FAO Regional Office for Europe and Central Asia

Georgia’s dairy industry working to stay fresh

Improving food safety and competitiveness in Georgia’s commercial dairy sector was the focus of the country's first National Dairy Congress, held this week in the capital Tbilisi.

The event, organized by FAO and the European Bank for Reconstruction and Development, drew around 150 participants, including commercial dairy farmers, processors, input and equipment suppliers, industry experts and government representatives.

The Congress was a chance to promote investment in Georgia's commercial dairy industry, keep abreast of changing food safety standards and share knowledge on state-of-the-art technologies.

"Georgia has an excellent investment climate, ideal agro-climatic conditions for dairy farming and strong demand for milk, cheese and other dairy products," said Victoria Zinchuk, associate director of EBRD's agribusiness team.

The country is also unique because many of the dairy products consumed here are not produced elsewhere, protecting the market from imports and making targeted investment along the entire value chain attractive.

From informal to commercial
While Georgia's dairy market is valued at an estimated US$ 0.5 to 0.6 billion, the country boasts just a handful of modern dairy farms and milk processing companies.

Most of the milk produced comes from smallholders and is sold through informal channels. Even among the country's few commercial farmers, most lack the technical skills and knowledge needed to produce high-quality milk.

"About 5 percent of the milk consumed in Georgia is sold to commercial dairy processors," said Andriy Yarmak, an FAO agricultural economist. "In the European Union, Georgia's most important trading partner, it's nearly 100 percent."

Simple changes, good results
Since setting up the Deep and Comprehensive Free Trade Area with the European Union in 2014, Georgia has worked to align its food safety legislation with that of the European Union.

In order to remain viable and competitive, Georgian dairy companies and farmers will need to upgrade their equipment, facilities and practices to meet more rigorous food safety, hygiene and quality standards.

As a 2015 study of Georgia's dairy sector by FAO, EBRD and the Association of Milk Producers in Ukraine revealed, commercial farmers can boost their productivity by up to 35 percent and significantly improve milk quality just by making some relatively simple improvements in their production practices − all without major investment.

"Basically we're talking about things like better feeding and fodder production, improved animal health, welfare and farm management and hygienic milk handling and processing," said Yarmak.

Next: closing the knowledge gap
The National Dairy Congress was sponsored by a new FAO-EBRD project, “Improving food safety in Georgia's dairy sector – Phase II”. Training on all aspects of milk production from farm to table is another aspect of the project.

Twenty selected commercial dairy farmers will soon participate in training in Ukraine − a country making considerable strides in transforming its dairy sector – and then pioneer those improved production practices back home in Georgia.

FAO and the EBRD will also work to get the word out to a wider audience, organizing conferences to share lessons with dairy industry specialists and publishing a practical manual on modern dairy farming, in Georgian language.

Investor confidence around the corner
"Improving the safety and quality of Georgian dairy products would encourage new investments to the sector. This, in turn, would lead to creating new jobs and improving livelihoods in the long term," said FAO Assistant Representative in Georgia Mamuka Meskhi.

International investors already sense the wave of changes supported by FAO and the EBRD. French-owned Lactalis, one of the world's largest dairy groups, recently became a shareholder in Sante, Georgia's leading dairy processing facility, sending a very positive signal to other international investors.

16 March 2016, Tbilisi, Georgia