From the Editorial Board
There will be need to double food manufacture to feed grown population in 2050. That is not easy to do.
Human creature has almost used the territories fit to be cultivated. Also due to the global warming, more and more territories have become dry and not worth for harvest. There is water shortage in the world that is the most important thing for agricultural sector. Of course, all of these have already reflected on the prices for almost each agricultural product. Comparing prices of 2003 of wheat and corn with the same prices in 2008, they have been tripled rice has become five times expensive. However, very often speculators are guilty in increasing prices beside objective reasons, particularly in recent months.
In recent months on commodity exchange of Russia prices of seed cultures rose almost by 50% at the same time the company shares that act in agricultural sector rose by 10%. Very often there are artificial rising in prices in the modern world. The speculators have financial mechanism to gain profit from inflation on agricultural products. They begin gaining profit by market speculations until manufacturers calculate their first gain. From 2007 to 2008 when investors were rocked by agricultural inflation the shares of fertilization manufacturers increased by 5-7 and they feel comfortable and safely up to now even in the hard times of global financial crises. The times are hard and Georgia is not an exception. Georgia”s 53% of population live in villages, 40% is employed in the sector of agriculture. Despite this, share of local agricultural product in GDP is only 8% that is only 12% of demand. There is hardly 40% of arable land cultivated in Georgia. 1990-2007 cultivated land was decreased from 700 000 ha to 297 000 ha.
Despite of the global technological progress Georgian peasant has problems with melioration systems and uses methods of tillage used a century ago.
There are many problems in agricultural sector of Georgia, two of them are very important: quality control and very low level of productivity. Georgian cattle farms are not developed. It is impossible for Georgian peasant with few cows and hens to compete foreigner farmer who produces significantly more products with significantly low expenditures. The infrastructure and methods of producing of agricultural products have to be changed and new technologies implemented. The result is that Georgia cannot supply its population with food products and depends on imported ones again. The Georgian officials often say that Georgian farmers do not have enough money to cultivate land and organize farms. Meliorating of one ha of land costs 70 Gel. Often there are bad climate conditions, so many of Georgian peasants have given up cultivation of lands.
The representatives of Georgian government think the problem could be solved by Boers if they invest in Georgian agricultural sector and bring their economies from Africa in Georgia.
The idea belongs to the State Minister of Diaspora Affairs Papuna Davitaia.
Boers are Dutch emigrants who came in Africa in XIX century and nowadays are under pressure by South Africans. Many of them have already gone to the other countries. After the Apartheid regime was over and black government began three thousand of white farmers were killed in Africa. The tension is so tough that Africans may force white Africans to abandon African lands. The white Africans are looking for shelter and maybe they find such one in Georgia and if pay attention that they are looking for places to be near with Asian and European markets Georgia is the very country for them.
On 29-th of September Africans 15 member delegation visited Georgia with invitation of Georgian side. As Georgian Officials say Boers have great experience in farming, new cultures maybe brought by them to the country and it would be good if they organize farms in Georgia. The representatives of the Ministry of Agriculture of Georgia said that Boers were shown many places of Georgia and now Georgian side is waiting for their interest. The deputy of the Minister of Diaspora Affairs Nika Avaliani stated: “”We have shown them the places now it is up to them if they bring their business in Georgia or not. There is well developed meat industry in South Africa, Boers have serious experience in Cattle farming and their local farmers supply enough meat for the 50 million population and 10 million of tourists. They can develop and prosper our agricultural sector, now the share of agricultural sector in GDP is only 8% if Boers are here the index will reach to 20% now the talks are about what sphere is in their interest. They are able to create big farms of cattle, market-gardening and poultry.” The future will show if Boers have desire to move to Georgia and if their experience is enough for the prosperity of our agricultural sector. One thing is clear – nowadays agricultural sector is attractive not only for investors but for speculators too and it does not concerns only Georgia”s one. Speculators use the any rate of rising prices on commodity exchange for speculative deals. One of the rings in speculative deals is company trading with food-stuffs as the rising prices on raw materials reflects on their products first of all.
There are louder estimations in Russia that food-stuff prices are set according to farmers and quality level of products but they are determined by speculators trading with market shares. There are calls for government to elaborate corresponding regulation to increase farmers role in setting prices and decrease the one of other food-stuff trader”s. Medvedev and Putin discuss the problem. Putin has already estimated the catastrophic increase of food-stuff prices as the result of speculators acting and Medvedev has ordered to the general procurator to examine the case.
It could be said that there is no deficit of speculative prices in our local market. Georgian customer often witnesses when products are becoming expensive in the global market, or Gel exchange rate is not steady and local market reflects the event logically but when prices are down abroad the Georgia”s market never reflects the same. It can be considered the matter to be the result of speculation.
Recently the exchange rate of Gel is becoming steady but companies are not going to make products more cheap that became expensive with the reason of depreciation Gel. The population remembers very well the times when after Gel depreciated by 3% food-stuff prices increased by 10-15%.
Inflation taking the start from the August became deeper and was spread on Georgia”s commodity market. As it was expected rising prices for bread was the reason of becoming expensive for other food-stuff. As imported products became expensive peasants sell their products with expensive prices. The current year was the record for Georgia in aspect of soaring prices. But the thing is that there are soaring prices for seed cultures in the global market. Analytics consider the reason of rising prices in Georgia to be linked with speculative factors as the national currency was not become so depressed to cause such leap in food product prices.
Human creature has plenty of problems: terrorism, financial crises, global warming, and food product shortage that becomes painful with the growing of world population. One of the reason of rising prices of food products are worsening climate conditions and bad harvest but as it seems the reasons are not only these ones the temptation of speculative deals has moved from other sectors of economic in agricultural sector.