SPECIAL REPORT

FAO/WFP CROP AND FOOD SUPPLY ASSESSMENT MISSION TO GEORGIA ¹

8 September 2000

MISSION HIGHLIGHTS

1. OVERVIEW

2. AGRICULTURE AND THE GEORGIAN ECONOMY

3. FOOD PRODUCTION IN 2000

• 3.1 The impact of the drought
• 3.2 Estimated Food Production

4. OVERALL FOOD SUPPLY SITUATION

• 4.1 Food Availability and Access
• 4.2 Cereal Supply/Demand Balance for 2000/01
• 4.3 Emergency Food Assistance Requirements

1. OVERVIEW

Several countries of the CIS have been affected by a severe drought and Georgia is among the hardest hit. This report contains the findings of an FAO/WFP Crop and Food Supply Assessment Mission which visited the country from 7-18 August 2000 at the request of the Government.

The objectives of the Mission were to:

• assess the impact of the current drought on food production and supply;
• estimate cereal import requirements in 2000/01 marketing year (July/June) including food aid; and
• estimate seed requirements for planting in the coming season².

The Mission was assisted in its task by the MoAF, local UN Offices, bilateral agencies and many NGOs.

The Mission found that agricultural production in 2000 has catastrophically dropped as a result of the serious drought. Six regions, namely Kakheti, Mtskheta Mtianeti, Kvemo Kartli, Shida Kartli, Samtskhe-Javakheti and Imereti, have been the most affected. The Mission observed the direct effects of the drought in both rain-fed and irrigated areas. It was evident that cereal crops had largely been lost in the eastern part of Georgia. However, production improved as one moved further west and north but yield reductions were assessed at 50 percent or more in these areas, whilst the quality of the grains produced was also very poor. In the irrigated areas, irrigation was generally inadequate, reducing yields by up to one half. The drought has affected all crops, not just cereals. The yield of potatoes, an important staple in the upland areas, is also poor particularly in the non-irrigated areas. Colorado Beetle further damaged the potato crop in the south and southwest. Sunflower output has been hard hit, as have the fruit, vegetables and grape harvests. Pasture and fodder crop production is affected, and will necessitate a reduction in animal numbers particularly in the east.

The Mission provisionally estimates total cereal production in 2000 at 326 000 tonnes, including 83 000 tonnes of wheat. Output of maize and barley is tentatively estimated at about 225 000 tonnes and 15 000 tonnes respectively, pending completion of the harvest. At the forecast level, aggregate cereal output in 2000 would be only 42 percent of the estimated 1999 total cereal production and 49 percent of the average of the last five years. With a minimum national cereal consumption requirement (including food, feed seed, losses) estimated at 1.07 million tonnes, Georgia's cereal import requirement in 2000/01 is estimated at 748 000 tonnes (620 000 tonnes of wheat, 88 000 tonnes of maize, 35 000 tonnes of barley and 5 000 tonnes of rice). Commercial imports are difficult to estimate precisely in view of informal imports and the volume of transit trade, but are estimated at 452 000 tonnes, while pledged food aid amounts to 88 000 tonnes. This leaves an uncovered deficit of 223 000 tonnes (112 000 tonnes of wheat; 80 000 tonnes of maize; 30 000 tonnes of barley; 1 000 tonnes of rice) which will need to be covered by additional food aid.

Emergency food aid is required for an estimated 696 000 worst affected drought victims and WFP is appealing for 65 772 tonnes for a period of 8 months (November to June), until the next main harvest. The Mission also established that cereal seed production had all but been lost, there being an estimated 4 000 tonnes of a required 30 000 tonnes in the country (see footnote 1).

2. AGRICULTURE AND THE GEORGIAN ECONOMY

Georgia has an area of 69 700 square kilometres and lies on the southern slopes of the Caucasus range with a coastline on the Black Sea. Eastern Georgia has a climate that varies from continental to semi-deserts. In the west, the climate varies from subtropical to moderate. The population of Georgia is estimated at between 4.5 and 4.7 million. As most of the country is mountainous, the population is concentrated in the central lowlands, where the density is 250-300 persons per square kilometre. Half the population lives in urban areas with 1.5 million people living in Tbilisi, the capital.

The independence of Georgia in 1991 from the former USSR was followed by many years of civil war and ethnic conflicts, with 260 000 people left internally displaced. Georgia's economy is strongly linked to the Russian Federation and the Commonwealth of Independent States (CIS) and about 44 percent of its trade is with the CIS. It depends on the Russian Federation, Turkmenistan and Azerbaijan for most of its energy supplies. Georgia has some oil, manganese and gold deposits but they are not currently exploited.

