantage of GESP strengthened business support
programs and the services they will be able to provide. In turn, these
enterprises and associations are more likely to become paying customers
for these services, thus supporting fulfillment of GESP objectives.

While these GESP and VAEG linkages should be strong, they also serve to
highlight some of the differences and possible overlap between the two
projects. VAEG is very much an enterprise and sector focused project
within the agriculture/agribusiness sector while GESP remains
concentrated at a higher policy and more general business level. VAEG
will seek to take advantage of general business services that GESP
develops, but will focus at the enterprise level. In the course of
working with enterprises and producers, VAEG will gather important
firm-level information that will inform the policy-making process, in
which GESP remains engaged. Both projects will include an emphasis on
associations with VAEG also including farmer or producer associations
along with industry associations. VAEG is very explicitly an integrated
approach that will include attention to raw material production,
value-adding activities and market identification/development for
selected commodities/products. Finally, VAEG is sector specific while
GESP has a broader \"business\" perspective.

Although the overlap is limited, it may be tempting to believe that GESP
could be directed to focus on the agricultural sector, or that the GESP
contract could be amended to include additional, agricultural sector
specific development work. The Assessment Team does not recommend either
of these options for two reasons. First, as apparent from the project
description of GESP in Section C.2., GESP is already an expansive and
rather complex program. Amending or redirecting GESP risks diluting that
project\'s effectiveness, while minimizing the impact of the new
activity. Second, by subsuming agricultural sector development support
under GESP, the Mission may sacrifice some control over the substance of
assistance being provided and signal less interest in and commitment to
agricultural sector development than it intends. The principal benefit
of amending GESP to include a focus on agricultural development would be
to avoid the need for establishing an additional management unit.
However, to adequately manage the activity, an additional management
unit with experience in agribusiness development and agricultural
marketing would have to be added in any case, since GESP does not
currently have the necessary expertise.

## Other Mission Programs

Other USAID programs such as those under S.O. 2.3, More Efficient and
Responsive Local Governance, and S.O. 3.1, Reducing Human Suffering in
Targeted Communities, will continue to provide assistance to some of the
same geographic areas and communities where the recommended agribusiness
activity will operate. This does not imply that there will be
duplication of efforts or activities. Rather, it is possible to envision
areas of collaboration and mutual benefit between programs. For example,
S.O. 3.1 programs that provide assistance to IDPs settled in rural areas
could benefit from the type of assistance a VAEG program would provide.
Currently, there are limited activities to support entrepreneurs from
these communities with improved access to credit, producer association
development or market access. Several NGOs receiving USAID support
outside of the S.O. 1.3 portfolio are engaged in agricultural
development activities in specific geographic regions. The credit,
extension information, input supply and association development
assistance they provide could bolster and be bolstered by value-added
processing organizations. S.O.2.3 anti-corruption programs will
strengthen the effectiveness of any program designed to support
enterprise development and enhance the business climate. At the same
time, enterprise development programming can inform anti-corruption
programs as to the impact of activities and areas for further attention.

It is both essential and efficient that linkages be established and
fostered among these various activities. This will require a strong
USAID commitment at all levels to make this happen and active USAID
support for such collaboration beyond simple meetings and exhortations
to implementers. The Team suggests that such collaboration be made a
specific requirement in Annual Work Plans that must be reported on at
regular intervals.

1.  **Other Donor Programs**

Numerous, on-going activities being implemented by other donors means
the recommended project will not need to devote significant resources to
all of the identified elements. For example, the TACIS-supported
Georgian Export Promotion Agency is already doing some work in
identifying and profiling export markets, arranging trade shows for
Georgian producers in target markets, and engaging in other export
promotion activities. The Georgian Investment Center is engaged in
investment promotion. However, neither of these projects works with
enterprises or associations in such a way as to prepare them for this
stage of development. A VAEG program could prepare enterprises and feed
them into export and investment promotion activities conducted by these
projects. Being able to leverage export and investment support for its
client enterprises similarly increases the impact of the VAEG program.
Similar collaboration may be possible with regard to loan financing.
AgroBusiness is expanding their outreach to the regions and will
continue their focus on making loans to mostly small and medium size
agribusiness enterprises. AgroBusiness Bank leadership has expressed an
interest in coordinating with a USAID program that would provide
technical assistance to improve the quantity and quality of enterprises
in their application pool. The Assessment Team recommends that a VAEG
project be designed to take advantage of these possible synergies and
project implementers should be encouraged, if not required to do active
outreach to other donor projects to ensure coordination.

**Annex I**

**Agriculture/Agribusiness Sector Background Information**

> **1. Introduction**

Agriculture plays an important role in the Georgian economy. In 1999,
the sector contributed over 33 percent of gross domestic product (GDP)
with the sector's contribution in 2000 expected to decrease slightly to
25 percent of GDP as a result of the drought and relatively positive
growth in industry and construction. Employment in the sector accounts
for just over 50 percent of total employment in Georgia with
agricultural exports ranking second only to metals in 1999 providing
over 17 percent of total exports ([^17]).

The importance of the sector to the Georgian economy, nevertheless,
belies a serious crisis of decline and stagnancy.
Agricultural/agribusiness output is down 30 to 40 percent from the
levels of the late 1980's. Many crops such as fruits, vegetables, sugar
beets, grapes and tea have experienced substantial production declines
(60-90 percent), due in large part to a loss of Former Soviet Union
(FSU) markets and a breakdown of the processing industry. Production
levels for many grains have remained near 1980's levels, but only
because increases in area cultivated have made up for decreases in
yields of 30-40 percent.

In value terms, food, drink and tobacco imports exceeded agricultural
sector exports in 1999 by a ratio of 3:1([^18]). This is in sharp
contrast to the 1980\'s when the value of Georgian food exports to the
rest of the FSU exceeded by a factor of 1.7 the value of food imports
from other Soviet republics ([^19]). Over 50 percent of the grain and
dairy products consumed are now imported.

Recent years have seen a number of positive changes in the enabling
environment for agriculture/agribusiness. The almost complete withdrawal
of subsidies, a relatively liberal trade regime, and the freeing of
domestic prices for agricultural products are good examples. The
interest and commitment of the Minister of Agriculture to restructuring
and downsizing of the Ministry of Agriculture (MOA) to meet the needs of
a market-driven agricultural sector is another positive step forward.

Despite these gains, many opportunities remain to improve further the
policy environment for the sector. General areas needing continued work
include the enforcement of customs procedures to avoid export and import
delays and tax policies (simplification and administration and VAT as
relates to agriculture) that discourage local production and processing.
Other agricultural sector specific problems include government rules and
regulations that impose lengthy registration requirements on the import
and use of new products (such as new seed varieties) and technology.
Similarly, the lack of a good seed law inhibits investment in the seed
industry. Finally, the lack of a good market information system,
particularly with respect to domestic and export market opportunities
and prices, hinders development.

> **2. Agro-Production Levels and Trends**

The country of Georgia has favorable conditions for the production of a
wide variety of annual and perennial crops - grain crops such as wheat,
corn and sunflower, high value crops such as grapes, fruits, tea,
citrus, vegetables and tobacco, and specialty crops such as essential
oils, organic herbs and spices. With the exception of the coastal plain,
most of Georgia has soils that are moderately fertile and easily tilled.
The climate is milder than in many parts of the FSU, with adequate heat
units, day length and growing days to enable production of a wide
variety of crops. Marginal rainfall makes supplementation by irrigation
water necessary in many regions. But overall the country has many
characteristics similar to California in the USA.

With variations due to weather, annual grain production of around
700,000 metric tons hovers around 1990 levels with increases in areas
planted in grain crops offsetting lower yields, Annex II, Table 1. Since
the early 1990\'s, areas under maize, wheat and sunflower have all
increased with year-to-year variations indicating price responsiveness
by producers. Domestic grain production, however, generally meets less
than 50 percent of estimated requirements (the largest deficit is in
wheat). Average yields of all grain crops are low to very low by Western
standards with increases of 200-300 percent possible.

Areas under potatoes after slumping initially are now at 1990 or higher
levels, Annex II, Table 4. Production of potatoes may actually be
reaching new highs, particularly if home garden production is included.
Vegetable production continues well below 1990 levels, largely due to
the decline in processing demand

The area planted to seed (apples, pears) and stone (plum, cheery, peach,
apricot) fruits has declined by 65 percent since 1990, Annex II, Table
5. While the production of seed fruit has continued to decline, the
production of stone fruit has stabilized since 1996. In fact, official
statistics indicate that production of stone fruit actually rose 30
percent in 1999 over 1998. A major reason for the decline of these
fruits is that immediately after the break-up of the FSU, the ownership
of the orchards was unclear, and some were neglected to a point where
they could not be reclaimed without great expense. Also, as in the case
of vegetables, the decline in processing demand resulted in less fruit
harvested. Once the new farmers knew they owned the trees, improved care
began and production of stone fruits rose.

With respect to citrus the decline has been even more dramatic, going
down by 86 percent between 1990 and 1999. The production of nuts
(walnuts, and hazelnuts) has been a bright spot for the sector as
production rose from 9,000 tons in 1990 to 35,000 tons in 1999.

The livestock sector, like the crop sector, has experienced substantial
declines - Annex II, Table 6. Production of meat and meat products is
40-45 percent below levels of the mid-80\'s reflecting a substantial
drop in animal numbers. The largest declines have been in swine and
sheep although swine numbers have stabilized at about the level of 1994,
and sheep numbers at the levels of 1996. Poultry numbers fell through
2000 to 1/3 of what they were in 1990, but egg production has recently
shown an upward trend. Broiler production remains limited, mainly due to
a lack of good feed sources, and the importation of low cost chicken
parts from international sources. Total milk production is almost back
to levels achieved in the late 1980\'s, as is production per animal of
900-1000 liters per lactation or about 12-15 percent of average Western
levels. Wool production has dropped more than 70 percent since the
1980s. Government veterinary services are hampered by a lack of budget.
Other constraints to increased livestock production levels include a
lack of feed (forages and feed concentrates), the collapse of the
artificial breeding system, lack of accessible markets (particularly for
milk), and low levels of knowledge by small-holders regarding management
of cattle and handling of milk.

The household sector (small farmers) in recent years has gained in
importance as the primary agricultural production sector in Georgia. In
1988 the household sector produced 25 percent of all grain compared to
95 percent by 1999. In the case of potatoes, vegetables, and grapes,
household producers accounted for 45-50 percent of production in 1988
and 98 percent in 1999. For fruits and citrus household producers have
been the dominant sector for many years, as in 1988 they accounted for
77-78 percent of production and in 1999 for nearly 99 percent. Nearly
all livestock products come from the household sector. In short, with
the exception of tea, where commercial enterprises produce about 55
percent of the crop, household producers are the most important sector.

In the past, Georgian agriculture exports contributed positively to the
trade balance. During the Soviet period Georgia was one of the major
suppliers for fruit and vegetable products to the republics of the FSU,
exporting fruit of various kinds, tea, essential oils, citrus, wine,
alcoholic drinks, mineral waters, canned fruit and vegetable products.
These agricultural exports were 1.7 times more than the imports of
agricultural products from other republics within the FSU-grain, meat
products, dairy products and fodder. More recently, official data
indicate that Georgia has moved from being a net exporting country to a
net importing country with respect to agricultural products. In fact,
since 1996 the imbalance in agricultural trade has become very
substantial with 1999 agricultural imports (including tobacco) appearing
to have exceeded exports by a ratio of 3 to l.

Georgia\'s competitive advantage in the agricultural production sector
likely lies in high value fruits and vegetables for the early spring and
late fall markets of Northern hemisphere countries, particularly Russia,
Ukraine, Poland, Belarus, and the Baltic's. Some products could even
move into Western Europe and the Middle East and perhaps China.
Certainly Georgia can produce wheat, corn, and other extensive crops,
but when producers are small and irrigation water can be made available,
it is more economically efficient to focus on higher value, labor
intensive crops. In non-irrigated areas of Eastern Georgia, where land
is extensive and rainfall limited, dryland technology similar to that
used in Montana, and North and South Dakota to produce wheat and other
crops for which there is domestic demand is probably is probably the
best strategy. The same may be true for parts of Western Georgia where
animal feed crops can be grown without irrigation.

In conclusion, the answer to the question "where is Georgia's
competitive advantage in agriculture?" really depends on the region in
Georgia and where the markets are. It should also be expected that over
time Georgia\'s competitive advantage crops will change as abilities
improve to meet grades and standards, health, safety, quality, packaging
and other elements of market demand. Georgia can seemingly be
competitive in a variety of products if systems that enable Georgian
products to enter export markets can be put into place.

> **3. Agro-Processing Levels and Trends**

Most small and medium sized enterprises in Georgia (including
agribusiness firms) have been privatized, but a substantial number of
the enterprises controlled by the MOA (reportedly over 130) remain in
government hands. Many of these soviet-era agricultural facilities are
old, of a scale that makes them inefficient and non‑competitive, in a
poor state of repair and simply not operating.

Visits by a USAID team in July/August of 2000 to flour mills, sugar
plants, wineries and dairy processing facilities in several regions
found most idle or operating at no more than 10 percent of original
capacity. A study of Khakheti region in August 2000 found that only 10
of 43 agricultural enterprises were operating at or near full capacity,
with 14 not operating at all, Annex I, Table 9. The others operated
partially, but none at over 50 percent of capacity. Because some
non-operating firms were very large in comparison to others that were
operating, average capacity utilization is difficult to determine.
Nevertheless, it is doubtful that more than 20 to 25 percent of the
processing capacity in the region was being utilized.

Recent Assessment Team visits (March, 2001) to selected regions
confirmed that many processing plants are not operating, or, if
operating, using only a small portion of original installed capacity.
For example, the GORKONI fruit cannery in Gore presently turns out 20
different products, compared to 270 products in the early 1990\'s with a
current capacity utilization rate of 10 percent of installed capacity.
Similarly, a CERMA baseline study of the viticulture and wine sector in
Georgia found that in 1999 only 9.3 percent of the grapes produced were
industrially processed. This was down from 60 percent in 1990 with the
1990 figure was based on 700,000 metric tons of grapes produced,
whereas, the 1999 figure was based on 200,000 metric tons of production.
These numbers are very consistent with a World Bank study that concluded
production levels in the agro-processing sector were at about 10 percent
of 1980 levels ([^20]).

Only small quantities of new plant and equipment are being imported.
While the limited availability of capital reportedly constrains the
establishment of new small and medium-size agricultural processing
enterprises, some local entrepreneurs are, nevertheless, establishing
new enterprises. Such enterprises, however, are often poorly integrated
into the local production and packaging networks. They import raw
materials to process, as well as the jars, bottles and labels for
finished export product.

Amid this depressed picture some good, though limited, examples exist of
local and foreign companies operating effectively in a range of areas
including fruit processing, bakery/macaroni processing, meat processing,
potato packing, and egg production and packing. In Gore, the fruit
processor GORKONI has established a joint relationship with the American
group GIG (21 percent of the shares) and a Swiss Company (also 21
percent of the shares) to process several fruits into fruit based
products and juices. They also export bulk apple juice concentrate. In
July/August, 2000 a local investor in Kutaisi put a flourmill back in
operation, established a bakery, and was readying a facility to initiate
a new macaroni line. However, during a February 12, 2001 visit to the
same facility it was learned that due to the poor wheat crop in 2000 and
the smuggling of flour, the mill has not been able to produce flour at a
profit, and is now idle. The bakery is still operating, and the macaroni
plant will come on stream soon. Near Tbilisi, a Georgian businessman
privatized a large previously state‑owned egg production facility,
renovated part of the facility and produces and packs eggs for the
Tbilisi market. He is looking for local sources of feed grains, but
expects to have to import feed from Russia for some time. Milk and ice
cream producers have imported modern equipment and use imported powdered
milk because local supplies of milk are inadequate in terms of quantity
and quality. While these enterprises demonstrate the potential of
agro-processing in Georgia, it is also significant that some of these
enterprises frequently import raw materials and packaging.

