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On 7 May 2014, before the Parliament of Georgia voted in the new Cabinet of Ministers of Georgia, a joint session of all sector committees of the Parliament was held with the ministers presenting reports about the activities of their respective ministries. The Minister of Agriculture of Georgia, Otar Danelia, emphasised the growth of the volume of processed grapes in his speech and stated: "The amount of export equals 8 million in 2015. This is less than the number registered in the same period of the previous year. It will be hard to reach the number of the previous year. However, we could have been in a much greater catastrophic situation if not for the policy which we conduct and encourage. This policy is market diversification. To compare, in 2012 the volume of processed grapes was 52,000 tonnes whilst in 2014, this number reached 124,000 tonnes."

FactCheck

took interest in the quantity of processed grapes over the last years. We addressed the Ministry of Agriculture and requested the respective information.

Table 1:

 Volume of Processed Grapes for Industrial Purposes in 2009-2014

Year 2009 2010 2011 2012 2013 2014
Volume of Processed Grapes (tonnes) 23,000 23,000 43,500 54,000 92,773 124,606

As illustrated in the table, the volume of processed grapes for industrial purposes has risen sharply. As compared to 2009 (23,000 tonnes) the amount of processed grapes in 2014 (124,606 tonnes) has registered an almost five-fold increase. Additionally, to take the year 2012, as named by the Minister himself and compare it to 2014, we shall see that the amount of processed grapes more than doubled from 54,000 tonnes to 124,606 tonnes.

Table 2:

Price of Red and White Grapes for Wine Factories in 2010-2014 (GEL)

Year 2010 2011 2012 2013 2014
White 0.60 0.70 1 1 1
Red 0.80 1 1 1.30 1.95
Racha (Red) 3 3 4 8 8

According to the decision of the Government of Georgia, wine companies are given subsidies as a means of supporting grape farmers to sell their produce. The amounts were as follows for 2013:  GEL 0.4 per 1 kilo of Rkatsiteli and Kakhuri Mtsvane grapes and GEL 0.15 per 1 kilo of Saperavi grapes. In 2014, the subsidies for white wine grapes decreased slightly and dropped to GEL 0.35 for Rkatsiteli grapes and Kakhuri Mtsvane grapes whilst the subsidy for red wine grapes remained the same at GEL 0.15 per 1 kilo. There were no subsidies for Aleksandrouli and Mujuretuli (Racha grape types) in 2013-2014 because these particular grapes already have a high market price.

To study the issue even further, FactCheck

looked into wine export as well. According to the data of the Georgian National Wine Agency, the amount of export to 46 different countries of the world in 2014 comprised 59,067,335 bottles (one bottle is equal to 0.75 litre in volume) which constitutes a 26% increase as compared to 2013. The amount of export in 2013 comprised 46.7 million bottles. The export income from wine in 2014 amounted to USD 184,927,801 which is 30% more than the number registered in 2013. In the first quarter of 2015, the amount of wine export comprised 5,100,184 bottles which constitutes a 67% decrease as compared to the same period (15,455,103 bottles) of 2014.

Table 3:

 Wine Export in 2010-Quarter I of 2015 (1 bottle = 0.75 litre)

Year 2010 2011 2012 2013 2014 2015 IQ
Wine Export (bottles) 15 million 19 million 23 million 46 million 59 million 5 million

Graph 1:

 Wine Export Income in 2006-2015 (USD million)

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As illustrated by the data, wine export has been growing annually since 2010 and reached its maximum in 2014. In 2014, there were 37,615,052 bottles of wine exported to Russia’s market which constituted 63% of the total wine export. However, in the first quarter of 2015, wine export registered a 67% decline as compared to the same period of the previous year. The Georgian National Wine Agency believes that the decreased wine export is largely due to the drop in the demand from two major markets for Georgian wine; namely, Russia and Ukraine. The amount of Georgian wine export to Russia and Ukraine decreased by 83% and 63%, respectively, in 2015 as compared to the same period of the previous year. In the first quarter of 2015, 1,823,241 bottles of wine were exported to Russia and 655,110 bottles of wine were exported to Ukraine.

In the period 2010-2014, Georgian wine was exported to 61 different countries in total. The top five export destinations for Georgian wine in 2010-2012 were almost unaltered and included the following countries:  Ukraine, Kazakhstan, Belarus, Poland and Latvia (in 2012, China moved to the fourth place). In 2013-2014, after the abolition of the Russian embargo on Georgian wine, Russia moved to the first place with a great margin:  it imported 22,997,170 bottles (49% of Georgia’s total wine export) in 2013 and 37,615,052 bottles (63% of Georgia’s total wine export) in 2014. The other top four countries are the same:  Ukraine, Kazakhstan, Belarus and Poland. According to the information of the Georgian National Wine Agency, Russia’s share in Georgia’s wine export constituted 71% in the first quarter of 2014. At the end of the year, a decrease in Russia’s share occurred as a result of export market diversification and the growth of wine export to other countries. As of the first quarter of 2014, Georgian wines were exported to 23 different countries whilst the number reached 46 by the end of the year. Nevertheless, the share of export of Georgian wine to these particular countries is so marginal that it is unable to significantly change the picture overall. For the first quarter of 2015, wine export has decreased considerably (by 67%).

Conclusion

In 2014, 124,000 tonnes of grapes were indeed processed which comprises an amount twice as much as that processed in 2012 (54,000 tonnes). In 2013-2014, each and every component of Georgia’s wine industry registered an increase, be it in the amount of processed grapes, the price of grapes for factories, wine export and wine export income.

However, at the end of the first quarter of 2015, the amount of wine export is only 5 million bottles which represents a 67% decrease as compared to the same period of the previous year (15,455,103 million bottles) which gives us the ground to assume that Georgia will register a decline in wine export at the end of 2015 as compared to 2014. According to industry specialists, this will lower the demand on grapes during the 2015 harvest and the price of grapes as well.

The considerable decrease in wine export and the respective income it generates is largely caused by the sharp drop in Georgia’s wine export to Russia’s market. Therefore, the Ministry of Agriculture and the private sector should undertake more vigorous measures for a real diversification of the export markets in order to reduce the dependence upon the economically and politically unstable Russian Federation.

FactCheck concludes that the statement of the Minister of Agriculture of Georgia is MOSTLY TRUE.