Agriculture remains the largest source of employment in Georgia, accounting for roughly 40% of the country’s workforce. However, agriculture’s relative contribution to gross domestic product is shrinking, falling from 10.3% in 2011 to only 7.4% in 2019.
Gaps in skills and market information currently hamper the sector’s ability to generate revenue and exports, and have resulted in surprisingly high food imports for a country with significant agrarian resources.
However, the development of mobile technologies, combined with increasing consumer preferences for ‘eating local,’ means the agricultural economy has tremendous room for growth. Encouraged by global trends, a growing number of Georgian firms—including supermarkets, hotels, and restaurants—are looking to replace imports with domestically p roduced fruit, vegetables, dairy and meat products.
The challenge, many of these firms find, is in sourcing high-quality produce in stable and sufficient volumes for commercial consumption. Most individual farmers are eager to reach larger markets but lack the ability to provide sufficient volumes of high-quality products to meet growing consumer demand.
The United States Agency for International Development (USAID) is partnering with the Georgian Farmers’ Association (GFA) to help bridge this gap, and thus drive job creation and income growth across Georgia. Through their collaboration, USAID, the leading development arm of the U.S. government, and the GFA, a non-profit organization that increases the productivity of farmers, are helping food producers improve the quality and quantity of their production and build connections with large-scale commercial purchasers.
One of the fruits of this partnership is Agronavti, a mobile match-making platform that allows local farmers to sell their products to hotels and restaurants affiliated with the Adjara Group, one of Georgia’s leading hospitality firms. Developed by the GFA with USAID financing and in partnership with the Adjara Group, the app is being taken up by a growing number of both farmers and firms in the hospitality industry.
And it’s working: since 2017, participating farmers have used the app to make $4.4 million in sales. Agronavti has been so successful, in fact, that in 2020 the GFA spun it off into a private entity, Agronavti LTD, which is capable of driving further development and expanding to new regions and value chains.
By charging a 10% fee on all products distributed through the app, Agronavti is setting itself up to become a commercially sustainable business in its own right.
Working with the private sector to solve a problem
The story of Agronavti began in 2017, when the GFA entered into a contract-farming agreement with the Adjara Group, a hospitality holding company with a chain of hotels and restaurants in several Georgian cities, which was searching for a way to source high-quality food produced in Georgia.
The contract provided the opportunity for GFA member farmers to sell their products directly to Adjara Group hotels and restaurants, providing a lucrative and stable market. This was a win-win, with the Adjara Group gaining the ability to provide its customers with high-quality, locally-produced food, and the GFA establishing a large and stable market for its member farmers.
“[The Adjara Group] wanted to supply its restaurants with more local food and less imported food,” said Tamar Toria, Executive Director of the GFA. “They tried to do this on their own but it was very difficult. They asked for our help in connecting them with farmers producing high-quality produce.”
For the GFA, a partnership with the USAID Zrda Activity in Georgia program, which was then providing grants to develop mobile tools for farmers, was a natural match. With USAID funding, the GFA was able to contract a local tech firm to design the Agronavti app.
“USAID is always looking for ways to promote innovation and private sector-led solutions that can support economic growth and generate higher incomes and high-value employment,” said Marika Olson, Office Director of USAID/Georgia’s Economic Growth Office.
The app’s first version was fairly straightforward. “We wanted to simplify the matchmaking process and include more farmers into the existing scheme that we had been operating in partnership with the Adjara Group,” added Toria. However, they soon realized that they could offer more than a matchmaking app, and even provide farmers with a market information system (MIS) that would not only create market linkages, but help farmers improve the quality and efficiency of their production.
“During the app development process, we realized that the GFA’s model, being unique in its matchmaking offer, could also serve as a one-stop-shop for its users. So we added other functionality offering more information, such as weekly prices for agro products,” said Toria.
Agronavti was expanded to provide farmers with real-time information about prices and weather forecasts, as well as access to research and training materials.
When Agronavti first launched, only a handful of farmers could meet Adjara Group’s quality and quantity standards. The GFA, with USAID assistance, continued to help farmers improve their products’ quality through technical assistance and the promotion of GeoGAP, a local certification scheme that is a domestic marker of quality for local farmers.
The investments made in improved quality and certification have allowed more farmers to benefit from Agronavti. There are now more than 150 products available through the application, with more farmers adding their products every day. And, with the $4.4 million in sales achieved since 2017, farmers have been able to hire more workers and reinvest more of their profits into innovations to improve the quality, efficiency, and scale of production.
GeoGAP is key to the continued success of Agronavti, but it has implications beyond the app. “We see the GeoGAP certification system, and the improved quality that it represents, as an important development for Georgian farmers. It is a stepping stone to more lucrative markets, both in Georgia and abroad. We hope to use it as a model for greater agricultural value in Georgia and across the region,” said Olson.
Supporting farmers through a commercially sustainable business model
Agronavti was developed and promoted with USAID assistance, but both the GFA and USAID saw the potential for it to become financially self-sustaining. Toria and her colleagues worked with the USAID Zrda Activity in Georgia program to develop a business model that could sustain itself without donor financing. “We realized it was crucial that the application be effectively monetized in order to generate sufficient revenues to cover its own costs and potentially provide profits to GFA as owner of the application,” said Toria.
In 2020, Agronavti LTD was born, and the new company made an instant splash, winning a 100,000 GEL grant from Georgia’s Innovation and Technology Agency (GITA) to integrate artificial intelligence (AI) into the application. AI will allow the app to provide farmers with recommendations based on soil analyses, weather forecasts, and best practices in agribusiness management. This will build the capacity of local farmers, helping them provide more produce to participating restaurants and hotels. It will also funnel more revenue back into Agronavti LTD, helping it to grow and benefit more businesses.
To learn more about USAID/Georgia programs and partnership opportunities, visit USAID.gov/Georgia or contact Beverly Hoover, USAID/Georgia’s private sector engagement coordinator, at email@example.com.