Packers of selected fruits indicated to the Assessment Team that they
have markets in former FSU countries, but these markets are not the most
attractive because they do not get paid for quality. Thus, packers are
looking for new market opportunities in western countries and, with
proper assistance in grading packing and handling local
producer/packers, believe they will find good market outlets for fresh
packed fruit products. Processors of juice, jams/jellies and wines have
identified some market outlets for their products in FSU countries as
well as western and Middle East markets.

To expand the markets for value-added fresh and processed products will
require developing a market support package, i.e., detailed market
profiles for targeted products including presentation, sanitary,
labeling and quality standards required, marketing strategies and
pricing information. This will need to be matched with information on
buyers and traders, and trade missions to establish relationships with
leading buyers. The Georgian Export Promotion Agency (GEPA) supported by
TACIS is working to develop export initiatives from Georgia and may be
able to help with some aspects of market support. Another opportunity
would arise if current efforts being implemented through Elkana (the
Biological Farming Association) are successful. Under this initiative a
Georgian organization would be authorized to issue certifications that
Georgian products meet international requirements and can be labeled as
organically grown. Other export initiatives underway include for
specialty packed fruit products to Israel, and for apple juice
concentrate to European markets.

The Assessment Team believes that the agro-processing sector (packing
and processing) is an area where USAID can make a difference. Many of
the newly privatized processors are beginning to revive operations. As
they do, assistance will be needed in market identification, organizing
to meet market demand and satisfy market requirements and locating
financing for equipment, maintenance and working capital to purchase raw
materials from farmers. The introduction of ISO 9000 to meet
international standards for quality assurance and HACCP ([^21]) will
also be required. It should be emphasized that putting together this
package is a complex undertaking involving not only changes in
production and processing technology but changes in approaches and
thinking. The development of new organizations and systems to ensure
market standards can be met on a consistent and sustained basis is part
of this effort..

> **4. Land Ownership**

According to 1999 data from the National Department of Statistics, there
are close to 2.6 million hectares of agricultural land in Georgia
([^22]). Of these, roughly one-third were privatized and distributed to
rural families according to the so-called "land privatization decree"
(Government Resolution 48, January 1992) and the subsequent Law on
Agricultural Land (March 1996). Of this land, nearly 70 percent was
arable or planted to perennials. Land associated with residential plots
was included in a total of up to 1.25 hectares distributed to each
family.

As of October 31, 2000, USAID, under its two land market projects (OMNI
II and SEGIR IV GBTI task orders) completed the surveying, titling and
registration of almost 1.2 million agricultural land parcels. This work
was carried out in 39 of the 67 raions of Georgia. According to the land
market project implementation team, there are approximately one million
agricultural land parcels remaining to be surveyed titled and
registered. The World Bank has been engaged in surveying, titling and
registering in two additional raions, while the Germans (KfW) signed a
\$30 million agreement with the GOG this year to begin surveying and
registering agricultural land. To date the Germans have agreed to focus
on rural residential/household plot land, though this may negate the
USAID efforts due to an incompatibility in the techniques used.

Ownership of the remaining two-thirds agricultural land in Georgia is
held by the state. The Law on Leasing (1996) allowed for the leasing of
any of the agricultural land remaining under state control. However,
only little over one half of this state-held land is leased (meaning
that a little over one third of all agricultural land is leased). The
leased land is a mixture of arable, perennials, pasture and hay land.
The remaining unleased, unallocated land held by the state is primarily
pasture land, much of this in the alpine zone. Only 6-7 percent of this
land is categorized as arable or planted in perennials. According to the
OSC survey conducted in July 2000, however, none of this land is
currently irrigated. According to the survey, 80 percent of the
unallocated land has no irrigation at all and 20 percent has irrigation
systems that are broken beyond functional use.

There are over one million farms that cultivate only their own privately
held land. The size of these holdings varies according to region, but
averages between .75 and .9 ha. According to the OSC survey, 84 percent
of the rural population is dependent on these subsistence farms, where
73 percent of the produce is consumed by the farm families themselves.
The remaining 15 percent of the rural population have enlarged its land
holdings by leasing additional agricultural land from the state. The OSC
survey indicates that the average size of land holding for farms that
have leased additional land is over 4 hectares. Statistics from the
State Department of Land Management (SDLM) in 1997 show average size for
farms that lease and own land to be 6 hectares, while the World Bank
survey, conducted in four regions in 1996, showed the average size of
farms with additional leased land to be 8 hectares. While these farms
are significantly larger than the average farm that only cultivates its
own land, they are still quite small.

The primary source of land for leasing is the state. Each local SDLM
office is responsible for concluding leasing agreements with interested
parties for the land within their jurisdiction. Lease agreements can be
arranged for up to 50 years, however over 40 percent of respondents in
the OSC survey hold leases of 1-3 years and another 32 percent have
leases for 4-6 years. Lease payments were originally intended to cover
both the land tax and an additional premium that would vary according to
the region and quality of the land leased. However, the typical
arrangement requires only the annual payment of land tax. This amounts
to 57 Lari per hectare per year for arable land of good quality,
including irrigated land.

Legislation to privatize the remaining state-held land is currently
being developed in the Parliament. The goal of this privatization is to
move arable land out of the public sector. While the first round of
privatization (1992) was intended to ensure each rural household
received a parcel of land, most agree that this round is intended to
create viable, commercial-scaled farms. The simplest way to do this is
to give priority purchase rights to the current leaseholders. However,
this strategy will effectively exclude 85 percent of all rural residents
from access to the land to be privatized in this second round. Many
Parliamentarians support a strategy that gives priority to leaseholders.
Many Parliamentarians are also themselves leaseholders. Since
leaseholders are often perceived as those who used connections or
political clout to gain control of the best state-held land, a strategy
that gives leaseholders priority access to the majority of land in this
phase of privatization may be unpopular with a large percent of rural
residents. However, many leaseholders have also made investments in
their leased land and are likely to be quite vocal in their opposition
to any strategy that would deprive them of what they perceive as their
land.

Use of the land tax as a determinant of the base purchase price may also
raise objections. Some claim that land tax does not accurately reflect
the variability of land quality (i.e. irrigated land vs. land with
non-functioning or no irrigation). The Germans and many in the SDLM take
this even further and want to conduct a soil survey to determine the
quality of the land. If the distribution were dependent on this soil
survey, it would slow the process and raise the cost significantly.

The OCS survey shows 47 percent of the rural population disagree with
the government's current direction on agricultural reform. Although it
is likely that this dissatisfaction is based on erroneous assumptions or
lack of information, it should not be dismissed. Whatever distribution
strategy is adopted for privatization of this land, efforts should be
made to expand public understanding and build public support for this
program. USAID should use the Association of Land-owners' Rights (APLR)
to promote a transparent privatization of this land that promotes
commercially viable farms while acknowledging social equity
considerations. Specific recommendations for a USAID position on the
legislation were provided in the Market Reform Assessment Report of
September 2000.

The current pattern of private land holdings is highly fragmented. Rural
residents typically own a small household plot surrounding their
residence and one or more plots of land that include some arable,
vineyard and pasture totaling up to 1.25 ha. These are rarely contiguous
plots and are often located both far from each other and from the
land-owner's residence. While it is hoped that the privatization of
state-held leased land will promote the development of more commercially
viable farms, the development of a land market is necessary to promote
the consolidation and rationalization of land holdings among rural
residents interested in and capable of engaging in commercial
agricultural activities.

According to the OSC survey, almost 55 percent of respondents expressed
a wish to acquire more farmland, especially that with improvements such
as irrigation or plantings of perennials, yet the land market has been
slow to develop. APLR data on subsequent land transactions as of January
22, 2001 show that approximately 2,600 land sales have been recorded
through out Georgia. Anecdotal evidence suggests that more transactions
are occurring, but are not being recorded. Recent policy changes have
reduced registration fees from 26 Lari to 7 Lari. It is anticipated that
this reduction in transaction fees will increase the incidence of
transaction registration. Still, the number of transactions, registered
or not, is limited in part due to the weak demand for agricultural
produce. Both the OCS survey and interviews conducted during the
Agricultural Assessment indicate that residents associate a higher value
to land that is of better quality, has higher yields, has improvements
such as irrigation or plantings of perennials, and is located in close
proximity to transportation lines and markets.

Agricultural development in Georgia is dependent on a consolidation and
rationalization of land holdings. Privatization of the state-held leased
land should facilitate this process. The development of a land market
will further improve land utilization. USAID is supporting the
privatization process and development of land markets through its follow
on to the Land Market Project. This support includes legal consultation
to parliamentary members on drafting the legislation, as well as support
and tracking of secondary real estate transactions in regions throughout
Georgia. These activities are necessary, but not sufficient, however.
While agricultural sector development in Georgia will benefit from land
market development, development of a land market in Georgia is tied to
an increased demand for agricultural produce.

7.  **Finance**

Numerous credit programs, with funding from various sources, are active
in Georgia. Commercial banks, credit unions and donor organizations are
making loans to a variety of borrowers. However, limited funds
characterize these credit suppliers. The 200+ credit unions are small
with few having more than \$50,000 in capitalization. The commercial
banking system is going through a period of consolidation and
stabilization and has a paid-in capitalization of less than \$90 million
as of August 2000. Donor supported projects operate with about \$10 to
\$15 million in loan funds. Many of the donor assisted programs have
only been operating only three to four years, and very few, perhaps only
the Microfinance Bank and FINCA, have yet reached the stage of being
self‑financing or sustainable in the long term.

Among lenders the credit terms vary substantially, tending to reflect
market rates and averaging around 30 percent per annum. The best rates
for agricultural/agribusiness projects are 18 percent per annum,
generally with a collateral requirement of 150 to 200 percent of the
loan value. Institutions interviewed indicated that collection rates are
good to date, although many loans are relatively new and repayment is
pending.

The financial institutions mainly provide short-term (one year or less)
medium and small size loans to mostly urban Georgian businesses. Very
little of the limited credit supply is directed to agriculture, which is
understandable when the risk of making a short term loan to an urban
business is compared with the risk of lending to an agricultural
enterprise. Loan for three months to urban businesses at 30 percent
interest or higher are much preferred to agricultural/agribusiness loans
at 18 percent for at least a six to eight month growing season.

For medium or long-term agricultural/agribusiness sector capital, the
banking system with its limited capitalization is not currently, and
will also not be in the short-term, a significant source. For the banks
the alternatives to agricultural lending are more attractive and the
legal/judicial system does not support the quick transfer of assets upon
default of borrowers. The resale value of fixed assets is also low in
the current economic climate and banks prefer liquid assets such as
precious metals, and easily transacted goods. Together these factors
make banks reluctant to lend for longer-term capital improvements.

Two sources of financing for many businesses are suppliers (supplier
credits) and buyers (trade credits). Such credit providers do supply
some credit to the agricultural sector for production inputs, but the
amount is small and will remain so until good repayment track records
are established. Trade financing and funds transfers by buyers of
agricultural products are also limited. Very few buyers are willing to
advance funds for purchases because there is still substantial
uncertainty as to whether the producer will actually deliver.

Also, with letters of credit only beginning to emerge as a method for
ensuring payment on delivery in the Russian market (the major market for
Georgian agricultural commodities and food products), the practice of
payment against an issued letter of credit is only now beginning. In
most cases, sales to the Russian market rely on payment one or two
months after delivery, after the purchaser has managed to sell the
product. This practice led to major problems for producers during the
late 90's financial collapse of Russian markets, because of nonpayment
for product shipped. Now many suppliers are beginning to adopt the
practice of requesting advance payments (at least some portion) prior to
delivery.

8.  **Investment**

As is evident from the discussion above, the Georgian banking system
does not have the capacity or willingness to finance the levels of
investment required by a growing agribusiness sector. New capital and
management expertise will need to come from private domestic and foreign
direct investment (FDI). In turn, since availability of domestic capital
appears limited, FDI is clearly a critical requirement.

Nevertheless, even though Georgia established a foreign investment law
in 1995 that aimed to provide a supportive environment for foreign
investors, FDI in Georgia has remained very low. From 1989 to 2000 the
total was about \$731 million or about \$138 on a per capita basis. For
comparison purposes, all countries in CEE exceed these per capita
levels. According to one source, total fixed capital investment in
Georgia (i.e., domestic and foreign) fell 57 percent in 1998 and by
another 28 percent from first quarter 1999 to first quarter 2000,
largely because pipeline construction is nearing completion. Recent
reports indicate a small improvement in 2000 (Georgia Times, 2/16/01).
Unfortunately, most foreign investors attracted to Georgia are unable or
unwilling to invest substantial amounts. They typically start with very
low capital investment levels, and rely on reinvested profits rather
than on new outside capital infusions.

There are many reasons that investors, both domestic and foreign, do not
invest in Georgia. Based on discussions with private sector investors in
Georgia (both Georgian and foreign) and on information from donor
sources familiar with local business, the major constraints to domestic,
but particularly foreign, investment in Georgia are as follows:

-   A perception of high political risk, including frequent changes in
    legislation and policies.

-   An uncertain macro-economic environment.

-   Perceived high levels of business risk resulting from observed
    failed joint ventures and broken business agreements where foreign
    investors believe they were treated unfairly. This leads to a lack
    of confidence in Georgians as trustworthy partners.

-   Legal businesses confront high levels of taxation and this, combined
    with widespread illegal evasion of taxes by small domestic firms,
    makes large-scale international businesses less competitive.

-   A small domestic market and insufficiently developed export market.

-   Excessive and non-transparent government regulations.

-   A weak and corrupt judicial system making contract enforcement
    difficult, and the protection of property rights uncertain.

-   Insufficient information from companies being privatized to permit
    adequate due diligence by serious foreign investors.

-   Finally, few Georgian companies are available for sale under
    conditions where foreign investors would be willing to invest. This
    is because of a general overvaluation of company assets by Georgian
    company owners and reluctance among them to sell a controlling share
    to foreign investors.

Continuing efforts to reduce or remove these reasons that inhibit
investment in Georgia are essential. Other sources of the financing
vitally needed to re-capitalize industry and agriculture are simply
inadequate or unavailable.

**7. Inputs and Technology Employed**

To date, the existing farm equipment pool in Georgia has largely been
able to meet the needs of the agricultural sector, but the equipment is
aging and becoming inadequate. Over the past decade the capital stock of
farm machinery in Georgia actually decreased by 40-70 percent, Annex II,
Table 8, as very little new equipment was purchased. The equipment that
remains in use is generally in extremely poor condition, and kept
working through the salvage of parts from inoperable machines. In many
cases it is already inadequate leading to poor land and seedbed
preparation, significant factors lowering productivity. Moreover,
increased demand for mechanical services and more efficient production,
consistent with expanded production and processing goals, will render
this equipment pool even more inadequate without some replacement. The
privatized Joint Stock Company, Agroservis, and the Joint Stock Company,
Agrotekhservis, created to take over mechanization responsibility from
government, are largely dormant.

Domestic production of agricultural machinery is extremely limited and
only very small numbers of tractors, combines and other pieces of modern
equipment have been imported into Georgia since 1990. International
machinery suppliers have no or minimal representation in the country,
but parts can be found for maintenance of some of the aging equipment.
The equipment that is available is generally not suitable for small
farms, but farmers have spontaneously associated to utilize equipment to
prepare blocks of land. Also, in a few cases, smaller scale equipment
has been obtained.

