comparative analysis of agriculture in the south caucasus

20
Comparative Analysis of Agriculture in the South Caucasus 4 th July 2013 Dr. George Welton

Upload: nieve

Post on 05-Jan-2016

35 views

Category:

Documents


3 download

DESCRIPTION

Comparative Analysis of Agriculture in the South Caucasus. 4 th July 2013 Dr. George Welton. The importance of agriculture in the Caucasus. Employment/Poverty. Commonalities Most rural families are ‘employed’ in this way But massively under-employed - PowerPoint PPT Presentation

TRANSCRIPT

Page 1: Comparative Analysis of Agriculture in the South Caucasus

Comparative Analysis of Agriculture in the South Caucasus

4th July 2013Dr. George Welton

Page 2: Comparative Analysis of Agriculture in the South Caucasus

The importance of agriculture in the Caucasus

employment poverty

growth security

Page 3: Comparative Analysis of Agriculture in the South Caucasus

Employment/Poverty• Commonalities

– Most rural families are ‘employed’ in this way– But massively under-employed

• Rural communities (particularly isolated communities) are generally poorer

• Median income for agricultural ‘employed’ is low relative to other sectors

Therefore• In urban communities the problem is unemployment• In rural communities the problem is under-

employment and low productivity

Page 4: Comparative Analysis of Agriculture in the South Caucasus

Georgia has strong basics• High rainfall – more than 2x Azerbaijan – almost 4x Armenia

• Large number of microclimates for high value goods– Nuts– Citrus

• Low labour costs• Land prices• Potential sources of low-price energy (hydro and

thermal)

Page 5: Comparative Analysis of Agriculture in the South Caucasus

But Georgia has low productivity

Wheat Maize Potatoes Tomatoes

Georgia 1 1.4 11 8.4

Armenia 2.1 4.7 17 38.7

Azerbaijan 1.9 4.5 14.5 17

Kenya 3.2 1.6 2.9 29.2

Brazil 2.8 4.4 25.3 60.7

France 7 8.9 39.8 98.3

Turkey 2.4 7.3 32.3 33.1

Productivity per hectare in various countries

Page 6: Comparative Analysis of Agriculture in the South Caucasus

And a bad comparative decline• Georgia has seen 11% decline per year on

average 1990-2000– 0.6% recovery per year (2000-2010)– Overall 20% growth in value(1996-2010)

• Both Armenia and Azerbaijan have seen far higher growth – Armenia showing particularly high growth in beef

and vegetables (4-6% for beef, 7-10% vegetables per year 2000-2010 volume growth)

– Azerbaijan seeing dramatic increase in beef and in grain production (7-10% for beef per year 2000-2010, 7-8% for grain 1995-2005 volume growth)

Page 7: Comparative Analysis of Agriculture in the South Caucasus

Slow recovery – the role of the state?• Shevardnadze Government– Failed state– Collapse in infrastructure

• UNM Government– Lack of attention and a rural focus– The problems of libertarianism• Animal disease• Irrigation• Education

– The problems of state competition

Page 8: Comparative Analysis of Agriculture in the South Caucasus

An example - irrigation can be fixed• Armenia and Azerbaijan have seen significant

improvements

• Georgia improvements less impressive. What is needed:– Very local management– Commitment to reinvest revenues– Remove confusion of energy

production/agriculture

Page 9: Comparative Analysis of Agriculture in the South Caucasus

The difference is not just spending• Georgia – at its low point in 2010, Ministry of

agriculture spending represented 0.5% of total spending

• Azerbaijan hard to estimate but huge categories of inputs are massively subsidized. This has led to distortions.

• Armenian MoAg spending only around 1% of total. However:– More market driven– Focused on education and rural advise– Consistent

Page 10: Comparative Analysis of Agriculture in the South Caucasus

Market Access– Internal – Georgia is clearly better• Easier business environment (E0DB-

Georgia – 9, Armenia – 32, Azerbaijan - 67)• Armenia has a few big producers offering

forward pricing– External Access• Armenia and Azerbaijan – Access to Russia• Georgia – unutilized access to West

– External competition• Georgia has unprotected markets

Page 11: Comparative Analysis of Agriculture in the South Caucasus

Land ownership and useage• The problem is NOT size of land-plots• But privatisation and good land-purchasing

system is useful for encouraging FDI• All countries have issues with land-ownership• Problems in Georgia’s system– GPS system is unlikely to lead to correction of

ownership issues without central input– Ownership issues hurdle to large and small

farmers – though biggest challenge FDI

Page 12: Comparative Analysis of Agriculture in the South Caucasus

Agricultural support servicesFor crops: Machinerry, seed, fertiliser, pesticides, orrigation

For animals: Veterinary, genetics, feed

For all: Cost and availability of finance

Lessons learned from the region•Government financing is common•Financing mechanism is key – needs to work through markets•One needs to be wary of causing distortion - Azerbaijan•In many areas – subsidy of support services is no use without education

Page 13: Comparative Analysis of Agriculture in the South Caucasus

Sector dynamicsBeef and Lamb • Imports of beef went up until 2008

• Exports of live animals (beef and lamb) have gone up dramatically and local production of beef went down • Local production has gone down (as they are exported as live animals)

Page 14: Comparative Analysis of Agriculture in the South Caucasus

Dairy• Driving force of farming sector• Most dairy consumed as cheese. All three

countries in the region have high self-sufficiency in own cheese production

But• Very low milk yield• Inefficient use of time in home production

Page 15: Comparative Analysis of Agriculture in the South Caucasus

Meat and dairy problems

- Animal disease- Bad genetics - Animal feed- Poor education

Missed opportunity- Mountain grazing is under-utilised – could be used to

raise more calves- Low use of animal feed makes lowland pasture a

limiting factor on growth- Demand for ‘fresh cheese’ in the winter – suggests

opportunity for shift in milk production

Page 16: Comparative Analysis of Agriculture in the South Caucasus

Trends - CropsPotatoes Nuts

Watermelons

Increase

Potatoes Nuts Watermelons

Decrease

Salome
tangerines have shown a huge increase from 1999 to 2005 from 52,000 to 113,000 tons. but afterwards their level dropped below 50,000. I think they haven't grown that much if you ask me. Numbers after 2006 show they are stable. I would remove that.
Page 17: Comparative Analysis of Agriculture in the South Caucasus

Exports Growth Areas

Nuts Wine/Spirits

Live animals

Fresh fruit and vegetables

InternationalCommodity

Regional Commodity

Page 18: Comparative Analysis of Agriculture in the South Caucasus

Two Agricultures. Two ProblemsSmall Farmers Commercial Farmers

Irrigation Land ownership

Chronic disease leads to low productivity

Disease is big risk for investment

Availability of capital Cost of capital

Availability of quality inputs

High level management and agronomists

Basic knowledge Complex social environment

Page 19: Comparative Analysis of Agriculture in the South Caucasus

Conclusions for Georgia•Significant opportunities exist. Highest demand depends upon:• Unusual climate (nuts and some citrus)• Geography (live animals and fresh fruit and vegetables)• Cultural product (wine)

•Demand/opportunity also exists in supply chain• Sustainability requires limited government intervention

General•Need to ensure that policies are consistent and market oriented•Government should first focus on structural problems• Education• Irrigation• Animal health• Land-ownership• Cooperatives

Page 20: Comparative Analysis of Agriculture in the South Caucasus

Thank you