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The apple value chain is one of the four value chains targeted by FinExCoop. Prior to the launch of FinExCoop, the apple sector had already been largely supported by MEPA/RDA. From 2015 to 2020, its programme “Plant the Future” financed 1,185 ha of modern apple orchards with a total investment of GEL 19.7 million, which was mainly financed by RDA’s co-investment subsidies (GEL 10.1 million) and RDA’s subsidized preferential agricultural credits. Key international suppliers of seedlings, equipment and inputs in the apple value chain had also been attracted to the country.
However, despite having a unique agronomic potential to produce high-quality apples, both with traditional local varieties and imported ones, Georgian yields remain low by regional standards. The production is also quite volatile, as local producers are faced with high climatic risks (i.e., drought, early frost, hail, floods), which tend to become more frequent because of climate change.
In middle-income countries like Georgia, where the population still spends 47% of its income on food, an increase of 1% in income translates into an increase of 0.51% in the consumption of fruit. These factors apply very well to apples. Apples are usually consumed where they can be produced, with limited consumption per capita in tropical countries and also in highly septentrional countries like those of Scandinavia. Apple consumption is the highest in countries with a favourable climate like those of Western Europe, China and many Mediterranean and Silk Road countries and in countries with good income per capita.
However, Georgia is an exception: while they have ideal agronomic conditions for growing apples, Georgians consume only 3 kg of apples per year against 10 kg for Azerbaijanis, 16 kg for Russians, Armenians and Ukrainians, 18 kg for Iranians, nearly 30 kg for Turks and 33 kg for Hungarians. Sooner or later, this exception will disappear and we should therefore expect a large future increase in the local market demand.
Despite its very modest local demand and excellent agronomic conditions to produce apples, Georgia has not yet been able to generate the large trade surpluses for apples of its regional neighbours, Turkey, Moldova, Iran and Azerbaijan. During most of the previous decades, Georgia even had trade deficits for apples. Yet, since 2017, its trade balance has substantially improved and reached USD 8.4 million surpluses as of 2021. In the same year, nearly all Georgian apples were also exported to Russia whose market has been closed to EU exporters since 2014.
It must be noted in this respect that, despite its embargo on imports of apples from the EU and other Western countries, Russia remains the third biggest net importer in the world. However, there is a risk that the Russian market will progressively close down. Georgia should therefore try to diversify its exports to other proximity markets like the EU and Arab countries.
Georgia has a huge diversity of climate considering its small-sized territory and can produce a very large diversity of pome fruit, stone fruit, fruit with shells and small berries. In 2021, Georgia produced 73.1 thousand apples. It should be highlighted that the apple is the most important fruit for the country in terms of volume.
The apple sector has been largely supported by the Government of Georgia. However, even though modern intensive orchards do not need much time to become productive, GeoStat has not registered any substantial increase in output which remains mainly located in Shida Kartli. One of the key features of this situation is the extreme annual variations in the output.
Today, even in the best years, Georgian yields remain very low by regional and international standards, including in modern intensive orchards which very often suffer from alternation with no production every second year. It is partly linked to natural events like late frost, which could be dealt with through adequate technologies, but it also mainly reflects the low technical level of most orchard managers who do not know how to control this natural phenomenon.
In well-managed orchards worldwide, alternation is systematically reduced by a combination of approaches. Good pruning in wintertime allows for efficiently managing future crop load. But thinning of trees to keep the right number of fruits is also necessary. It can be done manually, but it is quite heavy work with up to 250 hours of work per ha. It can also be done mechanically, but the best technology, virtually unknown in Georgia, is through chemical thinning.
Not only does alternation lead to poor harvest every second year, but it also leads to poor quality crops. Since there are too many small fruits in “good” years as they suffer from “bitter pit”, which is linked to a lack of calcium impacting the fruits.
Another key problem of Georgian orchards is still the poor management of pests and diseases, which tend to increase in frequency because of climate change (humid springs). Scab (Venturia inaequalis) is in particular a major cause for concern.
To deal with these problems, farmers have been using more and more pesticides with fewer results as pests and diseases become resilient to treatments. To export their products to countries which have strong controls over residues of pesticides, especially in the EU where the new Green Deal plans a reduction by 50% in the use of pesticides by 2030, could therefore become mission impossible.
The use of pesticides could be drastically reduced if they were applied just on time as is the case in advanced countries where meteorological stations and effective software like RIMpro are combined to give precise instructions to farmers on when and how to treat pests.
There have been some tentative experiences of such approaches in Georgia. But they have not given good results until now, because the equipment had been given either to suppliers of pesticides, who had no strong incentive to reduce the demand for their products or to State bodies not directly connected to farmers in the field.
There are other technologies which could be better mobilized to deal with pests in an environmentally-friendly way. One of them is the use of pheromones to monitor or trap dangerous insects like Cydia Pomonela.
Georgia can also learn from the best practices of advanced organic farmers who use animals like hens or dwarf sheep to clean their orchards from dead leaves and scabs.
