On 27 December 2013, on the air of the television company Rustavi 2, the Prime Minister of Georgia, Irakli Gharibashvili, spoke about the agricultural projects implemented by the government throughout the year 2013. As stated by the PM: “A total of 710 beneficiaries received assistance in the framework of the Agricultural Development Programme whose overall amount was around GEL 200 million. Furthermore, over 7,000 farmers were given preferential agro-credits with a total value of about GEL 205 million [...] two hundred hectares of land have been cultivated.”
FactChecktook interest in the facts outlined in the statement and set out to check their accuracy.
In line with the 2013 Summary Report prepared by the Minister of Agriculture, Shalva Pipia, in the framework of the Preferential Agro-Credit Project loans with a total value of GEL 220 million were administered to 8,052 beneficiaries. Among these, funding was provided for the opening of 53 new enterprises.[i]
FactCheck explored the subject of the financing of enterprises in a previous article as well. With respect to this issue it has been established that the initial promise voiced by the Georgian Dream and, specifically, Bidzina Ivanishvili referred to the large enterprises (factories). Ivanishvili repeatedly stated that at least one such factory was to be opened in each region of Georgia. Later on, the promise of the provision of funding for the construction of large factories was modified and turned into the promise of funding for enterprises in general (large as well as small).
As noted above, the enterprises were indeed financed, however, according to the information obtained by FactCheck, the majority of the financed enterprises comprised small and medium-type enterprises. As was uncovered in the course of our research, only one of the already opened enterprises employs 70 persons (and even that is only in the season of delivering citrus fruit) while the rest employs a maximum of 40 persons.
Based upon the information published on the official website of the Ministry of Agriculture, after 2013 the Preferential Agro-Credit Project included the following three components:
- Interest-free loans for a period of six months (instalment) for small farmers – 0% interest rate up to GEL 5,000.
- Preferential agro-credits for medium and large farmers. Loans of GEL 100,000 are given out with an interest rate of no more than 8%.
- Preferential agro-credits for agricultural enterprises with the interest rate of no more than 3%. The minimal amount of a loan comprises USD 30,000 while the maximal – USD 600,000. The loans are issued for a period of 84 months.
- Preferential agro-leasing – funding for the equipment of the enterprises processing agricultural products. The maximal interest rate is defined at 3%, the maximal amount of the loan amounts to USD 600,000 and the loan is issued for a term of 84 months.
- Preferential agro-credits to wine producing companies – preferential loan for the sector of wine-making and vine-growing solely for the procurement of grapes.
- Preferential agro-credits for the companies exporting and processing citrus – the maximal amount of the loan is set at GEL 10 million and credit is issued for a period of four months.
[i] GeoStat defines an enterprise as an economic unit which produces goods or provides services and performs various sorts of activities. An enterprise can be an individual (physical) or a legal entity. According to the size, the enterprises are divided in the following manner. It is deemed to be large if the average number of employed in a year exceeds 100 people or the average yearly turnover is higher than GEL 1.5 million. An enterprise is considered to be medium if the number of its employees ranges from 20 to 100 in a year while the yearly turnover varies between GEL 0.5 million and GEL 1.5 million. The category of small enterprises encompasses organisations employing a yearly average of no more than 20 people and having an average yearly turnover of less than GEL 0.5 million.