Georgia: TOP-10 events of the produce business in 2021

2021 was not an easy year for Georgian growers and exporters of fruits and vegetables, but despite the difficulties, it ends quite well. Georgian EastFruit team offers 10 main trends and news of the sector.

1. The ability to diversify exports to the most attractive markets while saving on logistics. According to the results of trade in 10 months of 2021, Georgia has already earned almost $150 million from the export of nuts and fruits. The figures for this group are most likely not to change much compared to 2020 and export earnings will be close to $160 million. As for vegetables, we note an unprecedented growth in exports +163 % – from $8.7 million in 2020 to $22.8 million in 10 months of 2021. As for the export structure, the share of Russia is a record one over the past 10 years – 80%. The geography of exports of fruits and nuts from Georgia includes Russia and the EU – 32% and 47%, respectively (based on the data for 2020), but there is a trend towards an increase in exports to Russia this year. While trade with the EU is mainly concentrated on hazelnuts, 80–90% of the rest of the group (berries, stone fruits, apples, citrus fruits) is exported to the Russian Federation.

Although the final trading results for 2021 will be available only in the second half of January, it is clear that the value of Russia as a trading partner of Georgia has grown by 5-7% compared to last year. As the experience of many countries, including Georgia itself, shows, an excessive focus on one trading partner is very risky, especially if it is as unpredictable as Russia. Therefore, the general trend is very negative.

On the other hand, it is gratifying that some Georgian exporters are trying to diversify their exports and are exploring the market of the Middle East. The export of fresh berries (blueberries, raspberries, strawberries) by air is already well mastered, but Georgia is doing bad in exporting such perishable goods by land.

There were the first attempts to export table grapes to Qatar in refrigerated containers through Azerbaijan and Iran this year. This invaluable experience has shown all the difficulties of the process – packaging, the formation of an export batch of high-quality products and the proper control over the entire supply chain. At the same time, we also managed to feel the potential profitability of this direction. Importers from the Middle East give a positive assessment of Georgian fruits and are interested in purchasing table grapes, cherries, peaches, plums and oranges from Georgia.

2. Price and trade swings, records and potato business openings. 2021 started with growers’ protests over low prices for potatoes due to lack of demand, but in the following months external demand increased so much that the export of Georgian potatoes overtook even expensive and trendy blueberries in terms of revenue by July.

Exports in the middle of the year were driven by low stocks and high prices for potatoes in Russia, which previously supplied potatoes to Georgia. Russians bought so many potatoes in the second quarter of 2021 that Georgia even had to import unusually large volumes of potatoes in July and August to meet domestic demand.

When harvest started in September, the exports of potatoes from Georgia became possible again. The reason is the same – high prices for potatoes in Russia due to poor harvests and reduction of areas planted with potatoes. Following the resumption of intensive potato exports in the fall, the Georgian market may face a new potato shortage in the coming months.

Overall, Georgia exported potatoes worth a record $16 million in the first 11 months of 2021, which is 4 times higher than the previous export record. Prices during export periods were the highest (if compared on a monthly basis) in the last 7 years.

The last season has shown that the Georgian supply chain is largely unprepared, with importers buying potatoes straight from fields. However, the situation was unique this year – Russia did not have much choice in where to get potatoes, so the buyers agreed to these conditions. If Georgia wants to be a stable exporter of potatoes in the future, the industry will have to invest a lot of money in storing, washing, sorting and packaging, as well as improving the quality of potatoes.

This is why another major event in the Georgian potato business in 2021 should be noted – some Georgian potato growers became convinced that investments in quality pay off. Potato growers who focused on quality felt more confident and earned more, regardless of the overall supply and demand.

3. Georgia has set a course for the development of the greenhouse sector. According to Georgia’s agriculture development strategy 2030, new greenhouses in the country will be createdon 500 hectares.

Aromatic herbs production in greenhouses is a traditional business for Western Georgia growers who export 50-60% of the country’s fresh aromatic herbs. But the approaches to production, packaging and logistics that we showed in this video remain ineffective and outdated. Therefore, Georgia is gradually losing even traditional markets for fresh herbs, yielding them to Iran and Uzbekistan.

