Investing in rural people

Research Report on Farmer in

G.Sirbiladze, N.Memarnishvili

Produced by Elkana Tbilisi, Georgia 2016 Table of Contents TABLE OF CONTENTS ...... 1 DISCLAIMER ...... 4 NOTE ON AUTHORS ...... 5 ACKNOWLEDGEMENTS ...... 6 ACRONYMS ...... 7 EXECUTIVE SUMMARY ...... 8 INTRODUCTION ...... 10 RESEARCH METHODOLOGY ...... 11

INTRODUCTION ...... 11 METHODS ...... 13 1. Survey ...... 13 2. Focus Group Discussions ...... 16 3. Case Studies...... 17 4. Individual Interviews ...... 19 REVIEW OF CURRENT SITUATION IN AGRICULTURAL SECTOR ...... 20

INTRODUCTION ...... 20 PRODUCTION ...... 22 1. Crop Production ...... 22 2. Livestock production ...... 24 INTERNATIONAL TRADE...... 26 SECTOR COORDINATION ...... 29 DEVELOPMENT ...... 30 QUANTITATIVE RESEARCH FINDINGS ...... 31

SURVEY ...... 31 1. Summary ...... 31 2. Grower Socio-Economic Characteristics ...... 36 3. Marketing ...... 48 4. Factors Affecting Grower Revenues and Sustainable Development ...... 54 5. Activities Coordinated through the Cooperatives ...... 60 6. External Support ...... 63 7. Participation in Decision-Making ...... 64 8. Extent of the Trust in the Management ...... 65 9. Changes Occurred after Becoming a Cooperative Member ...... 65 10. Factors that Motivate to Join / Start a Cooperative ...... 69 11. Membership Size Evolution ...... 73 12. Risk for the Development of Cooperation ...... 74 13. Joint Solution of Activity Relevant Challenges ...... 79 14. Farmer Collaboration with other Farmers ...... 80 15. Farmer Willingness to Collaborate with Other Farmers in the Future ...... 84 16. Existence of Local Leadership Potential ...... 88 17. Farmer Willingness to Join / Start a Cooperative ...... 89 18. Factors Underlying Occurred Changes after Becoming a Cooperative Member ...... 91 QUALITATIVE RESEARCH FINDINGS ...... 92

FOCUS GROUP DISCUSSIONS ...... 92 1. Introduction ...... 92 2 2. Cooperative Respondents ...... 93 3. Non-Cooperative Respondents ...... 97 4. Short Comparative Analysis ...... 101 CASE STUDIES ...... 105 1. Cases ...... 105 2. Comparative Review of Cases ...... 112 INDIVIDUAL INTERVIEWS ...... 117 1. Introduction ...... 117 2. Authorities ...... 118 3. Key Informants ...... 121 META-ANALYSIS ...... 127

PROBLEMS ...... 127 1. Main Barriers to Creation of Cooperatives ...... 127 2. Main Barriers to Development of Formed Cooperatives ...... 131 RECOMMENDATIONS ...... 134 1. Socio-Cultural Sphere ...... 134 2. Economic Sphere ...... 134 3. Policy Sphere ...... 136 ANNEXES ...... 138

ANNEX 1. METHODOLOGY GUIDANCE ...... 138 ANNEX 2. CASE STUDY INTERVIEW TOPICS ...... 168 ANNEX 3. FOCUS GROUP QUESTION GUIDE ...... 169 ANNEX 4. INDIVIDUAL INTERVIEW QUESTION GUIDE ...... 170 ANNEX 5. FOCUS GROUP PARTICIPANTS ...... 171 ANNEX 6. LIST OF MODEL VILLAGES ...... 179

3 Disclaimer

The opinions expressed in this publication are those of Elkana and do not necessarily represent those of the International Fund for Agricultural Development (IFAD) or AGROinform.

4 Note on Authors

Both named authors made contributions to this report. Principal responsibility for drafting sections was as follows:

Executive Summary Gocha Sirbiladze Research Methodology Gocha Sirbiladze Review of Current Situation Nukri Memarnishvili Quantitative Research Nukri Memarnishvili

Qualitative Research Gocha Sirbiladze Meta-Analysis, Recommendations Gocha Sirbiladze, Nukri Memarnishvili Annexes Gocha Sirbiladze

5 Acknowledgements

Elkana is appreciative of kind attention from the key informant experts from IFAD, Oxfam, Evoluxer and Elkana to make themselves promptly available for the individual interviews and to share valuable insights and recommendations. Elkana is grateful to the State Department of Statistics of Georgia (Geostat) for making available its nationwide network of local professional enumerators for the task of regional questionnaire survey of farmers. Finally, Elkana acknowledges critical importance of support by Mr Mikheil Pakatsoshvili in assistance to the organization of the survey in shortest time.

6 Acronyms

ABL Administrative Border Line ACDA Agricultural Cooperatives Development Agency CR Cooperative respondents dn know Do not know ENPARD European Neighborhood Programme for Agriculture and Rural Development EWH East-West Highway EU European Union FGD Focus Group Discussion FM Former Member GDP Gross Domestic Product Geostat State Department of Statistics of Georgia ha Hectare HH Household hp Horse power IDP Internally Displaced Person ICC Farmer Information and Consultation Center IFAD International Fund for Agricultural Development IM K kg Kilogram KK LEPL Legal Entity of Public Law M Member NC Non-Cooperative Village NCR Non-Cooperative Respondent nk Do not know NM Non-Member nr/na No response / not applicable PHP Post Harvest and Processing ShK SME Small and Medium Enterprise sq. m. Square meter t/h tons per hectare TOC Table of Content USAID Assistance for International Development USD United States Dollar YC Cooperative Village

7 Executive Summary

The present paper is the product of research on cooperatives in Georgia carried out by Elkana from August to October 2016 in the framework of the AGROinform1-led IFAD2-funded project “Promoting inclusive horticultural value chains in Armenia, Georgia, Kazakhstan and Moldova3” The goal of the research is to provide valuable information on horticultural producers' cooperation in Georgia and provide analytical material for supporting elaboration of the policies, recommendations and learning documents. The research consisted of both qualitative and quantitative studies. The data and opinions were collected from a total of 327 respondents (cooperative members, independent farmers, experts, governmental regulators), 118 of them – from 110 cooperatives. Unlike cooperatives of 90s of the last century, current cooperatives in Georgia are member-managed cooperatives. They started just 2-3 three years ago. Nevertheless, there was already about 1400 cooperatives in Georgia at the time of the research fieldwork, i.e. late summer of 2016. This rapid rise is credited to a number of significant State and non-State cooperative grants and related cooperative assistance programmes. Nevertheless, formation of many cooperatives in terms of commercial viability is still underway. The research found that while it can be said that cooperatives have been mushrooming in Georgia, for many rural (and urban) people, the cooperative still seems to be a big unknown. Judging by feedbacks from various respondents, limited access to finance, prejudices (unmet expectations, extreme mutual distrust), lack of administrative/financial skills and discipline, and a complexity of certain State procedures and rules constitute the main barriers to cooperative development. Most notably: Access to finances, i.e. availability of investment finances and particularly the credits seem to be the most acute issue for cooperatives (and the entire agricultural sector) that requires immediate action. Although the State runs a cheap agricultural credit scheme, farmers and other respondents request the State to ensure more useful and tailor-made agricultural credits from banks. Both cooperatives and farmers intending to create cooperatives are found by the research to be in pressing need of various capacity building interventions. Cooperatives lack administrative and financial skills, as well as business and strategic planning skills and the relevant personnel to run their organizations properly, i.e. in line with the law and various norms. Farmers, who plan to create a cooperative, tend to prioritize other questions like fundraising to the detriment of this problem during the cooperative formation process. On the other hand, the knowledge and skills transferred by the trainings also require further consolidation and individual on-the-work lessons in the form of consultations and coaching. Although there are various capacity building activities by the State and especially ENPARD, they all lack long-term and integrated elements (consultation, training, coaching, technical and other means together; or capacity building integrated in other kind of assistance). Besides, while farmers are taught administrative, financial and fundraising skills that require own computers and the Internet connection, many farmers actually lack both. On the better side, the State has been rapidly expanding the Internet network coverage in rural areas of the country4.

