The Prime Minister of Georgia, Irakli Gharibashvili, talked about agriculture during a meeting of the Cabinet and pointed out that there have been some significant advances in this field. According to his statement, the overall agricultural production amounted to GEL 3.21 billion in 2013 which was 14.3% more than in 2012 and 35.9% more than the average production of the past seven years. He also underscored that an increase of the share of agriculture in the Georgian economy has been recorded for the first time (2013 – 9.4%, 2014 – 9.6%).
FactChecktook interest in this issue and verified the accuracy of Mr Gharibashvili’s statement.
Georgia’s agricultural production amounted to GEL 3.4 billion in 2013 which was 12.4% more than in 2012. In addition, 2013’s production is 35% more than the average rate from 2006 to 2012. It should be pointed out, however, that comparing the data of 2013 to the average of the previous years is incorrect in an economic sense. Comparing the data of a certain year to that of the previous year is relevant; however, comparing it to the average data of the past several years provides no useful information.
Table 1:
Share of Agriculture in the GDP, Overall Production and Production Growth Rate
| Share of Agriculture in the GDP | Overall Agricultural Production (Current Prices, GEL Million) | Production Growth Rate | Agricultural Production in the GDP (Current Prices, GEL Million) | Growth Rate of Agriculture in the GDP | |
| 1999 | 26.24% | 2,070 | 9.07% | 1,401 | 6% |
| 2000 | 21.93% | 1,857 | -10.29% | 1,245 | -11% |
| 2001 | 22.43% | 2,102 | 13.17% | 1,399 | 12% |
| 2002 | 20.61% | 2,155 | 2.55% | 1,435 | 3% |
| 2003 | 20.55% | 2,483 | 15.22% | 1,653 | 15% |
| 2004 | 17.92% | 2,420 | -2.56% | 1,611 | -3% |
| 2005 | 16.69% | 2,585 | 6.84% | 1,716 | 7% |
| 2006 | 12.82% | 2,342 | -9.43% | 1,544 | -10% |
| 2007 | 10.70% | 2,390 | 2.07% | 1,563 | 1% |
| 2008 | 9.39% | 2,375 | -0.62% | 1,551 | -1% |
| 2009 | 9.37% | 2,229 | -6.16% | 1,457 | -6% |
| 2010 | 8.38% | 2,397 | 7.53% | 1,510 | 4% |
| 2011 | 8.84% | 2,878 | 20.07% | 1,855 | 23% |
| 2012 | 8.59% | 3,019 | 4.90% | 1,933 | 4% |
| 2013 | 9.41% | 3,394 | 12.42% | 2,195 | 14% |
| 2014 | 9.20% | 3,579 | 5.46% | 2,313 | 5% |
In addition, it is also notable that Irakli Gharibashvili did not talk about the data of 2014 in this context. A much lower – 5% – growth in agriculture was recorded in 2014 as compared to the previous year. Additionally, when the Prime Minister elaborates upon the growth of production of the agricultural sector in 2013, he does not mention that the growth was twice as much in 2011.
The Prime Minister focused upon the productivity of the agricultural sector; however, in order to actually see the progress in the field it would be much more relevant to compare the real added value created in the field to that of the previous year. In general, the growth of the economy or any single field is calculated using this method. A comparison using this method excludes inflation (the overall volume of production might increase in value due to the rising prices and not the increasing quantity) and shows the net share of agriculture in the created production. The highest real growth rate in the field of agriculture since 2005 was recorded in 2013 (11.3%). The real growth rate amounted to 1.5% in 2014.
Graph 1:
Real Growth Rate of Agriculture
Source: National Statistics Office of Georgia
The Prime Minister also talked about the share of agricultural production in the GDP. This share, for the most part, kept decreasing since 1996 (except 2001 and 2011). The share of agriculture did indeed increase from 8.6% to 9.4% in 2013 as compared to the previous year. However, according to the data of the National Statistics Office of Georgia, it decreased again to 9.2% in 2014.
Table 2 shows the share of agriculture in the economies of the countries neighbouring Georgia as well as those of developed countries.
