Issue 4, 2012. August-September

   

FIVE QUESTIONS WITH... NINO ZAMBAKHIDZE

Nino Zambakhidze is the owner of Georgian Business Zone (GBZ), a dairy processing plant and a mixed fodder producing factory in the village of Tsnisi in Akhaltsikhe in South Georgia. Zambakhidze won Georgia's National Business Award, the Mercury, in 2011 for her innovative work in agriculture. Investor.ge spoke with her about how a woman from Tbilisi started a dairy farm and what she is doing to change the market.

Maia Edilashvili

Q: It's unusual in Georgia that a women from Tbilisi launches a business in the agribusiness sector in a remote village.

A: There is a funny story behind this - I have a business partner in Tbilisi who went fishing, drank some alcohol, and felt like buying two cows. Not knowing what to do with them, we had to purchase a small [piece of land]. In 2008, we received a grant worth approximately $125,000 under Millennium Challenge Georgia's Agribusiness Development Activity as well as $50,000 within the framework of the Farmers to Markets project that is being implemented by CARE International in the Caucasus, a project which is a part of Community Investment Program initiated and funded by BP and its co-venturers and, in 2009, opened the diary plant where we now produce two types of cheese - Imeruli Sakhachaoure and Salty Cheese - under the trade mark of Akhaltsikhuri.

In 2010, we also obtained a co-financing grant from BP and its partners Care International in the Caucasus for $40 thousand (GBZ has invested $150 thousand in the project) to open a mixed fodder producing factory. Both plants hold ISO quality certificates.

Q: How welcoming was the village when you appeared there? Do they feel that they are benefiting from these projects?

A: We employ 25 people, all locals. In addition, we have 350 beneficiary farmers from eight villages, which provide the milk... Our diary plant was the first of its kind not only in Akhaltsikhe, but also in Georgia.

The main problem with farmers is that they do not calculate expenditures when they produce something. Initially, they did not realize that it would be more beneficial for them to sell milk to us rather than produce cheese domestically and sell it. The salary at the plants ranges between 250 lari and 300 lari monthly, while farmers selling milk to us get more on a monthly basis.

Q: Do you consider exporting your cheese?

A: If you send a product for export you have to send at least one container. In Tbilisi, the demand for cheese alone is 40 tons a day.

Now our diary plant's capacity is 2.5 tones per cycle - four hours is one cycle - but we can produce five tones, or 600 kg cheese. If we had more cows, we would produce more cheese and work around the year - at the moment we have to close down due to the lack of milk in wintertime.

Q: Do you plan expansion? What's next on your agenda?

A: We purchased a plot to construct a hothouse with the ability to produce bio gas. In addition, we will make an artificial lake to develop agro tourism around our place... like a demonstration village. [It would be] a training center both for our farmers and others. There will be a two-week long practical course - starting from the very first stage, when milk is obtained from cows, to selling cheese to consumers, and will include information about the sanitary-hygienic norms necessary for the cows. Additionally, we will teach how to calculate cost price. For instance, if you use bio gas instead of electricity, you will save money and then can use that money to buy better pesticides or a better variety of potato.

It will be more like a social projectproviding training for free. A farmer can't afford to travel overseas. I spent months living in various countries, including Holland and Turkey to see how farmers keep their farms. In Akhaltsikhe, no one had a clue that cows have claustrophobia and should not be milked in a closed space. So the more I see and the more I read, the higher my interest is in sharing it. Currently, I am in talks with potential donators.

As part of our future plans, we are thinking to introduce high producing cows in Georgia, since the genetics of the local breeds has been damaged and their milking ability is very low.

At present, local cows provide just six liters a day, which is disadvantageous to both farmer and entrepreneur. A Holstein cow, for instance, would provide 25-30 liters per day, although we don't yet know how well they will adapt to this environment. The productivity may suffer for some time but it would improve later.

Then we plan to introduce artificial insemination, which is the biggest factor in changing the birth cycle: Currently, in all Georgian villages, all cows give birth at the same time, meaning high milk productivity occurs at the same time everywhere - in May, June, and July. But if they start birthing from October, November and December as a result of artificial insemination, we will have high productivity all the year round.

Q: The share of the agriculture sector in Georgia's GDP has been declining and many people blame the government for not taking enough measures to help it. Do you think - given your experience - that there is potential in this field? Do you think that the initiatives should come from the government or from the private sector?

A: Georgia is an agrarian country, no matter what you plant or seed, everything grows here. I understand the government. Now farmers own 600 meter or one hectare plots and it's really hard to make a profit on such a small territory. If they merged their lands, that would increase profits.

Agriculture is a field which can't be revived overnight. I think it's like a chain process involving both the state and the farmers. We are grateful to the state for cancelling VAT for producing cheese. Previously we were selling plus VAT meaning that, in a month, we were paying approximately 15 thousand lari in VAT.

At present I am developing a consulting agency with a specific focus on advising entrepreneurs who want to invest in agriculture so we can play as mediators between suppliers and the market.