Agri-Food Expo Highlights How MCC Investments Are Creating Jobs in Georgia

Posted on December 17, 2010 by Jim McNicholas, Resident Country Director, Georgia

 

On November 29, 2010, Millennium Challenge Georgia (MCG) hosted a closing ceremony and exhibition for its agribusiness development program.  To celebrate this milestone, 60 of the program’s 283 agribusiness projects showcased their products at an Agri-Food Expo, with Georgian government officials as well as bankers and supermarket chains in attendance.

Since 2006, MCG and its implementing partner, CNFA, a U.S. non-profit, have co-financed 182 primary producers, 43 businesses projects that provide services to farmers, and 58 businesses that enable value-added and value-chain production.  MCG has invested $15.9 million in this program and, according to CNFA, Georgian citizens have invested $20 million more.  As of early autumn 2010, MCG reported that 2,613 jobs had been created as a result of agribusiness development program activities. 

At the Agri-Food Expo, Mamuka Tskioridze and Malkhaz Gabunia displayed their orange persimmons neatly packed in wooden boxes, alongside fresh salad greens and herbs.  With their company’s 1:1 matching investment and MCG’s $149,000 co-financing, these entrepreneurs have expanded their greens export business both in terms of volume and the types of products being offered to Belarus, Moldova and Ukraine.  “In the past, every product we bought from farmers we had to pack and ship that day because if not we would lose the product,” said Mr. Tskioridze.  “With the cold storage warehouse [which was also co-financed by MCG] we now have time to collect more products from our farmers and export using fewer trips.” 

One of the most successful projects to emerge from MCG’s agribusiness program was the establishment of 33 for-profit, privately owned, Farm Service Centers throughout Georgia.  Before the centers were opened, farmers had to get their supplies from stalls in various local markets.  These decentralized transactions made it difficult for farmers and their suppliers to build relationships and communicate with each other.  Now, one-stop Farm Service Centers have been established in every region in Georgia and have generated 100,000 transactions.  In addition to serving as a commercial exchange, the centers also provide opportunities for the exchange of information — knowledge warehouses where the Ministry of Agriculture, various Community Based Organizations, and individual farmers can showcase new farming techniques and relay important announcements.

Georgia’s Prime Minister, Nika Gilauri, closed the Agri-Food Expo by noting several program results, “More than 2,600 jobs have been created and these jobs are not just short-term jobs; they have long-term perspectives and provide long term opportunities…  Millennium Challenge Georgia proved that investments can be made in this sector and be successful.”

MCC and USAID Bring Mechanization to Georgian Farmers

Posted on January 11, 2010 by Chelsea Coakley, Program Analyst, Department of Compact Implementation

Investments in agricultural development are integral to MCC’s commitment to sustainable poverty reduction in rural Georgia. The Millennium Challenge Georgia Fund (MCG), implementing Georgia’s $395 million MCC compact, is nearing completion of the Agribusiness Development Activity (ADA), a $20 million program designed to strengthen commercial linkages among agricultural service providers, producers, processors, wholesalers/distributors, and markets. The 287 targeted matching grants already awarded to Georgian agribusinesses and farmers are supporting sustainable, long-term growth.

In addition to providing grants focused on enterprise and value chain development, MCG responded to a request from the Georgian Ministry of Agriculture to support the introduction of new agricultural machinery into the country by developing a new ADA component. The inability of small farmers to access machinery has been cited as a major constraint to agricultural development in Georgia. To meet the needs of Georgian farmers for increased mechanization of their agricultural techniques, MCG is providing grants up to $150,000 to a number of farm service centers. Over the past 4.5 years, ADA has focused, in part, on the creation of a privately-owned retail network of farm service centers to provide a complete range of agricultural goods and services for Georgian farmers.

USAID has also responded to the need for new agricultural machinery in Georgia. In early December 2009, USAID launched the Access to Mechanization Program, a $5.1 million program that will provide similar grants, in combination with a number of other funding mechanisms, to establish 25 to 30 machinery service centers throughout the country. The MCC and USAID programs complement each other and maximize impact by promoting a commercially-sustainable model of agribusiness that benefits farmers as well as the owners and employees of farm service centers and machinery service centers throughout Georgia.

