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FINANCE & EXTENSION & COOPERATIVE DEVELOPMENT FOR GEORGIAN FARMERS
FinExCoop GEORGIA
Newsletter - May 2022 - Issue 4
THE POTATO VALUE-CHAIN IN GEORGIA
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Potato is the fourth crop in Georgia by acreage, after maize, wheat, and barley. Nearly half of the acreage is located in the mountainous areas of Samtskhe-Javakheti. In Kvemo Kartli, potatoes are produced both in mountainous areas and in lowlands for early varieties. As it is usually the case with Georgian agriculture, nearly all output is provided by family holdings.
In 2020, only 17.1% of total Georgian holdings were selling more than 50% of their agricultural output to third parties. But in the case of potatoes, the share of sold output tends to be higher than on average in agriculture. To a large extent, potatoes can be considered as “the” cash crop of mountainous areas with 65.9% of output of potato sold in the market. On the demand side, compared to most countries of the region, the consumption of potatoes and potato products per capita in Georgia remains modest. But despite this modest consumption, Georgia is a net importer of potatoes as its output remains too small to cover its needs.
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Today, Georgian yields for potatoes registered by FaoStat (11.9 ton/ha in 2019) are the lowest in the region despite often exceptional growing conditions. In its experimental and demonstration plots with tough climatic factors (drought, hail), FinExCoop was able to achieve yields over 40 ton/ha in 2020 and in 2021. It demonstrates that it is possible to double and even triple the yields in the upcoming years. The major constraint for achieving higher yields is the lack of quality seeds. Imports of seeds have been very volatile. But even in 2020, one of the best years, total imports of certified seeds accounted for only 5% of total national requirements.
There has been steady growth in the use of pesticides, as for other sectors of Georgian agriculture. But many pesticides are of poor quality and used too intensively because of weak cropping practices (lack of crop rotations) and knowledge. Excessive use of pesticide goes against the EU Green deal which aims at a 50% reduction in the total use of pesticides.
A critical factor to explain the low level of investment in potatoes has been the rather unattractive evolution of their consumer prices vis-à-vis most other food items. In addition, producers of potatoes receive only half of the final retail value of their products, partly because the post-harvest value-chain is not effective. There is virtually no cold storage available for potatoes in Georgia. According to a recent GeoStat survey, 51.5% of total Georgian cold storage capacity is in Shida Kartli and 10.9% is in Kvemo Kartli. Samtskhe-Javakheti, the land of potato, is not even mentioned.
Despite poor yields, Georgian producer prices for potatoes are already lower than among many of its neighbours. Georgia could therefore potentially become much more competitive and a net exporter. As for most other agricultural products, exports of Georgian potatoes should focus on quality, diversity of varieties, and geographic indications with emergence of well-established brands.
Finally, most of Georgian neighbors are large net importers of seed potatoes for which transport costs play a critical role. For that reason, a full cycle of production of seeds close to the producers makes huge economic sense.
The development of a national seed capacity should combine that from in vitro technologies promoted by CIP USAID and from replication of imported Class A, then Elite, then Superelite seeds tested in particular by FinExCoop Georgia with three global leaders from the Netherlands, Germany and France.
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ABOUT US
The 4-year FinExCoop project is funded by the European Union (EU) under the NIF Programme Trust Fund. Even though it is not stricto sensu an ENPARD project, it is fully coordinated with the ENPARD programme in Georgia. FinExCoop is managed by the Agence Française de Développement (AFD) and it is implemented by a consortium led by the Frankfurt School of Finance & Management, in partnership with Chambre d’Agriculture du Loiret, Mercy Corps and Rural Development for Future Georgia (RDFG). Through its subsidiary Proparco, AFD also provides credit lines for agriculture to two local financial institutions, Credo Bank and Microfinance Institution Crystal. The main objective of FinExCoop Georgia is to promote the sustainable emergence of a new generation of small and medium-scale family farm entrepreneurs able to be competitive thanks to: Improved access to credit and other financial services including insurance (Fin like Finance); Higher productivity linked to better technical knowledge and appropriate use of better inputs and equipment (Ex like Extension); Their participation in market-oriented cooperatives or any other entities fostering their coordination in order to improve their access to inputs and equipment, to consolidate their output, and increase its value through better storage, processing and marketing (Coop like Cooperatives).