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The 4-year FinExCoop Georgia project is funded by the European Union (EU) under the NIF Programme Trust Fund. Even though it is not stricto sensu an ENPARD project, it is fully coordinated with the ENPARD programme in Georgia. FinExCoop is managed by the Agence Française de Développement (AFD) and it is implemented by a consortium led by the Frankfurt School of Finance & Management, in partnership with Chambre d’Agriculture du Loiret, Mercy Corps and Rural Development for Future Georgia (RDFG).
Through its subsidiary Proparco, AFD also provides credit lines for agriculture to two local financial institutions, Credo Bank and Microfinance Institution Crystal. The main objective of FinExCoop Georgia is to promote the sustainable emergence of a new generation of small and medium-scale family farm entrepreneurs able to be competitive thanks to improved access to credit and other financial services including insurance (Fin like Finance); higher productivity linked to better technical knowledge and appropriate use of better inputs and equipment (Ex like Extension); and their participation in market-oriented cooperatives or any other entities fostering their coordination in order to improve their access to inputs and equipment, to consolidate their output, and increase its value through better storage, processing and marketing (Coop like Cooperatives).
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FinExCoop’s Strategic Support to Farmers in the Apple Value Chain
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FinExCoop has systematically promoted cooperation among farmers. More and more, they are learning from each other, which is the best way for sustainable improvement. Many of them are now ready to act in a collective and cooperative way to improve their performance.
Apart from joining forces in some segments of their productive activities, for instance, the joint use of meteorological stations, farmers cooperate to better promote and sell their apples. Better access to storage and warehouse finance is in particular a must to avoid selling them just after harvest at depressed prices.
Prices paid to Georgian producers are among the lowest worldwide. It leaves a huge margin for improvement if Georgia is able to produce better quality fruit through better practices, but also if independent best producers join forces to better market their apples through efficient marketing and branding, including through the promotion of organic apples and apples with geographic indications.
An excellent example of such a prospect can be given by the French company Blue Whale, which was established in the 1950s by a group of French independent farmers to better market their products. Today, the Blue Whale is owned by 300 farmers working on 6,620 ha. It sells annually 240,000 t of apples, three times the whole production of Georgia, with a EUR 250 million turnover.
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After intensively working in the modern apple value chain, FinExCoop selected three pilots. It reflected the fact that, contrary to its other value chains, there has been much large-scale physical investment in the sector in the last decade, thanks in particular to the generous support provided by MEPA/RDA under its Plant the Future programme.
There was a big need for training and coaching. Despite having often received technical assistance from their international suppliers, many orchards are still poorly managed. Standard technologies such as chemical thinning to stabilize the crop load, avoid alternate and the production of the fruit of small calibre are for instance virtually unknown.
Against this background, there is still a considerable need for the improvement of local capacities. Georgia is an ideal country to produce high-quality fruit, but it cannot be done without the knowledge of best practices. In 2020, MEPA/RDA introduced a special 0.1 GEL/kg subsidy to fruit processors for buying what was defined as “non-standard apples” as there were too many of them on the market. While this subsidy may have played a stabilizing role in the short term, the future is to have a large majority of standard apples, which could be exported to markets focusing more on quality than the Russian one, like those of the Gulf States.
In December 2021, the FinExCoop’s Committee for pilots validated the proposal to support the organic orchard of the French-Georgian investor, Mr David Bertrand, in Lagodekhi. Mr Bertrand has the financial and technical capacity to make it a benchmark for the organic sector of Georgia which has been stagnating during the decade despite numerous programmes of support from donors. It will have a holistic dimension from the farm to the fork of final consumers, with the setting-up of a processing plant for cider and a component of agro-tourism.
FinExCoop has supported the farm with the provision of mixed fodder seeds to be planted in between the rows including leguminous for soil fertility.
FinExCoop provides support to three cooperatives of advanced apple farmers, already trained by the Project, which focuses on:
- Integrated pest management with the use of meteorological stations and special software like the Rimpro system from Belgium, which is used by the Association of Veille Sanitaire du Val-de-Loire in France. It allows for the effective use of pesticides and a strong decrease in their consumption. Also, the use of pheromones for better monitoring of pests.
- Use of chemical thinning.
- Development of joint marketing of best quality fruit under a single brand.
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Farmers were introduced to smart integrated pest management, which uses meteorological stations and dedicated software that is prepared by French expert Mr Marc Lancien, together with Turkish expert Mr Serkan Veziroglu and the local team.
FinExCoop also wanted to test chemical thinning but failed to find local importers of necessary inputs. After weeks of work, FinExCoop could have a potential agreement with regulatory authorities, but it came too late.
It must be noted that chemical thinning has been tested in 2021 in the Gori region by the company Agrocom, which registered the product Exilis with the Georgian NFA. FinExCoop will try to work with this company to import this product in 2022 and see whether it could also import another hormonal product based on ANA (naphthalene acetic acid).
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For several apple growing seasons, FinExCoop provided online and on-field trainings and coaching for better pruning and orchard management. Trainings were perceived well and recommendations were followed by the farmers.
The Project’s technical team was able to have a very efficient connection with the farmers. Online sessions of theoretical trainings on fertilization and pest control were beneficial for the farmers to improve orchard management. FinExCoop worked very closely with farmers in the fields, in particular in green pruning in Gori and Kareli.