1 National Federation of Agricultural Producers from Moldova (AGROinform) (http://www.agroinform.md). 2 The International Fund for Agricultural Development (IFAD), a specialized agency of the United Nations, is dedicated to eradicating rural poverty in developing countries. (https://www.ifad.org). 3 https://webapps.ifad.org/members/lapse-of-time/docs/english/EB-2015-LOT-G-24.pdf 4 Please see the information about State efforts towards nationwide internetization: http://sputnik- georgia.com/society/20160721/232789615.html 8 The researchers are accordingly recommending the following: The State need to work on the fast introduction of more farmer-friendly agricultural credit schemes (availability of grace period, longer maturity period, no significant hidden charges, etc.). If need be, the State could establish a temporary work group consisting of farmers and experts to this and other cooperative development ends. Regarding trainings, the State and non-State actors are advised to assess (a) the content of currently used cooperative management training materials and revise if required (to ensure that topics like international relations, cooperation principles are also covered on top of administration and finance management), and (b) the impact of implemented trainings in cooperative management on cooperative performance and the extent of member participation in decision-making. Regarding consultations and coaching, the State and non-State actors are advised to help cooperatives develop uniform organization development benchmarks and cooperative marketing plans. Such assistance should be structured, ideally in the form of a multi-year capacity development programme covering skills, knowledge and means of production. It seems a must to introduce permanent legal and tax consultations for cooperatives. As an option, Farmer Information Consultation Centers (ICCs), which are present in every municipality, could assume this function with the relevant budget top up and by enhancing capacities of specialists assigned to cooperative support tasks5. Not only State but also donors and other assistance organization need to counter concentration of benefits into small groups of farmers by calibrating technical and financial assistance by not only the available land and other resources of the cooperative (i.e. needs based approach) but also by the size (and perhaps other criteria that need to be developed) of a cooperative membership (size-based approach). In addition, the State and donors could consider introducing pilot programmes to fund projects on cooperative membership enlargement to cover costs of legal and other consultancy, transportation and alike. Therefore not only State but also donors and other assistance organization need to counter concentration of benefits into small groups of farmers by calibrating technical and financial assistance by not only the available land and other resources of the cooperative (i.e. needs based approach) but also by the size (and perhaps other criteria that need to be developed) of a cooperative membership (size-based approach). In addition, the State and donors could consider introducing pilot programmes to fund projects on cooperative membership enlargement to cover costs of legal and other consultancy, transportation and alike. Finally, regarding the cross-cutting issues, climate change and frequent weather extremes such as hails and spring freezes were found to be most prominent factors that indirectly affect cooperative development by driving down harvest size and quality of many farmers especially in hazelnut and grape production but also fruits and so on. However, this global issue at the same time offers an opportunity to farmers to get together and seek prevention and/or mitigation of the harm being sustained during such extreme weather spells.

5 Although it is not the subject of the current research, it should be noted here that availability of professional agricultural specialists in the country is a well-recognized problem that indeed cannot be solved in a year or two but needs raising the whole new generation of professionals through high school studies, practice and real field work. Therefore, the current research intentionally bypasses here the widespread need in agricultural specialists. 9 Introduction

The research on cooperatives in Georgia is implemented by Elkana in the framework of the AGROinform6-led IFAD7-funded project “Promoting inclusive horticultural value chains in Armenia, Georgia, Kazakhstan and Moldova.8” The research findings and recommendations will be used for the policy advice to the Georgian government and for the capacity building of selected farmer groups, intent on creating cooperatives in the framework of the above noted project. The research has been carried out from August to October 2016 in four pre-selected regions of Georgia (Imereti, Samegrelo, Shida Kartli and Kvemo Kartli). The research consisted of several types of data collection activities of either qualitative or quantitative nature (survey, focus group discussions, case studies, individual interviews). Data and opinions were collected from a total of 327 respondents (cooperative members, independent farmers, experts, governmental regulators), 118 of them – from 110 cooperatives. The data collection was regularly checked and quality standards enforced by several Elkana representatives by direct observation field visits and cross-checking with respondents, as well as database cleaning. The research is authored by Gocha Sirbiladze and Nukri Memarnishvili. Gocha Sirbiladze is an experienced international evaluation expert, while Nukri Memarnishvili is a senior agricultural expert experienced in cooperative development.

6 National Federation of Agricultural Producers from Moldova (AGROinform) (http://www.agroinform.md) 7 The International Fund for Agricultural Development (IFAD), a specialized agency of the United Nations, is dedicated to eradicating rural poverty in developing countries. (https://www.ifad.org) 8 https://webapps.ifad.org/members/lapse-of-time/docs/english/EB-2015-LOT-G-24.pdf 10 Research Methodology

Structure and content of the cooperative research methodology pivots on and complies with the Guidance Methodology9 (see in Annex 1) provisions. Certain revisions were however made to accommodate local peculiarities. The research methodology consisted of the following data collection methods: - Survey of cooperative and non-cooperative farmers; - Focus Group Discussions with other cooperative and non-cooperative farmers; - Case studies on cooperatives; - Individual interviews with key informants and regulators (stakeholders); - Desktop review of available information and data. The primary data collection methods (i.e. all of them except the desktop review that delivered secondary data) are extensively explained in the next section (Methods). General timing of method implementation is given below: - Desktop review: carried out by the Review and Quantitative Research Consultant in August 2016; - Survey fieldwork: carried out by interviewers in August 2016; - FGD fieldwork: carried out by Research Coordinator in August 2016; - Case study fieldwork: carried out by Research Coordinator in September 2016; - Individual interview fieldwork: carried out by Research Coordinator at the end of September 2016. The only important aspect about the sequencing of methods’ fieldworks was the positioning of individual interviews after all the method fieldworks to ensure cross-check and validation of the data using the interviews with key informant experts. That it – the first three methods were done in parallel mostly with casual overlaps, while the fourth method was launched after the first findings of the previous reports were presented to the Elkana management on 30 September 2016. Using these methods, the research reached a total of 327 respondents10: - Survey: 272 respondents (of which, 88 were cooperatives); - Focus Group Discussions (FGDs): 38 respondents (of which, 20 were cooperatives); - Case Studies: 12 respondents (from four cooperatives; two of these cooperatives and their 2 representatives were also counted in FGDs above); - Individual Interviews: 7 respondents (0 cooperatives). In terms of cooperative membership, the picture of respondent distribution is as follows: - 118 farmers from 110 cooperatives (Survey – 88 cooperatives and 88 farmers, FGDs – 20 cooperatives and 20 farmers, Case Studies – 2 cooperatives and 10 farmers); - 202 independent or non-cooperative farmers (survey – 184 farmers including 4 former cooperative members, FGDs – 18 farmers); - 7 key experts, government regulators (i.e. unrelated to cooperatives). The research team consisted of: - Elkana Director (Mariam Jorjadze): Overall supervision and monitoring of the research planning and implementation; Supervision over the selection of and facilitation of arranging individual interviews;

