Georgian Government has no plans to subsidize this year’s vintage
By Inga Kakulia
Friday, August 16
Vintage 2019 Coordination Headquarters is located in the Telavi Wine Hotel in Telavi and will work 24 hours a day for an active communication between state agencies, entrepreneurs and winemakers. Interested parties will be able to obtain vintage information at the Ministry of Environment and Agriculture hotline - 1501.
During the briefing, Mukhuzla also discussed the possible hardships and challenges that lay ahead for the Winemakers and Georgian wine in general. Since some negative expectations have already been placed, it is possible that the private sector will bear the consequences.
“Following the political events of summer 2019, We’ve seen a decrease in exports in the largest market for Georgian wine, Russia. In addition to that, the imposition of sanctions on Russia’s import of Georgian wines led to expectations that the demand for grape purchases from wine producers would decline during this year’s vintage. Winemakers say they will purchase fewer grapes than planned, as they may have problems with selling it” Mekhuzla said.
According to the National Wine Agency, 4 522 250 bottles of wine were exported from Georgia to Russia in May, 4 209 866 in June, and exports declined to 3 550 264 in July, down 27 percent from last July’s export, 28 percent lower than in May 2019.
As Mekhuzla pointed out, healthy and competitive environment of winemaking in recent years has made it possible for partial and complete harvest in 2017 without the state subsidies for the first time. In 2018, a record 230,000 tons of grapes were processed, and the grape growers’ revenues exceeded GEL 300 million.
About 250,000 tons of grapes are expected in the Kakheti region this year, which also raises the expectation that demand, especially on white grapes on the free market, will be low.
“Despite the possible low demand, the National Wine Agency is fully mobilized to assist the grape growers in resolving any obstacles and to make the 2019 vintage as smooth as possible,” added Mekhuzla.
During the briefing, it was disclosed that the government had no plans to subsidize this year’s harvest, but the farmers will still be able to make a profit.
The opposition has already made comments about this decision and regarding the condition of Georgian wine producers in general. The member of the United Nations Movement, Giorgi Botkoveli thinks that the price for white grapes per kg will probably be around 60-70 tetri, which he deems inadequate for the farmer’s work.
“The government tells us that this year the price of grapes will be much lower than it was last year. This means that Ivanishvili has decided to take revenge on the Kakhetian farmers for the result of the Georgian Dream’s election last year. Instead of letting the government support the farmers for the last seven years, and giving them cheap credits, on the contrary, it relied entirely on factories that set prices directly and do not care what the farmers did from year to year,” said Botkoveli.
Botkoveli criticized the government’s decision and added that it will simply allocate 20 million GEL for the state-owned factory where the remaining grapes will be bought for free. This 20 million means that the state will buy the remaining grapes for 40-50 tetri, from which it will produce alcohol, hence making more profit for themselves.
Otar Anguridze, Chairman of the TSU Center for Analysis and Forecasting commented on the topic and said that the decline in wine exports to Russia is directly linked to the political events that took place in June. It is worth noting that viticulture is a field that is developing at a very fast pace and provides a real competitive environment. In 2018, Georgia harvested without a subsidy and received a record 230,000 tons of harvest. The total income of viticulture exceeded 300 million GEL. It is planned to harvest 250 thousand tons by 2019. It should be noted that viticulture is precisely the area that allows a large part of the population of the regions to get involved, which is a good example of inclusiveness.
Even though the forecasts for the near future of Georgian wine leave a lot to be desired, The National Wine Agency seems determined to make the most of the situation. It is possible that refocusing on the production process and elevating the organization levels, instead of focusing exclusively on export and quantities, will provide the Georgian wine industry with the base it needs to increase its presence on the global market and become even more competitive when the tensions subside.
The new Telavi Headquarters initiative has the potential to increase the overall production quality as well as the process of the vintage, which will hopefully encourage more wine enthusiasts and producers to participate in the process.