Keeping the dairy industry fresh in Georgia, March 2016 Keeping the dairy industry fresh in Georgia, March 2016

10 March, 2016

10 March 2016

Improving food safety and competitiveness in Georgia’s commercial dairy sector was the focus of the country's first National Dairy Congress, held in the capital Tbilisi on 10 March 2016.

The event, organized by the Food and Agriculture Organization of the United Nations (FAO) and the European Bank for Reconstruction and Development (EBRD), drew around 150 participants, including commercial dairy farmers, processors, input and equipment suppliers, industry experts and representatives from the Government.

The Congress was a chance to promote investment in Georgia's commercial dairy industry, keep abreast of changing food safety standards and share knowledge on state-of-the-art technologies.

"Georgia has an excellent investment climate, ideal agro-climatic conditions for dairy farming and strong demand for milk, cheese and other dairy products," said Victoria Zinchuk, Associate Director of EBRD's agribusiness team.

The country is also unique in that many of the dairy products consumed there are not produced elsewhere, protecting the market from imports - making targeted investment along the entire value chain attractive.

From informal to commercial

While Georgia's dairy market is estimated at USD 0.5 to 0.6 billion, the country boasts just a handful of modern dairy farms and milk processing companies.

Most of the milk produced comes from smallholders and is sold through informal channels. Even among the country's few commercial farmers, most lack the technical skills and knowledge needed to produce high-quality milk.

"About 5 percent of the milk consumed in Georgia is sold to commercial dairy processors," said Andriy Yarmak, an FAO agricultural economist. "In the European Union, Georgia's most important trading partner, it's nearly 100 percent."

Simple changes, good results

Since setting up the Deep and Comprehensive Free Trade Area with the European Union in 2014, Georgia has worked to align its food safety legislation with that of the European Union.

In order to remain viable and competitive, Georgian dairy companies and farmers will need to upgrade their equipment, facilities and practices to meet more rigorous food safety, hygiene and quality standards.

As a 2015 study of Georgia's dairy sector by FAO, the EBRD and the Association of Milk Producers in Ukraine revealed, commercial farmers can boost their productivity by up to 35 percent and significantly improve milk quality just by making some relatively simple improvements in their production practices - all without major investment.

"Basically we're talking about things like better feeding and fodder production, improved animal health, welfare and farm management and hygienic milk handling and processing," said Yarmak.

Beyond the Congress: closing the knowledge gap

The National Dairy Congress was one initiative sponsored by a new FAO/EBRD project, “Improving food safety in Georgia's dairy sector – Phase II”. Training on all aspects of milk production - from farm to table - is another.

Twenty selected commercial dairy farmers will soon participate in a training in Ukraine - a country making considerable strides in transforming its dairy sector – and then pioneer those improved production practices back in Georgia.

FAO and the EBRD will also work to get the word out to a wider audience, organizing conferences to share lessons with dairy industry specialists, and publishing a practical manual in Georgian on modern dairy farming.

Investor confidence around the corner

"Improving the safety and quality of Georgian dairy products would encourage new investments to the sector. This, in turn, would lead to creating new jobs and improving livelihoods in the long term," said Mamuka Meskhi, Assistant Representative of FAO in Georgia.

International investors already sense the wave of changes supported by FAO and the EBRD.

French-owned Lactalis, one of the world's largest dairy groups, recently became a shareholder in Sante, Georgia's leading dairy processing facility, sending a very positive signal to other international investors.

EastAgri is supported by:

EastAgri is supported by FAO, EBRD, and The World Bank