9 Developed by the National Institute of Economic Studies of Moldova under the guidance of a leading partner - National Federation of Agricultural Producers from Moldova AGROinform. 10 The sum is 329 but because 2 farmers took part in both FGDs and Case Studies, the real number of persons involved in the research is 329-2=327. 11 - Elkana Programme Manager (Tamaz Dundua): Professional advice on the cumulative report structure and review of its final version; - Country Project Team Leader (Manana Tsulaia): Facilitation of overall strategy development and research planning, participation in methodology adaptation; Review of reports prepared by Research Coordinator and Review and Quantitative Analyst; Approval of the research budget and HR contracting; Monitoring of the research implementation; - Research Coordinator (Gocha Sirbiladze): Overall research design (including budget) and planning, fieldwork organization; participation in and coordination of methodology adaptation, design of all research tools; Training of interviewers; Coordination of the research fieldwork; Implementation of FGDs, case studies, individual interviews; writing reports on FGDs, case studies, individual interviews and other parts of the report except the survey report and literature review; Development of the survey results database in consultation with Review and Quantitative Analyst; Review of the survey report and literature review; Preparation of the final cumulative report and its translation from English to Georgian; - Review and Quantitative Analyst (Nukri Memarnishvili): Elaboration of the literature review and analysis and writing report on quantitative survey; Facilitation of the research methodology adaptation; Facilitation of the writing of other research reports and participation in meta-analysis including overall conclusions and recommendations; - Expert consultants (Rati Shavgulidze, Irakli Javakhishvili): Participation in the methodology adaptation, facilitation of the field work organization and implementation, participation in the fieldwork activities; Facilitation of reports writing; Review of reports prepared by Research Coordinator; - Administrative Assistant (Sopio Barbakadze): Administration of fieldwork including hiring interviewers, arranging trainings, focus group discussions, case studies, survey; Purchase of relevant items for the trainings and discussions; translation of the tools; technical assistance to the preparation of the reports (preparation of annexes); entering data from survey questionnaires into the database and clearing the entered data; - 10 Interviewers: Surveying respondents based on the methodology, in which they were trained by Research Coordinator, using a ready-made hardcopy questionnaire form; Entering respondent answers into the form; handover of the filled in questionnaires to Elkana. Given the complexity of the methodology and the factor of two authors, for the best efficiency of the research report writing, the report was split in separate documents, drafts of which were shared with the project management (Elkana Director, Project Team Leader, Research Coordinator, Review and Quantitative Analyst, Expert Consultants) one by one for comments: - Review of Current Situation; - Report on Survey; - Report on Case Studies; - Report on Focus Group Discussions; - Report on Individual Interviews; - Methodology; - Meta-Analysis of Reports (including a separate section on recommendations); - Report Introduction; - Technical parts (Acronyms, TOC, Annexes, Acknowledgement, Title Page, Note on Authors). All the reports took a due note of the Guidance Methodology instruction of structuring the document findings, conclusions and recommendations by the following key subjects: - Policies and regulatory framework; - Horticulture sector development opportunities and challenges (including economic factors); - Socio-cultural factors; - Cross-cutting issues (such as environment, etc.).

12 The research prioritized involvement of women. But in case of the survey, random selection ruled out any possibility of giving preference to them. In Georgia, 30% of rural households are led by women11. It means that the research achieved slightly higher than average involvement of women:

Data collection method Total # of respondents # of women % of women Survey 272 94 35% Focus Group Discussions 38 11 29% Case Studies 12 5 42% Individual Interviews 7 3 43% Total 32912 113 34%

1. Survey The survey was to collect quantitative data on household economies of the respondents, as well as their opinions and, in case of the first group, data on the cooperative activities. The survey targeted three groups of respondents: 1. The respondent (or his/her household member) is member of a producer group or cooperative (i.e. simply “Cooperative member farmers”); 2. The respondent (or his/her household members) have no experience of being members of an agriculture producers group or cooperative (i.e. simply “independent farmers”); 3. The respondent (or his/her household members) which are not member of an agriculture producers group or cooperative but have had such experience in the past (i.e. simply “former cooperative farmers”). Respective questionnaires were provided in the Guidance Methodology: 3 questionnaires in total. Furthermore, in order to see how the existence of cooperatives affects independent farmers, we divided the group 2 into 2 sub-groups: 1. Independent farmers living in cooperative-containing villages; 2. Independent farmers living in non-cooperative-containing villages. The group 2 questionnaire was used for both of them without discretion. Besides, it should be noted that the Guidance Methodology mentions a more generalized “farmer cooperation” and “producers’ groups”, rather than farmer cooperatives, and means not only cooperatives but farmer associations, various unions of producers and so on. In case of Georgia, the only actual form of farmer cooperation today is a farmer cooperative. Other forms are almost non- existent. What is more, cooperative registration process started about 2 years ago, meaning that the entire cooperative affair is a new development in the country, with all strings attached. The respondent selection methodology was the key issue of the entire research planning process because surveying each of the three groups with 2 sub-groups required different methodologies.

11 http://enpard.ge/en/agri-active-women-are-coming 12 The sum is 329 but because 2 farmers took part in both FGDs and Case Studies, the real number of persons involved in the research is 329-2=327. 13 Following the analysis of the existing situation (see next sub-sections per group), the research management adjusted the methodologies for the selection of respondents in every group. First, the research management had to come up with a sample size. The research was undertaken in four regions of Georgia (Imereti, Kakheti, Kvemo Kartli, Shida Kartli) with a cumulative population of 925,00013. The rural population is actually less than this figure if we deduce population of their urban centers – , Telavi, and Gori respectively: 925,000 – 148,000 – 20,000 – 125,000 – 76,000 = 556,000. Based on this figure of rural population in the target regions, we arrived at the figure of 271 respondents as a sample size (5% margin of error; 90% confidence level). To ensure equal division among groups, we rounded it up to 272. Next step was to divide this figure among the three target groups. However, as the third group was referring to a small number of non-operational status-suspended cooperatives, the third group size was revised down to just 8 (please see more details in the Former Cooperative Members sub-section by few pages below). Accordingly, the remaining 264 was equally divided in three: 1. 1st group (Cooperative Farmers): 88 respondents; 2. 1st sub-group of the 2nd group (Independent Farmers Living in Cooperative-containing Villages): 88 respondents; 3. 2nd sub-group of the 2nd group (Independent Farmers Living in non-Cooperative-containing Villages): 88 respondents. Depending on the group, the survey represented either targeted or random house-to-house visits to respondents by 10 professional, preselected enumerators: 2-3 per region. They had to pose questions and enter answers of respondents into a relevant type of questionnaires. The data collection lasted for about two weeks. The data collected via questionnaires was then entered by the database specialist into the Excel database template provided by the research coordinator. The clean database was then forwarded to Review and Quantitative Analyst. Elkana put in place data quality control and verification at all levels and steps during the survey process. Elkana Director, Project Team Leader, Expert Consultants and Review and Quantitative Analyst verified quality of the research methodology. Project Team Leader and Expert Consultants also monitored the field test of the survey methodology in all the four regions. The enumerators were duly gathered and instructed by Research Coordinator on all the survey details. Expert Consultants were observing the work of every survey enumerator (attending several visits of each enumerator) and giving follow-up instructions if necessary. Project Assistant – Data Base Specialist was calling to randomly selected respondents from the survey database verifying both the fact of survey and the data.

1a. Survey of Cooperative Farmers As per sample size division, the research had to pre-select (in a computer) randomly 88 cooperatives equally from the four target region (22 in each region). There were around 1400 registered cooperatives in the country around the time of the survey. According to informal estimates of Expert Consultants, regardless of what the formal registration data on planned cooperative activities suppose, roughly 2/3 of cooperatives are operating in livestock farming. Therefore, the research management calculated the following period for random selection of 88 cooperatives out of 1400 using the online database of cooperatives (http://acda.gov.ge/index.php/geo/cooperatives/start/): 1400 / 3 / 88 = 5. So, the research had to go through the list of randomly arranged online list of cooperatives the way it appears at and check with Expert Consultants, the cooperatives themselves and many other sources (ACDA, ICCs, etc.) if every fifth is indeed a horticultural (plus operational) cooperative fully or partially. This intensive

13 http://census.ge/files/results/Census_release_ENG.pdf 14 checkup and verification was required because the online cooperative profiles in most of the cases indicate both horticulture and livestock farming as their main directions, while in reality often it was on livestock farming which cooperatives where engaged in. If any cooperative that came out during random selection was shown by the checkup as a livestock cooperative (or status-suspended), the selection process will leave it and move on to the next immediate cooperative on the list and checks it in the same way whether the cooperative is horticultural. If it is than the selection process will continue in a usual way (selecting every fifth). If not, once again the selection process should move on to the next immediate cooperative on the list. There was however one more divider for the selection: 4 target regions. The research had to select equal number of cooperatives for them too. To this end, once the selection process would arrive at the 22nd eligible cooperative (i.e. horticultural+operational) for any given region, it would omit it and jump on to the next one. As seen from above, the selection process was labor intensive. Therefore, to duly enable the effective selection process, Elkana used Expert Consultants, research coordinator and assistant to this end. Cooperative survey meant surveying one member per cooperative. In all cases they were cooperative leaders.

