45% of population lives in villages and is engaged in agriculture.
Favorable trade regimes and tax incentives.
Ecologically clean, fertile soil and diverse climate conditions.
Ajara, due to its mountainous terrain, has relatively low percentage of arable land, which is about 25% of its territory (72 862 ha). Around 50% of the population is engaged in agriculture. The main goal of the Agricultural Development Concept of Ajara Autonomous Republic is to improve economic conditions of rural households and satisfy the growing demand for ecologically safe agricultural products. The agriculture has the following strategic objectives to acheive: efficient usage of agricultural lands, value chain development, intensification of production, improving capacity-building and developing infrastructure in the sector.
Land for agricultural purposes covers 72 862 ha, including cultivated area 10309 ha (mainly used for corn, beans, soybean, potatoes, vegetables, tobacco), perennial plants 15 899 ha (5200 ha for citrus, 5700 ha for tea, 4340 ha for fruits, 54 ha for subtropical persimmon, 80 ha for bay-leaf and for the rest-525 ha), mowing area 7159 ha, pastures 37 759 ha and fallow area 1736 ha.
There are around 115 000 cattles, 50 000 poultries and 19 000 beehives in the region.
ADVANTAGES OF AGRICULTURAL SECTOR IN AJARA
- Favourable trade regimes
- Competitive labour force
- Fertile soil and diverse climate conditions
- Income tax – 20%
- Dividends tax – 5%
- Profit tax – 15%
- 0% profit tax on primary production, if turnover is less than 200 000 GEL
- 0% VAT on primary agricultural products
- 0% Property tax (for first 5 years) on newly mastered land
- 0% Property tax on land with the area of 5 hectares and less
Since 2004 several major investments have been made in agriculture processing industry, mainly oriented on tea and citrus processing of local subtropical agriculture. However, considering the region’s profile as a tourist destination, catering and food supply will be in major demand.
It is noteworthy that despite existing potential of fruit and vegetables production, vegetable growing has subsidiary status and is mainly performed by small household farms. Moreover, current annual demand for vegetables and fruits in terms of minimal consumption basket amounts to around 45 000 tons, while only up to 20% of total current demand is produced locally (mainly during the early-summer and autumn period). Shortage is compensated mainly by import from Turkey (potato, tomato, onion, cucumber, pepper, garlic, eggplant). Growth of number of visitors to the region will lead to considerable growth of demand.
Accordingly, there is an urgent need for investment in agriculture and food production. Considering different factors (such as environment, availability of state-owned land for privatization, natural resources), any potential investor has certain opportunities for developing various kinds of successful food production schemes not limited to fruits and vegetables growing.
INVESTMENT PERSPECTIVES IN AGRICULTURAL SECTOR OF THE REGION
- Development of greenhouses (40ha)
- Development of cattle-breeding farms for meat production
- Development of poultry and egg production
- Development of fruits and vegetable processing enterprises
- Development of processing lines for fish, meat products, bakery,
- potato and other products
- Development of refrigerated storage facility for fruits and vegetables
- Promotion of ecologically safe products via “Farmers' Markets”
Greenhouse farming in Ajara was introduced in the 70s of the last century. The government of Ajara A. R. stimulates privatization of former greenhouse farms with certain conditions for an investor. Currently up to 40 ha of territory in Kobuleti and Khelvachauri municipalities, with its soil and climate conditions are available for greenhouse vegetable farming. However, modern technologies of greenhouses give maximum harvest opportunities and don’t depend on characteristics of soil. Selected areas for greenhouses are advantageous because of their proximity to the gas pipeline. Local climate creates favorable conditions for vegetable growing and minimizes power consumption.