Farming cooperatives key to Georgia’s European future

It’s difficult to get ahead in life if you’re a farmer in Georgia. The majority of Georgian farmers (95 percent) are small-time growers who own cultivate one hectare of land and own two cows. Limited production does not allow them to compete with imported products and their profits are low as a result.

Subsequently, a farmer only has enough produce to feed his family and cannot contribute to the country’s economy. To solve this problem the EU has offered Georgian farmers the opportunity to unite under a cooperative scheme and work towards a common goal – developing the economy.

Georgian walnuts at the exhibition of successful cooperatives in Kutaisi, Western Georgia. Photo by Agenda.ge/Nino Alavidze

Success story

Avtandil Tsitskiladze is a small farmer who is heavily involved in beekeeping. Seven years ago he started his business with five hives. After he became a member of a cooperative he expanded his business. He now owned more than 100 hives of various types and was one of the leaders of the Alioni agricultural cooperative in Georgia’s Adjara region. He believed being involved in a cooperative played an important role in the success of his business.

Tsitskiladze was one of a select group of farmers who were awarded a grant under the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD) and was now considered one of the more successful farmers in Georgia.

Honey and honey related products are one of the most successful products at Georgian market. Photo by Agenda.ge/Nino Alavidze 

"Together farmers can do more. It is cost efficient to work in a cooperative. For example we all use the same techniques and this way we save expenses by five percent at least.”

"This year our income was 20,000 GEL and next year we expect this income to double. The cost price of 1 kg of honey is two GEL and we sell the product for 20 GEL. While calculating the cost price we do not include the cost of our labour. Still, this business has become profitable and we see a better future now,” Tsitskiladze said.

2014 key achievements

There are 499 registered cooperatives in Georgia which cultivate 20,000 hectares of land. In total the cooperatives annually harvest 16, 500 tonnes of agricultural products including 5, 600 tonnes of citrus, 3, 600 tonnes of potato and 2, 500 tons of milk.

Furthermore, the cooperatives unite 920 women.

Cooperative "Kvitiri" in Western Georgia is involved in greens' producing and employs 20 women. Photo by Agenda.ge/Nino Alavidze

To date more than €2 million (4.65 million GEL) has been allocated to improve the qualifications of farmers involved in cooperatives, the Agriculture Cooperatives Development Agency announced.

Meanwhile, 35 small farming cooperatives were awarded grants by ENPARD. The grants provided capital investments such as tractors, trucks, processing equipment and seedlings to help the farmers develop their businesses.

Award ceremony took place at Akaki Tsereteli University in Kutaisi, Western Georgia. Photo by Agenda.ge/Nino Alavidze 

More than 700 small farmers’ groups applied for ENPARD support. About 200 applicants were pre-selected following strict criteria, such as business sustainability and the groups’ cooperation record. These pre-selected groups have since been trained in cooperative management and business planning.

Georgian products have a future in Europe

"I am happy that there are grants available to the best farmers and this will really contribute to the modernisation of agriculture in Georgia,” said Deputy Head of the EU delegation to Georgia Boris Iarochevitch.

Agriculture really has a future in Georgia and the country will be able not only to feed itself but also to export to the EU. There is a future of Georgian products in Europe,” he said.

"When we were building the European Union, development of agriculture played an important role. We still have a famous common agriculture policy which is a key element in Europe. In Europe, cooperatives are business-oriented and they produce a lot. They produce quality food that targets the market very efficiently. We are here to share our experience with Georgia,” he added.

Georgia’s First Deputy Minister of Agriculture Nodar Kereselidze said developing cooperatives in Georgia was the main strategic direction of the Ministry and it had been included in the Ministry’s new strategy for the 2015-2020 years. The state strategy will be published in February 2015.

Agriculture is dismembered in Georgia so the cooperatives could play a very significant role in improving the general picture. In EU member countries cooperatives are the main                  Deputy Head of the EU delegation to Georgia Boris Iarochevitch  driving force of the agricultural sector. As Georgia is embarking on the EU integration process, we decided to follow the EU’s experience and develop cooperatives to better Georgia’s agricultural sector,” Kereselidze said.

Cooperatives vs Kolkhoz

"It is not an easy task for us because Georgian farmers still make parallels between cooperatives and Kolkhoz - a form of collective farms in the Soviet Union,” Kereselidze added.

"Farmers have bad memories about Kolkhoz. But with ENPARD’s effort we can beat the stereotype and have assured farmers that cooperatives help them to increase their production capacity, increase their competitive advantage and what is important – to increase their income.”                         

"In the first stage we raised awareness of cooperatives among Georgian farmers. During the second stage we registered more than 400 farmers and now it is time to move onto the third stage, which is about contributing to the sustainability of already existing cooperatives and to help farmers do their business,” Kereselidze added.

Why is it important for small farmers to be involved in cooperatives?

The idea of creating cooperatives is to support development of Georgia’s agricultural sector, strengthen farmers’ abilities and increase the income of farming households.

Juan Echanove, the project manager of the Agriculture and Rural Development of the EU delegation to Georgia, said the challenge facing the industry today was that 95 percent of Georgian farmers were small-time farmers who cultivated small areas of land with one or two cows.

Juan Echanove summerising ENPARD Georgia's key achievements of 2014. Photo by Agenda.ge/Nino Alavidze 

Consequently, small farms produced limited goods and limited production did not allow them to compete with imported products. Similarly, these farmers only earned a small amount for their efforts. 

Low profits did not allow farmers the financial freedom to expand their farms and in turn, gain more profit. As a result, a farmer can only feed his family and cannot contribute to the country’s economy.

"Developing cooperatives is very useful for fighting against poverty. Sixty percent of agricultural output in Europe is produced by cooperatives. There are many small farmers not only in Georgia but in Europe as well. In Europe such farmers unite under cooperatives in order to reach the market and sell their products,” Echanove said.

"Cooperatives are business-oriented, which is about gaining profits. Agriculture is something that affects all of us because we all eat food. Knowledge transfer is very useful. Hundreds of cooperatives that have already been created in Georgia now take part in different trainings and seminars to improve their knowledge,” he added.

Farmers presenting potatoes from their cooperatives at the exhibition in Kutaisi, Western Georgia. Photo by Agenda.ge/Nino Alavidze

Echanove said some people from urban areas told him that cooperatives would never work in Georgia as it was not an idea that would be supported by the population.

"But they do not know Georgia I think. People cooperate all the time here. Now it is important to develop a business mentality among them. Georgia is on a good path,” Echanove said.

Head of the Agriculture Cooperatives Development Agency Giorgi Misheladze said: "During the first stage small farmers should create cooperatives which produce primary products. Later such cooperatives should unite and create second level agricultural cooperatives.”

"We have such an example in Tsakla, [a town in southern Georgia], where united cooperatives are going to establish a dairy processing plant. We have nine cooperatives which are ready to move on to the second level. This way we all will create a system which is well-known for everyone – as the saying goes, it takes a village to feed a town.”

What is ENPARD?

ENPARD is a €52 million EU-funded programme that was signed in December 2012. ENPARD aimed to boost the production of food in Georgia and reduce rural poverty.

Experts say that cooperatives will play a significant role in fighting against the poverty. Photo by Agenda.ge/Nino Alavidze

As part of this EU support, in 2013 Georgia adopted the law on agricultural cooperatives. To date more than 350 agricultural cooperatives have been registered with the Government. Business-oriented cooperatives are a key aspect of modern agriculture worldwide. The majority of small farmers in the EU are members of cooperatives and much of the agriculture output in Europe is produced by cooperatives.