Leveling up Georgian agriculture

“To make agriculture sustainable, the grower has got to be able to make a profit.”
—Sam Farr, American politician

When we sit down to eat a meal, seldom do we think about where the food that makes up our meal comes from or whose hands helped cultivate it. In fact, when most people think about agriculture, a simple idea comes to mind: put seeds in the ground; make sure there is enough water; harvest the crops; repeat next season. The realities of modern agriculture, however, are much more complex. Today’s farmers need to worry not only about the increasingly-complex craft of growing food but also about the business side of the industry, including ensuring enough funds are available to have a successful season and finding ways to guard against risks such as floods, droughts, hail and late frosts.

“Agriculture not only gives riches to a nation, but the only riches she can call her own.”
—Samuel Johnson, 18th century English writer

In Georgia, this is particularly important as most Georgian farmers are smallholder farmers, meaning that it is often more difficult for them to find adequate opportunities for financing and that one major event could destroy their livelihood, or even the livelihood of entire communities. Recognizing these needs, Business and Finance Consulting (BFC) was proud to partner with the Swiss Development Council (SDC) and the government of Georgia in May 2015 to implement the PAFAI (Promoting Access to Finance and Agri Insurance) project.

Over the course of the last two years, BFC worked to establish partnership links between farmers, suppliers, processors and financial institutions. Such value chain financing (VCF) schemes are important in establishing the strong, long-term relationships necessary for the growth of an industry [1]. BFC also worked closely with Georgia’s Agricultural Project Management Agency (APMA) to develop a national agricultural insurance system. This included a fruitful collaboration with Agroseguro, the operator of Spain’s national agricultural insurance program.

“Plant diseases, drought, desolation and despair are recurrent catastrophes throughout the ages.”
— Norman Borlaug [2]

The work completed during the PAFAI project has laid the groundwork for the future of Georgia’s agricultural sector. As with establishing any strong foundation, passing on knowledge to end-beneficiaries was vital. PAFAI accomplished this by:

  • Delivering financial literacy trainings to Georgian farmers
  • Developing and distributing financial and agricultural literacy information via video and informational leaflets specifically targeted for three different value chains
  • Increasing overall awareness of the need for and benefits of agricultural insurance

Loss Adjustment Training (in field – wheat)

While passing on knowledge is important, it was also necessary for to establish a paradigm for how the agricultural industry can work. For PAFAI, this meant:

  • Setting up seven (7) value chain financing schemes
  • Lowering collateral requirements for women farmers who are also members of the Georgian Farmers Association
  • Setting up a unified national loss adjustment system for agricultural insurance
  • Developing software which enabled the national agricultural insurance scheme to go completely paperless, meaning faster processing and an expanded operational capacity
  • Creating a database for historical weather risk data, allowing for more accurate actuarial calculations and improved data gathering on weather events

Loss Adjustment Training (in field – apples)

“Civilization as it is known today could not have evolved, nor can it survive, without an adequate food supply.”
— Norman Borlaug

Every project is rightly measured by the results it produces. For PAFAI, it is still too early to determine the extent of the long-term impact of the project; however, it is clear that Georgian agriculture is now in a better place to grow and help farmers realize a greater potential. Let us use this experience in Georgia as a model for helping other countries in Eurasia, and around the world, boost agriculture to the new heights necessary to better feed the nearly 7.5 billion people alive today.

For more insight into the results of the PAFAI project, watch a 5-minute video containing impressions on key project activities, below:

– footnotes –

[1] Farmers receive easier access to high-quality inputs and a greater capacity to repay loans; suppliers increase their customer base and can offer easy-to-obtain credit; processors receive security in the raw materials needed for production; and financial institutions increase their sales channels and have greater security in knowing that farmers will have the capacity to repay their loans.

[2] Norman Borlaug was an agronomist and humanitarian who led initiatives worldwide that contributed to the extensive increases in agricultural production termed the Green Revolution. Borlaug was awarded multiple honors for his work, including the Nobel Peace Prize.