1b. Non-Cooperative Farmers from Cooperative-Containing Settlements Having regard to the Guidance Methodology, the research management added the following specifics to the methodology: - After an enumerator surveys a cooperative farmer, he or she should then identify via the interviewed farmer a nearest household in the same settlement engaged in horticulture (solely or together with livestock activities). If it happens that two cooperative farmers are to be interviewed in a given settlement then the enumerator should accordingly identify two households engaged in horticulture; - If it so happens that the settlement where enumerator visits to interview a cooperative farmer is remote and its few households are engaged in livestock only then in such exceptional cases, enumerators will compensate the need in horticultural non-cooperative farmers by identifying an extra such farmer in the next settlement that she or he would visit to interview a cooperative farmer. In this way, the research would save unnecessary travel resources and time to (1) identify 22 cooperative-containing settlements and visit them using a specific technique, and then to (2) identify and survey 22 non-cooperative farmers (one per settlement) would be saved.

1c. Non-Cooperative Farmers from Non-Cooperative-Containing Settlements Having regard to the Guidance Methodology, the research management added the following specifics to the methodology: - Given that 22 is statistically insignificant quantity for any region, two model non-cooperative villages were identified per target region (in different municipalities) with the help of Expert Consultants. In each of these two villages (eight from four regions), in which enumerators had to survey 11 randomly selected farmers involved in any horticultural field. The model village meant a typical village for a given region in terms of a size, agricultural specialization, climatic and geographic conditions, absence of cooperatives (please see the list of such villages per region in Annex 6).

15 - Selection of 11 farmers in a non-cooperative-containing village will be done randomly, using a zigzag trajectory. The technique will use the settlement’s center as a start point. The enumerator would have to cast a coin to choose a direction and count every nth house: if a settlement has 100 households, the enumerator will have to call in every 4th or 5th house, rather than 9th (100/11=9), because there is 50% probability that any chosen household will have any real horticultural activity (having few trees and a 100 sq. m. orchard right in the house yard would not count). Opting for two typical villages rather than the entire region for the selection of 22 farmers ensured a much higher level of statistical significance within the chosen settlements. However, as a whole it’s a nonprobability modal instance purposive sampling.

1d. Former Cooperative Members Proportion of such a sub-group in the entire cohort of cooperatives is very low - several dozens of them at the time of the survey. The research management decided to survey two pre-identified former cooperative members per region from two different settlements: 8 in total. The number 8 was chosen because it is proportionally small to (1) reflect the insignificant portion of former cooperatives in the total and (2) allow equal number division across four regions. Surely, selection of 2 farmers per region means invoking again the nonprobability selection technique because this number is very small to think of any statistical significance, i.e. applicability of a random selection technique. The following criteria were used to identify two former cooperative members per region: (a) The candidate respondent was already not involved with the cooperative at the time of the survey; (b) The candidate respondent was engaged in any horticultural activity at the time of his or her involvement in the cooperative; (c) The horticultural area(s) the candidate respondent was engaged in at the time of his or her involvement in the cooperative was characteristic of the region; (d) The horticultural area(s) the candidate respondent was engaged in at the time of his or her involvement in the cooperative was different from horticultural area(s) the other selected respondents were engaged in, at least different between the two respondents within the same region; (e) The settlement of the candidate respondent (understood as his/her residence or base of operation) was different of other selected respondents; (f) The candidate respondent was a woman farmer desirably; (g) The candidate respondent was most likely ready and available to take part in the survey. Respondents were selected from the lists of status-suspended cooperatives provided by regional ICCs and cross-checked with the online database of cooperatives (where every profile has the “status” field) with the critical help from Expert Consultants. It should be noted that effectiveness of the respondent mobilization was greatly influenced by the widespread unwillingness of former cooperative members to share their opinions on the subject.

2. Focus Group Discussions 8 Focus Group Discussions (FGDs) counted a total of 38 farmers: 20 cooperative members and 18 non- cooperative farmers. FGDs were to retrieve first-hand knowledge from beneficiaries in an open, confidential group atmosphere via natural exchange and self-approximation of ideas, thoughts and information based on the formal, ordered list of key questions. Many answers here are energized from previous answers,

16 while every key question from the pre-defined FGD question guide may be further supported by follow-on exploratory questions. FGDs activity involved discussing with a group of active farmers the current situation around farmer cooperation in the country, personal work history and attitudes of non-cooperative and cooperative farmers, challenges and opportunities of cooperation, strong and weak sides of existing State and non-State cooperatives cooperative support programmes, as well as advises, requests and opinions from the beneficiaries themselves on how to improve effectiveness of such interventions in a plausible and mutually engaging way. The Guidance Methodology required three types of FGDs: 1. FGDs with cooperatives member farmers; 2. FGDs with non-cooperative farmers; 3. FGD with former cooperative members, in total – 12 FGDs. In each of four target regions, the plan will have one FGD per type, i.e. 3 different FGDs per region in total. However, given that the survey required over 80 cooperatives in the same four target regions, mobilizing a higher number of cooperatives (12 FGDs x 10 participants = 120 farmers) for FGDs (by the Guidance Methodology, survey participants should not be in FGDs and vice versa), a qualitative research instrument, proved to be the task next to impossible14. For one thing, although there were about 1400 cooperatives in Georgia at the time of the FGDs, only a part of them operated in horticulture in reality. More reasons include summer season of harvesting (“no time to attend”), blistering heat across Georgia, disinterest and so on. There are also reasons specific to every particular group. For instance, former members of the cooperative do not express any interest to take part in the FGDs. Therefore, the research management decided to go for 2 FGD per region, i.e. 8 FGDs in total, consisting of the first two types (instead of initially suggested three types): 1. 4 FGDs with cooperatives member farmers, 2. 4 FGDs with non-cooperative farmers.15 Accordingly, the project management elaborated two FGD question guides, each per the FGD type (please see Annex 3). The average size of every FGD was planned at 8-10 but in reality it went down to 5. The drop is explained by last minute rejections received from the invited participants, who originally gave their consents to attend the discussions (see the scanned participant lists in Annex 5). Despite the lower FGD sizes, the obtained information was substantive enough to make important judgments and conclusions thanks to purposeful selection using nonprobability expert sampling methodology with the help of Elkana experts16. At the beginning of every FGD, its participants were clearly notified that the discussion would be audio-taped but the generated information and knowledge would be kept confidential. In other others, although the FGD participants’ lists are not confidential, authors of the statements and all the bits of information would not be specified in the report or anywhere else. Two-way travel costs of the FGD participants were duly reimbursed.

3. Case Studies 4 Case Studies counted 4 cooperatives and a total of 12 respondents. Of which, 2 cooperatives (1 in Imereti, 1 in Shida Kartli) occur also in focus group discussions.