It is interesting to note that the land area under wheat and corn has
nearly doubled in the past few years while the machinery pool has
declined by half, demonstrating the skill of Georgian farmers in keeping
machinery operating and getting the job done with what is available. The
situation also suggests that the former system provided excessive
amounts of equipment to the agricultural sector. However, as indicated
above, there are costs in terms of efficiency and productivity.

Georgia produces nitrogen fertilizer, (Rustavi Nitrogen Fertilizer
Plant) while being totally dependent on imports for phosphorus,
potassium, and crop protection chemicals (CPCs). The majority of the
nitrogen produced is exported with domestic use at only 20 percent of
1985 levels. Limited quantities of phosphorous and potassium are
reportedly available but, based on the data set out in Annex II, Table
7, it would seem that potassium is not available. Saksoplanakopieri was
the state organization that distributed fertilizer and CPCs. But the
system has collapsed and no nationally effective system of fertilizer
distribution is now available in Georgia.

While fertilizer use in 1985 was not likely optimal since state farms
were not constrained by budget to use fertilizer and other inputs
efficiently, the current level of non-use clearly has very negative
consequences for soil fertility, and crop productivity. An estimated 86
percent of soil is deficient in phosphorus and 89 percent is deficient
in potassium. Most soil is also deficient in organic matter.

The Service of Agro-chemistry and Soil Fertility (SASF) of the MOA
provides soil analyses and fertilizer recommendation services on a fee
basis. There is only limited demand for such services by newly formed
farms because they do have the financial resources with which to buy the
fertilizer, and facilities are deteriorating.

The use of crop protection chemicals has similarly plummeted from levels
of the 1980\'s, Annex II, Table 7. Fungicides for fruits and vegetables
traditionally comprised 70-85 percent of CPC usage. Current usage is
just over one percent of the quantity used in 1985. Almost no herbicides
are currently applied and insecticide applications are also very low.
Georgia has very limited pesticide production capacity and is almost
entirely dependent on imports. All herbicides are imported. The Crop
Protection Service (CPS) under the MOA is responsible for registering
pesticides, for the importation, storage and overseeing the field
application of pesticides, operating the phyto-sanitary inspection
system and providing needed laboratory services. For largely budgetary
reasons, the CPS does very little in discharging these responsibilities.

During Assessment Team interviews in February 2001, two private groups
were interviewed (Farmers Union and Analytica) that are working to
distribute inputs to farmers. The Farmer's Union works to provide
farmers technical information, seed, and CPCs through local,
peasant-based distributors. The Union represents several international
suppliers including Novartis, Bayer, Solana, and Agroplanta. Analytica,
another private local company, also supplies seeds and CPCs to farmers
on a basis very similar to the program run by Farmers Union. They
represent international suppliers Dupont, Nufarm (Australia), BASF,
Uniroyal Chemical, and some Dutch seed companies.

Together, these firms cover a very small part of the country\'s input
needs, and claim that the principal reason farmers do not use inputs is
because of cost. Processors and associations dealing with farmers also
indicated that farmers could acquire inputs if they wanted them and
could pay. In a few cases the processors or associations help farmers
obtain inputs.

Water is another important input for agricultural production in Georgia.
Yet the irrigation system that was developed during the soviet period
has seriously deteriorated, both from neglect and uncertainty over
operational responsibility. The regional Water Operation and Management
Enterprises lack the resources to carryout the operation and maintenance
of the system and the area under irrigation declined from over 450,000
hectares in 1990 to less than 300,000 hectares by 1999. Only a few local
Water User Associations have emerged. In those irrigation systems that
are functioning, water use is relatively inefficient and fee collection
is often a problem. Further declines are anticipated unless investments
in maintenance and rehabilitation are made along with efforts to
decentralize control.

The effects of a deteriorating system are difficult to establish, but it
is clear that there have already been disruptions to agricultural
production. In a drought year like 2000, the effects are particularly
serious. The World Bank has plans to rehabilitate 225,000 hectares of
the irrigation system, and hope to get this program in place by mid year
2001. In fact, if this target date is missed the project may not be
implemented before 2003.

Since 1990 the government-operated seed supply system in Georgia has
largely collapsed. Some testing for registration of new varieties
continues through the Variety Testing Commission (with interested
parties covering the costs of testing). The Seed Quality Inspectorate or
Inspection Commission (Gosseminspektsia) is responsible for seed
certification, but has no field capacity. The two seed production
organizations, Gruzzernosemprom and Gruzsortsemovaochch, were privatized
in 1998, but almost all seed production has ceased and the farms are
trying to survive as normal agricultural production units. The Research
Institute for Crop Production is producing a limited quantity of seed.
Some vegetable seed is being imported through legal channels. Demand is
also being met by illegal imports, though quantities are unknown.

The Horizon Company, a Georgian seed company established with USAID
assistance, is producing limited quantities of maize, sunflower, wheat
and potato seed. This company produced over 450 metric tons of seed in
CY 2000 and plans to produce 600+ tons in CY 2001. The Bolnisi potato
seed growers, associated with the Dutch, are another group growing
potato seed for sale. They produce two Dutch potato seed varieties, and
sold about 400 tons for planting in 2001. In addition the Bolonisi
growers have retained sufficient seed to plant 60 hectares of their own.
They are also planting several new varieties on a test basis to enable
registration of these varieties.

Other seed sources include the German assistance organization, GTZ,
which has been helping, notably with imports of quality seed potato
varieties and with vegetable seed. Limited quantities of potato seed are
also produced by other private farmers with the Farmers Union and
Analytica, the two input supply distributors mentioned above, making
imported vegetable seed available. UMCOR receives donated seed that is
distributed to farmers, but they indicate that farmers save seed and use
the seed they trust, rather than the donated seed. With annual seed
needs in Georgia for grains and vegetables (excluding potatoes)
estimated at over 50,000 tons and requirements for \"high\" quality seed
(purchased seed) being about 25 percent, the amounts currently being
supplied are far from optimal. Potato seed requirements are 70-90,000
tons annually.

**8. Marketing**

The break up of the FSU disrupted historical patterns of trade
coordinated through Moscow. This coordination no longer takes place and
trade relations among the now independent countries of the FSU are now
more sporadic. Nevertheless, Russia remains one of Georgia's biggest
trading partner and, along with other FSU countries, will continue to be
Georgia's most likely target market for exports. However, exports to
Russia and other countries of the FSU have plummeted in recent years,
and in 1999 trade to the CIS countries was only about 30 percent of the
total.

Georgian processors have not been very successful in developing new
markets to replace those lost as the Soviet Union broke apart.
Sanitation, packaging and quality standards in Western Europe make it
difficult for Georgia to enter these potentially lucrative markets in
the near term. The problems of out-dated, inefficient and over-sized
facilities and the costs associated with transportation, customs and
corruption also make Georgian products expensive, when quality is
considered, relative to those produced in West Europe or such countries
as Poland or Turkey. As a result, it is often difficult for Georgian
goods to compete with goods from West Europe, Poland or Turkey. A
general lack of marketing expertise has added to the marketing
difficulties. The Assessment Team found little evidence that serious
attention was being given to the introduction or utilization of ISO 9000
or HACCP procedures.

A further problem is that the Soviet command economic system relied on
government agencies to order, "purchase" and distribute goods produced
by agricultural producers and processors. In a market economy, private
wholesalers and distributors carry out many of these functions. In
transition economies such as Georgia, Russia, Ukraine and other
countries of the FSU, an adequate system of distributors and wholesalers
have not yet developed. This means that even if a producer or processor
is able to get his goods from Georgia to Moscow, s/he will have
difficulty selling the goods without personal connections or without
spending significant time in the city fulfilling the sale of his goods.
The break up of large collective farms has additionally complicated
marketing relations within the sector, as there are now no centralized
collection points. The burden is placed on processors to collect raw
materials from dispersed and generally disorganized producers. Similarly
the marketing of fresh produce is fractured and inefficient. Many
producers market his/her own surplus, selling it by the side of the
road, or hauling it into Tbilisi in the trunk and back seat of a car.

For a limited number of agricultural products, there are market outlets.
Some milk producers are successfully marketing limited quantities of raw
milk in nearby settlements. Nuts are being sold for export and grape
juice can be sold to processors for use in the wine industry. For the
most part, however, surplus vegetables, fruit, and milk is not being
processed or being marketed beyond very local channels. With this
decline in demand, farmers have no income and no incentive to invest in
inputs to increase productivity or improve the quality of their output.
This leads to a further decline in demand. Local consumers, processors
and export markets will only demand Georgian produce if and when the
quality and consistency of supply improve.

Finally, to the degree that there is demand for agricultural produce,
either domestically or for export, this information reaches producers
largely through informal connections. The Assessment Team heard that a
program of market information had been carried out by one of the donor
projects, but that it had been discontinued and not replaced. Thus, no
source of market information currently exists that would help farmers
know what to produce. Further, very few farmers have contract
relationships with processors that could help orient their production
program. Farmers with vineyards likely get the most advice because
wineries work closely with them. Also, fruit growers such as those in
the Gore Association have some help in planning future production, but
help is extremely limited.

Georgia Agr Annex I.doc

**Annex II**

**Agricultural Sector Tables**

<table>
<colgroup>
<col style="width: 13%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
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<col style="width: 0%" />
<col style="width: 0%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="19"><h1 id="georgia">Georgia</h1></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td colspan="19"><h1
id="table-1---areas-of-annual-crops-000-hectares">Table 1 - Areas of
Annual Crops ('000 hectares)</h1></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td colspan="19"></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td></td>
<td>1985</td>
<td>1988</td>
<td>1990</td>
<td>1991</td>
<td>1992</td>
<td>1993</td>
<td colspan="2">1994</td>
<td colspan="2">1995</td>
<td colspan="2">1996</td>
<td colspan="2">1997</td>
<td colspan="2">1998</td>
<td colspan="3">1999</td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Grains</strong></td>
<td>273</td>
<td>272</td>
<td>270</td>
<td>291</td>
<td>277</td>
<td>256</td>
<td colspan="2">257</td>
<td colspan="2">260</td>
<td colspan="2">281</td>
<td colspan="2">437</td>
<td colspan="2">416</td>
<td colspan="3">379</td>
<td></td>
</tr>
<tr class="even">
<td>Wi.wheat</td>
<td>80</td>
<td>87</td>
<td>91</td>
<td>100</td>
<td>112</td>
<td>83</td>
<td colspan="2">68</td>
<td colspan="2">61</td>
<td colspan="2">79</td>
<td colspan="2">165</td>
<td colspan="2">141</td>
<td colspan="3">107</td>
<td></td>
</tr>
<tr class="odd">
<td>Wi.barley</td>
<td>25</td>
<td>30</td>
<td>30</td>
<td>32</td>
<td>32</td>
<td>23</td>
<td colspan="2">16</td>
<td colspan="2">16</td>
<td colspan="2">19</td>
<td colspan="2">23</td>
<td colspan="2">16</td>
<td colspan="3">11</td>
<td></td>
</tr>
<tr class="even">
<td>Rye</td>
<td>0.9</td>
<td>1.8</td>
<td>0.6</td>
<td>0.7</td>
<td>0.5</td>
<td>0.3</td>
<td colspan="2">0.1</td>
<td colspan="2">0.2</td>
<td colspan="2">0.2</td>
<td colspan="2">0.1</td>
<td colspan="2">0.1</td>
<td colspan="3">0.0</td>
<td></td>
</tr>
<tr class="odd">
<td>Spr.wheat</td>
<td>0.7</td>
<td>1.4</td>
<td>0.5</td>
<td>1.3</td>
<td>0.6</td>
<td>2.1</td>
<td colspan="2">1.8</td>
<td colspan="2">1.3</td>
<td colspan="2">1.3</td>
<td colspan="2">9.2</td>
<td colspan="2">3.8</td>
<td colspan="3">4</td>
<td></td>
</tr>
<tr class="even">
<td>Spr.barley</td>
<td>19</td>
<td>16</td>
<td>17</td>
<td>19</td>
<td>16</td>
<td>14</td>
<td colspan="2">13</td>
<td colspan="2">16</td>
<td colspan="2">13</td>
<td colspan="2">19</td>
<td colspan="2">18</td>
<td colspan="3">18</td>
<td></td>
</tr>
<tr class="odd">
<td>Oats</td>
<td>11</td>
<td>12</td>
<td>10</td>
<td>11</td>
<td>10</td>
<td>10</td>
<td colspan="2">8</td>
<td colspan="2">9</td>
<td colspan="2">6</td>
<td colspan="2">7</td>
<td colspan="2">7</td>
<td colspan="3">5</td>
<td></td>
</tr>
<tr class="even">
<td>Maize</td>
<td>118</td>
<td>109</td>
<td>107</td>
<td>115</td>
<td>95</td>
<td>112</td>
<td colspan="2">138</td>
<td colspan="2">142</td>
<td colspan="2">149</td>
<td colspan="2">203</td>
<td colspan="2">220</td>
<td colspan="3">223</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Legumes</strong></td>
<td>19</td>
<td>16</td>
<td>14</td>
<td>13</td>
<td>11</td>
<td>12</td>
<td colspan="2">14</td>
<td colspan="2">13</td>
<td colspan="2">13</td>
<td colspan="2">11</td>
<td colspan="2">9</td>
<td colspan="3">10</td>
<td></td>
</tr>
<tr class="odd">
<td>Beans</td>
<td>18</td>
<td>15</td>
<td>13</td>
<td>12</td>
<td>10</td>
<td>12</td>
<td colspan="2">13</td>
<td colspan="2">13</td>
<td colspan="2">13</td>
<td colspan="2">11</td>
<td colspan="2">9</td>
<td colspan="3">10</td>
<td></td>
</tr>
<tr class="even">
<td>Peas</td>
<td>1</td>
<td>&lt;1</td>
<td>&lt;1</td>
<td>&lt;1</td>
<td>0</td>
<td>0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="3">0</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Oilseeds</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="odd">
<td>Sunflower</td>
<td>12</td>
<td>12</td>
<td>13</td>
<td>13</td>
<td>12</td>
<td>14</td>
<td colspan="2">18</td>
<td colspan="2">36</td>
<td colspan="2">33</td>
<td colspan="2">36</td>
<td colspan="2">54</td>
<td colspan="3">71</td>
<td></td>
</tr>
<tr class="even">
<td>Soybeans</td>
<td>11</td>
<td>12</td>
<td>8</td>
<td>5</td>
<td>2</td>
<td>1</td>
<td colspan="2">1</td>
<td colspan="2">1</td>
<td colspan="2">2</td>
<td colspan="2">3</td>
<td colspan="2">2</td>
<td colspan="3">2</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Potatoes</strong></td>
<td>32</td>
<td>30</td>
<td>28</td>
<td>23</td>
<td>22</td>
<td>21</td>
<td colspan="2">24</td>
<td colspan="2">23</td>
<td colspan="2">24</td>
<td colspan="2">27</td>
<td colspan="2">34</td>
<td colspan="3">34</td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Industrial</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="even">
<td>Sugarbeet</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>2</td>
<td>1</td>
<td colspan="2">1</td>
<td colspan="2">1</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="2">0</td>
<td colspan="3">0</td>
<td></td>
</tr>
<tr class="odd">
<td>Tobacco</td>
<td>11</td>
<td>10</td>
<td>7</td>
<td>6</td>
<td>3</td>
<td>3</td>
<td colspan="2">2</td>
<td colspan="2">1</td>
<td colspan="2">1</td>
<td colspan="2">1</td>
<td colspan="2">3</td>
<td colspan="3">2</td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Vegetabl.</strong></td>
<td>38</td>
<td>39</td>
<td>36</td>
<td>31</td>
<td>25</td>
<td>25</td>
<td colspan="2">29</td>
<td colspan="2">29</td>
<td colspan="2">28</td>
<td colspan="2">32</td>
<td colspan="2">42</td>
<td colspan="3">43</td>
<td></td>
</tr>
<tr class="even">
<td>Tomatoes</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">39%</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="odd">
<td>Cabbage</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">18%</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="even">
<td>Onion</td>
<td colspan="7">} n/a, but figures from 1994 indicate the following
percentages</td>
<td colspan="2">16%</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
</tr>
<tr class="odd">
<td>Garlic</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">3%</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="even">
<td>Beet</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">4%</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="odd">
<td>Carrot</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">2%</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="even">
<td>Other</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2">18%</td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="3"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="21">Source: Goskomstat, and for 98 and 99 MAF, Dept of Crop
Prod.</td>
</tr>
</tbody>
</table>