The World Bank has classified Georgia as a low-income country, which is eligible for soft loans from the Bank's soft loan window, the International Development Association. GDP per caput of Georgia is one of the lowest among the CIS states and lower than in many developing countries. Government revenue is low; in 1999, the Government was able to finance only 37 percent of its budget, the balance being covered by external grants and loans. Georgia has been in transition from a planned to a market economy but has had trouble in developing the productive non-agricultural sectors, which translates into high levels of under- and unemployment.

Agriculture is still the main source of income and employment for most Georgians, accounting for 30 percent of GDP. Output in the sector is only about 70 percent of its level in 1990, but employment in the sector has doubled and it now accounts for over 50 percent of employment. Rural incomes have remained practically stagnant, mainly due to unequal access to inputs complementary to labour, barriers to land consolidation, poor market access for domestic production, scarcity of rural credit and limited off-farm earning opportunities. The availability of power (electricity and gas) remains erratic and ranges from about 10 hours per day in he major cities to only 2 hours at night in rural areas.

Land privatization has focussed on the small-scale (household/subsistence) sector with little real progress in restructuring the former large state farms. Land reform has resulted in the allotment of small parcels of land up to 1.25 hectares to each rural family and the lease, through district authorities, of state owned land to persons or legal entities, with the aim of creating a subsistence sector for small farmers and a market sector controlled by large leaseholders, Private producers account for the lion's share of fruit, vegetable and livestock production but only about two thirds of wheat production. The bulk of the domestic wheat production is consumed on farm for food, seed or feed: indications are that only 20 percent of domestic production of wheat is marketed.

Low yields, also as a result of poor infrastructure, inadequate access to credit for inputs and suitable machinery, and high costs associated with transport and marketing have had a negative impact on food production and the earning capacity of a significant proportion of the population and thus on household food security. Many farmers are stuck in a low-input low-output trap and domestic production suffers from import competition. The decayed state of irrigation and drainage systems is also a major constraint to increasing crop yields and the competitiveness of domestic produce with imports. More than 60 percent of grain, 60 percent of dairy products and 33 percent of meat are imported.

The drastic decline in agricultural production - of cereals, fruit, vegetables and livestock - this year will seriously affect household food security, because of reduced availability not only of foodstuffs but also of earnings from the sale of livestock products and other produce. Following two years of economic stagnation in the wake of the collapse of the Russian rouble in 1998, and continued poor rates of official tax collection, the government budget has been cut by 46 percent making it extremely difficult for the Government to provide adequate and timely social services and benefits as well as any effective means of support to the drought-affected population.

3. FOOD PRODUCTION IN 2000

3.1 The impact of the drought

Collection of meteorological data is not regular due to financial constraints. Rainfall data presented in Figure 1 are as much as could be gleaned from official records. However, satellite imagery of crop development confirms very poor yields, particularly in the east but extending further west as the season progressed.

Figure 1 - Georgia: Total Rainfall during Spring Season (March-June) 1997-2000

The failure of the spring rains, particularly in the east resulted in total crop failure of the rainfed crop in the worst affected areas, drastically reduced yields in many areas and adversely affected irrigated crops.

The irrigation system is surface water based. Melting snows are the source of water feeding the rivers and irrigation systems. The poor spring rains and poor snow levels of the preceding winter significantly reduced the available water and this has had a serious effect on the amount of water available for irrigation. The rivers were low (poor snowmelt) and the reservoirs were only partially filled. Furthermore, because of low water levels in the main canals, the output of hydroelectric power stations was reduced, leading to shortages of electricity. Moreover, throughout the country, the effectively irrigated areas are slowly shrinking as the main, secondary and tertiary canals are not being maintained. This situation clearly has the affect of further reducing potential yields.

The excessively high temperatures, in excess of 40^oC, caused poor fertilisation and pollen set, further reducing yields in the cereal crop. In potatoes the effect was different in that vegetation stopped, thus producing stunted plants incapable of supporting any significant yield in rainfed areas. The pollination of the open pollinated variety of sunflowers, favoured by the small farmers, was hit hard.

3.2 Estimated Food Production

3.2.1 Estimated Cereal Production

Table 1 shows estimated 2000 wheat production by region³.