To modernize the sector, increase the technological level of production, handling, cooling and logistics, and thus ensure the export of greenhouse products to a more profitable price segment, as the Italian company Orto Ricci did, the authorities are inviting investors to the country. And if the well-known state project “Plant the Future” and preferential agricultural loans are focused on supporting Georgian companies, then foreign investors are invited to develop the production of vegetables or herbs for supplies to the Russian market or the markets of the former USSR and the Middle East.

The Agrozone Imereti greenhouse cluster provides foreign investors with a unique opportunity to purchase or lease a fully prepared serviced agricultural plot in Georgia through a predetermined foreign investment approval mechanism.

If you have not submitted your application yet, hurry up – applications for participation will be accepted in the Call for Proposals until the end of 2021!

4. Nut production in Georgia is expanding rapidly. In the next 7 years, the production of almonds in Georgia will grow16 times, and the coefficient of self-sufficiency in walnuts has already approached 100%. Therefore, growers who sell the first harvest from modern almond and walnut orchards to the local market are already planning to export. Having experience in managing the quality of hazelnuts, Georgian walnut growers invest in further processing: drying, shelling and sorting. This year two new plants joined the existing walnut processing plant, the work of which is available to watch here. Of particular interest was our video about the work of the Anigosi walnut drying and processing plant.

According to the Association of Almond and Walnut Producers, next year five more factories will be added to the existing capacity, which now reaches 14 tonnes of walnuts per hour. At the same time, there is a shortage of capacities for processing almonds. According to EastFruit, the first almond processing plant is scheduled to open in early 2022. You can see how almonds are harvested in the largest orchard in Georgia here.

In addition to the most popular nuts in the world – almonds, walnuts, hazelnuts and pistachio – American pecans also grow in Georgia. They were initially planted for durable wood production, but hazelnut importers appear to be interested in pecans as well. Although there are no commercial plantations in the country yet, this nut is already being handled for export to traditional markets – the EU and China. According to the growers’ forecasts, the current potential of Georgia is 150 tonnes of pecans per year.

5. Growth in exports and a harvest of hazelnuts with severe quality problems. The situation on the hazelnut market remains complicated. Despite the fact that global trade in hazelnuts is fallingon average by 8% per year, additional pressure on prices is exerted by the collapse of the Turkish lira, the rate of which has more than halved since the beginning of the year. Therefore, Georgian trade slowed down in November and the factories are working on fulfilling contracts.

The hazelnut season turned out to be rather short, as due to the cold spring and heavy rains in August, the hazelnut harvest in Georgia began a week or two later than expected. The rains also affected the quality of hazelnuts from Western Georgia. Therefore, along with the record export volume, we also noted a record number of returns of hazelnuts from the EU due to non-compliance with quality and safety requirements. There were 13 returns in the 2020 season, and there are already 25 returns in the 2021 season, although it’s not over yet. At the same time, the growers claim that when repeated analyzes were carried out in 2021, no traces of aflatoxins were detected.

Could the struggle for quality influence the decision of the global leader Ferrero to sell 1.8 thousand hectares of hazelnut orchard in Georgia to a local company? The question remains open.

Despite the problems, Georgian hazelnut exporters still managed to get the highest export earnings in the last five years. This was due to a poor harvest in Italy and, accordingly, a sharp increase in demand for Georgian inshell hazelnuts, which Italians use for processing. As a result, the export of inshell hazelnuts increased to a record 5.9 thousand tonnes and $16 million in August-November 2021. The total income from all hazelnut exports, which is slightly overestimated due to sorting and re-export back to the EU, amounted to $68 million for the specified period.

The general trend of the last few years – the production of hazelnuts in Georgia is moving to the east – to Kakheti, where favorable conditions are created for the cultivation of hazelnuts due to climate change. Commercial hazelnut plantations in eastern Georgia have already been established by a Swiss chocolate maker, which was one of the main news of the year for the sector. On the contrary, Ferrero sold its plantations in Georgia.

6. The first commercial avocado plantation was established in Georgia. We have repeatedly noted that avocado is the fastest growing positionin the global fruit and vegetable trade. In this regard, the establishment of the first commercial avocado plantation in Georgia by Nutsge on 6 hectares in Lanchkhuti, Guria municipality, was a great news for the region. The owners talked little about the details of the project from the start, although they hoped that by planting the right varieties and creating the right conditions, their project would be a success. The first winter requires special attention, when the seedlings will pass the frost resistance test in practice.

