Issue 2, 2016. April-May

   

DAIRY SECTOR PRIME FOR INVESTMENT

Investor.ge spoke with Andriy Yarmak, a project coordinator and economist of the Investment Center of Food and Agriculture Organization of the United Nations (FAO), about the program Improving Food Safety through Capacity Building in Georgia's Dairy Sector.

Improving food safety and competitiveness in Georgia's commercial dairy sector was the focus of the country's first National Dairy Congress, which was organized by FAO and the European Bank for Reconstruction and Development (EBRD), and held in Tbilisi on March 10.




An audit of Georgia's commercial dairy industry found several interesting things, including untapped investment potential, according to Andriy Yarmak, the coordinator of the FAO and EBRD project to improve food safety in the country's dairy industry.

Georgia's "unique" dairy market - Georgian consumers demand products that are not produced elsewhere - has created a situation where "milk prices paid by processors in Georgia to farmers are probably the highest globally, especially considering the relatively poor quality and safety of most of the milk," Yarmak said in an e-mail interview with Investor.ge.

"This situation makes investments in commercial dairy farms very attractive - the payback period in Georgia would be much lower than in most other countries in the region."

He added that productivity at many relatively modern commercial dairy farms could also be significantly improved without major investments. "All they need is knowledge of modern practices in milk farming," Yarmak said.

Other major findings included:

Safety and quality of milk and many dairy products require significant improvement;

Only around 5% of milk goes through formal processing (in the EU - nearly 100%) - the rest is consumed fresh or processed in very primitive conditions;

The productivity of dairy cattle held by households and some extensive commercial farms is extremely low - in most cases within the range of 1000-1500 kg per year per cow, which is on par with production levels of good milking goats. However, this can be improved significantly;

Animal health is a very serious issue in Georgia and requires the attention of both the dairy business and the government;

Georgia has excellent climatic conditions for commercial dairy farming in some regions;

For many years, Georgia has lacked livestock specialists knowledgeable in dairy farming, which is a huge problem and limitation for new investment projects in the country.

Education and Opportunities

"Underproduction is not really a problem - it is an opportunity or, rather, a result of the problems [found in the audit]," Yarmak said.

He noted that the project will address these issues through capacity development, knowledge transfer and sharing experience (training modules, study tours, practical manuals).

Yarmak said the project will last two years.

"Increasing productivity and efficiency is possible through better feeding, improved keeping conditions, animal health management and overall herd management, milking and other factors. So, basically we are talking about improved knowledge," Yarmak said.
He noted that improving the safety and quality of Georgia milk to reach the levels required by the EU will be "a long process."

First Annual National Dairy Congress

Yarmak said that around 40-50 commercial farmers - as well as processors, equipment suppliers, industry experts and the government - attended the first annual national dairy congress.

"We are hoping that farmers, which represent at least 50-60% of all commercial production of milk in the country, would participate in this training program," he said.

"We expect that this would help increase commercial milk production in Georgia by around 35-40% in just two years, and that quality and safety of this milk will also increase significantly." Yarmak added that the program hopes "to boost commercial milk processing in the country to benefit consumers and contribute to import substitution."

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