Table 1 - Georgia: Wheat Production by Region, 2000

Source: MoAF

The table shows that 57 percent of the districts obtained yields below one tonne per hectare. In most of these districts, crop production can be regarded as close to total failure.

Estimates of spring crops, which had still to be harvested at the time of the mission, remain tentative. However, it is clear that yield losses were substantial, possibly amounting to 10 percent in the major producing areas of the west, around two-thirds in central area and up to 95 percent in the east. The 2000 maize harvest is provisionally forecast at 225 000 tonnes, less than half of the 490 000 tonnes harvested in 1999 and half of the five year average. Barley production is also forecast to be down to 15 000 tonnes compared to 51 000 tonnes last year.

3.2.2 The Outlook for other Basic Foods

Output of all other food and fodder crops is also markedly less. The drought has affected all other sub-sectors of agriculture including potatoes, vegetables, fruit, grapes, oilseeds, fodder crops and livestock production. In most regions, vegetable gardens have been damaged extensively due to excessive heat and lack of water for irrigation. The drought has also damaged pasture, which is important for livestock and dairy production.

The slow but steady recovery in animal production in evidence since 1995 for cattle and since 1999 for pigs will be curtailed due to overgrazing and the shortage and high price of feed. Household pig and poultry numbers will have to be cut back. Milk production is already down and animal productivity will suffer further during the winter months, reducing access to protein foods and earning potential in rural areas.

4. OVERALL FOOD SUPPLY SITUATION

4.1 Food Availability and Access

The drought has severely affected food availability and access at the household level particularly in rural areas but also for urban households which commonly obtain food supplies from rural relatives. However, there is still food available in markets but in less quantities and in the case of fresh produce at higher prices. As marketing of domestic produce is both difficult and expensive, urban areas are almost entirely supplied by imported wheat and flour, as well as poultry and processed food products. The main cereals, especially wheat (flour and bread), continue to be available on the market from imports and prices to date have not risen.

Vegetables and fruits are generally available in the markets (from imports and domestic production) but the volume and quality of domestic produce has declined significantly compared to last year. Whereas farmers used to bring produce to the markets, traders now have to go to the farms to look for and buy vegetables and fruits. In some markets, tomato and onion prices have increased by 100 percent and the price of cheese has increased by 40-55 percent compared to the same time last year.

The price of meat is declining; peasants have started to slaughter their livestock due to four-fold increases in fodder prices. Milk production is declining and is likely to decline further during winter when fodder becomes even scarcer. Livestock and particularly the presence of one or two head of cattle and/or some pigs/poultry represent an important source of protein and are an important capital asset. The sale of livestock products is a very important element in rural household budgets and represents a margin of security in an otherwise depressed rural economy. Many rural households are faced with sharply reduced output of virtually all basic crops and livestock products and will be forced to cut back food consumption or have to buy food in the markets. However, their purchasing power, particularly in the rural areas, is very limited.

4.2 Cereal Supply/Demand Balance for 2000/01

Drawing up of the cereal balance for Georgia is fraught with uncertainties in view of shortcomings in the collection of statistics, as in other countries in transition. Data on household production, consumption, prices and incomes are incomplete. Moreover, the actual level of wheat and flour imports is particularly difficult to estimate because of the significant volume of unregistered trade.

The cereal supply/demand balance for 2000/01 (Table 2) is based on the following assumptions and parameters:

• a mid-marketing year (i.e. December 2000) resident population of 4.6 million;⁴
• a per caput cereal consumption (wheat flour in grain equivalent) of 176 kg/person/annum, comprising 141 kg wheat, 34 kg maize and 1 kg rice. This is somewhat higher than the 173 kg per caput per annum indicated by the Household Budget Survey carried out in 1997 by the State Department of Statistics and the World Bank, in view of the reduced availability of other basic foodstuffs. In this regard, the final outcome of the potato harvest is crucially important;
• livestock production is based on grain (particularly maize and barley), pasture, fodder crops, straw and bran. Due to the drought and the high cost of feed, feed use is anticipated to fall to 182 000 tonnes from an estimated 407 000 tonnes in 1999/2000;
• seed requirement is based on the assumption that the area planted next season will be similar to last year (wheat: 105 000 hectares; barley: 29 000 hectares; maize: 225 000 hectares, totaling 359 000 hectares), with normal seeding rates for Georgia approaching 300 kg/hectare for wheat, 200 kg/hectare for barley and 30 kg/hectare for maize;
• post-harvest losses and any other uses are assumed to be about 12 percent for all crops;
• stock draw-down is assumed to be negligible as the strategic cereal reserve in wheat is low, about 35 000 tonnes and stocks in private hands are difficult to estimate;
• last year, commercial imports are estimated at 445 000 tonnes, including 430 000 tonnes of wheat and wheat flour (in grain equivalent) and small amounts of other cereals⁵. This year, commercial imports of about 420 000 tonnes of wheat together with a small quantity of other cereals are anticipated.