The farm has not yet passed the cold test, as the harsh weather in Georgia is expected in the coming months. Nevertheless, the company has already covered the trees with agrofibre to protect them from frost. It is expected that the temperature in winter will not drop below minus 10 degrees Celsius in the area where the farm is located.

Some problems with the seedlings have already showed up due to excess moisture, which in some plants caused root rot. Heavy rains in late summer and early fall this year have created problems not only for avocados, but also for traditional horticultural crops in Western Georgia, such as hazelnuts and mandarins. Although some of the seedlings have dried up, the company has no plans to replace them with imported seedlings. They plan to work only with plants that survive, hoping to start producing their own seedlings in the future.

7. Blueberry exports growth by 50% to a new record level. Of course, this is a new record. The 2021 season started a week later due to unfavorable weather, and the first early batches become availableon the market at the end of May. Export expectations were high from the outset, and they were confirmed – Georgia received record revenues from blueberry exports in the 2021 season. Export revenue increased by 48% compared to the previous season and amounted to $5.5 million as of August 2021.

By the end of the season, blueberry exports reached almost 1,000 tonnes and increased in volume by 44% compared to 2020. The volume of blueberry exports from Georgia has grown 5 times in 2 years!

There were also some obstacles – panic among blueberry growers and exporters was caused by new rules for access to the Russian market. Exporters refrained from purchasing blueberries for some time after receiving this information, which led to a sharp drop in domestic prices and a temporary suspension of exports. It is possible that if not for these problems, the exports of blueberries from Georgia would have been even higher at the end of the 2021 season.

The EastFruit team visited the orchards during berry harvesting, studied the details of their production and exports, and shared an unique video about the export opportunities of Georgian blueberries. If you are planning to import blueberries from Georgia, EastFruit has prepared a list of the largest blueberry growers with contacts, volumes and photos of plantations.

Blueberries are attracting more and more investments, both in production and technology improvements. A representative office of a leading producer of blueberry seedlings has been operating in the country for the second season.

8. Georgia is increasing the exports of persimmons. Despite the fact that the persimmon harvest was damaged by severe hailin the east of the country in the Kakheti region in 2021, and in some cases it was completely destroyed, the production and exports of persimmon in Georgia increased again.

In 2021, Georgia set a new record for persimmon exports. As of November 2021, Georgia exported 10.2 thousand tonnes of persimmons, and export earnings reached $5.1 million, which is already 9% more than in the same period last year. However, the export data for the 2021 season will change again in December as the exports are still ongoing.

You can find out which persimmon varieties prevail in Georgia at this link.

9. Breakthrough in the production of table grapes. Largely thanks to the promotion of information on the prospects and opportunities for growing table grapes in Georgiaand investments in modern technologies of growing, storage and processing by the FAO and EBRD project, within the framework of which the EastFruit platform was created, Georgia made a real breakthrough in this sector in 2021.

As of the end of November 2021, Georgia had already exported 775 tonnes of table grapes from the 2021 harvest, which is 3.2 times more than exports in the same period of 2020. Let’s remind that earlier Georgia was a large importer of table grapes, despite the excellent conditions for their cultivation.

Almost all exports of Georgian table grapes were made to Russia, creating risks for the industry. Therefore, diversification of exports should be a priority for Georgian growers and exporters of table grapes in the next season.

It is gratifying that Georgia is focusing on the popular and well-known table grape varieties: Red Globe, Thompson Seedless, Crimson Seedless and Regal Seedless. A Table Grape Association has been already established in the country.

In 2021, the first table grapes were harvested by Georgia’s largest grower that owns 30 hectares of modern vineyards. In the first year, the company harvested up to 100 tonnes of table grapes and sold them on the local market.

10. The success of the Georgian kiwi in the global market. Georgia managed to get into the global trade trend and become the leading regional producer of kiwi. Kiwi was second only to blueberries, avocados, cherries, raspberries, durian and mango in terms of growth in global trade in fruits and berries. It is also interesting that Japan, which is demanding on the quality, is the main sales market for Georgian kiwi – since 2016, about 70% of kiwi exports from Georgia have accounted for Japan. Japan also pays a fairly high price for quality fruit. A lot of interesting information about Georgian kiwi is available here.

If you think that we have missed something of the important events of the Georgian produce business in 2021, please write about it in the comments to this article.