Sectoral Growth. Agriculture,
industry, trade and transport dominate the structure of the Georgian economy.
Agriculture is the largest sector accounting for just under 20 percent of GDP
and 50 percent of employment, although its share in GDP has decreased
steadily (from over 30 percent of GDP in 1996). Industry contributes about 14
percent of GDP and 6 percent of employment, with its share changing little.
The share of transport and telecommunications has nearly tripled from 4.6
percent in 1996 to 12.1 percent by 2002. Transport has been the fastest
growing sector, growing at over 20 percent annually because of the rapid
expansion of oil transit from the Caspian Sea. Although transport turnover has
tripled, it is still at one third of the pre-independence level. Other fast
growing sectors include construction and financial services. Trade has grown
slightly faster than overall GDP. Sectoral growth index is presented in Fig.
3.1.1.
According to information from 2001 88.6% of the economically active population was employed, thus the unemployment rate was 11.4%.
The distribution of the employed work force by economic sectors is as follows:
Sector
%
Agriculture & forestry, fishery
53,4
Mining Industry
0,3
Processing Industry
6,5
Energy, gas or water production and supply
1,2
Construction
1,6
Trade & household goods technical service
8,6
Hotels & Restaurants
0,9
Transport, Warehouse economy and communications
4,0
Financial mediation
0,7
Operations with real estate, lease (rent) and business activity, research and projecting works
2,1
State management and self-defense, compulsory social insurance
5,8
Education
7,4
Health care and social service
4,3
Other communal, social and personal service, culture, entertainment, rest
2,4
Hired (engaged) service in private domestic economy
0,4
Ex-territorial (International) organization
0,1
Unidentified
0,1
Total
100
According to 2001 data, the minimum subsistence level for a medium sized family (4 persons) at average prices was 205.2 GEL.
3.2 Agriculture
Introduction. Only 44 percent of Georgia’s land is used for agriculture. Twenty-six percent is arable land, 9 percent is used for perennials, 65 percent is pastureland, and 0.4 percent is fellow land. Sixty percent of the arable land needs artificial irrigation. The soil is mainly moderately fertile and easy to cultivate. Table 1 below shows the distribution of the agricultural land by agricultural product.
Table 1 Distribution of Agricultural Land by Product
Product
Land occupied (thousand ha)
Cereals
379,0
Citrus
10,9
Fruit
60,0
Potato
34,0
Sunflower
40,0
Tea
40,0
Vegetables
40,0
Vineyards
61,3
In the 20th century, Georgia became a country of agro-industry, with well-developed agriculture and food industry and with a good level of production. More than half of its GDP came under the agro-industrial sector of the country; 47 - 48% of the main funds were accumulated within the sector and it employed 41 - 42% of the total population of Georgia.
Georgia used to be an important exporter of food and one of the main suppliers of vegetables, tea, citrus fruits, wine, mineral waters, brandy, canned and fresh vegetables and fruits to the markets of the former Soviet Union. In the second half of the 1980s, the Georgian share of the food market of the former Soviet Republics was 10 percent. The total amount of exported food products was 1.7 times more than imported ones. The country is now undertaking actions to re-establish this exporting.
Since independence in 1991 the country experienced many years of civil war and ethnic conflicts, with 260,000 people internally displaced.
However, Georgia's economy is still strongly linked to the Russian Federation and the Commonwealth of Independent States (CIS). Approximately 50 percent of its trade is with the CIS.
Agriculture is a main source of income and employment for the majority of the population, accounting for more then 30 percent of GDP. Output in the sector is only about 40 percent of its 1990 level, but employment in the sector has doubled and it now accounts for over 50 percent of the total employment.
Land privatisation has focused 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 significant share of fruit, vegetable and livestock production, when their share in wheat production is about two thirds of the total wheat production in the country. The bulk of the domestic wheat production is consumed on farms 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.
The 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 consumed in the country are imported.
Agricultural production in Georgia dropped sharply in 2000 due to a serious drought. WFP/FAO Crop and Food Supply Assessment mission carried out in mid-August 2000 estimates that Georgia will face a severe food crisis due to the drought. This situation is being exacerbated by on-going serious economic problems.
After droughts, agricultural production showed a slight increase of 5.6 percent in 2001, however the share of agricultural output in GDP dropped from 21 percent in 2000 to 19.2 percent in 2001.
During the present year, USAID has launched a five year program, called Support Value Added Enterprise (SAVE) that will promote economic growth through expanded production and sales of added-value agricultural products on international markets. Through this program the US government will support agriculture development through market expansion, standards on organic food production, distribution, improved credit and whole-chain food distribution networks.
Key Agriculture Indicators.
Agricultural output per hectare of agricultural land and per capita (US $)
Year
Per 1 ha of agricultural land
Per capita
1990
1195
725
1995
481
272
1996
539
302
1997
583
328
1998
531
301
1999
435
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