USDA Trade and Investment Mission to Georgia 2010
David Lee
President American Chamber of Commerce
CEO Magticom
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
American Chamber of Commerce
•Established in 1998
•150 + members
•2 member’s meeting per month: Embassy Briefing and Luncheon
•Excellent relationship with the Georgia Government
•Ability to lobby and influence legislation
•Magazine “Investor.ge”, published every two months.
•Full time staff
“At your service at all times!”
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)
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.
GSM/HSDPA/fixed CDMA Coverage – World ClassMagticom Provides High Speed Internet to all farming areas
Universal Internet AccessGeorgia covers a territory of 69,700 km² 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).
Positive Developments
• Georgia ranks 11 on the World Bank list of “Ease of Doing
Business
• Registration of business, licenses and agricultural land is
not a problem
• The tax regime is low with many incentives to farms
• The Government is accessible and supportive
• There are many free trade agreements
• Infrastructure has been massively improved since the Rose
Revolution – Roads, Airports, Telecommunications, (internet
is available everywhere).
• 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).
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.
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.
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.
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).
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
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.
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.
Getting it right - Hybrid Corn Trial on 220 hectare farm using US Pioneer (5 varieties), Spanish (5) Georgian (2) as at 9 July 2010.
Opportunity - Test the theory
Chief Agronomist Zurab Iakobashvili
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
The Opportunity
All the main macro requirements for profitable agribusiness are now in
place:
•Good climate, soils and access to water
•Good roads, airports, telecommunications and ports
•Good free trade agreements with the Mega Markets of Turkey, Europe
and the USA
•Good local demand
•Good country brand
•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
Thank youThe first movers – Ferrero and HiPP are already here,
You should be too!
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