What is the reason for the decline?
In recent years much has been written about Georgia’s reforms. Known authors publish solid works implying a common title "Why has Georgia succeeded?" They say that the team of Mikhail Saakashvili has managed to accomplish a lot in the last seven years. It is enough to say that the state budget since 2003 has increased eight-fold. By the end of the Shevardnadze era, it was only 500 million dollars, while at the moment it is close to four billion. GDP is growing, including per capita income. However, this figure so far is less than that of Azerbaijan (10,900 dollars) and Armenia (5,700 dollars), amounting to 4,900 dollars per capita. However, this can still be explained by the fact that Azerbaijan has leapt forward with large income from selling the "black gold", while Armenia (unlike Georgia) enjoys preferential free access to the Russian market.
But an analysis of the situation in the backbone industry of Georgia, agriculture, might lead to the conclusion that a crisis in Georgia's economy in the near future may undermine the very basis of Georgian statehood. This conclusion will not seem exaggerated if you look at the figures for the development process in the domain of agriculture.
First of all, in the past year the share of agriculture in GDP decreased by 2.3 times as compared with 2003. If we compare the figures with the ones in 1996, it has reduced by 4 times.
Today it is only 8.3% of total GDP.
Agriculture employs 57% of Georgia's workforce and 63% of the employment in the economy as a whole.
At the same time, unemployment in rural areas has increased from 20% in 2003 to 26.4% in 2010.
One worker in a Georgian village created an added value of about 70% every month while the minimum cost of living for an adult is considered to be $77 per month.
Only 28% of manufactured goods in the countryside are trade goods, while the remaining 72% become part of a subsistence economy. The ratio of the two figures is much more dangerous than it was in the Soviet era.Many recall that "private lots" and "farms" in the USSR were not intended to supply the market but only to feed the family. About 82% of produce appeared at bazaars (not to be confused with the market) and thus was incorporated into the original commodity-money relations, whereas today, in the era of the "free market", only 18% reach the bazaar.
Let us look at the figures of the commodification level of agricultural production in Georgian in the last decade:
1989 - 82%;
1998 - 22%;
2010 - 18%.
A generally accepted indicator of the level of agricultural development is the number of people in the country who can be fed with the production of one rural worker.
In Europe this figure amounts to dozens of people. For example, a Dutch or German farmer can "feed" from 20 to 30 people with their produce. But one Georgian farmer today can feed only 4.2 people. In 1988 this figure amounted to 7 people.
But if we take into account such indicators as the amount of added value, in fact it turns out that Georgian villagers are barely able to feed themselves and, if not for other activities in rural areas (trade, services), they would have not been able to make ends meet. Georgia cannot produce enough of any agricultural products (starting with milk and meat and ending with wheat and potatoes). Naturally, imports are growing almost exponentially, increasing the already huge trade deficit of the country. The share of imported products in the "food basket" of Tbilisi residents is 75%.
At the same time, 97% of Georgian crops are in the private sector and only 3% are owned by companies. The degradation of agriculture in Georgia is primarily due to the extremely low productivity level. Compared with the Soviet period it has decreased seven-fold. The experience of capitalism has still not yielded positive results for the economy of Georgia it seems.
To be continued
Georgy Kalatozishvili, Tbilisi. Exclusively for VK