<table style="width:100%;">
<colgroup>
<col style="width: 12%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="13"><h1 id="georgia-1">Georgia</h1></td>
</tr>
<tr class="even">
<td colspan="13"><h1 id="table-2--yields-of-annual-crops-qha1">Table 2
-Yields of Annual Crops (q/ha<sup>1</sup>)</h1></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Grains</strong></td>
<td>22.8</td>
<td>25.4</td>
<td>24.7</td>
<td>19.7</td>
<td>18.1</td>
<td>15.9</td>
<td>18.6</td>
<td>19.8</td>
<td>22.9</td>
<td>21</td>
<td>14.5</td>
<td>20.5</td>
</tr>
<tr class="odd">
<td>Wi.wheat</td>
<td>21.6</td>
<td>26.2</td>
<td>28.2</td>
<td>20.9</td>
<td>16.9</td>
<td>13.6</td>
<td>13</td>
<td>12.2</td>
<td>13.3</td>
<td>17.7</td>
<td>13</td>
<td>20.4</td>
</tr>
<tr class="even">
<td>Wi.barley</td>
<td>20.6</td>
<td>14.6</td>
<td>27.4</td>
<td>20.1</td>
<td>17.3</td>
<td>12.5</td>
<td>11.5</td>
<td>10.9</td>
<td>9</td>
<td>14.3</td>
<td>10.5</td>
<td>17.2</td>
</tr>
<tr class="odd">
<td>Rye</td>
<td>17.1</td>
<td>18.8</td>
<td>25</td>
<td>18.8</td>
<td>13</td>
<td>5.1</td>
<td>8.1</td>
<td>8.9</td>
<td>10.9</td>
<td>7.1</td>
<td>n/a</td>
<td>n/a</td>
</tr>
<tr class="even">
<td>Spr.wheat</td>
<td>16.1</td>
<td>12.8</td>
<td>15.1</td>
<td>13.5</td>
<td>14.8</td>
<td>6.6</td>
<td>10.1</td>
<td>11.9</td>
<td>13.6</td>
<td>6.7</td>
<td>12</td>
<td>17.5</td>
</tr>
<tr class="odd">
<td>Spr.barley</td>
<td>24.6</td>
<td>20.5</td>
<td>21.4</td>
<td>20.1</td>
<td>12.3</td>
<td>7.9</td>
<td>11.5</td>
<td>10.1</td>
<td>8.5</td>
<td>7.3</td>
<td>13.5</td>
<td>17.2</td>
</tr>
<tr class="even">
<td>Oats</td>
<td>11.5</td>
<td>15.3</td>
<td>12</td>
<td>10.8</td>
<td>9.9</td>
<td>6.5</td>
<td>7.9</td>
<td>5.3</td>
<td>6</td>
<td>12.4</td>
<td>8</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td>Maize</td>
<td>27.3</td>
<td>29.7</td>
<td>25.2</td>
<td>21.2</td>
<td>23.2</td>
<td>21.7</td>
<td>24.8</td>
<td>27.1</td>
<td>33</td>
<td>27.3</td>
<td>19.2</td>
<td>21.9</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Legumes</strong></td>
<td>7.4</td>
<td>6.3</td>
<td>4.5</td>
<td>4.5</td>
<td>4.8</td>
<td>4</td>
<td>6.1</td>
<td>9.3</td>
<td>8.7</td>
<td>7.1</td>
<td>10</td>
<td>9.4</td>
</tr>
<tr class="even">
<td>Beans</td>
<td>7.2</td>
<td>5.9</td>
<td>3.9</td>
<td>3.8</td>
<td>4.3</td>
<td>4.1</td>
<td>6.1</td>
<td>9.3</td>
<td>8.8</td>
<td>7.1</td>
<td>10</td>
<td>9.4</td>
</tr>
<tr class="odd">
<td>Peas</td>
<td>5.7</td>
<td>9.7</td>
<td>6.8</td>
<td>7.8</td>
<td>3.7</td>
<td>2.5</td>
<td>4.7</td>
<td>2.1</td>
<td>4.1</td>
<td>5.7</td>
<td>n/a</td>
<td>n/a</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Oilseeds</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Sunflower</td>
<td>7.7</td>
<td>13.6</td>
<td>5.8</td>
<td>5.4</td>
<td>5.9</td>
<td>2.3</td>
<td>4.3</td>
<td>2</td>
<td>1.2</td>
<td>8.9</td>
<td>8.4</td>
<td>5.8</td>
</tr>
<tr class="odd">
<td>Soybeans</td>
<td>5.2</td>
<td>5.6</td>
<td>4.4</td>
<td>4.2</td>
<td>1.8</td>
<td>0.7</td>
<td>1.8</td>
<td>1.3</td>
<td>14.6</td>
<td>6.3</td>
<td>7.5</td>
<td>5.5</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Potatoes</strong></td>
<td>125</td>
<td>109</td>
<td>106</td>
<td>110</td>
<td>95</td>
<td>116</td>
<td>123</td>
<td>152</td>
<td>121</td>
<td>130</td>
<td>119</td>
<td>130</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Industrial</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Sugarbeet</td>
<td>474</td>
<td>366</td>
<td>229</td>
<td>155</td>
<td>147</td>
<td>104</td>
<td>76</td>
<td>133</td>
<td>86</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Tobacco</td>
<td>19</td>
<td>11.8</td>
<td>11.2</td>
<td>12.6</td>
<td>12.5</td>
<td>0.9</td>
<td>9.3</td>
<td>8.3</td>
<td>9.2</td>
<td>11.3</td>
<td>3.8</td>
<td>10</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Vegetabl.</strong></td>
<td>144</td>
<td>148</td>
<td>111</td>
<td>105</td>
<td>114</td>
<td>141</td>
<td>143</td>
<td>140</td>
<td>136</td>
<td>151</td>
<td>84</td>
<td>97</td>
</tr>
<tr class="even">
<td>Tomatoes</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Cabbage</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Onion</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Garlic</td>
<td>} n/a</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Beet</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Carrot</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Other</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="13">Source: Goskomstat, and for 98 and 99 MAF, Dept of Crop
Prod.<sup>1</sup> The 'q' in q/ha describes the quantity quintel, which
is equal to 100 kg.</td>
</tr>
</tbody>
</table>

<table style="width:100%;">
<colgroup>
<col style="width: 16%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="12"><h1 id="georgia-2">Georgia</h1></td>
</tr>
<tr class="even">
<td colspan="12"><strong>Table 3 - Yields of Perennial Crops
(t/ha)</strong></td>
</tr>
<tr class="odd">
<td colspan="12"></td>
</tr>
<tr class="even">
<td></td>
<td>1985</td>
<td>1988</td>
<td>1990</td>
<td>1991</td>
<td>1992</td>
<td>1993</td>
<td>1994</td>
<td>1995</td>
<td>1996</td>
<td>1997</td>
<td>1998</td>
</tr>
<tr class="odd">
<td><strong>Seed fruits</strong></td>
<td>9.4</td>
<td>8.3</td>
<td>7</td>
<td>5.1</td>
<td>5.9</td>
<td>5.4</td>
<td>7</td>
<td>5.8</td>
<td>5.2</td>
<td>5.1</td>
<td>4.8</td>
</tr>
<tr class="even">
<td>Apple</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>4.8</td>
<td>4.9</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td>Pear</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>6.4</td>
<td>5.7</td>
<td>4.9</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Stone fruits</strong></td>
<td>6.1</td>
<td>6</td>
<td>6.2</td>
<td>3.4</td>
<td>3.1</td>
<td>1.8</td>
<td>2.7</td>
<td>2.5</td>
<td>2.8</td>
<td>3.1</td>
<td>2.8</td>
</tr>
<tr class="even">
<td>Plum/cherry</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>2.6</td>
<td>2.8</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td>Peach/apricot</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>2.7</td>
<td>3.5</td>
<td>3.2</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Nuts</strong></td>
<td>0.36</td>
<td>0.47</td>
<td>0.48</td>
<td>0.47</td>
<td>0.48</td>
<td>0.58</td>
<td>0.52</td>
<td>0.46</td>
<td>0.55</td>
<td>0.86</td>
<td>0.82</td>
</tr>
<tr class="even">
<td>Walnuts</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>1.15</td>
<td>1.02</td>
<td>0.85</td>
</tr>
<tr class="odd">
<td>Hazelnuts</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>0.41</td>
<td>0.83</td>
<td>0.8</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Subtropical</strong></td>
<td>5.2</td>
<td>3</td>
<td>6.6</td>
<td>6.9</td>
<td>8.1</td>
<td>8.2</td>
<td>9.2</td>
<td>8.3</td>
<td>8.3</td>
<td>8</td>
<td>7.5</td>
</tr>
<tr class="even">
<td>Fig</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
</tr>
<tr class="odd">
<td>Pomegranate</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
</tr>
<tr class="even">
<td>Persimmon</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Berries</strong></td>
<td>9.6</td>
<td>5.3</td>
<td>6.4</td>
<td>8.7</td>
<td>10.6</td>
<td>16.8</td>
<td>10.3</td>
<td>7.4</td>
<td>10.3</td>
<td>10.1</td>
<td>12.5</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Grapes</strong></td>
<td>8</td>
<td>5.9</td>
<td>6.8</td>
<td>6.1</td>
<td>4.1</td>
<td>4.7</td>
<td>3.8</td>
<td>4.8</td>
<td>3.6</td>
<td>4.1</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Citrus</strong></td>
<td>7.6</td>
<td>26.1</td>
<td>17</td>
<td>11.5</td>
<td>10.4</td>
<td>3.4</td>
<td>7.7</td>
<td>9</td>
<td>6.9</td>
<td>5.1</td>
<td>5</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Tea</strong></td>
<td>10.2</td>
<td>8.1</td>
<td>9</td>
<td>7.5</td>
<td>4.2</td>
<td>4.1</td>
<td>1.8</td>
<td>1.3</td>
<td>1</td>
<td>1.1</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td colspan="8">Source: Goskomstat, except 1998 MAF, Dept.of Crop
Production</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>

<table>
<colgroup>
<col style="width: 11%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="13"><h1 id="georgia-3">Georgia</h1></td>
</tr>
<tr class="even">
<td colspan="13"><h1
id="table-4---production-of-annual-crops-000-tons">Table 4 - Production
of Annual Crops ('000 tons)</h1></td>
</tr>
<tr class="odd">
<td></td>
<td>1985</td>
<td>1988</td>
<td>1990</td>
<td>1991</td>
<td>1992</td>
<td>1993</td>
<td>1994</td>
<td>1995</td>
<td>1996</td>
<td>1997</td>
<td>1998</td>
<td>1999</td>
</tr>
<tr class="even">
<td><strong>Grains</strong></td>
<td>622</td>
<td>691</td>
<td>667</td>
<td>573</td>
<td>501</td>
<td>407</td>
<td>478</td>
<td>515</td>
<td>643</td>
<td>918</td>
<td>603</td>
<td>780</td>
</tr>
<tr class="odd">
<td>Wi.wheat</td>
<td>173</td>
<td>228</td>
<td>257</td>
<td>209</td>
<td>189</td>
<td>113</td>
<td>88</td>
<td>74</td>
<td>105</td>
<td>292</td>
<td>205</td>
<td>219</td>
</tr>
<tr class="even">
<td>Wi.barley</td>
<td>52</td>
<td>44</td>
<td>82</td>
<td>64</td>
<td>55</td>
<td>29</td>
<td>18</td>
<td>17</td>
<td>17</td>
<td>33</td>
<td>4</td>
<td>19</td>
</tr>
<tr class="odd">
<td>Rye</td>
<td>2</td>
<td>3</td>
<td>2</td>
<td>1</td>
<td>1</td>
<td>&lt;1</td>
<td>&lt;1</td>
<td>&lt;1</td>
<td>&lt;1</td>
<td>&lt;1</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Spr.wheat</td>
<td>1</td>
<td>2</td>
<td>1</td>
<td>2</td>
<td>1</td>
<td>1</td>
<td>2</td>
<td>2</td>
<td>2</td>
<td>6</td>
<td>2</td>
<td>7</td>
</tr>
<tr class="odd">
<td>Spr.barley</td>
<td>47</td>
<td>33</td>
<td>36</td>
<td>38</td>
<td>20</td>
<td>11</td>
<td>15</td>
<td>16</td>
<td>11</td>
<td>14</td>
<td>17</td>
<td>31</td>
</tr>
<tr class="even">
<td>Oats</td>
<td>13</td>
<td>18</td>
<td>12</td>
<td>12</td>
<td>10</td>
<td>7</td>
<td>6</td>
<td>5</td>
<td>4</td>
<td>9</td>
<td>4</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td>Maize</td>
<td>322</td>
<td>324</td>
<td>270</td>
<td>244</td>
<td>220</td>
<td>243</td>
<td>342</td>
<td>385</td>
<td>492</td>
<td>554</td>
<td>420</td>
<td>490</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Legumes</strong></td>
<td>14</td>
<td>10</td>
<td>6</td>
<td>6</td>
<td>5</td>
<td>5</td>
<td>9</td>
<td>12</td>
<td>11</td>
<td>8</td>
<td>9</td>
<td>9.4</td>
</tr>
<tr class="even">
<td>Beans</td>
<td>13</td>
<td>9</td>
<td>5</td>
<td>5</td>
<td>4</td>
<td>5</td>
<td>8</td>
<td>12</td>
<td>11</td>
<td>8</td>
<td>9</td>
<td>9.4</td>
</tr>
<tr class="odd">
<td>Peas</td>
<td>1</td>
<td>&lt;1</td>
<td>&lt;1</td>
<td>&lt;1</td>
<td>&lt;1</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Oilseeds</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Sunflower</td>
<td>9</td>
<td>16</td>
<td>8</td>
<td>7</td>
<td>7</td>
<td>3</td>
<td>8</td>
<td>7</td>
<td>4</td>
<td>32</td>
<td>45</td>
<td>41</td>
</tr>
<tr class="odd">
<td>Soybeans</td>
<td>6</td>
<td>7</td>
<td>4</td>
<td>2</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>3</td>
<td>2</td>
<td>2</td>
<td>1.1</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Potatoes</strong></td>
<td>394</td>
<td>327</td>
<td>294</td>
<td>253</td>
<td>209</td>
<td>244</td>
<td>295</td>
<td>353</td>
<td>286</td>
<td>353</td>
<td>350</td>
<td>443</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Industrial</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Sugarbeet</td>
<td>47</td>
<td>37</td>
<td>23</td>
<td>16</td>
<td>29</td>
<td>10</td>
<td>8</td>
<td>13</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="even">
<td>Tobacco</td>
<td>21</td>
<td>12</td>
<td>8</td>
<td>8</td>
<td>4</td>
<td>0</td>
<td>2</td>
<td>1</td>
<td>1</td>
<td>1</td>
<td>3.4</td>
<td>2</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Vegetables.</strong></td>
<td>604</td>
<td>577</td>
<td>443</td>
<td>326</td>
<td>285</td>
<td>353</td>
<td>415</td>
<td>428</td>
<td>424</td>
<td>514</td>
<td>380</td>
<td>417</td>
</tr>
<tr class="odd">
<td>Tomatoes</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Cabbage</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Onion</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Garlic</td>
<td>} n/a</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Beet</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Carrot</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>Other</td>
<td>}</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="13">Source: Goskomstat reported production data.</td>
</tr>
</tbody>
</table>

