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Agriculture Sector Georgia

Transcript of Amcham presentation

  • 1. USDA Trade and Investment Mission to Georgia 2010
    David Lee
    President American Chamber of Commerce
    CEO Magticom

2. An Amcham supported by the highest levels of Government, Multinational Organizations such as the IMF and the US Embassy
Minister of the Economy
US Ambassador to Georgia
Prime Mister and Head of the IMF
3. American Chamber of Commerce

  • Established in 1998 4. 150 + members 5. 2 members meeting per month: Embassy Briefing and Luncheon 6. Excellent relationship with the Georgia Government 7. Ability to lobby and influence legislation 8. Magazine Investor.ge, published every two months. 9. Full time staff

At your service at all times!
10. Agribusiness
Jim Rogers: Farming is one of the few areas I am optimistic about.
Policymakers are looking more closely at how the private sector from agribusinesses to supermarkets can help ensure food security. In July last year, when world leaders pledged to devote $20bn over three years to a food security initiative, part of the commitment reflected a move away from reliance on aid models to a broader approach that includes fostering the growth of the agricultural sector in developing countries.
(http://media.ft.com/cms/62017148-0b29-11df-9109-00144feabdc0.pdf)
11. The Georgian Opportunity
Agro Food Products Exports 2008 US$228
Agro Food Products Imports 2008 US$913
2008 FDI US$1.6 billion
2008 FDI agriculture US$7.8 million, (0.5% of the total)
Since 1991 939,000 hectares has been transferred to 1.4 million people, 0.66 hectare average. 75% remains under state control.
Historically a major exporter of agricultural produce to the Soviet Union Soils and climate are excellent for many crops, excellent Brand in local and post-soviet space.
12. Universal Internet Access
Georgia covers a territory of 69,700km and its population is 4.436 million -63 people per square kilometre. (India 324, UK 254, China 137, Congo, Tanzania, Uganda, Malawi 25 to 60, USA 32).
GSM/HSDPA/fixed CDMA Coverage World ClassMagticom Provides High Speed Internet to all farming areas
13. Positive Developments

  • Georgia ranks 11 on the World Bank list of Ease of Doing Business 14. Registration of business, licenses and agricultural land is not a problem 15. The tax regime is low with many incentives to farms 16. The Government is accessible and supportive 17. There are many free trade agreements 18. Infrastructure has been massively improved since the Rose Revolution Roads, Airports, Telecommunications, (internet is available everywhere). 19. You have an AMCHAM!

Opportunity Increase plot sizes
Most local farming is on small plots of 1 to 5 hectares which is not economic for many crops.Animals are often grazed on common ground.But large plots are available to investors.Farm shown is 220 acres, (600 acres).
20. Opportunity Improve training, knowledge skills
The agricultural institutes are not functioning and land and crops are not being optimized.The number of graduates from agricultural colleges in minimal leading to the use of traditional rather that modern farming techniques.Herbicide and fertilizer use is low.
21. Opportunity Modernize Equipment
There is a shortage of equipment, particularly in the west.Modern seed drills, sprayers and harvesters would materially improve yields. Innovative financing is required if local market is to be maximized.
22. Opportunity- Local testing and correction of soil
There is no source of local lime for the acid soil in the west and testing laboratories are underutilized.
23. Opportunity- Improve seeds quality
No government testing of seed quality is performed and the use of imported seed is limited. (Seed shown is American cecilia hybrid).
24. Opportunity Introduce Irrigation
There are 26,000 rivers but most of the soviet era irrigation systems have been destroyed.Modern systems can be deployed but are rare.System shown is Turkish and capable of irrigation at 100 tonnes per hour
25. Opportunity Upgrade Infrastructure and storage
Many storage and greenhouse facilities are destroyed or in poor repair and need renovation.There are insufficient cold storage and drying facilities.
26. Opportunity Improve animal husbandry
Local breeds of cattle and buffalo can be improved through breeding.The introduction of foreign breeds has proven difficult but possible.Better land management and scientific feeding methods would have immediate results.Use of fencing is limited.
27. Opportunity - Test the theory
Getting it right - Hybrid Corn Trial on 220 hectare farm using US Pioneer (5 varieties), Spanish (5) Georgian (2) as at 9 July 2010.
28. Chief Agronomist ZurabIakobashvili
29. In August 2010, a test of 6 hectares in Imereti harvested 7.8 metric tons of corn cob per hectare using American Pioneer seed despite the drought
30. The Opportunity
All the main macro requirements for profitable agribusiness are now in place:

  • Good climate, soils and access to water 31. Good roads, airports, telecommunications and ports 32. Good free trade agreements with the Mega Markets of Turkey, Europe and the USA 33. Good local demand 34. Good country brand 35. Good land registry and licensing environment

Industry leaders with expertise and experience can solve the existing sector problems faced by local farmers quickly and economically, substantially improving yields.
A US$40 million RFP primarily dedicated to agriculture was issued by USAID in July 2010
36. Thank you
The first movers Ferrero and HiPP are already here,
You should be too!