the european union’s budget support to georgia under enpard...

80

WWW.ENPARD.GE

The European Union’s Budget Support

to Georgia under ENPARD I

The European Union's Budget Support to Georgia under ENPARD I

The European Union's BudgetSupport to Georgia under

ENPARD IJuly 2017

Authors:Maia Chitaia and Tamar Khuntsaria

Action Global Communications

www.enpard.ge 1

The European Union’s Budget Support – Result-based Funding

Budget support is the main form of assistance from the European Union (EU)to the Eastern Partnership region. It hinges on policy dialogue, partnershipand mutual accountability between the EU and its partner countries.

The budget support provided by the EU is a direct transfer of funds to a part-ner country’s budget where they can be managed using national systems.Budget support instalments are deposited into the state treasury of a partnercountry, subject to fulfilment of general and specific conditions as agreed be-tween EU and the partner country within a signed Financing Agreement.

To be eligible for budget support, a country must first of all adhere to the fun-damental values of human rights, democracy and rule of law. Secondly, thecountry must also have (1) a well-defined national or sectorial developmentor reform policy and strategy; (2) a stable macroeconomic framework; (3)good public financial management or a credible and relevant programme toimprove it; and (4) transparency and oversight of the budget (budget infor-mation must be made publicly available).

The financial resources received through budget support become part of thecountry's revenues to be used as decided by the authorities in accordancewith the country’s public finance system. However, since funding is disbursedwhen agreed conditions are met (specific conditions relating to targets in var-ious sectors, such as agriculture, education, etc.), it is important for the gov-ernment to allocate resources to the relevant line ministries to enable themto implement these reforms.

With the budget support mechanism, the EU enhances policy dialogue withpartner countries on key development issues and fosters partner countries'ownership of development policies and reforms.

* Eastern Partnership (EaP) is a joint initiative involving the EU, its member states and six eastern Eu-ropean partners: Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. The EaP encompassessupport for a market economy, sustainable development and good governance.

2

EU Budget Support under ENPARD in Georgia

The European Neighbourhood Programme for Agriculture and Rural Devel-opment (ENPARD) has been implemented in Georgia since 2013. The maingoal of the programme is to increase food production and reduce ruralpoverty in the country. The programme assistance is provided to the govern-ment directly through budget support, as well as through ComplementaryMeasures, implemented by partners, including international organisationsand NGOs working with the communities on the ground.

Budget support is the largest financial component of ENPARD:

The total value of direct support to the government of Georgia under ENPARDPhase I, for the period of 2013-2017, amounted to EUR 24.5 million (≈ GEL 62million). It is nearly half of the total budget of the programme’s first phase,EUR 52 million (≈ GEL 132 million).

Under ENPARD Phase II, for the period of 2016-2020, the share of the budget sup-port component is even larger, amounting to EUR 27 million (≈ GEL 69 million),out of the total value of the programme’s second phase, EUR 50 million (≈ GEL127 million).

EUR 24.5 million(≈ GEL 62 million)

Phase I (2013-2017)

EUR 27 million(≈ GEL 69 million)

Phase II(2016-2020)

€ €


3

With the direct financial assistance to the government under ENPARD, EU sup-ports and encourages policy development, as well as institutional and legalreforms aimed at strengthening and modernising the country’s agricultureand rural sector.

ENPARD budget support is conditional and performance related. The transfersto the Georgian state budget are allotted in several tranches, after the generaland specific conditions set out in the Financing Agreement are met.

Within ENPARD Phase I, the Financing Agreement defines the following gen-eral conditions for budget support:

• Satisfactory progress in the implementation of the agriculture sector policyand strategy,

• maintaining stability-oriented macroeconomic policy, • and the implementation of public finance management.

In addition, the Agreement stipulates specific conditions related to concretereforms in pre-defined priority policy areas, such as:

• Strengthening cooperation amongst small farmers, • capacity building for small farmers, • and capacity building of the institutions involved in agriculture.

www.enpard.ge

4

“The ENPARD programme serves as a key supporting tool for approximationof the institutional and legal framework of Georgian agriculture andagribusiness to EU standards. The programme’s budget support componenthas helped to achieve noticeable and tangible results in several directions.”

Minister of Agriculture of Georgia, Levan Davitashvili.


Before After

5

Achievements under the Budget Support Component of ENPARD Phase I (2013-2017)

The Minister of Agriculture of Georgia distinguishes several key achievements in the coun-try’s agriculture sector with the help of ENPARD’s budget support: Adoption of the coun-try’s Strategy for Agricultural Development (SADG) and Action Plan; Establishment of theAgricultural Cooperative Development Agency (ACDA) and fostering cooperation amongsmall farmers; Capacity building for small farmers through the establishment of the Min-istry’s Information and Consultation Centres (ICCs) in every municipality in Georgia; Ca-pacity building of the Ministry of Agriculture of Georgia; and overall support to the sector’ssustainable development with the state investment programmes.