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FINEXCOOP’S STRATEGIC SUPPORT TO FARMERS
Potato is a sector for which Georgia has large comparative agronomic advantages. The main critical factor for high volume and high-quality production is the availability of good seeds. The second key factor is effective crop rotation to limit the pressure from pests and diseases.
FinExCoop used a learning-by-doing approach to support farmers to improve potato production in Georgia. Work began with 8 pre-selected pilots who were chosen from 27 potential leading farmers and cooperatives in the regions of Samtskhe-Javakheti and Kvemo Kartli via careful analysis of calculation of their gross margins.
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Test: FinExCoop’s experimental and demonstration plots
Demo plots were established with these 8 pilot farms to test various varieties of potatoes and other crops included in the agronomic rotations. Climatic and agronomic conditions of all the pilots were assessed. Based on the results of the agronomic assessment farmers were recommended to apply the required amount of fertilizer and macro and micro elements to the demonstration plots.
In the first year a first international technological partner (“Germicopa” with local representative “AgroArt”) was selected to supply seeds to the pilots. In March 2020, FinExCoop received a 20-ton container with 4 different varieties of potato seeds for demonstration purposes and 6 different varieties of potato for experimental purposes. Despite pandemics, seeds were distributed on time to pilot farmers. Contractual agreements were signed with them that obliged them to transfer to other farmers 2 kg of reproduced seeds for each kg received.
In the second year, seeds were provided by 3 international technological partners, Agrico from the Netherlands, Germicopa from France, and Europlant from Germany. They included 7 experimental and 10 demonstration varieties of seed potatoes that in total made up 47 tons of seed potatoes. Both experimental and demonstration varieties of seed potatoes were cultivated on 13.6 ha of land.
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In that year, pesticides from reliable suppliers for demos were provided at no cost to the farmer that strictly abode to FinExCoop’s technical recommendations, and treatment of pests was made with the presence of FinExCoop’s agronomists.
FinExCoop also requested the farmers to introduce a crop rotation of at least three years in their potato fields. Many of the FinExCoop’s tests for fodder crops (12 different types of crops with 47 varieties) such as fodder beets, peas, oat, winter wheat, winter triticale, winter barley, winter peas have been made with pilot farmers for potatoes, as FinExCoop is promoting longer crop rotations to decrease pests and viruses. Often potato growers have cattle or need manure to fertilize their land and are therefore interested in generating more animal feed on their holdings.
In both years, FinExCoop has achieved significant results in terms of yield and quality even though as the focus was on the production of seed material requesting small tubers, the leaves of potatoes were usually cut one month before harvest. In 2021, the best yield was obtained by a farmer from Akhalkalaki municipality with the variety Vogue (42.17 ton/ha). This yield was three times bigger than yields recorded in 2020 in his municipality. Obviously, some farmers also suffered from poor cropping conditions, but still their yields were twice than average in their regions. These farmers could potentially substantially increase their yields in the future, especially if they had access to better planting and harvesting equipment. After harvest, gross margins were calculated for each farmer and each variety, which showed profitability of implemented activities.
The large scope of FinExCoop’s trials demonstrates that there is considerable potential for increasing the yields, quality, and profitability of Georgian potatoes. Subject to availability of good factors of production and technical assistance, Georgia could double its output in a short period of time. To achieve that aim on a systemic basis, GoG must develop a solid plan for the procurement of certified seeds, which should be mainly produced locally as the volumes required by Georgia amount to more than 40,000 t annually.
Because of the considerable improvement which could be expected from better seeds for all, there is a strong case for setting up one or various Public Private Partnerships in this field which should as a rule include the involvement of reliable international seed companies able to transfer and adapt their know-how to the Georgian environment and obtain international certification.
The strength of FinExCoop for these experimental trials has been its unique capacity to convince leading suppliers from the EU to provide their seeds often for free.
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Train: FinExCoop’s capacity building activities
Most training activities of FinExCoop have been provided in-the-field by its international and local agronomists, who coached pilot farmers in their plots. Unfortunately, the pandemics made it impossible to rely on large number of demo days.
