DCFTA and AA:

Challenges and opportunities in the

agriculture and food sector
JUAN ECHANOVE .EU DELEGATION- NOVEMBER 2014

Opportunities
Trade
Investments
Modernization
Health

Food safety
an agricultural
production
Non-complainant
imported foodstuffs
will not access
the Georgian market

Georgian producers
will be able to
substitute imports

Possibility to access
the EU market

Increase in
production

Safer farming conditions

(e.g. veterinary services)

Consumers
protection

Better health

Poverety
alliviation

Challenges
Costs for

Small farmers
Processing SMEs

Cost

for small farmers.

..are they really that much

affected ????

Length time frame for the approximation

Self-production is out
Small production is out
Derogations
Uplands
Traditional production

Massive State and EU support

ENPARD EUR 102 Million!!!!!

ENPARD GEORGIA

EUR 52 M EU contribution
BUDGET SUPPORT (24.5 M) 47 %
EUR 24 M Budget Support

GRANTS (20.7 M) 40%

EUR 18 M grants via NGOs

EUR 2 M grants via UNDP
EUR 0.7 M support to academic/research institutions

TECHNICAL ASSISTANCE (6.8 M) 13 %

EUR 2.3 M TA to MoA via FAO
EUR 1 M TA to Ajara MoA via UNDP
EUR 2.5 M TA to ADCA
EUR 0.5 communication and visibility
EUR 0.5 M other

6 years (BS 4 years)

ENPARD GEORGIA

THREE MAIN COMPONENTS..

Strengthened co-operation amongst small farmers

Main beneficiaries: Cooperatives and other farmers groups
Access to capacity building by small farmers improved
Main beneficiaries: ALL farmers
Improved efficiency of institutions involved in agriculture
main beneficiaries: Ministry of agriculture, Cooperatives Agency.

Why Cooperatives?

A cooperative is a business organization owned and

operated by a group of individuals for their mutual benefit.

It has nothing to do at all with a kolkhoz!

Cooperatives
supply their members with inputs for agricultural
production (seeds, fertilizers, machinery, TA)
And/or undertake transformation, packaging,
distribution, and marketing of farm products
Cooperatives are the dominant form for agricultural
production in Europe (i.e. over 50% of agri-food industry )
and elsewhere in the world where there are small farmers
(including USA)

The concept of Rural Development

in the EU perspective

RURAL
DEVELOPMENT
Improving the
competitiveness
of the agricultural sector

Improving
the environment
in the countryside

Improving the quality of life in rural areas

and encouraging diversification of the rural economy

Cost for SMEs.

Government Regulations

Drivers for Food Safety

12

Increases opportunities for

sales growth and new
markets
Improves operational
efficiency, lowers costs
and waste
Strengthens Risk
Management and Brands

Retailers
&
Multinationals

Export

Challenges for Georgian Food Retail Suppliers

Food businesses supplying the local market tend to be

smaller,
They usually have difficulty meeting stringent
quality/quantity requirements posed by retailers,
Challenges due to lack of long-term financing to upgrade
production facilities and increase scale.

Challenges for Food Retailers

Less developed suppliers - larger procurement departments,

Higher returns and withdrawals, more staff time,

More audits and inspections,
Higher losses due to improper storage and poor quality/safety,

Not to mention lost sales due to more customer complaints

13

Results with Retail Suppliers

in Georgia( IFC project)

Seven suppliers (SMEs) have

reported average increase in
food safety level by 30%
All participating suppliers
demonstrate improvements
Good improvement achieved at:

Control of food hazards

Facilities and environment
Personal hygiene
Product contamination control
Control of allergens

Retail suppliers reported $1.7

million increase in sales.

14

Results of Food Safety

Improvements with Clients
Common
Rationale

Reduction of food
safety related
risks

Increasing
attractiveness for
investors

Strengthening
market position
and enhancing
reputation

Results
Gained access to new markets: Kazakhstan, EU, increased export to USA,
Increased sales revenue by 17%,
Improved personnel management and control, personnel effectiveness.
Improved control, reduction in non-conformities,
Improved operation and maintenance of equipment, leading to reduced,
maintenance costs.
Access to new markets.

Increased shelf life of production,

Reduced number of returns,
10% increase in sales.

15

Food Safety - Better Business

Increase sales/profits,
access new markets

Improved access to major retailers

Improved export potential
Increased distribution points

Save costs , improve

operations and
efficiency

Reduced production losses

Lower costs on returns, withdrawals
Fewer fines from State Agencies
Higher worker productivity and retention

Fewer customer complaints

Enhanced reputation
Attractiveness for investors through better
risk management.

Manage risks and

enhance reputation

16

CIB NFA/ First phase

Result
(1) Increased level of knowledge and
practical skills of the NFA staff

Indicator
(1) At least 80% of participants in trainings
and other capacity building activities
improve their knowledge on the trainings'
subjects

Capacity building
(2) Increased public awareness on
food safety

(2) At least 50% of surveyed food producers

and processors are aware about basic food
safety standards by the end of the project

(3) Adequate IT capacity for the NFA (3) 100% of IT systems and data base
to enable the institutional tasks and
systems introduced by the project available
responsibilities efficient, time-effective and functioning by the end of the project
and well provided
(4) Developed NFA physical
infrastructure and standard working
environment

(4) 100% of the newly NFA regional offices

newly established or renovated by the
project are fully operational by the project
completion

Thank you!