14 For the problem with collecting the required number of feedbacks, please see also the section of the methodology about the survey. 15 “Former” cooperative members were interviewed during the survey. Indeed, there is no formally defunct cooperative in Georgia because they were set up quite recently (2014 and later) and because there is no formal procedure to close it down. ACDA can and does terminate the status, but not the legal form of a cooperative itself. 16 Rati Shavgulidze, Irakli Javakhishvili. 17 Case Studies were to highlight a vertical section of the life of cooperatives at different stages of production in a compact way. They are to complement factual information and knowledge derived via other research methodologies. Given that one of the main objectives of the research is to single out and characterize main factors of success and failure, the research chose to examine a case of total failure and several cases when advances are obvious but success is either still under the question mark or in the offing. This diversity of selection regarding the advancing cases was tied to a production cycle/ production base formation (the main eligibility criterion). Namely, four Cases were identified for the research, one per target region - Imereti, Kakheti, Kvemo Kartli and Shida Kartli – and at four different stages of production base development: 1. Promising Start; 2. First Production Cycle; 3. Second Production Cycle; 4. Failure. More eligibility criteria for the failed cooperative case were: (a) The leader and members all should claim that they want their cooperative closed; (b) The cooperative has no resource, no or poor history of performing anything (receiving an external assistance, especially technical or financial); (c) The cooperative leader and members are available and ready to get interviewed despite the negative feelings that they could be bearing; (d) the cooperative was supposed to work or has actually worked in any horticulture field. Unlike Focus Group Discussions, for which the Guidance Methodology required separate participants from the survey, case studies involved two respondents of the focus group discussions. This circumstance - having to meet the cooperatives several times – during FGDs and Case Studies - influenced positively on the effectiveness of Case Studies in terms of richness and depth of information obtained. It is important to note that the law on cooperatives is in force for no more than 3 years. So, all the cooperatives created under this law are basically no more than 2.5 years old. Differences among cooperatives should not have gone large in this short period of time. For ease of formal differentiation of the failure, the research took the fact of agricultural cooperative status suspension by ACDA as an eligibility criterion for the unsuccessful case. Agricultural cooperatives with the suspended status were several dozen in Georgia, enough to select the most suitable one out of them. The following eligibility criteria were devised for the three cases of operational cooperatives: - Being at any of the three target stages of production base development (See above); - Operational; - Engaged in a horticultural field, which is characteristic of a given region; - Availability on specific dates and consent/readiness for the lengthy case interview; - Having at least one representative of vulnerable groups such as women, IDPs, eco-migrants, people with disabilities, ethnic minorities; - Desirably at least one case is headed by women. During the selection the research used only eligibility criteria, not selection criteria, because the selection criteria (that normally would have been used after the selection by eligibility criteria) were not needed, as the best candidacies selected under eligibility criteria numbered no more than 4 and already matched the need in four different cases. After a comprehensive analysis, for the case of the Promising Start the research management selected the cooperative Chiri in Imereti region, for the case of the First Production Cycle – the cooperative Tiripona 2014 in Shida Kartli region, for the case of the second production cycle – the cooperative Nergebi in Kakheti. Regarding the failed case, the selection process settled on the cooperative “Agropiri.” During the selection of the cooperatives, verbal consent was obtained from their leaders.

Selection of the four cases was carried out using expertise and ground in-depth knowledge of Expert Consultants (R.Shavgulidze, I.Javakhishvili), who had first hand contact and work relations with most of the cases.

18 Next step after the selection was to devise a framework of topics prepared by the research coordinator, which would serve as a foundation for a case narrative (please Annex 2). Then the field work started. The research coordinator visited every case representatives in their production base and both interviewed cooperative members and observed the production base (in case of the operating cooperatives, he also observed their operations). Every case interview and observation lasted for 2-3 hours on average. The length of a case narrative is directly proportional to the obtained information. For instance, in the case of the failure case, the narrative is the shortest among the cases because it was harder to obtain diverse data by every topic. The narrative for each case is unfolding in a free, naturally flowing style, with topics covered in different sequences. It is possible that few topics are not covered due to impossibility of obtaining such information or because they are not relevant to a case in question. Although the narrator tries to look at every story from all possible angles to ensure objectivity, the cases remain cooperative- centered, i.e. conveying thoughts, information, assertions and conclusions largely through a prism of cooperative’s own position. This extent of unavoidable bias is actually a natural integral part of the case and should be balanced off and triangulated with the knowledge obtained from other methods, especially, individual interviews with experts and quantitative survey.

4. Individual Interviews As the name of the method says it already, 7 individual interviews counted a total of 7 respondents (no cooperative). Together with the quantitative survey, individual interviews are one of the critically important tools for triangulating data. Considering high intensiveness of the research fieldwork period (mainly the month of August 2016) that involved overlapping parallel processes of the survey, 4 cases and eight focus group discussions, the research management decided to hold only the minimum number of highly potent key informant individual interviews with experts and regulators in the field of cooperatives (see the names of people met in the Individual Interviews on page 123): - Heads of Regional Coordinating ICCs in Imereti and Kakheti respectively (2 interviews); - Key informant interview #1 (pivot person from Elkana, participant of three ENPARD consortia) (1 interview); - Key informant interview #2 (pivot person from Oxfam, the lead of an ENPARD consortium) (1 interview); - Head of ACDA (1 interview); - Head of the IFAD Project in Georgia (“Agriculture Modernization, Market Access and Resilience” (AMMAR) in Georgia) (1 interview); - Coordinator of EU-funded Evoluxer Project on ACDA capacity building (1 interview). The individual interviews were carried out after all the other data collection processes were over. In this way, the interviews were used as end-of-qualitative-research data validators. Some of the individual interviews were held electronically, i.e. by Skype. The interviews lasted from 30 min (IFAD) till 90 min (experts). It depended on the number and content of applicable questions asked from the pre-designed question guide prepared by the research coordinator and approved by the project management (see the questionnaire guide in Annex 4).

19 Review of Current Situation in Agricultural Sector

Agriculture sector remains an important although still declining sector in Georgia in terms of GDP contribution, foreign exchange earnings, and poverty reduction. The sector is mainly of subsistence nature and is characterized by low productivity and weak competitiveness.

Agriculture production is concentrated among small-scale farming households. Around 86.5% of total agriculture land has been farmed by 571,900 family holdings. Majority of holdings have small plots; about 77% of family holdings has owned at most 1 ha area of land, and average land plot size per family holding has been 1.2 ha.17

State allotment to the agriculture sector has increased substantially during the recent years. Ministry of Agriculture ongoing main activities include human, animal and plant health protection, research, international promotion of Georgian products, support to the development of business oriented farmer groups, rehabilitation of irrigation and drainage systems, and improvement in the availability and accessibility to financial resources and production inputs (planting stock, seeds, fertilizers, and chemicals, etc.). State funding of agriculture sector and the share in total budget allocations from 2010 to 2016 have increased by 48% and 41%, respectively (Figure 1).

Figure 1. State allotments to agriculture sector

350 3.5% 300 3.0%

250 2.5%

200 2.0%

150 1.5%

GEL budget,% 100 1.0% 50 0.5%

0 0.0% tota in share budget Agriculture

Budget allocation of the sector, mln. sector, of the allocation Budget 2010 2011 2012 2013 2014 2015 2016

Budget allocation Share in total budget

Source: Ministry of Agriculture Annual Report 2015

Agriculture contribution to GDP has been variable and was characterized with a trivial rise, by 1.8% during the 2010-2015 period (Figure 2).

Figure 2. Agriculture Share in GDP

9.4% 9.2% 9.0% 8.8% 8.6% 8.4% 8.2% 8.0% 7.8% 2010 2011 2012 2013 2014 2015*

Source: Geostat, estimates

17 Agriculture Census 2014; National Statistical Office of Georgia 20 The share of agriculture processing sector in GDP also has been characterized with an increasing tendency, but the rate of growth has been greater than agriculture’s, totaling 3.7% (Figure 3).