The adoption of a coherent agriculture strategy and action plan

One of the key areas of ENPARD’s direct support to the government is the elaborationand implementation of the sector policy and development strategies. In June 2015, withthe assistance of EU and technical support from the Food and Agriculture Organisationof the United Nations (FAO), the Georgian Ministry of Agriculture finalised and approvedthe Strategy of Agricultural Development of Georgia (SADG) 2015-2020 along with itscomprehensive Action Plan. The consecutive Annual Reports of the Ministry of Agricul-ture (released in 2015 and 2016) confirmed effective implementation of the Strategy,with an increasing fiscal commitment from the government towards the sector.

• Individually designed number of draftstrategies;

• Lack of common vision of the develop-ment sector;

• Lack of oriented approaches among smallscale farmers;

• Lack of expert knowledge in the sector;• Lack of fiscal commitment from the gov-

ernment toward the sector.

• Confirmed general agriculture strategy andAction plan 2015-2020;

• Strong vision on 7 key strategical directionsto modernise institutions and empower thesector;

• A detailed vision on supporting small scalefarmers and decreasing the dependence onthe imports;

• Intersected cooperation with adjoining sec-tors (e.g. Ministry of Infrastructure, NationalStatistics Office of Georgia);

• Integrated agricultural training system;• Fiscal commitment and planned budget to

implement the Action Plan.

Strategy of Agricultural Development of Georgia before and after the EU support

www.enpard.ge

6

The establishment of main bodies overseeing ENPARD implemen-tation

• ENPARD Steering CommitteeAt the start of the ENPARD implementation, in 2013, the government of Georgia es-tablished the ENPARD Steering Committee, composed of the Delegation of the Euro-pean Union to Georgia, the Ministry of Agriculture of Georgia and the Office of theState Minister of Georgia on European and Euro-Atlantic Integration as members. TheCommittee assesses the progress made in the implementation of ENPARD in Georgiaand decides on any modification of the programme. The Steering Committee meetingis held three times a year.

• ENPARD Stakeholders CommitteeIn 2013, the Ministry of Agriculture of Georgia established the ENPARD StakeholdersCommittee, which includes Steering Committee members plus all entities relevant tothe implementation of the programme, including the Ministry of Agriculture of theAutonomous Region of Adjara, FAO, the United Nations Development Programme(UNDP) as well as the grantees awarded via the small farmers co-operation componentof the programme. The Stakeholders Committee serves as an advisory body for coor-dination, coherence and effective implementation of ENPARD. The Committee meetsat least three times a year, normally back-to-back to the ENPARD Steering Committeemeetings.


7

Improved cooperation among small farmers

An important area in the focus of ENPARD I budget support is strengthening smallfarmers' businesses by encouraging them to cooperate with one another. With finan-cial assistance, knowledge transfer and experience sharing from EU, the governmentcould adopt a policy, establish institutions and design programmes in support of smallscale land farmers and agricultural cooperatives.

• The Law of Georgia on Agricultural Cooperatives was adoptedIn 2013, with the technical support of EU and the expertise of FAO, the tailor made lawon agricultural cooperatives was designed to help develop family households and or-ganise them into cooperatives. The Law governs the legal relations for operating agri-cultural cooperatives, for monitoring their activities, and for obtaining and terminatingtheir legal status.

• The Agricultural Cooperatives Development Agency (ACDA) was establishedIn July 2013, the Ministry of Agriculture of Georgia, on the basis of the Law of Georgiaon Agricultural Cooperatives, established the Legal Entity of Public Law, AgriculturalCooperatives Development Agency (ACDA). The functions of the Agency are to: award,terminate and/or cancel the status of agricultural cooperatives; create a database ofthe cooperatives; monitor the cooperatives’ compliance to the Law; promote smallfarmer cooperatives and implement state investment and consultation programmesin support of their development.

• Over 1500 small farmer cooperatives are registered in ACDASince the establishment of ACDA in 2013, at the time of writing (May 2017), over 1500small farmer cooperatives have registered in the Agency’s official database system.The number of agricultural cooperatives is steadily growing throughout Georgia.

