Agriculture

Georgia has a rich tradition in agriculture. Its fertile soil and favorable climatic conditions contributed to the development of agriculture. Almost all types of agricultural products can be grown in Georgia as the country has nine climatic zones. During the Soviet Union time Georgia used to be a major supplier of tea, citruses, grape/wine and early potatoes to the Soviet republics. At the end of the communist regime agriculture made up 27% of the country’s GDP.

 

The output of agriculture significantly declined after the Soviet Union collapsed. The difficult period of transition from centrally planned to market driven economy was further aggravated by the civil war in 1991-1992 and the wars in Abkhazia and South Ossetia (two autonomous regions of Georgia) in 1991-1993.

 

Arable lands and woods occupy 85% of the country's total land area. Vertical zones with almost all types of soil and climate characterize the country. Due to such diversity, the country is divided into 13 zones and 6 sub-zones of agricultural specializing. Annual climatic conditions are favorable for the production of a variety of agricultural products including grain-crops, melons and gourds, fruit, tea and citrus fruits.

 

With substantial investment in technological and infrastructure capacity, Georgia’s agricultural sector has the potential to export different agricultural products ranging from wheat, cereal, soy, cooking oil and corn to nuts, tea, citrus, and herbs. Particularly remarkable is Georgia’s viticulture sector.

 

Currently, about 55% of the total labor force is employed in agriculture, though much of this is subsistence farming. Current structural reforms in the sector will go a long way towards increasing future output while thus far about 25% of arable land has been privatized. Impediments to the sector’s development include lack of access to financing, absence of modern agriculture technology, and irrigation and drainage systems in need of renovation.

 

Wine industry - A matter of national pride for Georgians, wine is worthy of special emphasis. Viticulture and winemaking are the most important traditional fields of Georgia’s agriculture. The history of vine culture is inseparable from the history of the Georgian people. The country is considered as one of the oldest places of producing top-quality wines in the world. Over 450 species of local vine are bred in Georgia, from which 62 sorts are put in the standard assortment including 29 wine species and 9 table ones. The most famous high standard sorts of Georgian vines are: Rkatsiteli, Saperavi, Mtsvane, Khikhvi, Kisi, Chinuri, Tsolikauri, Tsitska, Krakhuna, Aleksandrouli, Ojaleshi, Chkhaveri, Aladasturi and others. Not only the local species of vine are cultivated in Georgia, but also the foreign sorts such as Aligote, Pino, Shardone, Cabernet Sauvignon, Shasla and Khalili.

 

According to the Ministry of Agriculture, over 200,000 tones of grapes were collected in Georgia in 2007.

 

The Impact of government reforms - Due to implementation of integrated reform policies significant progress has been achieved in the agricultural sector. As a result, Georgia offers expanding opportunities and a highly favorable environment for foreign direct investments in agriculture. We provide below a brief description of the reforms having a significant impact on the sector's development.

 

- Land reform is of paramount importance for the development of this sector. A new stage in the privatization of agricultural lands is under way including the plots which remain state property.

 

- Development of the land market - A smoothly functioning land market is a necessary precondition for the effective use of the land resources available in the country. Land reform allows farmlands to be sold in order to ensure that agricultural lands are transferred from less efficient to more efficient owners. The development of the land market is designed to stimulate foreign investment inflow into the agricultural sector.

 

- Taxation, as one of the main determining factors of the quality of the business environment, has a significant influence on the performance of agribusiness. To this end, important steps have been made to liberalize the taxation system. Property taxes on plots of land less than 5ha have been abolished. The new Tax Code provides also for the abolition of tax on transactions in property, zero percent profit tax and VAT, zero percent VAT on primary supply of agricultural products, and zero percent import duty on agricultural and other equipment.

 

- Agricultural infrastructure, systems of supply and services - Agriculture in Georgia is growing steadily. Recent reforms in land privatization, registration, development of infrastructure, and the program on leasing of agricultural technology, among other reforms, have already yielded positive results. Agricultural goods take an increasing share in GDP and export growth.

 

- good climatic conditions for growing a variety of products

- rich tradition of winery, citrus, cattle breeding and others

- opportunity to privatize agricultural land

- 0% of property tax on small plots of land (less than 5 ha)

- 0% of property tax on property transaction

- 0% of profit tax

- 0% VAT on primary supply of agricultural products
- 0% of import duty on agricultural and other equipment