Figure 3. Processing sector share in GDP

8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2010 2011 2012 2013 2014 2015*

Source: Geostat

During 2010-2016 total agriculture output has depicted increasing pattern. The growth has been most pronounced in agriculture services, followed by plant production and livestock production in declining sequence. Growth rate estimates of plant production, livestock production and agriculture services have been 13%, 8%, and 23%, accordingly (Figure 4).

Figure 4. Agriculture output

1,800

1,300

800

300 Value of output, mln. GEL mln. output, of Value

-200 2010 2011 2012 2013 2014 2015* Plant production Livestock production Agriculture services

Source: GeoStat, estimates

FDI in agriculture has surged during the last three consecutive years, and growth rate during 2010- 2015 period has approximated 11%; also, agriculture share in total FDI has risen, but to less extent, totaling 2.5% (figure 5).

Figure 5. FDI in Agriculture

2.0% 16,000

14,000 1.5% 12,000

10,000 1.0% 8,000 6,000

0.5% 4,000 FDI, ths. US$ ths. FDI, 2,000 0.0% 0

Agriculture share in total FDI,% total in share Agriculture 2010 2011 2012 2013 2014 2015

Agriculture FDI agriculture share in total FDI

Source: Geostat, estimates

21 The size of rural population as of January 2016 totaled 1,592 million persons, or 42.8% of total population. During 2010-2016 period rural population growth rate was negative and equaled -1.9%.18 In 2014, proportion of rural population living at less than 2.5 US$/day 2005 PPP poverty, was around 43% compared to that of 25% in urban areas. 19

Despite the progress made during the last three years, the sector still faces numerous problems and challenges. Local production is characterized with diseconomies of scale, cannot compete with imports, and the country is highly dependent on imports.

1. Crop Production Changes in production level were brought by changes in planted area and yield levels. During 2010- 2016 production of cereals, melons, fodder crops, fruits, grapes and citrus were characterized with an increasing pattern, while that of potatoes, vegetables, and tea, with a declining trend; production of beans largely remained unchanged (Table 1, Figure 6).

Table1. Annual and perennial crop production, ‘000 tons

Crop 2010 2011 2012 2013 2014 2015 Annual crops Grains 214.8 397.4 370.0 483.3 434.5 420.1 Beans 5.8 8.9 9.6 10.5 8.7 5.8 Potato 228.8 273.9 252.0 296.6 216.2 206.2 Melons 40.9 42.8 36.7 66.4 85.9 72.6 Vegetables 175.7 185.8 198.5 204.8 190.9 162.2 Fodder crop 37.1 66.6 36.9 41.1 43.9 66.5 Perennial crops Fruits 124.1 187.3 157.9 217.6 229.0 146.6 Grapes 120.7 159.6 144.0 222.8 224.9 267.8 Citrus crops 52.1 54.9 77.0 110.4 76.2 85.5 Tea 3.5 2.9 2.6 3.3 1.8 2.1 Source: Geostat

18 Geostat, estimates 19 Georgia: Recent Trends and Drivers of Poverty Reduction (FY16 Georgia Poverty Assessment), August 2016, World Bank 22 Figure 6. Compound annual growth rate in annual and perennial crop production levels

18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

-2.0%

Tea

Fruits

Beans Grains

-4.0% Potato

Grapes Melons

-6.0%

Vegetables Citrus crops Citrus -8.0% crop Fodder -10.0%

Source: Geostat, estimates

Area planted with annual crops was distinguished with an increasing pattern, and growth rate has been 4%. Increase in the area planted with spring crops was greater than that with winter crops; during 2010-2016 growth in the area planted with spring and winter crops equaled 5% and 0.4%, respectively (Figure 7).

Figure 7. Area planted with annual crops, ‘000 ha

350 300 250 200 150 100 50 0 2010 2011 2012 2013 2014 2015

Total area Winter crops Spring crops

Source: Geostat

Yield levels for the majority of crops either have increased or remained unchanged. The most significant increase was observed in wheat production, followed by barley, melons, and maize in a descending sequence. Yield levels for potatoes, vegetables, and annual forage crops have trended downward, while those of beans and perennial forage crops have remained largely unchanged (Table 2, Figure 8).

Table 2. Yield levels, ton/ha Crop 2010 2011 2012 2013 2014 2015 Wheat 1.0 2.1 1.7 1.8 1.3 2.6 Barley 1.1 1.9 1.6 1.3 1.3 1.8 Maize 1.4 2.3 2.4 2.4 2.3 1.7 Beans 0.6 0.7 0.8 0.5 0.6 0.6 Potato 11.1 13.6 9.9 11.3 11.6 8.1 Vegetables 7.1 7.6 7.1 8.3 7.2 6.7 Melons 15.2 12.1 13.5 24.1 22.9 22.0

23 Annual 4.5 4.6 6.2 3.9 3.1 4.2 forage crops Perennial forage crop 4.6 4.5 4.1 4.5 4.0 4.6 Source: Geostat

Figure 8. Compound annual growth rate in yield levels

22%

18%

14%

10%

6%

2%

-2%

Beans

Maize

Barley

Potato Wheat

-6% Melons

Vegetables

Annual forage crops forage Annual Perennial forage crop forage Perennial

Source: Geostat, estimates

2. Livestock production During 2010-2015, growth was observed in all types of livestock population. The most significant rise was noticed in swine population, followed by sheep, poultry, beehives, and cattle in a descending order (Table 3, Figure 9).

Table 3. Livestock population, ‘000 heads20 2010 2011 2012 2013 2014 2015

Large livestock 1,049 1,088 1,129 1,230 1,278 1,326

Including dairy cattle 562 588 602 641 665 650 Swine 110 105 204 191 205 198

Sheep & goat 654 630 743 857 920 891

Only sheep 597 577 688 796 866 842 Poultry 6,522 6,360 6,159 6,761 7,273 8,806

Beehives 312 328 348 399 403 422 Source: Geostat

20 Unit describing poultry population is million wings 24 Figure 9. Compound annual growth rate in livestock population

14% 12% 10% 8% 6% 4% 2%

0%

Swine

Sheep

Poultry

Beehives

Sheep &goat Sheep Large livestock Large

Dairy cattle & buffalo & cattle Dairy Source: Geostat, estimates

During 2010-2015, total meat output has surged, and it was mostly driven by growth in pork and poultry meats, whereas beef and mutton production have declined and output of other types of meat have remained largely unchanged. Milk output, especially sheep/ goat milk, and egg and wool output has risen, while honey output has fallen (Table 4, Figure 10).

Table 4. Livestock output 2010 2011 2012 2013 2014 2015

Meat, ‘000 tons 56.4 49.3 42.6 48.4 54.8 62.1

Beef 26.7 21.3 16.2 20.2 19.6 20.9

Pork 12.8 11.6 11.8 14.9 15.5 16.9

Mutton 4.9 4.0 2.5 2.8 4.1 4.8

Poultry 11.6 12.0 11.7 10.1 15.2 19.1

Other meat 0.4 0.4 0.4 0.4 0.4 0.4

Milk, ‘000 liter 587.7 582.1 589.5 604.7 656.2 676.5

sheep & goat 6.7 6.4 6.9 8.8 9.9 9.8

Eggs, mln pieces 444.5 483.1 474.0 495.3 549.4 601.2

Wool, ‘000 tons 1.7 1.7 1.6 1.6 2.1 2.3

Honey, ‘000 ton 4.2 2.7 4.1 3.9 4.1 4.1 Source: Geostat

25 Figure 10. Compound annual growth rate in livestock production

12% 10% 8% 6% 4% 2% 0%

-2% Milk

Beef

Pork

Eggs

Meat

Wool

Honey Poultry

-4% Mutton Other meat Other

-6% goat & shepp

Source: Geostat, estimates

Milk and wool yield levels were characterized with a trivial growth, and totaled 1.1%, and 1.6%, accordingly (Figure 11).

