Government of Georgia Decree №1372 September 18, 2013 Tbilisi On the Approval of the Strategy for the Development of Samegrelo – Zemo Svaneti Region for 2014-2021

Other Sectors of Economy

For a long time, poor condition in the transport and communication sectors significantly hindered development of business and economy. In the recent period, several infrastructure projects of great significance were implemented in the region.

One of two most significant ports of the country, Poti Port is the region’s commercial center and plays a particular role in functioning as the Europe-Caucasus-Asia transport corridor (TRACECA). Due to Poti Port, the transport and telecommunication sector is at the second place with respect to the added value produced by the region. Currently, Poti cargo turnover capacity is 10 million tons per year. Poti port has both road and railway communication. In Poti Port there are 15 specialized docks for transportation and loading of the oil products, railway wagons, food, fertilizers, metals, pipes and other cargoes, as well as passengers. Within the scopes of EU funded TRACECA project, the Port is a recipient of numerous small investment projects. In addition, Poti Port is a beneficiary of the EU funded project Caucasus Optical Cable, which provides operational safety and information system for the realization of railway potential to maximum possible extent. This project links the West with the East, Poti Port and Baku Port, and, to the south, via Tbilisi, Poti Port and Republic of Armenia. The Optical Cable Project serves both the railway operations and telecommunications. It should be noted that navigation route between Ilichevsk Port, Ukraine and Poti Port commenced its operation.

Samegrelo - Zemo Svaneti region is crossed by the railway sections of Tbilisi-Senaki-Poti, Tbilisi-Senaki-Zugdidi-Leselidze and Tbilisi-Senaki-Zugdidi-Jvari. Mestia Airport operates in Samegrelo - Zemo Svaneti regionr. The region’s second, Ingiri Airport requires significant renovation. Construction of Poti Airport has been already launched.

Added value generated in transport and communication sector in 2011 was GEL 185.2 million, 30% greater than in 2010. Turnover and production growth was 7.1% and 8% or GEL 420.8 million and GEL 284.1 million, respectively. In 2011, 5,183 people were employed in the sector. Average monthly remuneration has been increasing during 2006-2011 period. In 2011, it was GEL 918.4, the highest among the other sectors of the region’s economy and even exceeding the average figure for the country (GEL 866.8). Numerous large transportation companies operate in the region, providing services mostly to Poti Port. There are also small transport companies that provide passenger and cargo carriage, both, within the region and across the country.

Turnover of the entities engaged in trade, repairs of cars, domestic equipment and personal goods was GEL 439.7 million in 2010, 78.7% higher than in 2010. Production increased by 73.9%, amounting to GEL 76.7 million. In 2011, 4,600 people were employed in this sector, 78.5% higher than in the previous year. Most trade entities of the region are located in Poti and Zugdidi. Concentration of the trade entities is conditioned by high concentration of the population in Zugdidi Municipality. In addition, Zugdidi markets serve the populations of Tsalenjikha, Chkhorotsku and Khobi municipalities. In the recent years, the appearance of trade fairs and small markets improved significantly, as well as sanitary conditions and service quality. Trend of consolidation of these markets is apparent.

Agriculture

In addition, share of the region’s agricultural sector in agricultural production of the country is 14.1%. Most part of the capable population is employed in this sector. Most of them are self-employed, working in their household farms. Agriculture sector lacks modernization and is mostly subsistence economy. It is mostly oriented not to the market and goods production but rather to meeting household needs for food. Hazelnut production is an exception as it is almost entirely intended for export. There is significant imbalance between the number of employed and the output. The region is not rich with arable lands. In addition, because of the relief and other factors, it is distinguished with land fragmentation, significantly complicating consolidation of the farms.

Due to versatility of the natural environment, its soils are quite diverse, represented with various types.

Area of the region’s arable lands is 268,000 hectares. Majority of the rural households own parcels smaller than 1.25 hectare.

The region’s location conditions need both amelioration and irrigation systems. In Abasha Municipality, the drainage lands area comprises 14,600 hectares, 14,000 hectares of which require rehabilitation. 1,900 hectares in Khobi Municipality and 4,500 hectares in Senaki Municipality require rehabilitation as well. In Tsalenjikha Municipality, area of lands requiring irrigation is 3,000 hectares.

One of the region’s problems is unutilized lands, lands in the state ownership and abandoned, covered with shrubs and weeds. Aggregate unutilized land area is 14,800 hectares or 5.5% of total arable land. 5,000 hectares of these areas are degraded, mostly abandoned tea and tung plantations. Developing the state-owned and degraded lands has significant potential for increasing agricultural production.

It should be noted that significant part of the agricultural lands of the region are not registered.

In 2011, in terms of area of cultivation cereals (69%) stood on top, followed by nuts- 15%; vineyards – 4%; subtropical crops – 4%;fruits and legumes – 2%; citruses and tea – 1%;and potatoes and vegetables- 1%.