<table style="width:100%;">
<colgroup>
<col style="width: 12%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="13"><h1 id="georgia-4">Georgia</h1>
<h1 id="table-5---production-of-perennial-crops-000-tons">Table 5 -
Production of Perennial Crops ('000 tons)</h1></td>
</tr>
<tr class="even">
<td></td>
<td>1985</td>
<td>1988</td>
<td>1990</td>
<td>1991</td>
<td>1992</td>
<td>1993</td>
<td>1994</td>
<td>1995</td>
<td>1996</td>
<td>1997</td>
<td>1998</td>
<td>1999</td>
</tr>
<tr class="odd">
<td><strong>Seed fruits</strong></td>
<td>766</td>
<td>596</td>
<td>484</td>
<td>323</td>
<td>258</td>
<td>207</td>
<td>290</td>
<td>269</td>
<td>236</td>
<td>210</td>
<td>194</td>
<td>144</td>
</tr>
<tr class="even">
<td>Apple</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>146</td>
<td>134</td>
<td>122</td>
<td>98</td>
</tr>
<tr class="odd">
<td>Pear</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>76</td>
<td>62</td>
<td>50</td>
<td>40</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Stone fruits</strong></td>
<td>182</td>
<td>171</td>
<td>177</td>
<td>91</td>
<td>69</td>
<td>35</td>
<td>59</td>
<td>65</td>
<td>70</td>
<td>72</td>
<td>63</td>
<td>90</td>
</tr>
<tr class="even">
<td>Plum/cherry</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>36</td>
<td>37</td>
<td>31</td>
<td>37</td>
</tr>
<tr class="odd">
<td>Peach/apricot</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>12</td>
<td>14</td>
<td>8</td>
<td>17</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Nuts</strong></td>
<td>8</td>
<td>10</td>
<td>9</td>
<td>9</td>
<td>8</td>
<td>10</td>
<td>9</td>
<td>7</td>
<td>8</td>
<td>12</td>
<td>11</td>
<td>35</td>
</tr>
<tr class="even">
<td>Walnuts</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>4</td>
<td>3</td>
<td>2</td>
<td>18</td>
</tr>
<tr class="odd">
<td>Hazelnuts</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>5</td>
<td>9</td>
<td>8</td>
<td>17</td>
</tr>
<tr class="even">
<td><h2 id="subtotal">Subtotal</h2></td>
<td>956</td>
<td>777</td>
<td>670</td>
<td>424</td>
<td>336</td>
<td>253</td>
<td>358</td>
<td>341</td>
<td>315</td>
<td>294</td>
<td>268</td>
<td>269</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td><strong>Other</strong></td>
<td>48</td>
<td>28</td>
<td>63</td>
<td>61</td>
<td>72</td>
<td>69</td>
<td>88</td>
<td>56</td>
<td>56</td>
<td>50</td>
<td>44</td>
<td>24</td>
</tr>
<tr class="odd">
<td>Fig</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
</tr>
<tr class="even">
<td>Pomegranate</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
</tr>
<tr class="odd">
<td>Persimmon</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Berries</strong></td>
<td>1.0</td>
<td>0.5</td>
<td>1.3</td>
<td>0.9</td>
<td>1.1</td>
<td>1.7</td>
<td>1.0</td>
<td>1.5</td>
<td>2.1</td>
<td>2.0</td>
<td>2.5</td>
<td>1.6</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Grapes</strong></td>
<td>1024</td>
<td>696</td>
<td>768</td>
<td>665</td>
<td>357</td>
<td>371</td>
<td>308</td>
<td>451</td>
<td>328</td>
<td>332</td>
<td>312</td>
<td>220</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Citrus</strong></td>
<td>198</td>
<td>705</td>
<td>425</td>
<td>288</td>
<td>198</td>
<td>58</td>
<td>131</td>
<td>117</td>
<td>83</td>
<td>56</td>
<td>55</td>
<td>56</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Tea</strong></td>
<td>683</td>
<td>527</td>
<td>558</td>
<td>473</td>
<td>235</td>
<td>205</td>
<td>81</td>
<td>52</td>
<td>40</td>
<td>44</td>
<td>100</td>
<td>60</td>
</tr>
<tr class="even">
<td colspan="13">Source: For 1985 to 1998 World Bank &amp; Goskomstat
(some data differs substantially from Goskomst.prod.data); 1999 is based
on Goskomstat production data.</td>
</tr>
</tbody>
</table>

<table style="width:100%;">
<colgroup>
<col style="width: 20%" />
<col style="width: 10%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 7%" />
<col style="width: 6%" />
<col style="width: 1%" />
<col style="width: 6%" />
<col style="width: 1%" />
<col style="width: 6%" />
<col style="width: 1%" />
<col style="width: 6%" />
<col style="width: 1%" />
<col style="width: 6%" />
<col style="width: 1%" />
<col style="width: 6%" />
<col style="width: 0%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="17"><p><strong>Georgia</strong></p>
<p><strong>Table 6 - Livestock Indicators</strong></p>
<p><strong>Development of Livestock Population ('000)</strong></p></td>
</tr>
<tr class="even">
<td></td>
<td>Unit</td>
<td>1985</td>
<td>1988</td>
<td>1990</td>
<td colspan="2">1992</td>
<td colspan="2">1994</td>
<td colspan="2">1996</td>
<td colspan="2">1998</td>
<td colspan="2">1999</td>
<td colspan="2">2000</td>
</tr>
<tr class="odd">
<td><strong>Cattle</strong></td>
<td>000</td>
<td>1646</td>
<td>1548</td>
<td>1298</td>
<td colspan="2">1003</td>
<td colspan="2">944</td>
<td colspan="2">1008</td>
<td colspan="2">1030</td>
<td colspan="2">1050</td>
<td colspan="2">1122</td>
</tr>
<tr class="even">
<td><strong>of wh.cows</strong></td>
<td>000</td>
<td>649</td>
<td>620</td>
<td>552</td>
<td colspan="2">502</td>
<td colspan="2">514</td>
<td colspan="2">544</td>
<td colspan="2">556</td>
<td colspan="2">575</td>
<td colspan="2">640</td>
</tr>
<tr class="odd">
<td><strong>Buffaloes</strong></td>
<td>000</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td colspan="2">37</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">33</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td><strong>of wh.cows</strong></td>
<td>000</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td colspan="2">19</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">19</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td><strong>Sheep &amp; goats</strong></td>
<td>000</td>
<td>1978</td>
<td>1894</td>
<td>1618</td>
<td colspan="2">1192</td>
<td colspan="2">793</td>
<td colspan="2">652</td>
<td colspan="2">610</td>
<td colspan="2">587</td>
<td colspan="2">633</td>
</tr>
<tr class="even">
<td><strong>of wh.females</strong></td>
<td>000</td>
<td>1879</td>
<td>1228</td>
<td>1028</td>
<td colspan="2">811</td>
<td colspan="2">553</td>
<td colspan="2">459</td>
<td colspan="2">452</td>
<td colspan="2">417*</td>
<td colspan="2">449*</td>
</tr>
<tr class="odd">
<td><strong>Pigs</strong></td>
<td>000</td>
<td>1173</td>
<td>1099</td>
<td>880</td>
<td colspan="2">476</td>
<td colspan="2">367</td>
<td colspan="2">333</td>
<td colspan="2">350</td>
<td colspan="2">365</td>
<td colspan="2">411</td>
</tr>
<tr class="even">
<td><strong>of wh.sows</strong></td>
<td>000</td>
<td>170</td>
<td>216</td>
<td>209</td>
<td colspan="2">161</td>
<td colspan="2">200</td>
<td colspan="2">125</td>
<td colspan="2">118</td>
<td colspan="2">110*</td>
<td colspan="2">123*</td>
</tr>
<tr class="odd">
<td><strong>Poultry</strong></td>
<td>000</td>
<td>24296</td>
<td>25172</td>
<td>21760</td>
<td colspan="2">11211</td>
<td colspan="2">12290</td>
<td colspan="2">14645</td>
<td colspan="2">15540</td>
<td colspan="2">8240</td>
<td colspan="2">8470</td>
</tr>
<tr class="even">
<td><strong>Horses</strong></td>
<td>000</td>
<td>25</td>
<td>23</td>
<td>20</td>
<td colspan="2">17</td>
<td colspan="2">21</td>
<td colspan="2">26</td>
<td colspan="2">28</td>
<td colspan="2">30</td>
<td colspan="2">34</td>
</tr>
<tr class="odd">
<td><strong>Bee hives</strong></td>
<td>000</td>
<td>127</td>
<td>105</td>
<td>96</td>
<td colspan="2">65</td>
<td colspan="2">35</td>
<td colspan="2">52</td>
<td colspan="2">75</td>
<td colspan="2">78</td>
<td colspan="2">94</td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td colspan="4"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td><strong>Production of Major Livestock Products</strong></td>
<td>Unit</td>
<td>1985</td>
<td>1988</td>
<td>1990</td>
<td colspan="2">1992</td>
<td colspan="2">1994</td>
<td colspan="2">1996</td>
<td colspan="2">1998</td>
<td colspan="2">1999</td>
<td colspan="2">2000</td>
</tr>
<tr class="even">
<td><strong>Meat</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td>All livestock,</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td>live at slaughter</td>
<td>000 tons</td>
<td>253</td>
<td>268</td>
<td>263</td>
<td colspan="2">177</td>
<td colspan="2">171</td>
<td colspan="2">187</td>
<td colspan="2">147</td>
<td colspan="2">165</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td>Carcass</td>
<td>000 tons</td>
<td>166</td>
<td>172</td>
<td>170</td>
<td colspan="2">113</td>
<td colspan="2">108</td>
<td colspan="2">118</td>
<td colspan="2">108</td>
<td colspan="2">104</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td>Poultry,</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td>Slaughterweight</td>
<td>000 tons</td>
<td>n/a</td>
<td>n/a</td>
<td>n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td><h3 id="milk">Milk</h3></td>
<td>000 liters</td>
<td>684</td>
<td>731</td>
<td>659</td>
<td colspan="2">470</td>
<td colspan="2">429</td>
<td colspan="2">530</td>
<td colspan="2">640</td>
<td colspan="2">660</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td><strong>Eggs</strong></td>
<td>Mln pieces</td>
<td>823</td>
<td>890</td>
<td>769</td>
<td colspan="2">297</td>
<td colspan="2">251</td>
<td colspan="2">350</td>
<td colspan="2">380</td>
<td colspan="2">390</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td><strong>Wool</strong></td>
<td>Tons</td>
<td>6.2</td>
<td>6.8</td>
<td>6.2</td>
<td colspan="2">4.2</td>
<td colspan="2">3.4</td>
<td colspan="2">3</td>
<td colspan="2">1.7</td>
<td colspan="2">1.7</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td><strong>Livestock Productivity</strong></td>
<td>Unit</td>
<td>1985</td>
<td>1988</td>
<td>1990</td>
<td colspan="2">1992</td>
<td colspan="2">1994</td>
<td colspan="2">1996</td>
<td colspan="2">1998</td>
<td colspan="2">1999</td>
<td colspan="2">2000</td>
</tr>
<tr class="odd">
<td><strong>Meat production</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td>Aver.slaughterweight</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td>Cattle</td>
<td>kg</td>
<td>N/a</td>
<td>n/a</td>
<td>n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td>Sheep &amp; goats</td>
<td>kg</td>
<td>N/a</td>
<td>n/a</td>
<td>n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td>Pigs</td>
<td>kg</td>
<td>N/a</td>
<td>n/a</td>
<td>n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td>Broilers</td>
<td>kg</td>
<td>N/a</td>
<td>n/a</td>
<td>n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td><strong>Milk</strong></td>
<td>lts/lact</td>
<td>1043</td>
<td>1177</td>
<td>1108</td>
<td colspan="2">850</td>
<td colspan="2">871</td>
<td colspan="2">982</td>
<td colspan="2">1087</td>
<td colspan="2">1073</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td><strong>Eggs</strong></td>
<td>Nr./layer</td>
<td>166</td>
<td>184</td>
<td>n/a</td>
<td colspan="2">86</td>
<td colspan="2">39</td>
<td colspan="2">78</td>
<td colspan="2">164</td>
<td colspan="2">165</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td><strong>Wool</strong></td>
<td>kg/sheep</td>
<td>3.3</td>
<td>3.8</td>
<td>3.5</td>
<td colspan="2">3</td>
<td colspan="2">2.9</td>
<td colspan="2">2.9</td>
<td colspan="2">3.4</td>
<td colspan="2">3.4</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td><strong>Fertility rates</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td>per 100 cows (total)</td>
<td>Nr. calves</td>
<td>65</td>
<td>n/a</td>
<td>59</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">89</td>
<td colspan="2">85</td>
<td colspan="2">92</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td>By ag enterprise</td>
<td>Nr. calves</td>
<td>55</td>
<td>n/a</td>
<td>49</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">54</td>
<td colspan="2">49</td>
<td colspan="2">42</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td>By household owner</td>
<td>Nr. calves</td>
<td>70</td>
<td>n/a</td>
<td>63</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">90</td>
<td colspan="2">91</td>
<td colspan="2">91</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td>per 100 ewes &amp; does</td>
<td>Nr. Lambs</td>
<td>75</td>
<td>n/a</td>
<td>70</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">99</td>
<td colspan="2">111</td>
<td colspan="2">114</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td>By ag enterprise</td>
<td>Nr. Lambs</td>
<td>84</td>
<td>n/a</td>
<td>80</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">48</td>
<td colspan="2">36</td>
<td colspan="2">41</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td>By household owner</td>
<td>Nr. Lambs</td>
<td>67</td>
<td>n/a</td>
<td>60</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">112</td>
<td colspan="2">152</td>
<td colspan="2">124</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td>per 100 sows (total)</td>
<td>Nr. Piglets/yr</td>
<td>1039</td>
<td>n/a</td>
<td>737</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">985</td>
<td colspan="2">723</td>
<td colspan="2">833</td>
<td colspan="2">n/a</td>
</tr>
<tr class="even">
<td>By ag enterprise</td>
<td>Nr. Piglets/yr</td>
<td>892</td>
<td>n/a</td>
<td>711</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">367</td>
<td colspan="2">290</td>
<td colspan="2">260</td>
<td colspan="2">n/a</td>
</tr>
<tr class="odd">
<td>By household owner</td>
<td>Nr. Piglets/yr</td>
<td>1096</td>
<td>n/a</td>
<td>744</td>
<td colspan="2">n/a</td>
<td colspan="2">n/a</td>
<td colspan="2">986</td>
<td colspan="2">841</td>
<td colspan="2">837</td>
<td colspan="2">n/a</td>
</tr>
</tbody>
</table>

Source: Goskomstat and partially MAF, Dept. of Livestock; \* indicates a
team estimate

.

