Preamble
The issues revolving around the ecological impact of food
supply are one of the topical problems in the 21st century world.
That is why Affinitas Consulting regularly provides articles about the situation
and the opportunities in different directions of agricultural sector in Georgia,
one of the countries in the Caucasus that is seeing a revival in agriculture
interest. This article is dedicated to the livestock sector and will
provide information about:
- The
current situation of this business in Georgia;
- The challenges
related to the production process;
- Statistical
and economic data;
- Specific
information about pork, beef and mutton production in Georgia;
- Existing
livestock project implementations and potential opportunities in the Georgian
industry.
Current Situation
Livestock was and is one of the major sectors of the agricultural
sector in Georgia. Archaeological excavations together with Georgian monuments prove
that even in the ancient times this sector was highly developed in the country.
However, nowadays this sector while offering a lot of
potential to foreign investors it is suffering from some internal issues.
Problems date back to Soviet Union times when farmers were
only asked to grow the animals and the government guaranteed price and
guaranteed all other steps of the supply chain. Nowadays free market conditions
force small farmers and entrepreneurs to face competition with foreign
investors at a disadvantage due to a chronic lack of credit and therefore
investments as well as knowledge.
Therefore this sector is currently proceeding by virtue of inertia.
In order to accelerate development process almost every government of Georgia initiates
some initiatives, however the problems stay the same and is mostly linked with the
lack of financial resources.
The table provided by Georgian Statistics Department is
great proof of such opinion. According to the department only 8.8% was the
share of agriculture in the country’s total GDP in 2011. Such percentage is
especially alarming after taking under consideration the fact that 50% of
citizens are employed in the agricultural sector.
The Share of Agriculture in Total Georgian GDP:
But the
fact that livestock takes about 50% of the total agriculture share is quite interesting:
Livestock’s Major Sectors
Sheep
Breeding
Sheep breeding is one of the most interesting and ancient sectors
in Georgian livestock. The legend of Argonauts,
according to which sailors (Argonauts) visited Kolkheti (Georgian territory) to
get the so called Golden Fleece –
Sheep leather is quite a good evidence of that.
There are two types of Georgian sheep: Tushuri and Imeruli.
So called Tushuri
sheep is mostly spread in Eastern part of the country. Such breed is very popular,
mostly because of its main characteristic: endurance. Tushuri can walk about 600-700 kilometers per season, it has strong
leg and can easily be adapted to environmental conditions.
Tushuri
doesn’t need high quality food, it can be fed in semi-desert lands and weights
about 60-80 kilograms.
Imeruli
sheep
is mostly spread in Western part of the country, has more rude wool and its uniqueness
is in its reproduction functions.
It can be bred any time of the year, it breeds about 2-3
sheep per gestation period and its pregnancy period is shorter, about 137-143
days.
Such variety of sheep weights about 35-45 kilograms and its
meat actually doesn’t consists of fat and so is dietary kind of food.
It should be emphasized that during Soviet Union about
2,000,000 sheep was recorded in the country, however nowadays the number came
down to 800,000 units.
Such decrease is the result of different factors, however
it’s mostly linked with finances. Since the taxes on pastures increased, the
farmer that had limited financial abilities had to sell even such sheep that in
future should have lambs.
Markets
for Georgian sheep realization
It’s noteworthy that mutton consumption in Georgian is quite
low, about 70 tonnes per year and is mostly depended on the Azerbaijanis living
in the country.
However the interest towards Georgian sheep, namely in Tushuri is quite high in foreign
countries, as this breed is very similar to sheep from Middle East Awassi, which is very popular and quite expensive
in Arabian countries.
If the price for Australian Merinos sheep in Arabian countries is about $8 USD and for Syrian Awassi is $15, price for Georgian sheep
occupies middle position between them.
Nowdays, Tushuri
sheep is exported in Libya, Syria, Jordan, Iran, Saudi Arabia, Egypt,
Azerbaijan, Qatar, Kuwait, United Arab Emirates, Oman and in Israel.
