DCFTA and AA:Challenges and opportunities in the agriculture and food sector

JUAN ECHANOVE .EU DELEGATION- NOVEMBER 2014

Opportunities

Trade Investments Modernization Health

Food safety an agricultural productionNon-complainant

imported foodstuffs

will not access the Georgian

market

Georgian producers will be able to

substitute imports

Possibility to access the EU

marketIncrease in production

Safer farming conditions(e.g. veterinary services)

Consumers protection

Poverety alliviationBetter health

Challenges Costs for…

Small farmersProcessing SMEs State

Cost for small farmers….

..are they really that muchaffected ???? Length time frame for the

approximation Self-production is out Small production is out Derogations

– Uplands – Traditional production

Massive State and EU supportENPARD EUR 102 Million!!!!!

EUR 52 M EU contribution

BUDGET SUPPORT (24.5 M) 47 %EUR 24 M Budget Support

GRANTS (20.7 M) 40%EUR 18 M grants via NGOs EUR 2 M grants via UNDPEUR 0.7 M support to academic/research institutions

TECHNICAL ASSISTANCE (6.8 M) 13 %EUR 2.3 M TA to MoA via FAOEUR 1 M TA to Ajara MoA via UNDPEUR 2.5 M TA to ADCA EUR 0.5 communication and visibility EUR 0.5 M other 6 years (BS 4 years)

ENPARD GEORGIA

ENPARD GEORGIA

THREE MAIN COMPONENTS…..

Strengthened co-operation amongst small farmersMain beneficiaries: Cooperatives and other farmers groups

Access to capacity building by small farmers improved Main beneficiaries: ALL farmers

Improved efficiency of institutions involved in agriculture main beneficiaries: Ministry of agriculture, Cooperatives Agency….

                                            

A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit.

It has nothing to do at all with a kolkhoz!

Cooperatives…– supply their members with inputs for agricultural

production (seeds, fertilizers, machinery, TA) – And/or undertake transformation, packaging,

distribution, and marketing of farm products

Cooperatives are the dominant form for agricultural production in Europe (i.e. over 50% of agri-food industry ) and elsewhere in the world where there are small farmers (including USA)

Why Cooperatives?

Improving the quality of life in rural areas and encouraging diversification of the rural economy

RURAL DEVELOPMENT

Improving the competitiveness

of the agricultural sector

Improving the environment

in the countryside

The concept of Rural Development in the EU perspective

Cost for SMEs….

Gove

rnm

ent R

egul

atio

ns

Retailers&Multinationals

Export

Increases opportunities for sales growth and new markets

Improves operational efficiency, lowers costs and waste

Strengthens Risk Management and Brands

Drivers for Food Safety

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Challenges for Georgian Food Retail Suppliers Food businesses supplying the local market tend to be

smaller, They usually have difficulty meeting stringent

quality/quantity requirements posed by retailers, Challenges due to lack of long-term financing to upgrade

production facilities and increase scale.

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Challenges for Food Retailers• Less developed suppliers - larger procurement

departments,• Higher returns and withdrawals, more staff time,• More audits and inspections,• Higher losses due to improper storage and poor

quality/safety,

Not to mention lost sales due to more customer complaints…

Results with Retail Suppliers in Georgia( IFC project)

Seven suppliers (SMEs) have reported average increase in food safety level by 30%

All participating suppliers demonstrate improvements

Good improvement achieved at:– Control of food hazards– Facilities and environment– Personal hygiene– Product contamination control– Control of allergens

Retail suppliers reported $1.7 million increase in sales.

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Results• Gained access to new markets: Kazakhstan, EU, increased export

to USA,• Increased sales revenue by 17%,• Improved personnel management and control, personnel

effectiveness.• Improved control, reduction in non-conformities,• Improved operation and maintenance of equipment, leading to

reduced, maintenance costs.• Access to new markets.• Increased shelf life of production,• Reduced number of returns,• 10% increase in sales.

Results of Food Safety Improvements with Clients

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Reduction of food safety related risks

Increasing attractivenes

s for investors

Strengthening market

position and enhancing reputation

Common Rationale

Food Safety - Better Business

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Save costs , improve

operations and efficiency

Increase sales/profits, access new

markets

Manage risks and

enhance reputation

• Improved access to major retailers• Improved export potential• Increased distribution points

• Reduced production losses • Lower costs on returns, withdrawals• Fewer fines from State Agencies• Higher worker productivity and retention

• Fewer customer complaints• Enhanced reputation • Attractiveness for investors through

better risk management.

Result Indicator

(1) Increased level of knowledge and practical skills of the NFA staff

(1) At least 80% of participants in trainings and other capacity building activities improve their knowledge on the trainings' subjects

(2) Increased public awareness on food safety

(2) At least 50% of surveyed food producers and processors are aware about basic food safety standards by the end of the project

(3) Adequate IT capacity for the NFA to enable the institutional tasks and responsibilities efficient, time-effective and well provided

(3) 100% of IT systems and data base systems introduced by the project available and functioning by the end of the project

(4) Developed NFA physical infrastructure and standard working environment

(4) 100% of the newly NFA regional offices newly established or renovated by the project are fully operational by the project completion

CIB NFA/ First phase

Capacity building

Thank you!