• A Gender mainstreaming process is promoted in the cooperativesSince the introduction of ENPARD, up to May 2017, 79 women-owned cooperativeshave been registered; in 306 cooperatives there are female chairpersons; Out of 13,763shareholders 3,134 are women. Women make essential contributions to the develop-ment of the agricultural and rural economy in Georgia. They play a significant role inthe agricultural labour force and in agricultural activities. However, not many womentake on leading roles in the sector. ENPARD encourages the empowerment of femalefarmers’ and their proactive engagement in agriculture and rural activities.

www.enpard.ge

8

State investment programmes in support of cooperatives

During 2013-2017, with ENPARD budget support and the EU financial and technicalassistance schemes, the government was able to initiate a series of state investmentprogrammes to support small farmer cooperatives’ sustainable development andgrowth. At the time of writing (May 2017), the following investment programmes insupport of agricultural cooperatives have been launched across the country:

• State Programme for Supply of Agricultural Equipment to Agriculture cooperatives Over 667 Agriculture cooperatives received over 1,700 types of agricultural equipment,including machinery to help plough and seed. The total budget allocated from thegovernment for the programme is GEL 4,277,994 (≈ EUR 1,677,000).

• State Programme on Fostering Hazelnut Production Development through the Pro-motion of Agricultural CooperationThe programme equips the cooperatives with integrated systems for hazelnut pro-duction, processing and marketing. With the programme, the 500-member coopera-tive “Darcheli Nut” is established and granted with the production infrastructure valuedat GEL 760,790 (≈ EUR 298,300).

• State Programme to Support Beekeeping Agriculture Cooperatives The programme improves the material and technical base of agriculture beekeepingcooperatives and increases the quality and quantity of honey and other beekeepingproducts through providing capital investment for agriculture cooperatives. 150 bee-keeping cooperatives were granted with over 11,190 beehives and other equipmentimportant for honey production. The total financial commitment from the governmentis GEL 928,313 (≈ EUR 365,000).

• State programme to Support Dairy Production Agriculture Cooperatives The programme provides capital investment and technical assistance for equippingthe dairy production agricultural cooperatives. The total budget allocated for the im-plementation of the programme is GEL 1 million (≈ EUR 392,000).

• State programme to Support Viticulture CooperativesUnder the programme viticulture cooperatives are granted machinery necessary forprimary processing of grapes. The programme also entails technical assistance. Coop-eratives receive training in technical and methodological aspects of functioning thewine factory, as well as sector specific requirements under Georgian legislation. Theprogramme budget is GEL 1 million (≈ EUR 392,000).

• Training for the taxation codex for the cooperatives387 Cooperative members in over 30 municipalities received practical training in busi-ness and financial administration. The government allocated GEL 102,639 (≈ EUR40,250) for these trainings.


9

Improved access to knowledge, information and capacity buildingfor small farmers

Under ENPARD I budget support component, EU assisted the Ministry of Agricultureto establish regional and district-level Information and Consultation Centres (ICCs) toprovide information, consultation and advice to local farmers on modern farming prac-tices. ICC advisers in regional offices were selected according to their technical com-petence and communication skills, and were fully trained in their role andresponsibilities.

• 59 Information and Consultation Centres were established at regional and district-level in GeorgiaOf these, 53 ICC offices, in nine regions, function under the Department for Agricultureand Food of the Ministry of Agriculture of Georgia, and 6 are located in the Au-tonomous Republic of Adjara, under the Ministry of Agriculture of Adjara. The ICCsprovide information and consultations about the Ministry’s policy and programmes,legal and tax liabilities, modern agricultural crop technologies, harvest technologiesand post-harvest storage, as well as rational use of pastures. As of 2017, more than300,000 farmers have received ICC services across the country.

• Thematic information brochures were developed The brochures were developed with the technical support from FAO and distributedto the ICCs. The brochures give information on technical aspects that are relevant forsmall farmers in the value chains on potatoes, hazelnuts, mandarins, corn, animal hus-bandry and dairy. In addition, with the assistance from FAO, the National Strategy forAgricultural extension is being finalised. The strategy will provide the framework toimprove the way in which the ICCs work.

www.enpard.ge

10

Capacity building provided to the Ministry of Agriculture of Georgia

One of the key precondition of ENPARD budget support was the institutional devel-opment of the agricultural sector. With the technical support of FAO, EU has achievedthe following results:

• A Policy Unit within the Ministry of Agriculture of Georgia was established The functions of the Policy Unit are to develop, implement and monitor policies inagriculture and rural development. The policy background of the Ministry has beensignificantly improved, and the Strategy for Agricultural Development of Georgia2015–2020 and the Action Plan serve as a good basis for the Ministry’s work. The Strat-egy is revised and adjusted twice a year, allowing for a better monitoring of perform-ance.

• The Monitoring and Evaluation system of the Ministry is being developedThe Ministry, through its Policy Unit, with the technical support from FAO is elaboratingan effective Monitoring and Evaluation system for agricultural projects in 2017-2020.Once fully in place, the system will offer the Ministry and its agencies finalised modulesof effective monitoring and evaluation for tracking and measuring results of the agri-cultural development programmes.

