On 10 April 2014, representatives of the Ministry of Agriculture and the Agricultural Project Management Agency presented a report summarising the activities implemented within the framework of the Preferential Agro-credit project throughout the year. The event was opened with a speech by the Minister of Agriculture, Shalva Pipia:  “It is our accomplishment that within the framework of preferential agro-credit, we have already issued 14,100 credits with the total amount of GEL 318,000,000 in all regions of Georgia and in different fields of agriculture. A total of 70 new enterprises have been funded and over 400 existing enterprises have been expanded and refurbished. Initially, the project envisaged three components whereas today, it includes seven components and covers a very wide spectrum. Therefore, we are continuing the project.” (Source:  Banks and Finances)

FactCheck

inquired about the accuracy of the Minister’s statement and studied the implementation of the Preferential Agro-credit project.

The Rural and Agricultural Development Fund, a non-entrepreneurial (non-commercial) legal entity, was established on 22 January 2013 on the initiative of Bidzina Ivanishvili for the purpose of carrying out the Rural Support Programme. Two legal entities of public law became the donors of the Fund; namely, the International Charity Fund for Rural and Agricultural Development and the international charitable Cartu Foundation.

According to the information received from the Ministry of Agriculture, at the sitting held on 26 February 2013, the board of the Rural and Agricultural Development Fund approved the Preferential Agro-credit project which envisaged the receipt of preferential agro-credits from financial institutions in pursuance of the establishment of new agricultural enterprises and the technological re-equipment of existing enterprises.

The Preferential Agro-credit project, crafted by the Ministry of Agriculture, is being implemented by the Agricultural Project Management Agency which started operating in March of 2013. A total of 13 banks, two micro-financing organisations and two leasing companies are involved in the implementation of the project. Initially, the project comprised three components:  1. interest-free loans for small farmers, 2. preferential agro-credits for medium and large farmers and 3. preferential agro-credits for agricultural enterprises.

In the course of one year the project was further developed based upon the requests and the needs of farmers and entrepreneurs with further components being added:  4. preferential agro-leasing, 5. preferential agro-credits to wine producing companies, 6. preferential agro-credits for companies exporting and processing citrus and 7. preferential agro-credit to companies which process agricultural products and are funded with a concurring grant.

The website of the Ministry of Agriculture publishes a report summarising the activities implemented within the framework of the Preferential Agro-credit project throughout the year.

In line with the report, as of 4 April 2014, 14,100 preferential agro-credits with the total amount of GEL 318,000,000 have been issued in all regions of Georgia and in different fields of agriculture. Over the span of the year a total of 70 new enterprises have been funded and over 400 existing enterprises have been expanded and refurbished.

In keeping with the same report, the following amounts of credits have been issued in over 30 fields of agriculture:  component 1, 4,309 credits (GEL 1,837,478), component 2, 9,258 credits (GEL 168,644,280), component 3, 482 credits (GEL 96,991,211) and component 5, 48 credits (GEL 4,965,810).

A total of 482 agro-credits have been awarded within component 3. Of these, in the Kakheti region – 215, Lower Kartli – 96, Tbilisi – 24, Samegrelo – 27, Inner Kartli – 40, Imereti – 39, Samtskhe-Javakheti – 20, Guria – 5, Mtskheta-Mtianeti – 7, Ajara – 6 and Racha-Lechkhumi – 3.

Component 3 credits have been issued according to the following fields of activity:  production of primary goods from cattle-breeding – 240 credits (31% of the total amount of credits), production of alcoholic beverages – 39 (23%), production of primary products from plant-growing – 92 (17%), infrastructural enterprises – 41 (13%), processing of products from plant-growing – 25 (8%), Or processing of products from cattle-breeding – 26 (6%) and mixed production – 19 (3%). In total, GEL 96,991,211 have been issued for activities under component 3.

According to the report, a total of 70 new enterprises have been funded as a part of the project’s component 3 with an average of GEL 300,000 worth of preferential agro-credits being granted for the opening of each new enterprise.

According to the regions, new enterprises have been opened in:  Kakheti – 26, Lower Kartli – 17, Inner Kartli – 10, Samegrelo – 2, Samtskhe-Javakheti – 2, Guria – 3, Ajara – 3, Mtskheta-Mtianeti – 2 and Imereti – 5.

By their fields of operation, the enterprises funded within the activities of component 3 can be grouped as follows:  refrigerators for the storing of products – 13, swine-herding – 2, green house thrift – 5, vine growing – 3, nut processing – 2, cattle-breeding – 5, fishing – 2, production of packaging material – 1, livestock breeding – 1 and tobacco production – 1.

It is also to be mentioned that FactCheck

has previously studied the matter of enterprises. At that stage, as of October 2013, funding was provided to 49 new and 155 operating (for the purpose of their development) enterprises in the framework of the Preferential Agro-credit project.

FactCheck

also tried to get in touch with the owners of the 49 funded enterprises and inquire about the construction of their undertakings. We managed to contact several entrepreneurs as follows.

Individual entrepreneur, Zviad Bikashvili, told FactCheck

that he holds a storage facility thrift in the Dedoplistskaro district which was given funding of USD 117,000 in April of 2013. Presently, one-third of the work is completed on the construction but the facilities are already being used for storing cereals. The enterprise employs nine people.

Individual entrepreneur, Bondo Rakviashvili, registered in February of 2012 as a vineyard owner in Gurjaani. He found his vineyard damaged by hail last summer and this year he received a preferential agro-credit (of USD 90,000) for the recovery of his hail-damaged grapes.

