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Six days in Georgia: Reviving and modernizing an outdated agricultural sector

Part Two in series on OPIC’s work in Georgia
See also – Part One: A tour of the projects OPIC supported to help rebuild this young nation

By Judith Pryor
Vice President, OPIC Office of External Affairs

Factory in Georgia
OPIC’s support has helped dairy products producer Sante GMT offer more products, including yogurt.

 

Anyone who travels to Georgia’s capital city of Tbilisi will likely be impressed with the quality of the infrastructure and the speed at which this former Soviet Republic has recovered from years of conflict to build a growing economy that’s increasingly attracting tourists and expanding its local industries. OPIC, which was one of the first development finance institutions to invest in Georgia after it gained independence in 1991, has played a central role in helping revitalize what is today a very livable modern city, just 100 miles from the Russian border.

But OPIC’s work in this small country extends far beyond Tbilisi. By investing in small farmers and more modern agricultural production, we’ve helped bolster food production, improve food safety and build a cohesive network connecting thousands of tiny farms to larger production facilities. These products have delivered far ranging benefits to the farmers who produce the food and now earn a consistent income, to the workers who have found employment at food processing facilities. Consumers now have access to a broader range of food, and the country is updating an aging agriculture infrastructure and introducing more modern practices.

Some of these projects include:

  • Financing for the upgrade and expansion of a milk production facility that has generated income for 5,000 small rural farmers and dramatically increased production of milk, cheese, yogurt and other dairy products.
  • Financing for the expansion of a local winery that has increased production of Georgian wine, an iconic national product, while also helping boost tourism around the wine tasting sector and putting local farmers to work.
  • Lending to small businesses and entrepreneurs through a partnership with Citi that has supported loans to multiple small businesses, including the Kula juice producer that sources fruit from hundreds of local farmers, and the Entrée chain of artisan cafes offering breads, sandwiches, salads and desserts.
  • Financing to support the introduction of Wendy’s franchise restaurants that support hundreds of jobs, and source a quarter of their food locally.

Helping remote farmers earn income
Generating income from farming, or sourcing food and wine from local producers, might seem pretty basic for a country where agriculture is a major industry. But when I traveled outside the capital city, I encountered not only breathtaking views but deteriorating roads that left many farmers isolated.

Teliani Valley CEO Shota Kobelia
OPIC’s support for the Teliani Valley winery has helped boost local tourism and generate income for local farmers.

 

Many of Georgia’s dairy farmers are in reality rural households with just a handful of cows on their property. During my three hour journey from Tbilisi to the village of Gomareti to visit some of the projects OPIC supports, I saw that transportation outside of the capital is tenuous. Roads have not been repaved since Soviet times and conditions are poor.

One of the most successful projects OPIC has supported in Georgia is Sante GMT, which used OPIC financing to revive the country’s dairy industry. OPIC financing helped Sante modernize its production facilities, double its employee base and its annual revenue, and triple the number of products it produces, to include yogurts, cheeses and dessert foods.

Sante established a network of milk collection facilities around the country so that these small farmers could bring their milk to a nearby location. Today an astounding 5,000 farmers are generating income from this project and Sante is operating a robust dairy production facility.

OPIC’s support for the Teliani Valley winery – set in a scenic fortress 1,600 meters above sea level – has benefited the country in similar ways, helping the facility plant new vineyards so it could boost production, while also generating income for hundreds of grape farmers. More than one third of the grapes used by this major wine producer are grown by independent farmers. Five years ago, Teliani Valley was producing about 750,000 bottles of wine a year. Today annual output exceeds 4.5 million.

I wrote in my first post about the value of tourism to Georgia and how OPIC’s support for agriculture products is also helping support that nascent tourism sector. The Teliani Valley winery facilities have been expanded to provide lodging and now host about 3,000 tourists a year who previously had no place to stay overnight when they traveled to this scenic landmark about 60 miles outside of the capital city. In addition to boosting agriculture production and regional tourism, the project will help increase exports of Georgia’s distinct wines that have a taste all their own.

“Wine is very important to the Georgian economy,” explains Teliani Valley CEO Shota Kobelia. “OPIC’s support for this project has created jobs and helped raise the profile of Georgian wine.”

Sante GMT Workers
OPIC client Sante GMT has established milk collection centers around the country that are generating income for 5,000 local farmers
 

 

A far-reaching impact
I was fortunate to be able to see many of these projects in person. After a drive of breathtakingly picturesque views that took much longer than it would have on well-paved roads, we arrived at one of Sante’s milk collection centers, a simple white building divided into rooms where the milk was tested for quality, and then transferred into large cooling tanks to prepare for shipment. This was just one of many such collection facilities around the country. This particular collection center served 400 small farmers who not only receive payment for the milk they deliver but are also educated about best practices for raising dairy cows and food safety.

We traveled on to meet with some of the farmers who produce milk for Sante. I saw how these remote farmers were quickly acquiring business skills as they responded to requests for more milk by asking Sante for more money! But the exchange between Sante and its farmers was more than just financial. Sante is working with farmers to educate them on raising calves year round rather than just the spring time so that they will be able to produce milk year round. The company is also encouraging them to save more money to buy more cows. In this way the project is introducing modern processes that will continue to elevate the country’s dairy industry.

Sante GMT Products in Stores
A market in Georgia displays some of the juice beverages produced with the support of OPIC financing.

 

Earlier this year, OPIC recognized Sante GMT with an Impact Award for development impact. Keep in mind that one of the key ways any development project delivers a positive impact in a host country is to create jobs and a means for locals to generate income. A project that has generated income for 5,000 people offers exceptional developmental impact.

As I’ll detail in my next post, I visited OPIC-supported projects across a range of sectors from tourism to education to financial services, and throughout my visit, I saw signs of OPIC’s support for the local agriculture sector. When I visited local grocery stores, I saw Sante’s milk products and Kula juices on the shelves, and when I toured one of the Wendy’s franchises in a busy street in Tbilisi, I came to understand how food chains that introduce standards and quality control are introducing affordable food produced according to high standards. Agriculture is key to development and my tour of OPIC-supported projects in Georgia showed how investing in food producers delivers far reaching benefits.

Coming next: Six days in Georgia: How OPIC partners with financial intermediaries to support small local businesses.

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