About 266,244 live sheep were exported in 2009 year from
Georgia, in 2012- 178,000, in 2011 – 150,00 and in 2012 about 120,000.
Domestic sheep is also interesting from wool point of view.
If one sheep can give about 2-2.5 kilograms of wool and a lamb about 1-1.5, it
comes out that Georgia has capacity to produce about 1,700,000 kilograms of
wool per year. While domestic price per kilo of the product is about $6 USD.
Sheep is also attractive in terms of milk production,
especially for cheese production. It gives less milk than a cow, about 1-2
liters, however its milk is full of fat and is beneficial for health.
Important to note is the fact that the export can be much
more, as the interest towards Georgian sheep is large and considering the current
World food trends it will only increase.
Pork and Beef Production
Pork and beef production is more relevant in Georgia, as the
demand for them is higher on domestic market also.
Nowadays the retail price for beef in Georgia varies between
9-11 USD, while for pork between 8-11 USD.
Cows average weight is between 350-459 kilograms and price
for a cow is 500-718 USD. Pigs weight is about 80-180 kilograms with a price of
270-500 USD.
Despite the high demand on local market, farmers and small
entrepreneurs are not able to satisfy the market and this shortage is filled
with imported goods.
As for example, about 7,700 tones of frozen beef and 7,500
tone of pork was imported in Georgia in 2009 year, with the total price of 12
million and 16,6 million USD respectively.
According to the experts, the most of this shortage space
can be supplied by locally produced meat, that nowadays can not be reached
because of existing challenges.
However the Department of the Georgian Ministry of Economy
and Sustainable Development released quite optimistic data:
In the first quarter of 2012 the share of agricultural
products increased comparing with 2011 year.
Structure
of exports according to sectors in the first quarter of 2011-2012 years:
For example, the export of cattle was 9,8 mill USD, that is
112% raise comparing the previous year. And it’s noteworthy that 99.6% of this
goes to Azerbaijan and 0.4% to Iraq.
According to this department the share of agricultural
products is reduced in the total import in the first quarter of 2012year. From
19% it came down to 16%.
Structure
of imports according to sectors in the first quater of 2011-2012 years:
However, the import of beef was increased by 60.3% and was
about 6.1 mill USD. And 92% from the total import was from India and the rest
from Germany, Turkey and Brazil.
Pork import increased by 80% and consisted of 7.2 mill USD,
from which 60% was from Brazil and 40% from Canada, Netherlands, United States
and other countries.
Despite of meat, cow gives also milk, about 12-13 liters
during Summer and 8 liters during Winter.
Along with the seasons the amount of milk given from cow
depends on the quality and amount of food it gets. Considering the financial
abilities of domestic farmers, it can be assumed that in case of better quality
and more amount of food Georgian cow can be milked better.
The process of milk realization is better organized by domestic
dairy producing companies. The company representatives regularly visit the
village inhabitants and buy milk from them. Or the peasants go to the special
places and sell the product.
The price per liter of milk in case of first option varies
between 40-50 cents, while in the second case it’s higher.
Conclusion
Existing local demand is able
to support the development of a stronger livestock industry in Georgia provided
that private investment likely from foreign countries will be focused in the
industry.
Considering the above data, it
can be easily seen that if livestock business will be developed in Georgia, the
existing and growing demand in the Georgian market can easily be satisfied by
locally produced goods.
The reasons that caused the
delay of the sector’s development are also clear. Similarly to the agriculture
sector in general, also in livestock mostly little farmers and peasants contribute
to the industry and all of them are unable to expand the business because chronic
lack of financial resources (credit) that prevents them to modernize their
technology and create economies of scale.
Direct foreign investments can
easily accelerate the development process of this sector, that turns out to be
attractive and full of opportunities in terms of both directions like export
and of supplying domestic market.
Article by: Kate Lekishvili & edited by Luca Gorlero. All rights are reserved. Total reproduction or partial reproduction of the information above is forbidden unless authorized in writing by Affinitas Consulting.
