The FINANCIAL -- The Estonian-Georgian film, Tangerines, was nominated for the Academy Award for Best Foreign Language Film in 2014. While the film was shot in Guria, the story takes place in Georgia’s breakaway region of Abkhazia during the war in the early 1990s.
In the film, two of the main characters are peasants from Estonia who are living and working in Abkhazia, one as a tangerine grower and the other as a manufacturer of wooden crates for transporting tangerines to markets (much like the one in the photo above). Unlike their families and neighbors, these two men did not leave the region during the war for a variety of reasons, including their ambition to harvest and market their tangerines.
While many readers may be familiar with the film, they may be less familiar with the tangerine sector itself. In this article, I’ll therefore explore the role of the tangerine sector in the Georgian economy and then discuss some of the approaches taken by the government and international donors toward the sector in recent years.
TANGERINE PRODUCTION AND MARKETING IN GEORGIA
Tangerines are the main citrus fruit produced in Georgia. Tangerines are only grown in the western part of the country, primarily in Achara, Guria, and the breakaway region of Abkhazia, though they are also grown to some degree in Samegrelo and Imereti. While tangerine production fluctuates from year to year, in 2013 nearly 107,000 tons of the fruit were harvested.
Data Source: National Statistics Office of Georgia. Production in Abkhazia is not considered in these figures.
Many peasants from western Georgia are dependent on tangerine production for their families’ livelihoods. When I was a child, many farmers from Achara were coming to my home village, Kvemo Alvani, in Kakheti (which is nearly 500 km away from Achara) to sell their tangerines for cash or to trade them in exchange for other agricultural products (including potatoes, corn, or wheat, for instance). This was a traditional form of informal cooperation in marketing between these tangerine growers, as they were often renting a bus and selling their tangerines together. Such marketing practices persist to date, though local traders also play a critical role in market intermediation.
The main export markets for Georgian tangerines are currently Ukraine and Russia, as illustrated by the graphs below. Some of the exported tangerines go to neighboring countries or to countries in Central Asia as well. Unfortunately, these main export markets are politically unstable from time to time. Current market prices for exported tangerines are also lower than they are in Europe.
Data Source: National Statistics Office of Georgia. The total volume of exported tangerines was about 35,000 tons in 2013, though only about 22,500 tons in 2014.
In Russia, many of these tangerines end up in major markets like Moscow. Yet, most interestingly, the tangerine trade there has been contested by different mafia groups in recent years. As an article in the Georgian Journal describes, the Georgian mafia undertook an operation to import tangerines from Achara, label them as originating from Morocco, and then sell them to Russian consumers at a significantly higher price than what would normally be the case. This subsequently led to bloody battles over control of Moscow’s valuable fruit market.
THE POLICY ENVIRONMENT
Tangerines are typically grown and harvested by family farmers in Georgia, so it’s therefore not surprising to see that this is one of the main sub-sectors favored by the government for policy interventions.
In 2013, the government started to subsidize the sector. A 10 tetri subsidy per kilogram of non-standard tangerines (those which may be slightly damaged or misshapen) was provided to farmers for those tangerines delivered directly to processing companies. Farmers received an additional 15 tetri per kilogram for standard tangerines which were exported. In total, the government spent 13.8 million GEL from its reserve fund, with about 12 million GEL spent on subsidies for standard tangerine production and the remaining 1.8 million GEL on subsidies for non-standard tangerines.
Due to unfavorable weather conditions this year, a substantial part of the tangerine harvest consisted of non-standard tangerines. This was one of the main reasons why the government decided to continue the subsidy scheme. In 2014, the subsidies were targeted somewhat differently. In particular, the companies had to purchase non-standard tangerines for no less than 20 tetri per kilogram. If they did so, they would receive an additional 10 tetri per kilogram from the government. The budget for this program and the 2014 harvest was 2 million GEL. The government also opened a coordination office and started a hot line in Achara to try to improve the marketing and processing of both standard and non-standard tangerines. The latter were purchased and processed by three fruit plants in Achara, including one financed by the government’s preferential credit program.
Last year, the government also launched an agricultural insurance pilot program. This year, due to three hailstorms, much of the tangerine crop was damaged, resulting in payments to farmers by insurance companies amounting to nearly 1.8 million GEL.
DIFFERENT POLICY OPTIONS
Arguably, many of these initiatives aim to support tangerine growers and processors in the short run. These policies do not necessarily provide incentives for Georgian tangerine farmers to improve the quality of their products or to try to enter premium markets for tangerines or juices.
It might be more efficient for the government to focus on helping farmers adopt new technologies (e.g., by facilitating regional expos) for improved production, harvesting, and post-harvest treatment. There could also be further efforts at supporting vocational education and training in the sector.
For instance, the now completed Economic Prosperity Initiative (EPI), a USAID-financed program, was undertaken with both of these aims in mind. Agricultural experts from California were invited to Georgia to share their experiences with farmers and to train farmers on the proper treatment of their tangerine trees with regard to trimming, land cultivation, application of fertilizers, and harvesting. According to an article in Commersant (available in Georgian), as a result of these trainings, some farmers adopted new technologies and had better harvests, which varied from 55 kg to 100 kg per tree. Further, the quality of the tangerines was higher, the sizes were larger, the tangerine surfaces were more uniform, and even the color was improved.
A variety of initiatives could also be undertaken to improve how tangerines are sorted, stored, transported, and processed. These might take the form of supporting the establishment of growers’ marketing cooperatives or even establishing export-oriented collection centers. Local government officials could also help growers identify new markets in order to diversify their export portfolios, which is rather important considering recent events in Ukraine and Russia.
Though any policy initiative has its costs. As stated in a recent UNDP/ENPARD report on agriculture in Achara, “unlike mandarins, money does not grow on trees: in order to subsidize agriculture, government has to tax the rest of the economy.” Which of these initiatives is the most cost-effective in the long run or whether such initiatives should even take place again remain open questions.
COULD THE GEORGIAN TANGERINE SECTOR BE AS SUCCESSFUL AS THE FILM?
Last year, Georgia signed the Association Agreement with the European Union, which will enable Georgian farmers to sell their products in European markets and face a low tax regime if they meet the standards and regulations set by Deep and Comprehensive Free Trade Agreement (DCFTA).
One EPI/USAID expert believes that if Georgian tangerine farmers will adopt new technologies and very strictly follow the lessons from their trainings, Georgian tangerine plantations could be producing crops suitable for European markets in about five years.
If Georgia will be able to produce and sell more agricultural products (including tangerines) in European markets, it could enable growers to receive higher incomes and prices for their tangerines and therefore achieve better economic conditions for their families.
Improved access to markets could also lead to political benefits in the long run. If some farmers in Abkhazia are willing to imitate growers in Achara or Guria and undertake similar improvements to their production and marketing practices, they might be able to achieve access to European markets as well. This could contribute to higher prices for producers, on the one hand, and greater trade and a thawing of relations between Abkhazia and Georgia, on the other. Such trade and improved relations would hopefully prevent another situation like the one shown in the film from taking place, when, as the two Estonians in the film describe, there was a Citrus War.
This article was edited by Adam Pellillo and translated into Georgian by Irakli Kochlamazashvili.
The article was produced with the assistance of the European Union through its European Neighbourhood Programme for Agriculture and Rural Development, Austrian Development Cooperation, and CARE Austria. The contents are the sole responsibility of ISET-PI and can in no way be taken to reflect the views of the European Union, Austrian Development Cooperation, or CARE Austria.