The United National Movement published an infographic on its Facebook page saying that the Government of Georgia has wasted GEL 2 billion spent on agriculture in the past few years as the growth rate of agriculture is decreasing.

FactCheck

took interest in the accuracy of the United National Movement’s statement.

After the elections, the new government set the development of agriculture among its top priorities. The overall amount of money allocated from the state budget from 2013 to 2016 for subsidising the grape harvest and the United Agro-Project alone exceeded GEL 600 million whilst private credit resources encouraged by the state to go to the field of agriculture reached GEL 711 million and USD 218 million. In total, the amount of money spent by the Ministry of Agriculture from the state budget equalled GEL 808 million from 2013 to 2015 whilst the plan for 2016 is GEL 295 million. Of this amount, GEL 183 million had already been used up as of August 2016. It is debatable whether or not it was reasonable to prioritise the agricultural sector at this stage of development of the economy; however, FactCheck

refrains from entering into this particular debate and sticks to analysing the facts.

The state projects in the field of agriculture are run by the Agricultural Projects Management Agency, a non-commercial entity. Of the important projects already in operation, the largest amount of money, GEL 354 million, has been spent on the project targeting the facilitation of spring agricultural work for farmers with small land plots in terms of which the farmers are given so-called ploughing cards and/or agro-cards which they can use for ploughing their fields and/or acquiring goods and equipment for agricultural purposes.

The state also runs the Agricultural Insurance project. In terms of this project, the state subsidises insurance policies issued by licensed insurance companies. The overall amount spent on this project from the state budget equalled GEL 21 million.

Apart from the projects mentioned above, we also have Plant for the Future and Product of Georgia as well as programmes for the rehabilitation of tea plantations and facilitating agricultural industries. The Preferential Agro-Credit project, implemented since 2013, is also one of the important activities in the field of agriculture. As of June 2016, a total of 24,537 loans with an overall value of GEL 700 million have been distributed in terms of the project whilst 1,937 loans with an overall value of USD 208 million have also been given out.

Chart 1:

 Trends of Changes of Added Value Created in the Field of Agriculture

Source: National Statistics Office of Georgia

As the chart illustrates, the real added value created in the field of agriculture in the past ten years was at its highest in 2005, amounting to GEL 1.94 billion. In the period from 2006 to 2012, despite relatively high economic growth rates, the growth rate in the field of agriculture was mainly negative which means that the added value created in the field was decreasing. As a result, the numbers in 2012 equalled GEL 1.58 billion. It should be pointed out that 2011 was an exception to the rule as the growth rate reached 8.5%; however, this fact can be associated with the post-crisis revival of the Georgian economy.

The added value created in the field of agriculture has had a trend of growth since 2013; however, the high growth rate of 11.3% observed in 2013 went down to 1.6% and 2.9% in 2014 and 2015, respectively. Despite the fact that the growth rate itself has decreased as compared to 2013, the absolute numbers keep increasing; however, they have not yet reached the indicators recorded in 2005. The image is similar if we analyse the data of the first quarter alone.

It should be pointed out that the state spent a significant amount of money in 2014-2015 as well as in the first two quarters of 2016 in order for the field of agriculture to grow by just 2%. This indicated inefficient money spending and is mainly aimed at social assistance for the rural population rather than direct economic profit.

  Conclusion

The amount of money attracted by the state in the field of agriculture exceeds GEL 2 billion in the period from 2013 to 2016 and includes money allocated directly from the state budget as well as loans from the private sector gathered in terms of government projects (mainly the Preferential Agro-Credit project).

According to the data of the National Statistics Office of Georgia, the added value created in the field of agriculture had a trend of decrease from 2006 to 2012. There was a trend of growth apparent in the period from 2013 to 2015. It should be noted, however, that the growth rate in 2014 and 2015 was much lower than the one recorded in 2013. The trend has continued in 2016 as well.

It should also be pointed out that despite the attention which the field of agriculture is getting from the government and the monetary resources directed towards it, the field is growing by an average of only 2% which indicates inefficient state budget spending.

Hence, FactCheck concludes that the information depicted in the infographic published by the United National Movement is HALF TRUE.