+------------+-------+-------+-------+-------+-------+-------+-------+
| *          |       |       |       |       |       |       |       |
| *Georgia** |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| # Tab      |       |       |       |       |       |       |       |
| le 7 - Pes |       |       |       |       |       |       |       |
| ticide and |       |       |       |       |       |       |       |
|  Fertilize |       |       |       |       |       |       |       |
| r Supplies |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
|            |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
|            |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| *          |       |       |       |       |       |       |       |
| *Pesticide |       |       |       |       |       |       |       |
| Supply (in |       |       |       |       |       |       |       |
| physical   |       |       |       |       |       |       |       |
| tons)**    |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
|            | 1985  | 1988  | 1990  | 1992  | 1994  | 1996  | 1998  |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Herbicides | 1000  | 1398  | 1177  | 140   | 2     | 5     | 18    |
+------------+-------+-------+-------+-------+-------+-------+-------+
| In         | 7794  | 8462  | 3523  | 1142  | 15    | 5     | 10    |
| secticides |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Fungicides | 20933 | 14150 | 17856 | 6882  | 104   | 190   | 234   |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Total      | 29727 | 24010 | 22556 | 8164  | 121   | 200   | 262   |
+------------+-------+-------+-------+-------+-------+-------+-------+
|            |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
| **         |       |       |       |       |       |       |       |
| Fertilizer |       |       |       |       |       |       |       |
| Supply (in |       |       |       |       |       |       |       |
| \'000 tons |       |       |       |       |       |       |       |
| of pure    |       |       |       |       |       |       |       |
| nu         |       |       |       |       |       |       |       |
| trients)** |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+
|            | 1985  | 1988  | 1990  | 1992  | 1994  | 1996  | 1998  |
+------------+-------+-------+-------+-------+-------+-------+-------+
| N          | 128   | 112   | 64    | 31    | 4     | 5     | 28    |
+------------+-------+-------+-------+-------+-------+-------+-------+
| P          | 84    | 75    | 26    | 8     | 0     | 0     | 4     |
+------------+-------+-------+-------+-------+-------+-------+-------+
| K          | 34    | 40    | 4     | 0     | 0     | 0     | 0     |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Total      | 246   | 227   | 94    | 39    | 4     | 5     | 32    |
+------------+-------+-------+-------+-------+-------+-------+-------+
| Source:    |       |       |       |       |       |       |       |
| MAF,       |       |       |       |       |       |       |       |
| Department |       |       |       |       |       |       |       |
| of         |       |       |       |       |       |       |       |
| Agr        |       |       |       |       |       |       |       |
| ochemistry |       |       |       |       |       |       |       |
| and Soil   |       |       |       |       |       |       |       |
| Fertility  |       |       |       |       |       |       |       |
+------------+-------+-------+-------+-------+-------+-------+-------+

<table>
<colgroup>
<col style="width: 19%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td><strong>Georgia</strong></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="5"><h1
id="table-8---department-of-agricultural-mechanization-1988-98">Table 8
- Department of Agricultural Mechanization 1988-98</h1></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="7"><h1 id="section-1"></h1></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td>1988</td>
<td>1990</td>
<td>1992</td>
<td>1993</td>
<td>1994</td>
<td>1995</td>
<td>1996</td>
<td>1997</td>
<td>1998</td>
</tr>
<tr class="odd">
<td>Tractors</td>
<td>26806</td>
<td>26000</td>
<td>23009</td>
<td>20800</td>
<td>18200</td>
<td>15160</td>
<td>15240</td>
<td>17583</td>
<td>17240</td>
</tr>
<tr class="even">
<td>Grain combines</td>
<td>1576</td>
<td>1343</td>
<td>1236</td>
<td>1114</td>
<td>1080</td>
<td>949</td>
<td>996</td>
<td>1018</td>
<td>969</td>
</tr>
<tr class="odd">
<td>Plows</td>
<td>10343</td>
<td>8339</td>
<td>6720</td>
<td>5491</td>
<td>5365</td>
<td>5216</td>
<td>5232</td>
<td>5367</td>
<td>4190</td>
</tr>
<tr class="even">
<td>Cultivators</td>
<td>5370</td>
<td>4370</td>
<td>3184</td>
<td>2626</td>
<td>2567</td>
<td>2307</td>
<td>2335</td>
<td>2340</td>
<td>1750</td>
</tr>
<tr class="odd">
<td>Drills</td>
<td>4237</td>
<td>3852</td>
<td>2987</td>
<td>2737</td>
<td>2692</td>
<td>2018</td>
<td>2064</td>
<td>1910</td>
<td>1870</td>
</tr>
<tr class="even">
<td>Trailers</td>
<td>10490</td>
<td>8589</td>
<td>6846</td>
<td>5251</td>
<td>5298</td>
<td>5265</td>
<td>5483</td>
<td>5617</td>
<td>5083</td>
</tr>
<tr class="odd">
<td>Fertilizer spreaders</td>
<td>2534</td>
<td>2373</td>
<td>1832</td>
<td>1635</td>
<td>1319</td>
<td>1084</td>
<td>1192</td>
<td>1230</td>
<td>949</td>
</tr>
<tr class="even">
<td>Sprayers</td>
<td>4851</td>
<td>4027</td>
<td>2928</td>
<td>2262</td>
<td>2206</td>
<td>1905</td>
<td>1628</td>
<td>1498</td>
<td>1450</td>
</tr>
<tr class="odd">
<td>Trucks</td>
<td>20182</td>
<td>17800</td>
<td>15255</td>
<td>13823</td>
<td>13420</td>
<td>12860</td>
<td>12371</td>
<td>12110</td>
<td>10353</td>
</tr>
<tr class="even">
<td>Maize combines</td>
<td>350</td>
<td>300</td>
<td>285</td>
<td>260</td>
<td>225</td>
<td>211</td>
<td>198</td>
<td>176</td>
<td>104</td>
</tr>
<tr class="odd">
<td>Potato combines</td>
<td>48</td>
<td>40</td>
<td>38</td>
<td>35</td>
<td>32</td>
<td>29</td>
<td>22</td>
<td>10</td>
<td>9</td>
</tr>
<tr class="even">
<td>Forage harvesters</td>
<td>1479</td>
<td>1400</td>
<td>1291</td>
<td>1200</td>
<td>1115</td>
<td>918</td>
<td>750</td>
<td>630</td>
<td>241</td>
</tr>
<tr class="odd">
<td>Mowers</td>
<td>2252</td>
<td>2200</td>
<td>2115</td>
<td>2005</td>
<td>1853</td>
<td>1603</td>
<td>1415</td>
<td>1162</td>
<td>568</td>
</tr>
<tr class="even">
<td>Presses</td>
<td>1818</td>
<td>1700</td>
<td>1598</td>
<td>1410</td>
<td>1355</td>
<td>1209</td>
<td>1090</td>
<td>990</td>
<td>730</td>
</tr>
<tr class="odd">
<td>Pumps</td>
<td>1053</td>
<td>990</td>
<td>900</td>
<td>809</td>
<td>750</td>
<td>619</td>
<td>439</td>
<td>300</td>
<td>280</td>
</tr>
<tr class="even">
<td><p>Irrigation machines</p>
<p>Total</p></td>
<td><p>575</p>
<p>97267</p></td>
<td><p>520</p>
<p>87203</p></td>
<td><p>490</p>
<p>74106</p></td>
<td><p>453</p>
<p>65341</p></td>
<td><p>408</p>
<p>61361</p></td>
<td><p>309</p>
<p>55238</p></td>
<td><p>269</p>
<p>52451</p></td>
<td><p>180</p>
<p>53938</p></td>
<td><p>155</p>
<p>47784</p></td>
</tr>
<tr class="odd">
<td colspan="10">Source: MAF, Department of Mechanization. Note that
some figures disagree greatly with estimates of Goskomstat</td>
</tr>
</tbody>
</table>

**Georgia**

Table 9: Processing Plant Utilization Kakheti Region, August 2000

  -------------------------- -------------- -------------- --------------
                             Capacity                      
                             Utilization                   

  Description                Full           Partial        Closed

  Bread & bakery products                   5              

  Complex Agro-industry                                    1

  Confectionery production                                 1

  Dairy processing           1              2              1

  Meat processing            1              2              1

  Grain & Macaroni           3              5              1
  processing                                               

  Beverages                  1              2              

  Production of packing                                    1
  items                                                    

  Sunflower processing       2              3              3

  Fruit & Vegetable          1                             4
  processing                                               

  Miscellaneous              1                             1

  Total                      10             19             14
  -------------------------- -------------- -------------- --------------

Source: A Survey of Agricultural Resources in Khakheti Region, Georgian
Foundation, August 2000.