Figure 11. Compound annual growth rate in milk and wool yields

2.8 1,360

2.7 1,340 1,320

2.7

1,300 2.6 1,280 2.6

1,260 l/head/year kg/hear/year 2.5 1,240 2.5 1,220 2.4 1,200 2010 2011 2012 2013 2014 2015

l/h/yr kg/h/yr Source: Geostat, estimates

Georgia’s main trade partners in agriculture and food have included Turkey, and member countries of CIS and EU. Georgia has a DCFTA with EU, FTAs with CIS members and Turkey, and GSP trade regime with USA, , , , and Norway.

Georgia has been net importer of agriculture and food products. Total trade turnover has fallen in 2015 due to political and economic developments in main trade partner countries.

Growth rate of exports has been higher than that of imports; growth rates of exports, imports and exports coverage of imports ratio totaled 9%, 3%, and 12%, accordingly (Figure 12).

26

Figure 12. Value of trade, and export coverage of imports

1,400 70%

1,200 60%

1,000 50%

800 40%

600 30%

Trade, mln US$ mln Trade, 400 20%

200 10% Export coverage imports,% of coverage Export 0 0% 2010 2011 2012 2013 2014 2015 Exports, $US mln. Imports, $US mln. Coverage ratio, %

Source: Geostat, estimates

Major 15 agriculture and food products have accounted for about 78% of total agriculture exports. The most significant growth rates were observed in export supply of live cattle, fish meal, hazelnuts, mineral waters, and wine (Table 5, Figure 13).

Table 5. Major 15 agriculture export products In total ag Product, 6-year exports CAGR HS 6 CC share rank mean stdev Hazelnuts, shelled 22% 1 28% 127,449 53,121 Wine 15% 2 21% 87,111 51,695 Mineral water 13% 3 22% 77,017 39,678 Grape wine spirit 9% 4 3% 53,143 15,594 Soft drinks 3% 5 6% 18,812 5,398 Live sheep 3% 6 19% 15,995 4,560 Wheat 3% 7 -81% 15,820 20,667 Whiskies 2% 8 -100% 11,588 6,328 Mandarins 2% 9 -0.9% 11,223 4,615 Live cattle 1% 10 164% 8,375 13,299 Fish meal 1% 11 32% 7,537 6,513 Soybean meal 1% 12 9% 6,770 2,990 Hazelnuts, in-shell 1% 13 -26% 6,301 3,855 Food preparations 1% 14 -47% 5,462 2,131 Species 1% 15 19% 5,239 1,798 Source: International Trade Center, estimates

27

Figure 13. Share of major export products in total agriculture exports

Species Food 1% Other preparations 22% 1% Hazelnuts, shelled Hazlenuts, 22% in-shell 1% Soybean meal 1% Fish meal Wine Live 1% 15% cattle Mandarins 1% 2% Whiskies Wheat 2% 3% Grape wine Mineral water Live sheep spirit 13% 3% 9% Soft drinks 3%

Source: International Trade Center, estimates

Main 15 imported products represented about 47% of total agriculture imports. The most notable growth was observed in import supply of swine cuts and feed additives (Table 6, Figure 14).

Table 6. Major 15 agriculture import products Product In total ag exports 6-year CAGR HS 6 CC share rank mean stdev Wheat et al. 14% 1 -7.7% 161,819 26,286 Cigarettes 8% 2 4.7% 94,119 12,417 Poultry cuts 4% 3 2.0% 48,665 7,617 Sunflower oil 4% 4 4.6% 42,070 5,548 Chocolate et al. 3% 5 0.9% 33,515 4,742 Food 2% 6 3.0% 27,005 3,697 preparation Sugar raw 2% 8 -5.1% 20,177 22,491 Sugar refined 2% 7 -12.3% 22,761 5,623 Swine cuts 1% 9 20.2% 17,566 6,758 Sugar confect. 1% 10 4.3% 16,729 2,773 Bovine cuts 1% 11 -3.8% 16,678 4,623 Margarine 1% 12 0.7% 15,056 1,185 Poultry whole 1% 13 2.1% 14,059 2,903 Feed add. 1% 14 15.7% 13,602 4,434 Milk powder 1% 15 4.4% 13,299 2,784 28 Source: International Trade Center, estimates Figure 14. Share of major import products in total agriculture imports

Cigarettes 8% Poultry cuts 4% Wheat et al. 14% Sunflower oil 4%

Food preparation 2%

Other Chocolate et al. 53% 3%

Sugar raw 2%

Sugar Sugar confect. refined 1% 2% Bovine Poultry whole Milk powder Feed add.Margarine cuts Swine cuts 1% 1% 1% 1% 1% 1% Source: International Trade Center, estimates

Agriculture sector has been receiving substantial donor support in different areas. Sector coordination in the agriculture sector started in 2009, under the initiative of the EU Delegation. Currently the sector coordination group, which is led by the MoA, gathers some 40 members (MoA, donors, NSAs). The groups analyze and discuss sector topics and are sub-divided in sub-groups which have been set up in function of the objectives of the sector strategy. A clear labor distribution amongst the key donors is also in place. While the EU is focused on cooperative development, capacity building to the MoA, advisory services for farmers, pilot rural development initiatives, and a food safety improvement, USAID has been supporting agribusiness development; USDA has been focusing on improvement of agricultural statistics; WB has been providing assistance on irrigation and land registration, and Swiss Development Cooperation on agriculture vocational education and dairy sector value chain support. Different IOs and NSAs are also active in the sector in the framework of the EU ENPARD funded activities.

29

Cooperatives are one of the policy instruments to address diseconomies of scale and poor linkages in input and output markets.

The sector continues to be a major development challenge. Limited reform and modernization is one of the root causes for the persistence of high poverty levels in rural areas. Sustained efforts are required for reform and modernization of the sector to address high poverty rates, progressive depopulation of the rural areas, diseconomies of scale, under-developed market linkages and agriculture research-extension system, absence of land market, high dependence on imports, deteriorated melioration infrastructure and animal health services.

According to most experts Georgia has a significant agriculture potential, where estimates indicate that both farm production and agro-industrial production could increase fivefold from current depressed levels. The failure of Georgian agriculture to modernize is one of the root causes for the persistence of high poverty levels in the country. There are many issues depressing agriculture productivity. One of the major challenges in the sector has been limited commercialization and competitiveness of small-scale farmers. Improved agriculture productivity and commercialization play an important role in poverty alleviation. This requires increased participation of farmers in input- output markets. Small-scale producers, independently, have limited power and capacity to be successful players in these markets, and such arrangement makes unsustainable both the agriculture sector and producers, farming on small plots.

Policy makers and the Donor community recognize that farmer cooperatives are appropriate institutions for enhancement of productivity and commercialization of small farmers, since cooperation represents an important solution for small producers to realize economies of scale and increase their bargaining power in input and output markets. Support to the development of small and medium-size enterprises (SMEs) in the rural areas, such as small farmers' cooperatives, is also one of the main results foreseen in the Strategy of Agriculture Development of Georgia 2015/2020 and in its Action Plan. The Strategy states that agriculture cooperatives can increase the competitiveness of Georgian farmers, by increasing their income through increased economies of scale and integration of farmers into the supply chains. In July 2013 the Parliament of Georgia approved the Law on Agricultural Cooperatives. Since the adoption of the Law more than 1,500 farmer groups have registered as agricultural cooperatives. The Government and the Donor community with joint coordinated efforts have been supporting development of cooperative enterprises in rural areas through provision of technical assistance to the management and members of cooperatives, and allocation of small-scale machinery and equipment.

Cooperative enterprise has been in early stage of development in Georgia, and it requires further increased technical and financial assistance to attain effectiveness and sustainability.