As a result of MCC-funded farm machinery grants and USAID’s newly-launched Access to Mechanization Program, beneficiary farmers will now be able to plant, cultivate, and harvest their crops far more efficiently. Georgian farmers are motivated to move toward greater mechanization, as they expect the effect to be transformative. By increasing productivity and improving the quality of their existing crops, farmers will be able to generate greater income and secure necessary capital for upcoming seasons.

Eyewitness to Change in Georgia: Lessons of a Greenhouse and a Pipeline

Posted on August 25, 2009 by Chelsea Coakley, Program Analyst, Department of Compact Implementation

Upon landing in Tbilisi, Georgia, I had over an hour to prepare for our teams departure for the opening of a new greenhouse complex, so far the largest grantee of MCC’s Agribusiness Development Activity (ADA) in Georgia, which provides grants for small- to medium-sized farmers to access modern farming supplies and increase agricultural productivity. We drove four hours into west-central Georgia to participate in the opening ceremony with Georgian government representatives, municipal authorities, and staff from Millennium Challenge Georgia Fund (MCG). The event was as welcoming as the project was innovative, and I felt honored to be part of this much-anticipated day.

Mr. Zurab Janelidze, who invested more than $450,000 to match $299,736 in MCG grant funding, developed his vision for Herbia LLC, a comprehensive system for greenhouse production and distribution of fresh herbs and vegetables. Herbia was established on two hectares of land in the rural Georgian town of Tskaltubo and is linked to an existing cold storage facility one of the few in rural Georgia - that also has the capacity to pack, store, export, and cater to local demand. Mr. Janelidzes strategy will serve as an example for high-value agricultural production in Georgia, while earning substantial revenues from the export of fresh culinary herbs and greenhouse tomato production, which will be sold domestically. The enterprise will also purchase fresh herbs from small farmers in the area to augment its own production, packing, and exporting. Upon touring Herbia LLC, its potential to make a positive impact in the Imereti region was evident as I walked through several greenhouses and saw many local workers picking produce.

I also visited multiple phases of the MCC-funded Energy Infrastructure Rehabilitation Project in the Mtskheta Tianeti region. This project is rehabilitating an essential source of energy for the people of Georgia, which, at over 2,200 meters at times, is one of the worlds top three highest-elevation pipelines, making rehabilitation efforts not only challenging but also absolutely critical due to the remote nature of these repairs.

The Energy Infrastructure Rehabilitation Project is an exemplary case of true country-led development, as all phases of this project have been implemented by a Georgian company. The Georgian Oil and Gas Company currently operates the pipeline on the governments behalf and has been responsible for the design and supervision of the entire project. Improved management of the pipeline, together with MCC investments for repairs, have already resulted in a decline in gas leakage, which means increasingly reliable access to natural gas for Georgian citizens and their enterprises.

Distance creates a clearer perspective on experiences. Now back in Washington, I am able to reflect on my recent trip to the field and can say I feel privileged to have observed these transformative projects in person. It was truly exciting to witness the focused energy and enthusiasm of the Georgians at work on a daily basis. It is clear that MCCs partnership with the Government of Georgia is highly valued and will continue generating positive results.

A Shared Commitment to Georgia’s Economic Growth

Posted on July 24, 2009 by Jim McNicholas, Deputy Resident Country Director, Georgia

Vice President Joe Biden visited Tbilisi, Georgia this week, meeting with Georgian President Mikhael Saahkashvili, members of Parliament, leaders of the opposition parties, and business leaders. One of the highlights of the visit for the Georgian media was the Vice Presidents visit with children at a center for families displaced by the August war. At each stop on his visit, the Vice President spoke of a U.S.-Georgia partnership based on the ideals of democracy and re-affirmed the U.S. commitment to support the Georgian people as they continue to build the institutions and economy of their country. I especially today call upon the young people of Georgia, Mr. Biden said on the floor of the Parliament, the next generation of Georgian leaders, to continue to contribute their ideas, their voices, and their energy to help create a peaceful, stable, democratic, and economically prosperous Georgia.

