2021 June-July Analysis

Something smells fishy: but that may be a good thing for the Georgian seafood industry

For a country with thousands of rivers and lakes, the fact that Georgia has to import nearly 75% of its consumed fish and seafood products might raise more than a few eyebrows.

In 2020, Georgia spent $31 million on 16,500 tonnes of imported fish products, exporting just 4,200 tonnes worth $6.82 million. But plans have been set in motion to reverse the flow of fish (and capital), with the government hoping that in the near future the country’s fisheries will be able to both satisfy domestic demand and, perhaps, even export their own catch on a larger scale.

The 26,000 rivers, 860 lakes and 12 reservoirs in Georgia, experts say, could be capable of producing between 40-50,000 tonnes of fish annually.

Much excitement in the industry was generated by the recent Law on Aquaculture from 2020, which was drafted with the participation of UN FAO experts. The CEO of Georgian Fish and Caviar, Malkhaz Shubalidze, says that the regulations laid out in the plan for fish and seafood production in line with European standards and market expectations are likely to increase the appetites of the European market for Georgian fish goods.

“This law provides a roadmap to the possibility of unobstructed entrance to the European market. The trustworthiness of our fish should increase, and Europe will know that if, for example, I feed my fish with feed produced in Georgia, it will comply with European standards,” Shubalidze says.

The Georgian Ministry of Agriculture is particularly interested in the development of storage, refrigeration and processing facilities.

“This requires a complex approach, and will need support at every stage of the production process. The state will continue to actively support private initiatives, as close cooperation with the private sector will enable us to develop both aqua[culture] and mariculture in Georgia,” Minister of Environmental Protection and Agriculture Levan Davitashvili notes.

The aim of raising the country’s fish production more than 20 times over may seem ambitious, but Ministry of Agriculture Rural Development Head Archil Partsvania says it is enough to look at the example of Armenia to see just what is achievable in Georgia.

Armenia already produces four times as much fish as Georgia per year, approximately 12,000 tonnes, Partsvania says, and it accomplishes this in artesian waters since, unlike Georgia, Armenia does not have seaboard access, nor does it have the numerous rivers or lakes Georgia enjoys.

Georgian Fish and Caviar’s Shubalidze says Georgia has other advantages over Armenia in the fish market, namely that of quality, thanks to its water resources. Armenia’s main market, Shubalidze points out, is Russia, and Russian distributors are allegedly dissatisfied with the quality of Armenian fish and are eagerly looking for new partners in Georgia. However, Georgia continues to lag behind in the infrastructure needed to produce the necessary quantities.

The Chairwoman of the Fish Producers Association of Georgia, Nino Chobanyan, says low production capacity is largely attributable to the currently low skills of fish farmers, a deficit of industry specialists and lagging infrastructure. For example, she says, the country lacks fish pathologist experts, which means there are few specialists who can identify and treat fish diseases. Chobanyan says it is common for 30 to 40 percent of fry purchased for reproduction to die.

Chobanyan adds that a study on the price chain of aquaculture in Georgia is in presently process with EU assistance, and as soon as the study is completed, an additional long-term action plan for this industry will be developed based on its results.

Presently there are nearly 700 fish production sites officially registered in Georgia. The main focus of these sites on carp, trout, salmon, and sturgeon.

Georgian Fish and Caviar says that with qualified management, fisheries in the country could easily compete with imports, and described to Investor.ge its own growth as an example:

In 2019 the company’s fish farm had 15,000 sturgeon fry, rising to 75,000 in 2020. In 2021, the farm was already counting 240,000 fry. Malkhaz Shubalidze states that such growth has significantly influenced import and retail prices. For example, big producers in Georgia that supply sturgeon to trade networks have started getting their supplies from Georgian Fish and Caviar. Correspondingly, no more sturgeon fry is imported from Armenia and Russia, and the wholesale price for sturgeon decreased from GEL 27 to GEL 24 in the past year. In other conditions, given the devaluation of the lari, 1 kg of sturgeon could have gone up to 33 GEL on the market, Shubalidze says, however, the increase of production that the company achieved caused a correction in the other direction.

A similar situation exists for black and red caviar. Before the Georgian Fish and Caviar produced its own caviar, black and red caviar of Moldovan and Italian production was sold at Georgian supermarkets for GEL 3,000 and GEL 350 per kilogram, respectively.. Today, customers have the option to choose caviar produced in Georgia, and instead of paying GEL 3000 for one kilogram of black caviar or GEL 350 for kilogram of red caviar, customers can pay, if they feel so inclined, a mere 2500 GEL or150 GEL, for a respective kilogram of black or red caviar.

For Georgian Fish and Caviar, the cost to raise one kilogram of sturgeon is approximately 18 GEL, of which around 80% goes to fish feed.

Increased production of feed in Georgia would be very beneficial to the market, Shubalidze says, with quality feed already available in the country but at a hefty price (up to 35,000 euros per tonne).

It was the high cost of imported feed that convinced Manana Metreveli to open her own feed production facility in Tsnori, which has been operating for nearly a year. Partially supported by a cheap loan, she purchased equipment and produces 20 types of feed for poultry, fish, and other animals. 70% of the raw materials for production are sourced from Poland, Turkey, Belgium and France. Shubaladze says he has used this feed as well, and that if it turns out that the feed produced in Georgia holds up in terms of quality against European options, it will be a big boost to farmers.

This year the Tsnori feed production facility increased its production from 300 to 1000 tonnes. Manana Metreveli says that this is related to the high demand for her product. However, she notes, she faces hurdles in convincing farmers to switch from traditional methods of feeding milled barley and wheat. She hopes this attitude will soon change, as the nutritional value of two kilograms of extruded feed equals nearly eight kilograms of traditional feed. Besides, it is difficult for the fish to digest such traditional feed, which can often lead to fry losses. Metreveli points at this dynamic as one of the major reasons for the country’s dependence on fry imports.

While in Metrveli’s opinion it is still a bit early to be discussing prospects for exporting fish from Georgia, the prospect of displacing imported products at a competitive price is real.

Industry specialists say that simply fulfilling the needs of the domestic market would already generate significant income, despite the country’s rather lower annual fish consumption per capita (eight kilograms) compared to the European average (24 kilograms). But given the market is just beginning to take its first steps now, there is plenty of room for growth in the near term, and larger prospects may be on the horizon.