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State-owned company purchases grapes for more than 60 mln Gel

By Natalia Kochiashvili
Friday, October 11
Government meeting was held yesterday, after which the Minister of Environment and Agriculture of Georgia Levan Davitashvili, told reporters that more than 60 million GEL was spent to ensure minimum guarantees for farmers and not to have problems with Rkatsiteli grapes. As the Minister explained the intervention was caused by a record harvest.

“We have granted several orders to state-owned company Akura to procure grapes that the private sector does not stock. In this case, we have a record number, so we have had to let Akura intervene multiple times. As a result, the state had to intervene quite a bit in the storing of Rkatsiteli grape varieties,” commented Davitashvili.

He also informed the public that Saperavi was acquired entirely by the private sector and this has been established as regular practice established in recent years. Minister called this a healthy demand and linked it to export, saying that that about 80% of the wine exported from Georgia is red wine. Therefore, Rkatsiteli grapes are mainly for domestic consumption -its small share goes to exports as wine and some go to brandy alcohol.

“As a rule, when the state intervenes, it produces brandy alcohol from excess grapes that the market cannot absorb and these are state reserves that do not run out of value. It represents an additional source of resource for companies producing brandy/cognac alcohol,” said the minister.

According to him, the harvest of Rkatsiteli is about 170 thousand tons, of which a certain volume was bought by the state company.

As the minister explained, the state interventions were caused by the private sector's inability to store/afford the crop and “Akura” stepped in to prevent the grapes from spoiling and create minimum guarantees.

“It was a private, commercial loan taken by a state-owned company, but it was neither a state funding nor a state guarantee. It has its capital, its resources, which were used as collateral for the banking sector. This is a state-run operation, though - with non-state money, and we hope that these operations will not be at minimum commercially unprofitable. We will see this according to what the conjuncture will look like,” said Davitashvili.

According to him, the government will submit updated data to the Committee on Agriculture in the revised version of the draft state budget for 2020.

"Each ministry is asking for more because the priority of the ministries is different, but when we talk about the government, it is a united team and we have the opportunity to reconcile positions, define priorities and present a concerted position to the public and in this case to parliament,” explained he.

Davitashvili announced that they have worked much, including with the Ministry of Finance. Their demands were far greater than the funding provided for in the current version of the budget project, and as the minister stated, the Agrarian Committee knows this and he plans to work closely with them. “Together with the Ministry of Finance we will continue to work on internal allocation of certain priorities to submit an updated version to the Agrarian Committee and I hope we will have their support, ” said the minister.

Notably, the Chairman of the Parliamentary Committee on Agrarian Affairs Otar Danelia postponed the consideration and voting of the document due to the remarks regarding the draft state budget of 2020. Danelia believes that the government should have provided more funding for agricultural programs than it currently reflects.

According to next year's budget project, the funding of the Ministry of Environment and Agriculture will increase by around GEL 15 million making it GEL 353 million.