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Street scene in Zerti village
Street scene in Zerti village. Photo: ESI

Over 50% of Georgia's population lives in rural areas, most being self-employed in agriculture.

Georgia used to be known for its wines, tea and citrus fruit. Until 1989, Georgia supplied all of the Soviet Union with tea. Tea leaf production decreased, however, from 581,000 tons in 1985 to 7,500 tons in 2007 (Agricultural Statistics 2007), of which almost half (3.600 ton) is produced in the Guria region. Most of the former tea-fields have now turned into deserted pasture grounds.

According to agricultural statistics for 2007, citrus production most of it concentrated in Adjara decreased from 238,100 tons in 1990 to 98,900 tons in 2007.

One of the main structural problems in the agricultural sector in Georgia is low efficiency, an outcome of the small scale of production.

The small size of most farms is a result of privatization strategies after the end of Soviet rule. The former kolkhozes collective farms were split up between local farmers. The farmers' individual lots were so small from around 0.5 to 1.5 ha that they turned into small subsistence farms. The small production quantities also have problematic effects on access to the market, which is more expensive and more complicated for farmers who only sell small amounts.

Infrastructure, like roads and irrigation systems, is also a problem area in Georgia.

A big blow to Georgian agricultural exports came as a result of the 2006 Russian embargo imposed on all agricultural imports from Georgia. New export markets have to be explored, and the EU is the biggest available. However, due to the lack of institutions to ensure product quality such as food safety Georgia is incapable of penetrating the EU market with its agricultural products on a large scale.

The trends Georgia has been seeing in the past years included a 10 percent point drop in the share of agricultural production in nominal GDP, from 21% in 2001 to 11.2% in 2006. This does not mean that agricultural output has decreased over this period, however. Instead, it has stagnated, with other economic sectors spurring Georgia's significant GDP growth.

October 2008

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