[Annex III]{.smallcaps}

[Assessment Team Schedule]{.smallcaps}

+----------+---+-----------------------------------+---+---------------------+
| ***Day   |   | ***Agenda Item***                 |   | ## Contact          |
| /Time*** |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| ###      |   |                                   |   |                     |
| ##  {#se |   |                                   |   |                     |
| ction-2} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ##### Mo |   |                                   |   |                     |
| nday, Fe |   |                                   |   |                     |
| bruary 5 |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 0900     |   | USAID/Tbilisi- ER                 |   | James Watson/Donald |
| -10:00   |   |                                   |   | Niss                |
+----------+---+-----------------------------------+---+---------------------+
| 10:00    |   | USAID/Tbilisi - Contracting       |   | Shahid Pervaiz      |
| -10:30   |   | Office                            |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 10:30    |   | USAID/Tbilisi- PPS                |   | Earl Gast/Judy      |
| -11:00   |   |                                   |   | Schumacher          |
+----------+---+-----------------------------------+---+---------------------+
| 11:00 -  |   | Portfolio Review SO 3             |   |                     |
| 1:30     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 1:30 -   |   | USAID/Tbilisi - HR                |   | Nicole Jordania     |
| 2:30     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 3:00 -   |   | UMCOR                             |   | Hank Shumacher      |
| 4:30     |   |                                   |   |                     |
|          |   |                                   |   | Michael             |
|          |   |                                   |   | Karalashvili        |
+----------+---+-----------------------------------+---+---------------------+
| 5:00 -   |   | USAID/Tbilisis - DIR              |   | Mike Farbman/USAID  |
| 5:30     |   |                                   |   | staff               |
+----------+---+-----------------------------------+---+---------------------+
| 6:00 -   |   | World Bank                        |   | George Maglakelidze |
| 7:30     |   |                                   |   |                     |
|          |   | Rm. 540 Ministry of Agriculture   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| ######   |   |                                   |   |                     |
| {#sectio |   |                                   |   |                     |
| n-3 .unn |   |                                   |   |                     |
| umbered} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ####     |   |                                   |   |                     |
| ## Tuesd |   |                                   |   |                     |
| ay, Febr |   |                                   |   |                     |
| uary 6 { |   |                                   |   |                     |
| #tuesday |   |                                   |   |                     |
| -februar |   |                                   |   |                     |
| y-6 .unn |   |                                   |   |                     |
| umbered} |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:00 -   |   | ACDI-VOCA                         |   | Hugh Brown          |
| 10:30    |   |                                   |   |                     |
|          |   | 35 Davitashvili Str.              |   | Aleksandre          |
|          |   |                                   |   | Kavtaradze          |
|          |   |                                   |   |                     |
|          |   |                                   |   | Irakli              |
|          |   |                                   |   | Kherodinashvili     |
+----------+---+-----------------------------------+---+---------------------+
| 11:00 -  |   | Horizon Seed                      |   | Beka                |
| 12:00    |   |                                   |   | Tagauri/Horizon     |
|          |   | 69 Oneashvili Str.                |   | Staff               |
+----------+---+-----------------------------------+---+---------------------+
| 11:00 -  |   | #### APLR/Land Mark               |   | Dato Arsenashvili   |
| 1:00     |   | et {#aplrland-market .unnumbered} |   |                     |
|          |   |                                   |   | Jaba Ebanoidze      |
|          |   |                                   |   |                     |
|          |   |                                   |   | Lela Sharinishvili  |
+----------+---+-----------------------------------+---+---------------------+
| 12:00 -  |   | Lunch                             |   |                     |
| 1:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 1:30 -   |   | Save the Children                 |   | Will Bateson        |
| 3:00     |   |                                   |   |                     |
|          |   | 54 Mtskheta St.                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 3:30 -   |   | Sibley International              |   | William Cain        |
| 5:00     |   |                                   |   |                     |
|          |   | 12 Rustaveli St. 5^th^ floor      |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 5:30 -   |   | Georgian Export Promotion Agency  |   | Paul Galbraith      |
| 6:30     |   | (GEPA)                            |   |                     |
|          |   |                                   |   | George Gaganidze    |
|          |   | 42A Aleksandr Kazbeki Ave (first  |   |                     |
|          |   | floor)                            |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 7:00 -   |   | CARE                              |   | John Perry          |
| 8:30     |   |                                   |   |                     |
|          |   | 100 T. Tabidze St.                |   | Rene Celaya         |
+----------+---+-----------------------------------+---+---------------------+
| ###      |   |                                   |   |                     |
| ##  {#se |   |                                   |   |                     |
| ction-4} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ###      |   |                                   |   |                     |
| ## Wedne |   |                                   |   |                     |
| sday, Fe |   |                                   |   |                     |
| bruary 7 |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ###      |   |                                   |   |                     |
| ##  {#se |   |                                   |   |                     |
| ction-5} |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 7:00 -   | T |                                   |   |                     |
| 9:30     | r |                                   |   |                     |
|          | a |                                   |   |                     |
|          | v |                                   |   |                     |
|          | e |                                   |   |                     |
|          | l |                                   |   |                     |
|          | t |                                   |   |                     |
|          | o |                                   |   |                     |
|          | T |                                   |   |                     |
|          | e |                                   |   |                     |
|          | l |                                   |   |                     |
|          | a |                                   |   |                     |
|          | v |                                   |   |                     |
|          | i |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:30 -   | A |                                   |   | Levan               |
| 10:30    | C |                                   |   | Sasurkinashvili     |
|          | D |                                   |   |                     |
|          | I |                                   |   |                     |
|          | / |                                   |   |                     |
|          | V |                                   |   |                     |
|          | O |                                   |   |                     |
|          | C |                                   |   |                     |
|          | A |                                   |   |                     |
|          | C |                                   |   |                     |
|          | r |                                   |   |                     |
|          | e |                                   |   |                     |
|          | d |                                   |   |                     |
|          | i |                                   |   |                     |
|          | t |                                   |   |                     |
|          | A |                                   |   |                     |
|          | s |                                   |   |                     |
|          | s |                                   |   |                     |
|          | o |                                   |   |                     |
|          | c |                                   |   |                     |
|          | i |                                   |   |                     |
|          | a |                                   |   |                     |
|          | t |                                   |   |                     |
|          | i |                                   |   |                     |
|          | o |                                   |   |                     |
|          | n |                                   |   |                     |
|          | i |                                   |   |                     |
|          | n |                                   |   |                     |
|          | T |                                   |   |                     |
|          | e |                                   |   |                     |
|          | l |                                   |   |                     |
|          | a |                                   |   |                     |
|          | v |                                   |   |                     |
|          | i |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 10:30 -  | A |                                   |   |                     |
| 1:00     | C |                                   |   |                     |
|          | D |                                   |   |                     |
|          | I |                                   |   |                     |
|          | / |                                   |   |                     |
|          | V |                                   |   |                     |
|          | O |                                   |   |                     |
|          | C |                                   |   |                     |
|          | A |                                   |   |                     |
|          | P |                                   |   |                     |
|          | r |                                   |   |                     |
|          | o |                                   |   |                     |
|          | c |                                   |   |                     |
|          | e |                                   |   |                     |
|          | s |                                   |   |                     |
|          | s |                                   |   |                     |
|          | o |                                   |   |                     |
|          | r |                                   |   |                     |
|          | C |                                   |   |                     |
|          | l |                                   |   |                     |
|          | i |                                   |   |                     |
|          | e |                                   |   |                     |
|          | n |                                   |   |                     |
|          | t |                                   |   |                     |
|          |   |                                   |   |                     |
|          | - |                                   |   |                     |
|          | B |                                   |   |                     |
|          | a |                                   |   |                     |
|          | k |                                   |   |                     |
|          | e |                                   |   |                     |
|          | r |                                   |   |                     |
|          | y |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 11:15    | A |                                   |   |                     |
| -11:45   | C |                                   |   |                     |
|          | D |                                   |   |                     |
|          | I |                                   |   |                     |
|          | / |                                   |   |                     |
|          | V |                                   |   |                     |
|          | O |                                   |   |                     |
|          | C |                                   |   |                     |
|          | A |                                   |   |                     |
|          | P |                                   |   |                     |
|          | r |                                   |   |                     |
|          | o |                                   |   |                     |
|          | c |                                   |   |                     |
|          | e |                                   |   |                     |
|          | s |                                   |   |                     |
|          | s |                                   |   |                     |
|          | o |                                   |   |                     |
|          | r |                                   |   |                     |
|          | C |                                   |   |                     |
|          | l |                                   |   |                     |
|          | i |                                   |   |                     |
|          | e |                                   |   |                     |
|          | n |                                   |   |                     |
|          | t |                                   |   |                     |
|          |   |                                   |   |                     |
|          | - |                                   |   |                     |
|          | F |                                   |   |                     |
|          | r |                                   |   |                     |
|          | u |                                   |   |                     |
|          | i |                                   |   |                     |
|          | t |                                   |   |                     |
|          | P |                                   |   |                     |
|          | r |                                   |   |                     |
|          | o |                                   |   |                     |
|          | c |                                   |   |                     |
|          | e |                                   |   |                     |
|          | s |                                   |   |                     |
|          | s |                                   |   |                     |
|          | o |                                   |   |                     |
|          | r |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 12:00 -  | A |                                   |   | P. Noneshvili       |
| 1:30     | C |                                   |   |                     |
|          | D |                                   |   |                     |
|          | I |                                   |   |                     |
|          | / |                                   |   |                     |
|          | V |                                   |   |                     |
|          | O |                                   |   |                     |
|          | C |                                   |   |                     |
|          | A |                                   |   |                     |
|          | P |                                   |   |                     |
|          | r |                                   |   |                     |
|          | o |                                   |   |                     |
|          | c |                                   |   |                     |
|          | e |                                   |   |                     |
|          | s |                                   |   |                     |
|          | s |                                   |   |                     |
|          | o |                                   |   |                     |
|          | r |                                   |   |                     |
|          | C |                                   |   |                     |
|          | l |                                   |   |                     |
|          | i |                                   |   |                     |
|          | e |                                   |   |                     |
|          | n |                                   |   |                     |
|          | t |                                   |   |                     |
|          |   |                                   |   |                     |
|          | - |                                   |   |                     |
|          | S |                                   |   |                     |
|          | o |                                   |   |                     |
|          | p |                                   |   |                     |
|          | h |                                   |   |                     |
|          | i |                                   |   |                     |
|          | o |                                   |   |                     |
|          | T |                                   |   |                     |
|          | i |                                   |   |                     |
|          | m |                                   |   |                     |
|          | b |                                   |   |                     |
|          | e |                                   |   |                     |
|          | r |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 1:30 -   | L |                                   |   |                     |
| 2:30     | u |                                   |   |                     |
|          | n |                                   |   |                     |
|          | c |                                   |   |                     |
|          | h |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 2:30 -   | S |                                   |   | Dave Harmon         |
| 3:30     | i |                                   |   |                     |
|          | b |                                   |   |                     |
|          | l |                                   |   |                     |
|          | e |                                   |   |                     |
|          | y |                                   |   |                     |
|          | I |                                   |   |                     |
|          | n |                                   |   |                     |
|          | t |                                   |   |                     |
|          | e |                                   |   |                     |
|          | r |                                   |   |                     |
|          | n |                                   |   |                     |
|          | a |                                   |   |                     |
|          | t |                                   |   |                     |
|          | i |                                   |   |                     |
|          | o |                                   |   |                     |
|          | n |                                   |   |                     |
|          | a |                                   |   |                     |
|          | l |                                   |   |                     |
|          |   |                                   |   |                     |
|          | - |                                   |   |                     |
|          | T |                                   |   |                     |
|          | e |                                   |   |                     |
|          | l |                                   |   |                     |
|          | a |                                   |   |                     |
|          | v |                                   |   |                     |
|          | i |                                   |   |                     |
|          | o |                                   |   |                     |
|          | f |                                   |   |                     |
|          | f |                                   |   |                     |
|          | i |                                   |   |                     |
|          | c |                                   |   |                     |
|          | e |                                   |   |                     |
|          |   |                                   |   |                     |
|          | 2 |                                   |   |                     |
|          | 3 |                                   |   |                     |
|          | C |                                   |   |                     |
|          | h |                                   |   |                     |
|          | a |                                   |   |                     |
|          | v |                                   |   |                     |
|          | c |                                   |   |                     |
|          | h |                                   |   |                     |
|          | a |                                   |   |                     |
|          | v |                                   |   |                     |
|          | a |                                   |   |                     |
|          | d |                                   |   |                     |
|          | z |                                   |   |                     |
|          | e |                                   |   |                     |
|          | S |                                   |   |                     |
|          | t |                                   |   |                     |
|          | r |                                   |   |                     |
|          | e |                                   |   |                     |
|          | e |                                   |   |                     |
|          | t |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 3:30 -   | # |                                   |   | Paata Giorgobani    |
| 4:30     | # |                                   |   |                     |
|          | # |                                   |   |                     |
|          |   |                                   |   |                     |
|          | W |                                   |   |                     |
|          | i |                                   |   |                     |
|          | n |                                   |   |                     |
|          | e |                                   |   |                     |
|          |   |                                   |   |                     |
|          | A |                                   |   |                     |
|          | s |                                   |   |                     |
|          | s |                                   |   |                     |
|          | o |                                   |   |                     |
|          | c |                                   |   |                     |
|          | i |                                   |   |                     |
|          | a |                                   |   |                     |
|          | t |                                   |   |                     |
|          | i |                                   |   |                     |
|          | o |                                   |   |                     |
|          | n |                                   |   |                     |
|          |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 5:30 -   | Y |                                   |   | Levan Samarguliani  |
| 7:30     | o |                                   |   |                     |
|          | r |                                   |   |                     |
|          | a |                                   |   |                     |
|          | l |                                   |   |                     |
|          | i |                                   |   |                     |
|          | Y |                                   |   |                     |
|          | o |                                   |   |                     |
|          | g |                                   |   |                     |
|          | u |                                   |   |                     |
|          | r |                                   |   |                     |
|          | t |                                   |   |                     |
|          |   |                                   |   |                     |
|          | S |                                   |   |                     |
|          | a |                                   |   |                     |
|          | g |                                   |   |                     |
|          | a |                                   |   |                     |
|          | r |                                   |   |                     |
|          | e |                                   |   |                     |
|          | d |                                   |   |                     |
|          | j |                                   |   |                     |
|          | o |                                   |   |                     |
|          | , |                                   |   |                     |
|          | V |                                   |   |                     |
|          | i |                                   |   |                     |
|          | l |                                   |   |                     |
|          | l |                                   |   |                     |
|          | a |                                   |   |                     |
|          | g |                                   |   |                     |
|          | e |                                   |   |                     |
|          | G |                                   |   |                     |
|          | i |                                   |   |                     |
|          | o |                                   |   |                     |
|          | r |                                   |   |                     |
|          | g |                                   |   |                     |
|          | i |                                   |   |                     |
|          | t |                                   |   |                     |
|          | s |                                   |   |                     |
|          | m |                                   |   |                     |
|          | i |                                   |   |                     |
|          | n |                                   |   |                     |
|          | d |                                   |   |                     |
|          | a |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 7:30 -   | R |                                   |   |                     |
| 8:30     | e |                                   |   |                     |
|          | t |                                   |   |                     |
|          | u |                                   |   |                     |
|          | r |                                   |   |                     |
|          | n |                                   |   |                     |
|          | t |                                   |   |                     |
|          | o |                                   |   |                     |
|          | T |                                   |   |                     |
|          | b |                                   |   |                     |
|          | i |                                   |   |                     |
|          | l |                                   |   |                     |
|          | i |                                   |   |                     |
|          | s |                                   |   |                     |
|          | i |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| ###      |   |                                   |   |                     |
| ##  {#se |   |                                   |   |                     |
| ction-6} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ##       |   |                                   |   |                     |
| ### Thur |   |                                   |   |                     |
| sday, Fe |   |                                   |   |                     |
| bruary 8 |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:00     |   | Farmers' Union                    |   | Raul Babeshvili     |
| -10:30   |   |                                   |   |                     |
|          |   | Prospect Tserateli 142            |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 11:00    |   | #                                 |   |                     |
| -1:00    |   | ### Portfolio Review SO 3.1 {#por |   |                     |
|          |   | tfolio-review-so-3.1 .unnumbered} |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 11:00    |   | Agribusiness Bank                 |   | Peter Shaw,         |
| -12:30   |   |                                   |   |                     |
|          |   | 10 Budapeshti Street              |   | Michael             |
|          |   |                                   |   | Mgaloblisvili       |
+----------+---+-----------------------------------+---+---------------------+
| 12:30 -  |   | Lunch                             |   |                     |
| 1:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 1:30 -   |   | TACIS                             |   | George Kipiani      |
| 2:30     |   |                                   |   |                     |
|          |   | ########  {#section-7}            |   | Soso                |
|          |   |                                   |   | Tsiskarishivili     |
|          |   |                                   |   |                     |
|          |   |                                   |   | Irma Khvedeliani    |
+----------+---+-----------------------------------+---+---------------------+
| 4:00 -   |   | Ministry of Agriculture           |   | Craig McPhee, KPMG  |
| 6:00     |   | Expenditure Meeting               |   |                     |
|          |   |                                   |   |                     |
|          |   | 80a Tabidze Street                |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 7:00 -   |   | Minister of Agriculture           |   | David Kirvalidze    |
| 8:30     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| *        |   |                                   |   |                     |
| *Friday, |   |                                   |   |                     |
| February |   |                                   |   |                     |
| 9**      |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:30     |   | Georgian Investment Center        |   | Saba Sarishvili     |
| -10:30   |   |                                   |   |                     |
|          |   | 42 Kazbegi, 2^nd^ Floor           |   | ###  {#section-8}   |
+----------+---+-----------------------------------+---+---------------------+
| 11:00    |   | ####### Land Team at Parliament   |   | Dato Arsenashvili   |
| -12:00   |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 11:00    |   | Mission-Wide Issues (Portfolio    |   |                     |
| -1:00    |   | Review)                           |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 12: 30   |   | Borusan Makina (Catepillar)       |   | Ismael Shahin       |
| -1:30    |   |                                   |   |                     |
|          |   | 74 Kostava Street                 |   | George              |
|          |   |                                   |   | Gigineishvili       |
+----------+---+-----------------------------------+---+---------------------+
| 1:00 -   |   | Lunch                             |   |                     |
| 2:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 3:00 -   |   | Analytica                         |   | Koba Khutsishvili   |
| 4:00     |   |                                   |   |                     |
|          |   | University Building #2            |   |                     |
|          |   |                                   |   |                     |
|          |   | Chavchavadze Ave. Rm. 214         |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 4:30 -   |   | Imperial                          |   | Nugzar Jikia        |
| 5:30     |   |                                   |   |                     |
|          |   | 18 Queen Tamara Street            |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 6:00 -   |   | GTZ                               |   | Ekkehard Clemens    |
| 7:00     |   |                                   |   |                     |
|          |   | 43 Gogebashvili St., 4^th^ Floor  |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| **S      |   |                                   |   |                     |
| aturday, |   |                                   |   |                     |
| February |   |                                   |   |                     |
| 10**     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 8:00 -   |   | ######### Travel to G             |   |                     |
| 9:00     |   | ori {#travel-to-gori .unnumbered} |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9-       |   | Meet with ACDI/VOCA Gori          |   | Avtandie            |
| 00-10:45 |   | Production Credit Association     |   | Tsrialashvili       |
|          |   | Staff and Gori Fruit Growers      |   |                     |
|          |   | Association                       |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 11:00 -  |   | Meet with Gorkoni Fruit Cannery   |   |                     |
| 12:00    |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 12:00 -  |   | Lunch                             |   |                     |
| 1:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 1:30 -   |   | Visit Gomi Liquor and Vodka       |   |                     |
| 2:00     |   | Company                           |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 2:30 -   |   | Return to Tbilisi                 |   |                     |
| 3:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 3:00 -   |   | Team Meeting                      |   |                     |
| 6:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| *        |   |                                   |   |                     |
| *Sunday, |   |                                   |   |                     |
| February |   |                                   |   |                     |
| 11**     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 1:00 -   |   | Travel to Kutaisi                 |   |                     |
| 4:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
|          |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| *        |   |                                   |   |                     |
| *Monday, |   |                                   |   |                     |
| February |   |                                   |   |                     |
| 12**     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
|          |   | In Kutaisi                        |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:00 -   |   | Dairy --private loan for herd     |   | Nato Bibileishvili  |
| 10:30    |   | expansion                         |   |                     |
|          |   |                                   |   | (In Tskaltubo)      |
|          |   | Village Chuneti                   |   |                     |
|          |   |                                   |   |                     |
|          |   | Factory "Chanadi"                 |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 11:00 -  |   | Flour Mill; Bakery; Retail Outlet |   | Murad Tsivtsivadze  |
| 12:30    |   |                                   |   |                     |
|          |   | 274 Tsereteli                     |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 1:00 -   |   | Lunch and Briefing at Sibley      |   | Paul Louise         |
| 2:00     |   | International                     |   |                     |
|          |   |                                   |   | Mamuka Erikashvili  |
|          |   | 3 Gogebashvili Street - Kutaisi   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 2:00 -   |   | Meat Processing Plant "Imtec"     |   | Nino Dvali          |
| 3:00     |   |                                   |   |                     |
|          |   | Hatchery "Gibra 98" Ltd           |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 3:00 -   |   | Return to Tbilisi                 |   |                     |
| 6:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| **       |   |                                   |   |                     |
| Tuesday, |   |                                   |   |                     |
| February |   |                                   |   |                     |
| 13**     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:00 -   |   | Elkana Organic Association        |   | Nana Nemsadze       |
| 10:00    |   |                                   |   |                     |
|          |   | Delisi 3^rd^. St, Naqueti 16      |   | Tamaz Dundua        |
|          |   |                                   |   |                     |
|          |   | Sabartalo Reg.                    |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 10:30 -  |   | Martin Bauer                      |   | #####               |
| 11:30    |   |                                   |   | ### *Noe Kinkladze* |
|          |   | 55 Chavchavadze Ave.              |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 3:30 -   |   | WB Delegation                     |   | Iain Shucker        |
| 4:30     |   |                                   |   |                     |
|          |   | 18a Chonkadze Street              |   | Darejan Kapanadze   |
+----------+---+-----------------------------------+---+---------------------+
| **We     |   |                                   |   |                     |
| dnesday, |   |                                   |   |                     |
| February |   |                                   |   |                     |
| 14**     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:00 -   |   | WB Team                           |   | Iain Shucker/       |
| 10:00    |   |                                   |   | Darejan Kapanadze/  |
|          |   |                                   |   | David Bontempo      |
+----------+---+-----------------------------------+---+---------------------+
| 10:15-   |   | USAID/Tbilisi- RCO                |   | Carlton Bennett     |
| 11:00    |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 11:00    |   | USAID/Tbilisi- DIR                |   | Mike Farbman/Staff  |
| -12:00   |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 12:30    |   | USAID Advisor to Ministry of      |   | Don Van Atta        |
| -1:30    |   | Agriculture                       |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 4:00 -   |   | US Department of Commerce         |   | Nino Kumsishvili    |
| 5:30     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 7:30 -   |   | Ministry of Agriculture           |   | David Kirvalidze    |
| 8:30     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| **T      |   |                                   |   |                     |
| hursday, |   |                                   |   |                     |
| February |   |                                   |   |                     |
| 15**     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:00     |   | European Commission Food Security |   | Joep Cuijpers       |
| -10:00   |   | Programme in Georgia, Ministry of |   |                     |
|          |   | Agriculture and Food              |   | Sophie Kemkhadze    |
|          |   |                                   |   |                     |
|          |   | Address: 41 Kostava Street, Room  |   |                     |
|          |   | 349                               |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 11:00    |   | American Chamber of Commerce      |   | Fady Asly           |
| -12:00   |   |                                   |   |                     |
|          |   | 1 Nutsubidze Street               |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 1:30 -   |   | Mission-Wide Issues (Portfolio    |   |                     |
| 3:00     |   | Review)                           |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 6:00 -   |   | GTZ                               |   | Ekkehard Clemens    |
| 7:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| #        |   |                                   |   |                     |
| ##  {#se |   |                                   |   |                     |
| ction-9} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ##       |   |                                   |   |                     |
| # Friday |   |                                   |   |                     |
| , Feb 16 |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:00 -   |   | Material Review and Drafting      | # |                     |
| 7:00     |   |                                   | # |                     |
|          |   |                                   | # |                     |
|          |   |                                   |   |                     |
|          |   |                                   |   |                     |
|          |   |                                   | { |                     |
|          |   |                                   | # |                     |
|          |   |                                   | s |                     |
|          |   |                                   | e |                     |
|          |   |                                   | c |                     |
|          |   |                                   | t |                     |
|          |   |                                   | i |                     |
|          |   |                                   | o |                     |
|          |   |                                   | n |                     |
|          |   |                                   | - |                     |
|          |   |                                   | 1 |                     |
|          |   |                                   | 0 |                     |
|          |   |                                   | } |                     |
+----------+---+-----------------------------------+---+---------------------+
| ##       |   |                                   |   |                     |
| #  {#sec |   |                                   |   |                     |
| tion-11} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ###      |   |                                   |   |                     |
| Saturday |   |                                   |   |                     |
| , Feb 17 |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:00 -   |   | Trip to Bolnisi                   |   |                     |
| 10:00    |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 10:00 -  |   | The Fund of Georgian Private      |   | Goga Kharatishvili, |
| 11:30    |   | Farmers Assistance                |   | Ucha                |
|          |   |                                   |   |                     |
|          |   | (Bolnisi potato growers)          |   | Tkheladze, Misha    |
|          |   |                                   |   | Sokhadze            |
+----------+---+-----------------------------------+---+---------------------+
| 11:30 -  |   | Return to Tbilisi                 |   |                     |
| 12:30    |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 1:00 -   |   | Agribusiness Bank                 |   | Peter Shaw          |
| 2:30     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 3:00 -   |   | Central Market                    |   |                     |
| 4:30     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| ##       |   |                                   |   |                     |
| #  {#sec |   |                                   |   |                     |
| tion-12} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ###      |   |                                   |   |                     |
|  Monday, |   |                                   |   |                     |
|  Feb 19  |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
|          |   | HOLIDAY                           |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| **       |   |                                   |   |                     |
| Tuesday, |   |                                   |   |                     |
| Feb 20** |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 9:30 -   |   | USAID/Tbilisi-RLA                 |   | Joakim Parker       |
| 10:30    |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 5:00 -   |   | USAID/Tbilisi-ER and ACDI/VOCA    |   | Gerald Andersen/Don |
| 6:00     |   |                                   |   | Niss/Tamara         |
|          |   |                                   |   | Sulukhia            |
+----------+---+-----------------------------------+---+---------------------+
| ##       |   |                                   |   |                     |
| #  {#sec |   |                                   |   |                     |
| tion-13} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ### W    |   |                                   |   |                     |
| ednesday |   |                                   |   |                     |
| , Feb 21 |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 11:00 -  |   | Supermarket- BIG BEN              |   | George              |
| 12:00    |   |                                   |   | Makharashvili       |
|          |   | 52 Chavchavadze Ave.              |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 12:00    |   | UN/FAO                            |   | Peter Dickie        |
| -1:00    |   |                                   |   |                     |
|          |   | 9 Eristavi street                 |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 2:00 -   |   | ACDI/VOCA                         |   | Rusty Schultz       |
| 3:30     |   |                                   |   |                     |
|          |   | 35 Davitashvili street            |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| ##       |   |                                   |   |                     |
| #  {#sec |   |                                   |   |                     |
| tion-14} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| #        |   |                                   |   |                     |
| ## Thurs |   |                                   |   |                     |
| day, Feb |   |                                   |   |                     |
| ruary 22 |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 10:00    |   | UMCOR                             |   | Hank Schumacher     |
| -11:00   |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| ##       |   |                                   |   |                     |
| #  {#sec |   |                                   |   |                     |
| tion-15} |   |                                   |   |                     |
|          |   |                                   |   |                     |
| ### Fri  |   |                                   |   |                     |
| day, Feb |   |                                   |   |                     |
| ruary 23 |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+
| 10:00 -  |   | Georgian Wine and Spirits         |   | George Mshvidobadze |
| 11:00    |   |                                   |   |                     |
|          |   | 2 Sarajishvili Ave., 4^th^ floor, |   | Irakley             |
|          |   | Avchala                           |   | Cholobarghia        |
+----------+---+-----------------------------------+---+---------------------+
| 5:00 -   |   | USAID/Tbilisi - DIR               |   | Mike Farbman/USAID  |
| 6:30     |   |                                   |   | staff               |
+----------+---+-----------------------------------+---+---------------------+
| 7:00 -   |   | Minister of Agriculture           |   | David Kirvalidze    |
| 8:00     |   |                                   |   |                     |
+----------+---+-----------------------------------+---+---------------------+

