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Investment Opportunity in the Georgian Agriculture Sector

Investment Opportunity in the Georgian Agriculture Sector. June 2011. Agriculture Sector Overview. Source: Department of Statistics of Georgia . Dynamic of Import/Export of Agricultural Food Products .

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Investment Opportunity in the Georgian Agriculture Sector

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  1. Investment Opportunity in the Georgian Agriculture Sector June 2011

  2. Agriculture Sector Overview Source: Department of Statistics of Georgia

  3. Dynamic of Import/Export of Agricultural Food Products • According to the 2010 data, the export and import of agro food products were US$304 million and US$928 million. • In 2010, main export commodities were: nuts, citruses, natural grape wines, spirits, soda, mineral & spring waters, sheep, cattle etc.

  4. Agriculture Export-Import, 2010 Export by Products (304 US$ mln) Export by Countries Import by Products (928 US$ mln) Import by Countries

  5. Agriculture Export, 2010 Top 10 exported products Top 10 export markets

  6. 4 Reasons for Underdeveloped Agricultural Sector

  7. Important Snap-Shots • Main challenges are monocultures and low production per ha. • With technology and knowhow average harvest could be tripled • During the Soviet Era, Georgia used to be main supplier of the Union’s market with selected agro products, which pushed the country into monocultural agro production (ex. grape, citrus, tea etc) * Data for 1988 is exaggerated to some extent due to reporting interests in the centralized system of planning

  8. Advantages of Investing in Agricultural Sector of Georgia • Wide-range of climatic zones • Rich and pesticide-free soils - Ideal place for production of organic food • Rich tradition of winery, growing citrus, grape, sunflower, tea, etc • Legal provisions to own (i.a. for foreigners) agricultural land • 0% VAT on primary production of agricultural products • 0% export duty + 100% VAT refund • 0% of import duty on agricultural and other equipment • 100% depreciation allowance on investment • Low-cost and skilled human resource base • Liberal labor regulations • Strategic link from East to high value Western markets • Well developed transport sector including railway and sea ports essential for effective exports of agricultural goods

  9. Agricultural Land Overview • Agricultural land consist of approximately 3 mln hectares: • Residential - 1% • Arable land - 27% • Perennials crops - 9% • Pastures - 63% Source: Ministry of Agriculture of Georgia

  10. Available Agricultural Land through Privatisation

  11. Strong Integration Into the Global Economy • FTA agreements with the CIS countries • FTA with Turkey • GSP+ with the EU • GSP with the Canada, Japan, Switzerland, Norway Developments in the nearest future: • FTA with EU • FTA with USA

  12. Investing in Georgian Agro Business GSP + 7200 products duty free FTA with NIS & Turkey GSP with Canada Switzerland, Norway GSP with Japan • Farming • Processing • Storing Technology+Knowhow Potential extra input materials

  13. Grape, Citrus & Apple Grape Citrus Apple DATA FOR 2009 Wine export – 10.9 mln bottles 13

  14. Import Substitution Opportunities Meat, 2009 Fruits & Vegetables, 2008 Juice, 2009 Local Production Import Local Production Import Local Production Import 14

  15. Import Substitution Opportunities Vegetable Oils Processed Fish Local Production Import Local Production Import DATA FOR 2009 15

  16. Consumption of Agro Products in Georgia (e.g.) Consumption Import Production Consumption Import Production DATA FOR 2009

  17. Consumption of Agro Products in Georgia (e.g.) Consumption Import Production Consumption Import Production DATA FOR 2009

  18. Investable Agricultural Industries • Wine Sector • Mineral and Portable Water • Fishery • Citrus Production • Intensive Apple Production • Fresh Culinary Herbs • Off-Season Storage • Georgian Beef Fattening Operation • Fruit Jam and Sauce Processing • Integrated Dairy Production – Collection, Processing and Distribution • Pedigree Poultry Hatching Eggs

  19. Success Stories • Ferrero Group - one of the leading confectionary producers in the world • Nutella, Raffaello, Ferrero Rocher • The Georgian subsidiary of Ferrero Trading Lux S.A., AgriGeorgia LTD, was set up in spring of 2007 • At present AgriGeorgia LTD owns more than 3,000 ha. of agricultural land in Samegrelo area • About EUR 21 mln investment • Nowadays AgriGeorgia LTD employs on average more than 400 employees • Hipp • US$ 11 mln investment in juice processing industry • Fruit collection and processing • Mainly producing apple juice; further plans to produce cherry and apricot juice YOU GONNA BE THE NEXT ONE!

  20. Contacts

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