Resume:
A substantial growth in the funds allocated for agriculture started in 2012. The share of agriculture in the total economy was 8.6% in 2012. Funding for agriculture increased annually until 2017. In 2013-2017, budget funding amounted to GEL 1,456.7 million (in accordance with the changes in the consumer price index, the adjusted amount would be GEL 1,265.7 million) whilst the real growth in the agriculture sector constituted 12.1%. At the same time, the share of agriculture in the economy exceeded 9% in 2013-2016 although it dropped to 8.2% in 2017. This was the first time when the figure was behind the number for 2012.
Although the real growth in the agriculture sector in 2013-2017 was comparably lower as compared to other fields of the economy, added value has been created in agriculture. Therefore, it is incorrect to claim that the agriculture sector has not increased. The share of agriculture in the total economy was lower as compared to the figure for 2012 only in 2017. In addition, the statistical data of these years indicate that the rate of return on state investment in agriculture is rather low.
Analysis At the committee hearing of the 2019 draft state budget, United National Movement member, Giorgi Baramidze, spoke
about agriculture. As he stated, agriculture has not increased as compared to 2012 and its share in the total economy has declined. In his statement, Mr Baramidze emphasised the deteriorated situation under the Georgian Dream’s rule.
Since 2012, funding allocated for agriculture has significantly increased. In 2011, the share of assignments for agriculture from the total budget was 1.1% (GEL 85.1 million) and increased to 2.9% (GEL 228.4 million) in 2012. Agriculture funding increased annually until 2017. In 2017, it was at the level of the previous year. In 2018, agriculture funding has decreased as compared to 2017. In 2013-2017, the total funding allocated for the Ministry of Agriculture of Georgia reached GEL 1,456.7 million.
Graph 1:
Funding for Agriculture and Growth Rates (GEL Million, %)
Source: National Statistics Office of Georgia, Ministry of Finance of Georgia[1]
Even though funding for the Ministry of Agriculture increased substantially in 2012, the agricultural sector, in fact, decreased by 3.8% in that year. After an 11.3% growth in 2013 owing to increased budget funds, the agriculture real growth rate has never been more than 1.6%. In 2017 it decreased by 2.7%. Therefore, notwithstanding the increased funding for agriculture in 2012-2017, the agriculture growth rate has been unstable. In total, the agriculture sector increased by 12.1% as of 2017 as compared to 2012. This means that in the aforementioned period, GEL 1,456.7 million was spent[2] from the state budget and only GEL 190.6 million of added value was created.[3]
In regard to the share of agriculture in the total economy, it was 8.6% in 2012 which increased to 9.4% in 2013. Over the next three years, however, it declined by 0.1 of a percentage point annually and dropped to 8.2% in 2017. This means that other sectors of the economy have increased more as compared to agriculture. This fact highlights the lower productivity of agriculture as compared to other fields of the economy.
[1]
The funding is shown based on the 2018 state budget. The figures for the first quarter of 2018 are compared to the same period of the previous year.
[2]The value of these funds measured in 2010 prices constitutes GEL 1,265.7 million. The real GDP figures are also measured in 2010 prices.
[3] We used the 2010 consumer price index and calculated the figures for the next years excluding inflation.