Table 2:
Share of Agriculture in the GDP and the GDP Per Capita
| Country | Share of Agriculture in the GDP | GDP Per Capita (Current Prices, USD) |
| UK | 0.65% | 39,351 |
| Belgium | 0.83% | 45,387 |
| Germany | 0.86% | 45,085 |
| Japan | 1.22% | 38,492 |
| USA | 1.31% | 53,143 |
| Denmark | 1.36% | 58,894 |
| Canada | 1.52% | 51,911 |
| France | 1.69% | 41,421 |
| Greece | 3.80% | 21,910 |
| Russia | 3.94% | 14,612 |
| Azerbaijan | 5.66% | 7,812 |
| Turkey | 8.49% | 10,946 |
| Georgia | 9.20% | 3,602 |
| Armenia | 21.94% | 3,505 |
Irakli Gharibashvili communicated the growth of the share of agriculture in Georgia’s economy in the context of the country’s economic development. Table 2 illustrates that the wealthier the country, the lower the share of agriculture in its economy is. FactCheck
looked into the data of 56 countries (both developed and developing ones in different regions). Chart 2 shows the same correlation between the wealth of the country and the share of agriculture in its economy.
Graph 2:
Share of Agriculture and the GDP Per Capita
Source: World Bank
Whilst talking about positive processes in the agricultural sector, it is also important to remember how much was spent for its development and assess whether or not the growing income corresponds to the past expenditure. A total of GEL 723 million in loans was distributed in terms of the agro-credit project in 2013 and 2014 and a large part of agricultural land was ploughed free-of-charge. Specifically, spring crops encompassed 258 thousand hectares in 2013 and 264 thousand hectares in 2014. More than 200,000 hectares of land was cultivated at the expense of the state budget. FactCheck wrote
about the subsidies in the agricultural sector earlier as well. The production in the agricultural sector increased by an average of 3.8% from 2003 to 2012 without the active engagement of the government. We had just a 5% growth of production of the agricultural sector in 2014.
We should approach the steps taken by the Government of Georgia by a cost-benefit analysis. In the field of agriculture, it is also very important for the costs to correspond to the benefits. There have been higher nominal growth rates in the field of agriculture in the previous years as well (20% growth in 2011) but the engagement of the government in the sector has never been so evident.
Conclusion
The production of the agricultural sector amounted to GEL 3.4 billion in 2013 which was 12.4% more than in 2012. Comparing the data of 2013 to the average of the previous years is incorrect in an economic sense and provides no useful information. Irakli Gharibashvili talked about the data of 2014 but said nothing about the same indicators in 2014 when the growth rate of production was much lower (5%).
It should also be noted that the Prime Minister spoke about the nominal growth of production. However, it would make more sense to take the real growth rate of the agricultural sector into account. The real growth rate of the agricultural sector amounted to 11.3% in 2013 whilst it decreased to just 1.5% in 2014.
The Prime Minister’s statement that the increase of the share of agriculture in the Georgian economy has been recorded for the first time is incorrect. A growth of the share from 8.4% to 8.9% was recorded in 2011. In addition, FactChecklooked into the data of various countries and found that the wealthier the country, the lower the share of agriculture in its economy is.
The Prime Minister messed up the numbers as well. The overall production of the agricultural sector in 2013 was GEL 3.4 billion and not GEL 3.2 billion. In addition, the share of agriculture in the GDP did not increase from 9.4% to 9.6%. It decreased by 0.02% and amounted to 9.2%.
It should also be noted that when focusing upon the progress in the agricultural sector, it is important to make a cost-benefit analysis, finding out the amount of money spent in the field and whether or not the income exceeds the expenditure. A high rate of agricultural production in Georgia, without the involvement of the government, has been recorded in the previous years as well (2011). In 2014, however, the growth rate of production amounted to 5%, even with the active engagement of the government which is 3.7 times less than in 2011.
FactCheck concludes that Irakli Gharibashvili’s statement: “There have been some significant advances in the field of agriculture,” is MOSTLY FALSE.
