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New wholesale market financed by EBRD to increase efficiency for Georgian agricultural sector
To finance the construction of basic facilities for fruit and vegetable wholesalers in Tbilisi, as well as collection assembly markets in three rural Georgian towns, the European Bank for Reconstruction and Development (EBRD) is to provide a 15-year US$ 8.1 million (ECU 7.1 million) sovereign guaranteed loan to a Georgian joint-stock company, Green Market (GMC).
In the presence of Georgia's Minister of Finance, Michael Chkuaseli, the Mayor of Tbilisi, Badri Shoshitaishvili, and Managing Director of GMC, Jemal Kuridze, the Director of the EBRD's team for Georgia, Olivier Descamps, explained: "Currently, most fruit and vegetable wholesalers in Tbilisi operate on the periphery of existing retail markets. In addition, as appropriate wholesale facilities do not presently exist many farmers have to sell their own produce in the retail markets, resulting in a loss of economies of scale and large produce losses in transportation."
Mr Descamps continued: "This project will help to enforce existing regulations for the trading of fresh produce, and will improve hygiene and quality standards which will assist Georgia in regaining lost export markets."
Mr Shoshitaishvili commented: "The market will remove a key bottleneck and help raise produce quality, benefiting both agricultural producers and consumers. The establishment of these facilities, which are for the exclusive use of the private sector, demonstrates the important and growing role of small local enterprises in the marketing and distribution of fresh produce."
Mr Chkuaseli commented: "This project is the second that has been signed with the EBRD this week, following the loan agreement signed yesterday at Borjomi. These two important projects mark a new milestone in the relationship between the EBRD and Georgia."
The new facilities will be developed in two phases. First, a small wholesale market (1,800m²) and associated infrastructure will be established in Tbilisi. In the second phase an additional trading hall (4,140m²) will be built in Tbilisi and three collection and assembly markets will be established in the rural towns of Akhaltsike, Gurjaani and Marneuli. The second phase will only be implemented once the facilities set up in the first phase have satisfied certain operational targets and additional financing has been raised from local investors.
"Wholesalers and farmers have shown a great deal of interest in this project," said Mr Kuridze. "The first phase will provide existing wholesalers with good, basic facilities. It will also have an important demonstration effect, encouraging the growth of new wholesalers, which will in turn increase competition and transparency in the trading of horticultural produce."
The agricultural sector accounts for around 47 per cent of GDP, making it the single most important sector in Georgia's economy. The lack of wholesale markets and associated grading and packaging facilities has affected the capacity of farmers to grow and deliver produce competitively, efficiently and on a regular basis, to the detriment of consumers.
In addition to the EBRD's loan to GMC, a US$ 1.5 million (ECU 1.3 million) stand-by facility will be provided to Georgia to finance costs related to the project.
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