Table 2 presents Georgia's cereal supply/demand balance for 2000/01.

Table 2 - Georgia: Cereal Supply/Demand Balance for 2000/01 (`000 tonnes)

1/ Includes oats.

2/ Includes 5 000 tonnes of rice of which 4000 tonnes imported commercially and 1 000 tonnes to be supplied as food aid.

Total cereal import requirement is estimated at 748 000 tonnes, comprising 620 000 tonnes of wheat, 88 000 tonnes of maize, 35 000 tonnes of barley and 5 000 tonnes of rice. Commercial imports are estimated at 437 000 tonnes (420 000 tonnes wheat; 8 000 tonnes maize; 5 000 tonnes barley, 4 000 tonnes rice), while pledged food aid amounts to 88 000 tonnes of wheat. This leaves an uncovered deficit of 223 000 tonnes (112 000 tonnes wheat; 80 000 tonnes maize; 30 000 tonnes barley and 1 000 tonnes of rice) which needs to be covered by additional food aid.

In addition, and crucially, the country urgently needs assistance with quality seed for planting in the upcoming season. The deficit in wheat seed alone is 26 000 tonnes.

4.3 Emergency Food Assistance Requirements

The Georgian Government has requested the international community for assistance. The Government has declared the affected regions as disaster areas and has written the UN Secretary General and the international community for assistance. The Government has also donated some fuel to some districts to enable the fields to be ploughed. However, the amount of fuel which has been donated is not sufficient, while most farmers are concerned about where to get the seed for planting and food to eat until the next harvest.

4.3.1 WFP Present Involvement in Georgia

WFP has been providing food aid to IDPs and vulnerable groups affected by the economic crisis and civil conflicts in Georgia since 1993. In 1997, WFP started implementing Food for Work (FFW) projects to contribute towards the improvement of household food security for the rural population. Between 1997 and 1999, WFP distributed 18 400 tonnes of food to 73 800 food insecure households and supported 188 FFW projects (with a vast majority in the agricultural sector).

The new Protracted Relief and Recovery Operation (PRRO) 6122.01 which officially started in July 2000 for a two year period, aims to provide 30 000 tonnes of commodities to 454 000 persons (if sufficient funding is made available). The PRRO comprises of two main programmes. First, the Relief Programme that distributes food assistance to orphans, disabled, single elderly pensioners in institutions, and Chechen refugees. Second, the Recovery Programme that aims to rehabilitate essential agricultural and social infrastructure by providing food assistance through FFW activities. The objective of the recovery component is to increase agricultural production and food security through agricultural rehabilitation and skills training.

4.3.2 Role of Food Aid

Given the drought situation currently prevailing, WFP is proposing to implement a new Emergency Operation (EMOP) to assist the most seriously affected population. The role of food aid under the new WFP EMOP is: to ensure that the affected rural households have access to sufficient food until the next harvest, to prevent malnutrition and to prevent the depletion of assets. Food aid is appropriate because households lack purchasing power to meet their basic food requirements.

4.3.3 Regions' specifics

It must be noted that the six regions where the drought has struck have different variables that vary from one village, district and region to another and must be taken into account to avoid generalization. They include irrigation, closeness to a river, closeness to main roads, number of livestock owned and diversified livelihoods. Some regions have mountainous districts, such as Mtskheta-Mtianeti and Kvemo Kartli, which have not been as badly affected by the drought as the "agrarian" plains of Kakheti. The contribution of specific agricultural activities to household income also varies by region: In Kakheti, the region worst affected by the drought, livestock, dairy, vegetable and grape productions are the most important activities. These activities on the average contribute to about 70 % of household income. In areas where there is no irrigation, households lost all their vegetable produce. There is as well an estimated loss of up to 70 % of grapes. Moreover, cereal production has been reduced by 70 - 100 %. Extensive damage to pasture means that households have less income to purchase bread and other food. Due to the lack of fodder and loss of livestock a decline in milk production is inevitable and therefore loss of income and means to purchase food for those that depend upon livestock.