• The first European standard Agriculture Census was conductedIn 2014, National Statistics Office of Georgia (GeoStat) conducted an agriculture censusin parallel with the population census. The agricultural census improved the accuracyof agriculture statistics in Georgia. The census provided primary data on the structureof the agriculture sector, such as the size of property holdings, land use and landtenure. With the updated statistics, the government is better equipped to lead on spe-cific agriculture development programmes.

• The Market Information System was createdThe Market Information System was established by the Ministry of Agriculture of Geor-gia. The system gives producers insight into market demand while providing policymakers with a tool to ensure fair and stable food prices for consumers. Every week, theICC members in 59 different municipalities in Georgia, monitor and fix the market priceon 60 different kinds of agriculture products. Currently, the system is located on theMinistry’s internal servers and includes two years’ worth of information in the database.The software will be launched for a broader audience in 2017.


11

• Over 200 staff members of the Ministry of Agriculture of Georgia were trained ❖ The following trainings were delivered to the Policy Unit members and to other

representatives of the Ministry: Time management, communication, computer lit-eracy, English language, financial instructions and technical training for the Min-istry’s IT staff.

❖ The Ministry of Agriculture officers received specific trainings in value chain devel-opment: post-harvest technologies, contract farming, sustainable value chainanalysis, geographic indications and quality schemes, analysis of support pro-grammes and agricultural policies, and integration of Geographic Information Sys-tems (GIS) in reporting.

❖ Study tours for the Ministry staff were organised in several European countries -Hungary, Serbia, Italy and Czech Republic - to share the European experience inagriculture and rural development.

• The seed certification scheme was createdThe seed certification scheme was approved. The seed testing laboratory in Tsilkaniwas equipped and its staff trained, and the first certified wheat seed since soviet timeswas released in 2015, with an estimation of a 30% increased productivity.

www.enpard.ge

12

Budget Support under ENPARD Phase II (2016-2020)

The budget support related activities of ENPARD Phase II for the period of 2016-2020aim to achieve the following main goals:

• Enhanced competitiveness, climate-resilience and sustainability of the agriculturesector in Georgia;

• Improved sanitary and phytosanitary standards (SPS), food safety and food qualitystandards and procedures for inspection and control;

• Improved employment and living conditions in the rural areas through the diver-sification of the rural economy.

The budget support component of ENPARD Phase II builds on the previous EU assis-tance to the government under ENPARD Phase I, providing support to the policy re-form process as defined in the Strategy of Agricultural Development of Georgia andthe recently adopted Strategy for Rural Development of Georgia, for issues such as:agriculture, SPS/food safety and food quality, and rural development.

Under support to SPS/food safety and food quality, the programme focusses mainlyon improving the food safety situation through the training of inspectors, the regis-tration of Food Business Operators, the upgrading of border inspection points, andthe adoption of international standards in the Laboratory of the Ministry of Agriculture.This is complementary to a separate EU funded programme (the Comprehensive In-stitution Building – CIB Programme) in support of the National Food Agency (NFA).

Within the rural development component, the programme focusses on the imple-mentation of the recently adopted Strategy for Rural Development of Georgia. Thisincludes the establishment of Local Action Groups (LAGs) and the implementationof rural development initiatives through bottom-up and participatory approaches atmunicipal level. It also entails the implementation of the Rural Development Strategyin Adjara AR.

Additionally, the programme delivers related services to the poor, rural population,including the breakaway region of Abkhazia, intended to promote the diversificationof the rural economy, including support to the development of micro-enterprises,and other economic opportunities promoting the sustainable use and protection ofnatural resources, biodiversity and ecosystems, and the mitigation and adaptation toclimate change.


13www.enpard.ge

“The agriculture and rural sector is a complex one, requiring long-term andcoherent approaches. We know that this is also the vision of the Governmentof Georgia and we welcome the continuous efforts to bring such long termand strategic vision. Georgia is on the path of coming closer to Europe. TheAssociation Agreement and DCFTA are key milestones in this. Modern, busi-ness-oriented farmers, agricultural cooperatives and strong rural commu-nities create an essential foundation for Georgia to take the best out of theseagreements, and to shape itself along the lines of the way agriculture andrural development is understood in Europe.”

Ambassador János HermanHead of EU Delegation to Georgia

ENPARD Communication Unit 84a Paliashvili Street, Apt. 3

0165 Tbilisi, Georgia Tel: (995 32) 222 04 26

WWW.ENPARD.GE

This publication has been produced with the assistance of theEuropean Union. The contents of this publication are the sole re-sponsibility of Action Global Communications and can in no waybe taken to reflect the views of the European Union.

the european union’s budget support to georgia under enpard...

Documents