Overview
Georgia’s fertile soil and favorable climate support production of a wide variety of high‐value agricultural products, including grapes, berries, nuts (hazelnuts, almonds, walnuts, and chestnuts), citrus fruits, apples, peaches, and apricots. However, the rugged and mountainous territory also limits total available arable acreage, especially for field crops. Russia traditionally received most of Georgia’s exports but, since Georgia signed a DCFTA with the EU in 2014, Georgia has focused on developing European markets. Georgia also grows an increasing quantity of crops, including vegetables and corn, for domestic consumption. Georgia relies on imported powdered milk, meat products, and wheat imports. Starting in June 2021, wheat imports from Russia have been largely replaced by wheat flour imports due to Russia’s export duties on wheat.
For Georgia, agriculture remains an important sector in terms of GDP contribution. Agriculture accounted for 7-8 percent of GDP for the last ten years. The sector also provides an important safety net for the rural population, considering that over 40 percent of Georgia’s population lives in rural areas. According to the World Bank’s assessment, 64 percent of registered agricultural land, being pasture and hayland, belonged to and was managed by public authorities as of 2021. The share of commercial farms in agricultural production remains low. The overwhelming majority of households own less than two hectares of agriculture land. Only 4.8 percent of households own two to five hectares of land, and 1.5 percent own more than five hectares. With such ownership structure, commercial farming remains underdeveloped.
The new Constitution that came into force in December 2018 imposed restrictions on the sale of agricultural land to foreigners. The Constitution also states that exclusions may be specified in Organic Law, which has higher authority than regular laws and requires votes from at least two-thirds of Parliament to pass. The parliament adopted a law in 2019 which allows foreigners to purchase land under an investment plan and other preconditions.
The Georgian government identified agriculture as a priority for development and considerably increased funding for the sector, although priorities and programs change frequently. It has also set up the Agriculture Investment Fund to support the sector by providing credit to farmers. Governmental programs implemented through the Rural Development Agency, such as Plant the Future, Preferential Agrocredit, etc., may create additional demand among farmers for equipment and inputs supplied from abroad, including from the United States.
Leading Sub-Sector
Food Processing and Packaging
Georgia’s strategic location positions it to be an ideal exporter to regional and European markets for certain bulk commodities like citrus fruit and hazelnuts. The sector has suffered from the collapse of traditional links among post-Soviet states, decades of negligence towards state‐owned enterprises, obsolete equipment, lack of investment, and lack of current technical knowledge. Georgia imports 80 percent of its packaged food products and 70 percent of its overall food, which has a significant negative impact on its trade balance. However, the food processing industry is growing steadily but slowly following the privatization of state enterprises and an increasing demand for locally produced goods. In addition, a number of foreign aid programs, including USDA and USAID, target agricultural development and provide financial or material support to individual farmers or bigger enterprises to enable them to meet the requirements of international markets. Opportunities for growth in the sector are ripe, to enable Georgia to increase food production for domestic consumption and become an exporter of niche agricultural goods to the broader region, including Europe, Asia, and the Middle East. This sector is growing steadily with a proliferation of Georgian‐branded products ‐- wine, beer, dairy, nuts, sausages, fruit juices, and mineral waters ‐- filling local stores and beginning to find new export markets. Georgian wines and spirits have long enjoyed an excellent reputation in Russia and other former Soviet countries, and improved bottling and packaging now allows Georgian firms to sell products across a wider export market.
According to UN Comtrade (https://comtrade.un.org/labs/data-explorer/), Georgia’s total food and agricultural imports were $1.4 billion in 2022. Leading suppliers of these goods are Russia, Turkey, Brazil, and Ukraine.
The United States exported $28 million of agricultural and related products to Georgia in 2022, a 52 percent decrease from 2021. Many of these products were re-exported to neighboring countries.
There are opportunities for U.S. exporters of food processing and packaging equipment for fruits, nuts (particularly hazelnuts and walnuts), vegetables, citrus, and meat and dairy products. Currently, many of the existing processing plants use old equipment that does not provide for high productivity or technical safety. Existing alternatives mostly include Turkish technologies or second‐hand lines from Europe. Based on information provided by local authorities and managers, the best sales prospects are for small and medium capacity bottling lines, production plants for wine and juices, and machinery for tea processing and packaging. Additional prospects involve seed crushing and oil refining machinery. There is also demand for mini‐bakeries and machinery for the manufacture of confections. Price and payment terms are important factors affecting customers’ purchasing decisions. In many cases, the lease or purchase of used equipment may be a means by which local enterprises can acquire plant machinery and equipment for restarting production.
There are also opportunities for tree nuts, animal feed, and livestock genetics, although a lack of clear regulations for genetically engineered feed, for instance, have stymied U.S. exporters, and attention on better animal breeding has only recently emerged as a focus in Georgia.