On 2 May 2013, the Georgian Subtropical Fruit Company was registered in the village of Natanebi in the Ozurgeti district. The company received a loan of USD 235,000 with which it purchased fruit storing refrigerators for the purpose of exporting fruit. Currently, 80% of the enterprise’s construction has been completed and its work will start from 15 November (the start of the subtropical fruit season). Overall, 70 people are projected to be employed in the enterprise.

Individual entrepreneur, Davit Beriashvili, was registered in the Public Registry on 5 August 2013. He intends to set up a pig farm in Telavi for which he took a credit of USD 84,700. According to him, the construction is to be completed by the end of December following which four-to-five people will be employed in the enterprise.

The Geo-Fruit Company received a preferential agro-credit (with a value of USD 95,000) on 24 June 2013. The company plans the cultivation of fruit trees on four hectares of land. The saplings have already been purchased and the company is waiting for the favourable season for planting.

The registry enlists the AgroTech company starting from 14 March 2013. A preferential agro-credit in the amount of USD 185,000 was granted to the company for the building of a modern farm. The company brought 50 cows from Switzerland and purchased up-to-date milking equipment. The farm is already operating and employs a total of ten persons.

The Vaziani Company received a preferential agro-credit of USD 600,000 and constructed a wine-making factory including the purchase of up-to-date equipment. As of November 2013, 40 persons are employed in the factory. The company has been listed in the registry since 27 July 2012.

The Punic Georgia company appears in the registry starting from 16 July 2008. The enterprise received a preferential agro-credit in the amount of USD 600,000 and renovated a poultry raising farm including the purchase of equipment. The company has been operating since 10 September and is employing 40 persons.

The Facebook page of the Ministry of Agriculture publishes a photograph collage depicting the activities of several enterprises financed as a part of the activities of the Preferential Agro-credit project.

Individual entrepreneur, Givi Ninidze, received funding as a part of the project. He established an apiary thrift in Ozurgeti employing two persons. He was registered as an individual entrepreneur on 2 March 2009.

Individual entrepreneur, Giorgi Iashvili, started up a fishing thrift in the Sighnaghi region using funding he received as a part of the Preferential Agro-credit project. He employs 13 persons and the enterprise was registered on 5 May 2013.

Individual entrepreneur, Valeri Daudishvili, was granted a credit in order to start up a wine-making enterprise which he opened in Gurjaani. The enterprise employs 15 persons and was registered on 26 October 2010.

Individual entrepreneur, Kartlos Shinjikashvili, was registered in the Public Registry on 27 November 2013. He received a preferential agro-credit to start a vine growing enterprise in Gurjaani. He employs ten persons.

Individual entrepreneur, Vakhid Dashdamirov, built a cattle farm with the preferential agro-credit he received. He employs four persons and was registered in the Public Registry on 20 September 2013.

Sartitchala 777 Ltd was registered in the Public Registry on 17 May 2007 following receipt of a preferential agro-credit which enabled the opening of a poultry farm in Lower Kartli. The enterprise employs 12 persons.

Individual entrepreneur, Ramaz Zirakadze, established a greenhouse thrift in Bagdadi, Imereti. The enterprise employs ten persons and was registered on 7 October 2013.

Individual entrepreneur Mamuka Kokrishvili developed sheep-breeding in Sighnaghi using the preferential agro-credit acquired through the project. The enterprise employs ten persons and was registered on 7 October 2013.

The Alaverdi Ltd alcoholic beverages company was registered in the Public Registry on 8 April 2008. The company received an agro-credit for wine-making and built a wine factory. It employs 75 persons.

Conclusion

The Preferential Agro-credit project was approved by the Rural and Agricultural Development Fund at the sitting held on 26 February 2013. A total of 70 new enterprises have been funded as a part of the project with an average of GEL 300,000 worth of preferential agro-credits being granted for the opening of each new enterprise.

According to the regions, new enterprises have been opened in:  Kakheti – 26, Lower Kartli – 17, Inner Kartli – 10, Samegrelo – 2, Samtskhe-Javakheti – 2, Guria – 3, Ajara – 3, Mtskheta-Mtianeti – 2 and Imereti – 5.

By their fields of operation, the enterprises can be grouped as follows:  refrigerators for the storing of products – 13, swine-herding – 2, green house thrift – 5, vine growing – 3, nut processing – 2, cattle-breeding – 5, fishing – 2, production of packaging material – 1, livestock breeding – 1 and tobacco production – 1.

FactCheck

 analysed the list of those 49 enterprises, made public by the Ministry of Agriculture, which were funded as a part of component 3. Of those 49, 17 enterprises are newly-registered (thus, established under the current government). We checked the dates of their establishment in the Public Registry. The rest of the enterprises were registered in the past years, some of them as far back as the 1990s.

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verified the registration dates of the enterprises in the list posted on the official Facebook page of the Agricultural Project Management Agency.

The fact that not all of the abovementioned enterprises are registered after the launching of the Preferential Agro-credit project (earlier than 2012-2013) does not mean that the work performed by these enterprises cannot be considered as a start-up. Specialists do not define a start-up necessarily as a newly-registered enterprise. An enterprise might have existed previously but have taken up new activities with the help of a granted credit. Therefore, an enterprise may have been established years ago but its activities can still be new. All of these enterprises were given funding as a part of the Preferential Agro-credit project and they either renewed their business or took up new activities.

Taking into consideration the findings elaborated above, we conclude that the statement of the Minister of Agriculture, Shalva Pipia, “Within the framework of preferential agro-credits, we have already issued 14,100 credits with the total amount of GEL 318,000,000. A total of 70 new enterprises have been funded and over 400 existing enterprises have been expanded and refurbished,” is TRUE.

Originally published in The Financial, issue N. 24 (404)