On-line training was provided by French expert Philippe Clouet in March 2021. It gathered a high number of participants (66), including 20 ICCs, 13 women, 18 young farmers and 6 persons of ethnic minorities which play a key role in potato production, both in the lowlands (Azeris), and uplands (mainly Armenian).
In addition, FinExCoop organized its First International Agribusiness Online Forum that was dedicated to “Situation and prospects of the potato value-chain in Georgia Think and Act together”. The online forum gathered forces with other key stakeholders involved in the field, development organizations, off-takers, suppliers of inputs and equipment to think and act together for modernisation of potato value chain in Georgia. More than 140 participants attended the forum representing a large diversity of stakeholders, high quality presentations and debate, and involvement of all the critical stakeholders including the FinExCoop’s pilot farmers who participated through a video clip shot in their farms. The Forum provided a unique opportunity for the stakeholders from the public and private sector to exchange information about the hot topics in the potato value-chain and extend recommendations for the sector’s development. The meeting focused on the ways for the potato sector modernization, development of value-chain at farmer’s level, promoting better access to inputs and equipment, as well as better accessibility on finances and market opportunities.
The feedback on the Forum was excellent and it was therefore decided to replicate it for the other FinExCoop’s value-chains, modern intensive apple orchards and beef-and-dairy.
All the presentations of the Forum have been put on the FinExCoop’s website.
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Transfer: Leveraging on FinExCoop’s activities
In order to ensure sustainability and replicability of its actions, FinExCoop believes that it is of utmost importance to systematically promote innovative horizontal linkages among its potato pilot farmers, who are genuine grassroot leaders, and between them and their environment within the value-chain.
To help create this willingness of its pilot farmers to work together, FinExCoop organized with them a Potato festival with modern retailer Carrefour. It took place during three days at the end of October 2021. The idea behind it was to promote collectively best Georgian farmers, best potato varieties, and best terroirs. And create a nearly direct connection between the farmer and the final consumer, following the concepts of the new EU strategy from Farm to Fork. The video of the event can be found at FinExCoop’s website.
The Potato festival was perceived well. It convinced pilot farmers that by organizing them better and collectively, they could obtain much better prices for their quality products. It was also a great way to increase customer’s knowledge and give customers an opportunity to choose specific potatoes for specific dishes. A great output of the Potato festival was finally to convince Carrefour that this strategy of focus on traceability of quality terroir products could be a key strategy for the future.
Against this successful background in the field and in the shop and building on the large element of trust and social capital that has been accumulated during the last two years, FinExCoop proposed to its pilot farmers to establish their elite Georgian potato cooperative based on best European examples.
The goal of this cooperative, currently being launched will be to:
- Ensure regular access of high-quality seeds and develop its capacity to eventually become part of a PPP scheme for large scale reproduction of seeds;
- Ensure access to high-quality machinery for potato, including second-hand from leading EU suppliers like Grimme which participated in the potato conference;
- Develop common storage, sorting, packaging, marketing and branding with direct connection to modern retailers and with development of exports.
FinExCoop plans to support this cooperative with inputs (some of the seeds to be refunded by pilot farmers will be channelled to the cooperative) and technical assistance. It will in particular promote the capacity of its members to plan its future through establishing of connection with other EU potato cooperatives.
FinExCoop will support cooperative’s smart marketing activities. It plans to replicate in Georgia the very interesting experience of French Brittany in the promotion of innovative and high-quality varieties of potatoes made by la Confrérie des Toqués de la Patate which gathers 52 chefs “crazy” about good potatoes, Les chefs Toqués | La Confrérie des Toqués (confreriedestoques.fr). With initial support from leading stakeholders in HORECA, such as the head of Entrée or that of restaurant Monograph, it will organize an event “one pilot farmer, one variety of potato, one chef, and one cooking recipe”. Chefs will be filmed when making their dishes and the video clips will be disseminated on social media.
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For more information, please contact us via email info@finexcoop.ge or reach us at +995 599 30 57 58. Please also visit our website and our Facebook page. We look forward to hearing from you.
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This publication has been produced with the assistance of the European Union. Its contents are the sole responsibility of FinExCoop and do not necessarily reflect the views of the European Union. |
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