Structure of agricultural products in the region was as follows:


Agricultural products (thousand tons, 2011)



Source: Geostat

With regard to planted areas, in 2011, hazelnut production covered 24,400 hectares. Fruit plantations covered an area of 12,300 hectare, 3,000 hectares greater than in 2009 and 500 hectares more than in 2010. Though the increase in fruit plantation areas is positive, the situation, with respect to productivity, is not satisfactory. In 2011, average hazelnut yield was 1.3 t/ha. Hazelnut production is very profitable for small farmers. Currently, in Samegrelo region there are about 700 small farmers who earn their incomes from hazelnut production. Most of these farmers have 1-2 hectare of hazelnut plantation areas. 85% of the hazelnut plantations in Georgia are located in Samegrelo.

Plant growing productivity in the region is very low. This results from low awareness of modern technologies, poor labor organization, obsolete and degenerated genetic materials, unavailability of funds, lack of service centers, degradation and amortization of arable lands, underdeveloped infrastructure, lack of processing facilities, etc. Yields of feijoa, persimmon, fruits and vines could be doubled in the region, while yields of the vegetable crops and potatoes could be increased by several times.

Thermal waters in Samegrelo - Zemo Svaneti region provide favorable conditions for the development of greenhouses and nursery farms. Greenhouse farms operating in Zugdidi, Senaki and Khobi municipalities successfully use thermal waters and this greatly decreases production costs. These farms mostly produce cucumbers and tomatoes. Though, other greenhouse farms in the region produce greens and flowers as well. Currently, there are 250 greenhouse farms in the region, with 23 hectares aggregate area and up to 500 tons of capacity. The region has significant potential to not only significantly expand production based on consumption of thermal waters but also fully substitute the imports in the region and even in the country. In Zugdidi and Khobi municipalities there are 12 nursery farms with a total area of 44.8 hectares. These farms produce saplings of fruit trees, citruses, palms, berries, vegetables and vegetable oil crops.

Livestock: In 2011, the region’s value of livestock production was GEL 180.1 million, GEL 123.5 million of which was from meat and dairy products, and GEL 29.2 million from poultry products.

In 2011, there were 197,400 heads of cattle (output: 6,100 tons of meat and 93,200 tons of milk); 30,400 pigs (pork output at slaughtered weight was 2,200 tons); 1,016,200 birds (31 million eggs); 13,300 goats (output not recorded); and 109,100 beehives (1,100 tons of honey).

In 2011, compared with year 2010, number of cattle increased by 5,200 heads, and meat production by 1,600 tons; and milk production went up by 7,300tons (it should be noted that number of cattle was at its peak at 204,200 in 2008). Similarly, in 2011, pork production increased by 200 tons, while number of poultry decreased by 67,200 and number of eggs by 10.8 million. Increase of beehives number was 8,400 in 2011.

With respect to productivity, the situation in livestock production is unsatisfactory, which is mostly caused by obsolete genetic materials, improper veterinary services, low awareness of technologies, and quantitative and qualitative scarcity of food. In 2010, a private company procured 64 heads of Holstein Friz cows, one of the world’s best varieties, with milk yields 6 times higher than average milk yields in Georgia, from a Dutch export company. It should be noted that Lucerne hay is the best food for cattle.

The region has 10 refrigerator and 9 closed warehouses;. 8 refrigerating warehouses and 8 closed warehouses in Poti; one refrigerating warehouse in Zugdidi Municipality; and one refrigerating warehouse and one closed warehouse in Senaki Municipality.

The key export products of Samegrelo - Zemo Svaneti region include: hazelnuts, wine, tea, persimmon and fish powder, which are exported to EU, CIS, Asian and American markets. Exports grow steadily, mostly due to growth in hazelnut export.

In the first quarter of year 2012, 7,200 tons of hazelnuts, with a total price of GEL 45.9 million, were exported, comprising 9% of the country’s total exports. Key export markets for Georgian hazelnuts are: Italy (GEL 7.6 million), Germany (GEL 7.9 million), Azerbaijan (GEL 4.6 million), France (GEL 1.5 million), Belgium (GEL 3.8 million) and Ukraine (GEL 2.9 million).

The Italian confectioner company Ferrero is one of the largest investors in the region’s agricultural sector. The company has acquired over 5,000hectares of agricultural lands and planted hazelnuts. Direct foreign investments into this enterprise amount to $30 million.

Other export goods include “Gurieli” brand of tea, packaged in Zugdidi, laurel leaves and vegetable oils.
New technologies, stimulation systems and mechanisms

The agricultural service center operating in Samegrelo - Zemo Svaneti region provides introduction to the latest innovations to certain extent. Currently, Zugdidi service center has 64 large and small tractors and 13 lorries; Khobi – 4 combines and 50 large and small tractors; Senaki – 119 large and small tractors and 1 combine; Mestia – 9 tractors; Martvili- 48 tractors; Chkhorotsku – 52 tractors; Tsalenjikha – 41 tractors; and Abasha – 77 large and small tractors. Existing fleet of the vehicles and tractors is not able to meet the demand of agricultural goods production and requires increase by several times. The region lacks small-scale machinery. In addition, the problem of financial affordability of the machinery is of significance as well. Population is often unable to procure high quality materials, which negatively impacts the yields.