In November 2021, FinExCoop started to prepare the pilot launching of meteorological stations with RimPro software, visits were also made for general analysis of the orchards.
In the most cases, FinExCoop was quite impressed by the improvements which followed its online training lessons and coaching in the field. An increase in sustainable yields by a minimum of 30% was the norm. Some farmers had so well learnt about technologies like pruning that they had been able to teach their neighbours, with also excellent results.
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In parallel with the highly effective contribution of Mr Lancien in Georgia, FinExCoop has developed, as part of its new training initiative in 2022, a 3-month training-by-doing for young Georgian farmers and specialists in French orchards and nurseries. Within this scope, two trainees have worked in the experimental conventional and organic orchards of Campus of Pouillé, Dalival, Moulin Neuf, Dalival Durtal, Dalival Villers-Cotterets, Dalival La galolie, and IFO. Trainees focused in particular on FinExCoop’s planned innovations in 2022 (use of meteorological stations, use of pheromones, use of chemical thinning). The work of this program demonstrates that it could be further extended with other trainees through its integration into the bilateral Georgian-French program of circular migrations.
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With improved training and knowledge, FinExCoop is convinced that excellent results from material investments co-financed by RDA Plant the Future can be achieved in the near future. Upon return one of the trainees plans to establish his own orchard and the rest plan to support Georgian farmers with their improved skills and knowledge in orchard management.
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FinExCoop plans to keep on providing on-site trainings as well as coaching in the field in strong coordination with FAO. FinExCoop will build on meteorological stations and strengthen three local cooperatives with farmers who are already trained and mobilized by the Project. Each of them now operates one climatic station with adequate software providing technical recommendations.
The cooperative disseminates the use of modern technologies such as chemical thinning and the use of pheromones (autumn-winter 2021) among its members. The Project plans to develop the marketing of the high-quality products of the farmer members of these cooperatives, replicating with apples what FinExCoop did in 2021 with potatoes (direct marketing with Carrefour and any other large retailer willing to join the fray).
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On June 9-10th 2022, FinExCoop organised the Second International Agribusiness Online Forum which was dedicated to the “Situation and Prospects of the Apple Value-Chain in Georgia: Think and Act Together”.
The two-day online forum covered 5 different sessions including the general environment, improving the environment for investment in modern apple value-chains in Georgia, FinExCoop’s strategic work in the apple value chain, producing Georgian apples with the best EU Green deal standards, putting more value in Georgian apples. More than 65 people attended the forum and shared their perspectives on improving the apple value chain in Georgia. A new group of highly motivated leading farmers, with much-improved knowledge and technical capacity, is clearly emerging.
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FinExCoop team has prepared a video film and testimonies of the FinExCoop’s pilot farmers in apple’s value chain, namely “Main challenges faced by advanced apple farmers in Georgia”, which could be watched at the above video link.
Rich content was presented by Georgian and international speakers at the event and the presentations of speakers can be accessed through the following online link.
finexcoop.ge/mailing/2022mayweb1/Slides.pdf
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Special attention was given to the presentation of farmers who worked with the project and benefited from joint cooperation, in particular Mr Zurab Gojiashvili, a farmer from Gori Municipality village Kvarkheti. Mr Gojiashvili spoke about his experience of the apple orchard, and mentioned that FinExCoop Georgia and its advisor Mr Marc Lancien introduced a different approach, they have constant dialogue, which improved feedback and mutual trust between the advisor and company managers. They have now registered their weather station with RimPro and try to elevate pest management to the next level.
At the end of his speech, Mr Gojiashvili expressed his hope to improve the quality of their product in the cold storage to extend the market period beyond May, and also build up cooperation between other farmers to reach the demand of international buyers.
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The forum concluded with main points on producing more and better-quality apples and finding ways to export to EU markets. AFD expressed interest to act on the Action Plan that will be proposed by FinExCoop based on the conclusions of the Apple value chain forum.
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On the second day of the Second Agribusiness Forum, FinExCoop organised a field visit to one of the meteorological stations in the Shida Kartli region, Gori municipality. The visit took place at Mr Mirian Okroshiashvili’s apple orchard in Skra village. The field visit was dedicated to apple orchard fields, meteorological stations and the marketing of apples in Shida Kartli and the future development of a cooperative applying the best EU smart pest management.
This field visit was an excellent opportunity for high-level representatives from the Government of Georgia, international partners and other key stakeholders to get acquainted with progress in the strategic field of modern orchards in Georgia.
To support the data collection and efficient usage of meteorological stations the Project has established WhatsApp groups, which share the experience and knowledge among the members of the farmer groups in three pilots. Local and international experts of FinExCoop are constantly in touch with farmers and provide online consultations and dialogues to build confidence in farmers to manage their apple orchards.
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For more information, please contact us via email [email protected] or reach us at +995 599 30 57 58. Please also visit our website and our Facebook page. We look forward to hearing from you.
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This publication has been produced with the assistance of the European Union. Its contents are the sole responsibility of FinExCoop and do not necessarily reflect the views of the European Union. |
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