405georgia agr schedule1

Annex IV

References Consulted

1.  ACDI/VOCA, \"Project Proposal for Fruit Growers Association, Gore,
    Georgia\"; February 2001.

2.  ACDI/VOCA, \"Artificial Insemination Feasibility Study\"; February
    2001.

3.  ACDI/VOCA, \"Analysis of the Tbilisi-Area Dairy Sector\"; February
    2001.

4.  American Chamber of Commerce, \"AmCham News\", Volume 2, Issue 1,
    February, 2001

5.  CERMA, \"Guidance for a Medium-term Outlook Plan to Guide Georgian
    Viticulture and Wine Sector Modernization; August 17, 2000;
    FAO-financed.

6.  Commission of the European Union, \"Georgia - MAF/TACIS Strategic
    Plan for the Agriculture and Food Sector, 1997-2001;\" February,
    1997.

7.  Food and Agriculture Organization, \"Annex Tables on Area Sown and
    Number of Tons Available and Needed for Spring Crops in Drought
    Affected Areas of Georgia for the Spring Season 2001; February 2001
    Estimates; \" Peter Dickie.

8.  Food and Agriculture Organization, \"Special Report - FAO/WFP Crop
    and Food Supply Assessment Mission to Georgia;\" September 8, 2000.

9.  Georgia Times, \"Taxation System Destroys Agricultural Sector,\"
    2/23/01

10. Georgia Times, \"Why Does Europe Close Its Doors to Georgian
    Wines,\" 1/23/01

11. Georgian Export Promotion Agency, \"Directory of Georgian
    Exporters - 2000,\" December 2000, TACIS.

12. Georgian Investment Centre, Ministry of Trade and Foreign Economic
    Relations of Georgia, \"Investment Guide 1999:\"

13. Georgian Investment Centre, Ministry of Trade and Foreign Economic
    Relations of Georgia, \"Your Guide and Partner in Georgia;
    One-Stop-Shop.\"

14. Georgian Investment Centre, Ministry of Trade and Foreign Economic
    Relations of Georgia, \"Your Guide and Partner in Georgia; Forestry
    Resources.\"

15. Imperial (commercial hazelnut firm), \"Georgia; 2000 Company
    Information Report;\"

16. International Fertilizer Development Center, \"Georgia, Armenia, and
    Azerbaijan: An Assessment and Strategy to Develop Agricultural Input
    Markets in the Caucasus;\" February 1998.

17. International Monetary Fund, \"Georgia: Recent Economic Developments
    and Selected Issues; IMF Staff Country Report No. 00/68\"; May 2000.

18. International Monetary Fund, \"Georgia-Interim Poverty Reduction
    Strategy Paper-Joint Staff Assessment;\" December 6, 2000.

19. International Rescue Committee, Inc. \"Model Farm and Agricultural
    Extension Service component of the VTJC;\" August 2000..

20. KPMG Consulting-Barents Group, \"Expenditure Review, Ministry of
    Agriculture;\" February 2001.

21. KPMG Consulting-Barents Group, \"USAID Fiscal Reform
    Project-Georgia;\" July 2000.

22. Ministry of Agriculture & Food - International Relations Department,
    \"Completed Projects of International Organizations, Operating in
    the Agricultural and Food Sectors of Georgia 1995-2000;\" February
    22, 2000.

23. Overseas Strategic Consultants, \"Georgia Farmland Survey;\" July
    2000.

24. Save the Children, \"Drought Recovery Assistance Activities\";
    November 3, 2000; William Bateson.

25. Save The Children, \"Rapid Appraisal of Agriculture in Inguria,
    Imereti and Samegrelo Regions of West Georgia;\" William Bateson,
    July, 2000.

26. Save The Children, \"GAI Semi-Annual Progress Report 2;\" Fall,
    2000.

27. Secretariat to the Foreign Investment Advisory Council under the
    President of Georgia, \"International Community and Georgia
    1992-2000, Overview of Assistance;\" March 2000;.

28. Sibley International, Georgia Enterprise Support Program, \"Baseline
    Surveying Results and Analysis;\" Mid/late 2000.

29. Sibley International, Georgia Enterprise Support Program, \"Capital
    Products Survey, Survey Results;\" Colette McInerney.

30. Sibley International, Georgia Enterprise Support Program, \"Wine
    Industry-Kaheti Region; Review and Analysis of Problems;\" October
    2000.

31. State Department of Georgia for Statistics; \"1999 Georgian
    Agriculture Statistical Abstract:\" 2000.

32. USAID, \"Agriculture As An Engine of Growth in Development
    Countries;\" June, 1999.

33. USAID, \"Export and Investment Promotion Services, *Do They Work?\";
    USAID Program and Operational Assessment Report No. 6;* March 1994

34. USAID, \"Export Promotion in Indonesia\"; USAID technical Report No.
    6; April 1993.

35. USAID, \"Georgia Market Reform and Agricultural Assessment;\"
    September 2000.

36. USAID, \"Export and Investment Promotion in Egypt and Morocco; A
    Review of USAID Experience;\" Technical Report No.22; June 1994;
    Dana Wichterman, Academy for Educational Development.

37. World Bank, \"An Update of Agricultural Developments in Georgia;\"
    July 24, 2000; Iain Shuker.

38. World Bank, \"Georgia: Roads Project, Project Appraisal Document;\"
    May 2000.

39. World Bank, \"Staff Appraisal Report - Georgia, Agricultural
    Development Project;\" Report No. 15938-GE, February 28, 1997.

327 georgia agr references1

[^1]: . ISO 9000 is a set of five universal standards for a Quality
    Assurance system that is accepted around the world. About 90
    countries have adopted ISO 9000 as national standards. Once a
    company is registered to the appropriate ISO 9000 standard, buyers
    have the assurance that product quality will be as expected.

[^2]: . See footnote 10 below for a discussion of the Hazard Analysis
    and Critical Control Point (HACCP) principles.

[^3]: . Additional information on the Agriculture/Agribusiness Sector is
    contained in Annex I.

[^4]: . The source of these numbers is the IMF Report of April 7, 2000.

[^5]: . Latest year for which data is available.

[^6]: . From \"Georgia Reform in Food and Agriculture Sector: A World
    Bank Country Study.\" 6/1/96

[^7]: . See Annex II for production tables.

[^8]: . See \"Georgia: An Update of Agricultural Developments\" by Ian
    Shuker of the World Bank, July 24, 2000.

[^9]: . HACCP stands for Hazard Analysis and Critical Control Point. It
    is based on seven principles: analysis of hazards, identification of
    critical control points, establishing preventative methods with
    critical limits at each control point, establishing procedures to
    monitor the critical control points, establishing corrective actions
    to be taken when monitoring shows a critical limit has not been met,
    establishing procedures to verify that the system is working
    properly and establishing effective record keeping to document the
    system. HACCP focus on identifying and preventing hazards from
    contaminating food, is based on sound science, permits efficient and
    effective oversight, places responsibility for ensuring food safety
    on the food manufacturer or distributor, helps food companies
    compete effectively in world trade and reduces barriers to
    international trade.

[^10]: . Not including approximately 72 thousand hectares of
    agricultural land in contested areas.

[^11]: . In making these assessments what farmers and growers may not
    realize is that the levels of on-farm technology currently employed
    will probably not result in products that satisfy the quality and
    standards required by international markets. To meet those standards
    will require adoption of new production technology. It also requires
    that producers be willing to accept totally new practices and
    technology if they are going to be competitive. Many farmers will
    not understand the technology involved. The packer/processors will
    need to work extensively with growers to produce the quality and
    yield required for Georgian farmers to be competitive.

[^12]: . The new Minister of Agriculture has recognized the necessity of
    restructuring the MOA to meet the needs of a market-driven
    agricultural sector and has requested foreign assistance in doing
    so. This assistance package is discussed in detail under U.S.
    Assistance below.

[^13]: . Several NGOs continue to provide assistance to small farmers in
    specific geographic areas, often using funds from the monetization
    of USDA provided commodities.

[^14]: . During this assessment, the Team met many agricultural
    producers and processors. When asked their opinion of the MOA, most
    people were critical. Although they speak more favorably of the new
    Minister, most see the MOA as irrelevant at best, and at worse as
    corrupt and a hindrance to their production and processing
    endeavors. The proposed restructuring is an opportunity to change
    the functions of the local MOA branches so that they are a resource
    and provide needed services to agricultural producers and
    processors. The Assessment Team recommends that the Minister and his
    officers be encouraged to hold public meetings in communities across
    Georgia to solicit input on how the MOA could better serve and build
    support among constituents.

[^15]: . The exception would be a significant add-on or amendment to an
    on-going activity such as the GESP project. Such an add-on or
    amendment could probably include many of the same elements as a new
    activity. However, after reviewing on-going activities the
    Assessment Team concluded that such an approach would either require
    a major reorientation for all projects or the development of almost
    a stand-alone activity. For GESP particularly, including a new
    component, would also increase the complexity of what is already a
    very complex project and probably hurt both efforts. Finally, such
    an approach would probably not be consistent with the original
    solicitations for assistance implementation.

[^16]: . CERMA, \"Guidance for a Medium-tern Outlook Plan to Guide
    Georgian Viticulture and Wine Sector Modernization; August 17, 2000.

[^17]: The source of these numbers is the IMF Report of April 7, 2000.

[^18]: Latest year for which data is available.

[^19]: From \"Georgia Reform in Food and Agriculture Sector: A World
    Bank Country Study.\" 6/1/96

[^20]: . See \"Georgia: An Update of Agricultural Developments\" by Ian
    Shuker of the World Bank, July 24, 2000.

[^21]: . HACCP is Hazard Analysis and Critical Control Point.

[^22]: . Not including approximately 72.0 thousand ha. of agricultural
    land in Abkhazia and Samachablo.