In recent years Georgia has been positioning itself to become a ‘third hub’ after Italy and Spain to supply olives and olive oil to the Asian market, namely China, India and Kazakhstan. While current production of olives is still low, both producers and the government feel confident they’ve identified a niche, and the opportunity is ripe for Georgia to fill the gap.
Demand for olives and olive oil in these countries is on the rise but they lack their own production, says George Svanidze, Chair of the International Olive Council and founder of Georgian Olive. Svanidze is one of the first businessmen to have planted an olive grove in Georgia, which he did in 2017 with the help of the state. The World International Olive Council, he adds, is convinced that Georgia has high potential in olive production and considers Georgia a truly prospective hub.
Deputy Minister of Agriculture of Georgia Giorgi Khanishvili concurs, and says the feasibility of Georgia’s taking such a position is by no means low, but that it will take some time to achieve this goal. “Georgia’s location, alongside its investment and strategic development vector, makes our country a good candidate to be such a hub in many regards. We are at the crossroads of Europe and Asia – transit corridors pass through here. All this makes Georgia attractive, not only for local production but also for collecting goods produced in European countries and supplying them to the Asian market,” Khanishvili notes.
Khanishvili also points out the attractiveness of the free trade access that Georgia enjoys to markets with some 2.5 billion potential customers:
“We have free trade regimes with China, the European Union and the Gulf countries. Negotiations on free trade relations with the United States and India are in an active phase. Consequently, the fact that products exported from Georgia are exempt from customs duties, both from Europe to Asia and vice versa, gives Georgia a significant advantage.”
Climate, soil and quality
The optimism among olive producers is palpable: Georgian Olive’s Svanidze says that the quality of olive oil distilled in Georgia is not inferior to foreign alternatives, and part of the reason why Georgia was easily accepted into the International Olive Council at the end of 2019 and served as the chair country in 2020 was its suitable climate and soil.
To be clear, Svanidze does not expect Georgia to replace Spain or Italy in the world market, but he is sure that Georgian olives and olive oil will have their own distinct niche in the market.
“Italy has 840 varieties of olives, while Spain takes up 51% of the olive market. Georgia will not surpass Spain or other major producers, but our quality will be comparable to theirs. Currently, Sicilian olives are considered the best in the world, but Georgian olives and olive oil is in no way inferior to its Sicilian counterpart. Georgian olive oil meets the highest standards in terms of taste and acidity,” Svanidze noted.
Carrefour seems to believe so as well: the French supermarket franchise has already signed a multi-year contract with local olive producers, and Georgian olives will be sold internationally in the premium price segment.
Labor, land and capital
Georgia could be supplying between 9,000-10,000 tonnes of olives to markets by 2025, Deputy Agriculture Minister Khanishvili says. The roots have already been placed firmly in the ground, with the state program Plant the Future having already helped plant 540 hectares, with a total investment of 5 million GEL, of which 3 million has been an investment by the state.
Meanwhile, individual farmers have planted more than 500 hectares of olive groves without state aid. Both Khanishvili and Svanidze hope that foreign investors will soon take an interest in cultivating olives in Georgia, noting that the low cost of labor and low taxes will surely be attractive to foreign investors.
“Picking is cheap with us and it encourages investors. Compared to paying 25-35 EUR in Europe, they could get the same work done here for 35-40 GEL (8.5-10 EUR) per day. Electricity and water bills are also way lower, as well as the profit tax. In short, we have an attractive culture and environment for investment,” said Svanidze.
One issue to be resolved remains that of the ownership of agricultural land by foreign citizens. Khanishvili however says this will soon be solved, as “the government plans to issue a special decree [. . .] which will allow a foreign investor to buy land from a Georgian farmer provided his investment proposal is interesting and attractive. It is important to have more people investing in production, and not just buying land and sitting on it until it becomes more expensive.”
Khanishvili noted that foreign investors’ interest is facilitated by the government program offering grants for processing plants in Georgia.
“This program could apply to the production of olive oil. Depending on the capacity of the enterprise, a single grant may not exceed 500,000 GEL or 40% of the total investment. The investor can also use agro-credit for the construction, and have the state cover 80% of the loan guarantee,” said Khanishvili.
Svanidze, meanwhile, mentions plans to set up an international olive laboratory and issue quality certificates.
To give a sense of scale of the financial possibilities of olive production, Svanidze estimates that given proper care, yearly income from one hectare of olive orchards could easily fetch $8,000-9,000, and he singles out the Taribana Valley and Dedoplistskaro district as prospective sites for the development of 200,000 hectares of olive orchards.
Hopes of similar numbers have encouraged Guram Natroshvili and Giorgi Mchedlishvili – beneficiaries of the Plant the Future program.
Mchedlishvili says the family has been engaged in agriculture for a long time. They wished to cultivate some perennial crops, and chose olives due to the good prospects associated with them.
He said they took into account the fact that olives are a drought-resistant crop, which allows them to adapt to the climatic conditions of Kakheti in general, and Sighnaghi district in particular.
So far, Mchedlishvili has planted olives on 60 hectares. The state covered a total of 70 percent of the cost of the seedlings.
The state also financed 50 percent of the costs of the irrigation system. The farmer planted the first seedlings in 2018 and he expects to cover the costs with the harvest of 2022. Mchedlishvili is sure that after that he will be able to export both olives and olive oil. Depending on financial means, Mchedlishvili plans to build an oil distillation plant later.
Natroshvili is looking after an olive grove he planted on about 35 hectares in Dedoplistskaro. He says Svanidze encouraged him to enter this business and he is confident in its future.
The father, the son and the grandson
The olive business is time-consuming and tending an olive grove requires much effort and care from the farmer at first. As an old Italian saying goes, “a father plants an olive tree, the son takes care of it, and the grandson reaps the harvest. But the results are serious, Natroshvili says, and once an olive tree is about ten years old, it requires less attention and the production process can be mechanized.
Even though olives are a new crop for Georgia, it is already possible to fully process them locally. Svanidze has built an olive oil distillery in Tsnori, a town in the Kakheti region.
In addition to oil, the distillery produces soaps, perfumes, and creams. It is noteworthy that before olive growing in Georgia took off, the local market was saturated with imported products. Nowadays, about 25 percent of the market is filled with local produce, Svanidze says.