Overview

Georgia’s fertile soil and favorable climate support production of a wide variety of high‐value agricultural products, including grapes and wine, 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 five 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 most recent agricultural census conducted in 2014, the share of commercial farms in agricultural production remained low.  The overwhelming majority of households  (93.6 percent) own less than two hectares of agricultural 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 an ownership structure, commercial farming remains underdeveloped.

As a result of land reform, the Georgian government has privatized over 45 percent and leased about 30 percent of the country’s agricultural land.  The law on Privatization of State‐owned Agricultural Land was passed in July 2005, which increased efficiency and output in the agricultural sector.  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 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 increasing demand for locally produced goods.  In addition, a number of foreign aid programs, including 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 the Commonwealth of Independent States countries. Improved bottling and packaging now allow Georgian firms to sell products across a wider export market.

According to Trade Monitor Data (TMD), Georgia’s total agricultural imports were $1.34 billion in 2021, which represents an increase of over 29 percent since 2016.  Leading suppliers of these goods are Russia, Ukraine, and Turkey, which collectively account for $709 million, or nearly 53 percent of total imports.

The United States exported $58 million of agricultural and related products to Georgia in 2021, which represents an increase of over 63 percent since 2016, though total agricultural exports to Georgia for 2021 decreased by nearly 43 percent from $101 million in 2020.  Many of these products were re-exported to neighboring countries.  The top U.S. export items were poultry meat and products ($36.8 million), pistachios ($5.6 million), and almonds ($5.2 million) which amounted to $47.6 million, or 82 percent of total agricultural sector exports to Georgia. U.S. exporters face a higher 12 percent tariff on many items, like beef, compared to EU exporters, and are increasingly forced out of the market in competitive sectors as Georgia adopts EU animal and animal product regulations.

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 Soviet equipment that do 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 is only a newly emerging focus in Georgia.