As part of the U.S.-Georgia partnership, the Millennium Challenge Georgia Compact, a five year program totaling $395 million in grant funds, has been providing necessary resources for Georgians to invest in their economy and reduce poverty. Georgia is committed to the core MCC philosophy of country ownership and accountability. It has created a strong management team and government oversight board to ensure that U.S. funds are spent efficiently and achieve results for the Georgian people.

Now in its fourth year of implementation, Georgia is beginning to see tangible results. Under MCC funding, the municipal water supply network for Poti, Georgia’s largest port, has been rehabilitated, improving the water supply for the city’s population of 50,000. Georgia’s energy security has been strengthened by the completion of two rounds of priority repairs on the main natural gas pipeline. The pipeline, operated by the Georgian Oil and Gas Corporation, transports gas from Azerbaijan to Georgia for residential heating and to operate Georgia’s only electricity power plant.

Additional infrastructure improvements are on the way. Another four municipalities are undergoing water system rehabilitations. Construction on the Samstkhe-Javakheti road, connecting Tbilisi with Armenia and Turkey, is currently underway. Georgia also chose to invest in agriculture and to assist the growing number of small and medium size enterprises in Georgia. The Enterprise Development Project has already invested over $25 million in the Georgian economy through a combination of grants and equity investments for farmers and businesses. Much of this total has been mobilized since the August war and since the economic crisis has negatively impacted the Georgian economy.

Millennium Challenge Georgia Fund CEO George Abdushelishvili recognizes that he, his team, and partners have a lot of work ahead to deliver on the promise of the MCC grant. When Georgia has a good partner, and especially when we hear Vice President Biden highlight our countries partnership here in Tbilisi, it makes me want to do more, he says.

Helping Georgia Achieve Long-Term Growth

Posted on September 9, 2008 by Rodney Bent, Deputy Chief Executive Officer

After last month’s conflict between the Republic of Georgia and Russia, Under Secretary of State Reuben Jeffery led an interagency delegation to Tbilisi, Georgia, from August 25 to 27, to assess that country’s economic and reconstruction needs. MCC signed a $295 million compact with Georgia in September 2005 to help the government there reduce poverty, and I was glad to be a part of the U.S. assessment team.

The delegation arrived in Tbilisi aboard a U.S. Air Force C-17 bringing relief supplies such as tents and humanitarian daily rations. From the moment we landed, the delegation spent three days in intense discussions with officials from the U.S. Embassy, the Government of Georgia, businessmen, civil society, and ordinary citizens.

Georgia is a small country, smaller than South   Carolina, with about 4.6 million citizens. The Prime Minister, Lado Gurgenidze, heads a team that is energetically confronting the challenges of the conflict: a new influx of internally displaced persons, disruption of transportation networks, and general uncertainty about the future. Before August, the Georgian economy had been growing at about 10 percent a year.

What we saw was sobering. Areas of Georgia that were already in need of assistance to replace aging or inadequate infrastructure are now more in need than ever. I met with Georgians who made it clear that, given the proper roads and other resources, they could resume their plans for economic growth.

MCCs existing projects [see map] were not directly affected by the conflict. The MCC model—in which the partner country selects and implements projects—is one that the Georgian government would like to replicate more broadly, both with other donors and for other sectors of the economy. The Georgian government has proposed a Phoenix Fund for a broad array of possible infrastructure projects, from roads to railroad rolling stock to natural gas projects to water and sanitation.

MCC, as part of the package of assistance announced by the Administration after the assessment team returned to the U.S., is considering a $100 million compact amendment for Georgia. The new funds would enable Millennium Challenge Georgia to finish some projects for which preliminary design and feasibility studies had already been completed, but could not fit within the compact’s original $295 million total. Such an amendment would first need to be approved by MCC’s Board of Directors. Many of the projects under consideration were previously included in the original compact but were later scaled back as a result of external pressures such as dollar depreciation and increased international construction costs.

MCCs indicator assessment of Georgia for fiscal year 2008 was markedly positive in that Georgia passed 15 of the 17 indicators, including every indicator in Ruling Justly and Economic Freedom. Our new set of indicators for Georgia, and other candidate countries, will be released by early November.

Click here for more details regarding ongoing MCC projects in Georgia and information about how additional resources will help Georgia reduce poverty and achieve long-term economic growth.