In Kvemo Kartli and Shida Kartli regions, vegetable production is the most important activity followed by dairy, fruit and potato production. These activities contribute, on the average, to about 80 % of household income. In Shida Kartli losses of up to 60 % have been recorded. Areas which have no access to irrigation have had a complete loss. Although pasture has been affected by the drought, the loss of livestock may not be as high as in the Kakheti

4.3.4 Vulnerable Groups and Coping Mechanisms

The current drought is directly affecting the small land holders who grow less, spend less on farming inputs and, thus have marginal yields. The small size of land allocated per household and the decay of irrigation and drainage systems are factors limiting the development of agriculture. The drought is exacerbating these structural problems.

The other population group affected, are those who were already vulnerable (pensioners, widows, single parents households, disabled persons and families without a breadwinner). Although they are entitled under the social assistance scheme (SOBES), the erratic payment of their pension (12 Laris /per month which equals to US 6 $) coupled with arrears in payments (15 months for certain persons interviewed) puts them in a critical situation in terms of food security.

Many rural households are "new farmers". They turned to agricultural production to cope with the loss of employment after the collapse of the previous economic system. Many sold assets as the transition into agricultural production was not easy. Now agriculture has become their main livelihood strategy and is their only major source of income. In the rural areas, households have been compelled to adopt bartering due to lack of cash.

Urban households supplement their generally low income through additional jobs in the informal or service sector. Urban families often have subsistence gardens providing them a substantial part of the income.

Georgians have also developed several coping mechanisms to help them face difficult times. They include petty trade, selling of assets, borrowing, receiving remittances from family members abroad or living in Tbilisi, and collecting wood and reselling it. The current drought is changing once again consumption patterns. A few years ago, the most vulnerable population decreased their meat intake and and increased their consumption of beans. The drought is now forcing more and more people to rely mainly on bread consumption thus decreasing their main source of proteins.

The "empty soup " (composed of water broth, a few vegetables, potatoes and whatever spices are available) is now the "main meal" for the households most affected by the drought.

4.3.5 Beneficiary Numbers

Little data was available to estimate the drought related beneficiary caseload. Therefore, a number of indicators were used to estimate the beneficiary numbers, they included: the extent of losses of the various crops; the contribution of the various agricultural activities to household income; livestock production and the condition of pasture. Hence, table 3 below gives numbers of WFP estimated beneficiaries.

Table 3 - Beneficiaries Numbers affected - by Region

1/ Total population in Georgia according to latest figures is 4.6 million persons

A Household Food Economy Assessment Survey wil lbe undertaken to sharpen beneficiary targeting. The following criteria will be used to target households: i) these with less than two hectares, not more than two cows and harvest losses exceeding 40 %; and; ii) these headed by female and elderly people with no other source of income.

WFP will also monitor the evolution of food security situation by increasing field visits to conduct assessments at district and household levels.

4.3.6 Proposed Intervention and Emergency Food Aid Requirements 2000/2001

WFP is proposing an "Emergency Operation" (EMOP) for eight months. The EMOP is intended to distribute 66 000 tonnes of relief food to 696 000 beneficiaries living in the six regions (Kakheti, Mtskheta Mtianeti, Kvemo Kartli, Shida Kartli and Samtskhe-Javakheti and Imereti). The duration of the EMOP is November 2000 to June 2001. This period will ensure that households have access to food until the next harvest.

A daily ration per person comprising of 400 grams of enriched wheat flour, 30 grams of beans and 20 grams of oil will be provided for six months from November 2000 till April 2001, a period considered to be of severe food stress. This ration provides 80 percent of the 2 100 kilocalories It is proposed to reduce the daily ration to 200 grams of flour, 15 grams of beans and 10 grams of oil during the months of May and June since vegetables and fruit are available.

Table 4 - Food basket and Quantities required for an 8 months EMOP

1/ Please refer to the "Table on Beneficiary Targeting" in order to understand the calculation used in stipulated that specific beneficiary number.

4.3.7 Logistics

Food earmarked for Georgia arrives at the port of Poti and Batumi and is then delivered by rail and road directly to extended delivery points (EDPs) located in Tbilisi (East Georgia) and Kutaisi (West Georgia). The additional tonnage planned for this drought EMOP amounts to 65 772 tonnes. An expansion of logistics, transport and storage capacity will therefore be needed.