30 Quantitative Research Findings

1. Summary The survey included 272 farmers in four regions of Georgia. Surveyed growers comprised former members of cooperatives, current members of cooperatives, and non-member growers residing in the settlements with and without cooperatives.21

Average size of farmer households (HH) has been 4 persons (± 2). Mean HH size of current- Members (5; ±2.4) was slightly larger than that of non-Members (4; ±2), and smaller than that of former-Members (5.2; ±2). About 65% of surveyed growers have been males. Former-Members have consisted of the largest percentage of males (100%), followed by those of current-Members (82%) and non-Members (57%) in a descending sequence. Between non-Members, female representation was greater in the settlements without cooperatives (47%) than that in the settlements with cooperatives (38%), although male respondents prevailed in both types of settlements. Average age of surveyed growers was 52 years (±8). Mean age of non-Members (54 years) has been slightly higher than that of each of former- and current-Members (50 years, each). All surveyed growers, on average, have been involved in agriculture for 26 years (±8). On average, current-Members (24 years) have had greater experience than former-Members (16 years), and were less experienced than non-Members (28 years). Across non-Members, growers both in the settlements with and without cooperatives have had the same level of experience (28 years, each). Highest proportion of growers has had technical high school level education (39%), followed by high school (24%), agriculture vocational school (21%), mandatory education (13%), no education (3%), and elementary school (1%) education levels in a descending order. A higher proportion of current- Members have had technical high school level education (68%), followed by those with agriculture vocational school education (17%), high school education (14%), and a mandatory education (1%) levels; among former-Members, prevailing level of education has been technical high school (63%), agriculture vocational school (25%), and mandatory education (13%); and that among non-Members has been high-school education (30%), technical high school (24%), agriculture vocational school (22%), mandatory education (18%), no education (4%), and elementary school education (1%) levels. Majority of growers (57%) have had previous professions. The most frequently reported professions consisted of engineers (12.1%), economists (8.5%), drivers (5.9%), teachers (4.8%), and accountants (3.8%). The three most often cited occupations across grower categories were as follows: former- Members – technologist (25%); current-Members – engineer (18.2%), economist (14.8%), teacher (5.7%); non-Members in the settlements with cooperatives – engineer (12.2%), driver (5.4%), economist (2.7%); non-Members in the settlements without cooperatives – driver (9.8%), engineer and economist (6.9%, each), accountant (3.9%). About 18% of all farming HH heads have had income other than generated through the sales of agriculture products. The source of other income for all former- and current-Members has been employment in the public sector. Across non-Members in the settlements without cooperatives, with the exception of growers in Imereti, major source of income also has been public sector; in Imereti source of other income consisted of family business, non-agriculture employment, private wage, and employment in agriculture (4.5%. each). Around 8% of farming HH also had income generated by HH members other than HH heads. Approximately, 50%, 45%, 50%, and 23% of growers representing former-Members in Kakheti, current-Members in Imereti, and non-Members in the settlements without and with cooperatives in Imereti have had additional income source from HH members

21 Please see the methodology section for more details and numbers. 31 other than HH heads, accordingly; this type of additional income in case of other categories of growers did not exceed 20%. Area of total utilized agricultural land of around 60% of growers has been in the range of 0-2 ha, and about 14% of growers have farmed on more than 10 ha area of land. Approximately 57% of current- Members, 50% of former-Members, and 73% of non-Members, has farmed in the range of 0-5 ha, 0-5 ha, and 0-2 ha area of land, respectively. Largely, horticultural crops were cultivated on about 50% of area of total utilized land. Proportion of total land under horticultural crops was greater among former-Members (74%) than those between current-Members (54%) and non-Members (53%). In general, about 61% of growers have produced horticultural crops on the area of land ranging between 0-1 ha. Around 65% of current-Members, 50% of former-Members, and 72% of non- Members have farmed horticulture crops on the area ranging between 0-2 ha, 0-2 ha, and 0-1 ha, accordingly. Around only 22% (±0.4) of land has had irrigation water supply. Irrigation requirement is greater in the east part of the country than in the west. Inclusive of western Region, Imereti, around 22% (±0.4) of land has had irrigation water supply. Only between 50-60% of land was irrigated in Shida and Kvemo Kartli. The figure in Kakheti was lower. Among grower categories, roughly equal proportions of land under current- and non-Member ownership has been irrigated (26% vis-a-vis 21%), while all former-Members have reported lack of irrigation supplies. In general, growers have followed diversified production activities, and produced 31 types of horticultural crops including 13 types of vegetable crops, 12 types of fruit crops, 2 types of melons, and 3 types of berries. The three major vegetable and fruit crops consisted of potatoes (11%), tomatoes (17%), cucumber (8%), and hazelnuts (12%), grapes (16%), apples (6%), accordingly. Major vegetable crops produced/ traded by former-Members, current members, and non-Members have been potato (50%) and tomato (18% and 15% respectively) respectively; while main fruit crops for the same category of growers in the same order as provided above, were represented by grapes and peaches (13%, each), hazelnut and grapes (14%, each), grapes (20%), and grapes and hazelnuts (14%, each), accordingly. Around 69% (±0.34) of total agricultural turnover of all growers was accounted by horticultural crops. Proportion of revenue generated through the sales of horticultural crops was greater among non-Members (70%; ±0.29) compared to those of former-Members (69%; ±0.34) and current- Members (67%; ±0.18); however, variability in proportion was lowest among current-Members. Across regions and within grower categories, proportion of horticulture revenue in total agriculture revenue was greater among growers in Shida Kartli and Kvemo Kartli than among those in Kakheti and Imereti. In Imereti, former-Members, current-Members, non-Members in the settlements without cooperatives and non-Members in the settlements with cooperatives have attributed 70%, 59%, 51%, and 59% of their total agriculture income to horticultural crop sales; in Kakheti these proportions across grower categories in the same order were 25%, 52%, 100%, and 53%; in Shida Kartli – 100%, 90%, 81%, and 88%; and, in Kvemo Kartli – 95%, 74%, 100%, and 71%. Growers have had both full- time and part-time employees. About 21% of all growers have had full- time employees. Around 25%, 20%, and 21% of former-, current-, and non-Members, have had full time employees, respectively; among non-Members, approximately 25% and 16% of growers, in the settlements without and with cooperatives, have had full time employees, accordingly. The average number of full-time employees among grower categories has been 6 persons (±3.5), and average number of full-time employees across grower categories has been as follows: former-Members – 12.5 (±3.5), current-Members – 9.3 (±12.4), and non-Members – 4.6 (±7.6). In general, greater proportion of all growers (36% vs. 21%) has had part-time employees than full- time employees. Approximately 63%, 47%, and 30% of former-, current-, and non-Members, have had part-time employees, respectively. The average number of part-time employees has been 11 persons (±11.3), and that across grower categories have been the following: former-Members – 13.6 (±11.3), current-Members – 18.4 (±2), and non-Members – 5.7 (±8.2).

32 Three major factors that have had at least moderately significant impact on farmer revenue and sustainable development have been natural hazards (96%), market and price volatility (87%), and access to finance (86%). Reportedly, the trivial issues included insufficient knowledge and skills (40%), negative impact of government policies and regulations (46%), and underdeveloped social services (47%). Among former-Members, the most frequently referred factors having at least moderately important effect on farmer revenue and sustainable development consisted of natural hazards (100%), low endowment with equipment et al./ low access to infrastructure/ access to finance (88%, each), and low access to PHH infrastructure/ market and price volatility (75%, each). Amongst current- Members, issues having at least greater than moderately significant impact on grower revenue and sustainable development comprised natural hazards (89%), market and price volatility (85%), and access to finance (83%). Like in case of current-Members, between non-Members the three recurrently mentioned aspects have been natural hazards (99%), market and price volatility (89%), and access to finance (87%). Non-Members in the settlements without cooperatives most often have identified natural hazards (99%), low access to infrastructure (88%), and access to finance (87%) as factors having at least moderately significant impact on their revenue and sustainable development, while those in the settlements with cooperatives – natural hazards (99%), market and price volatility (95%), and access to finance (86%). Open markets, small retailers, and wholesalers have been major buyers of horticultural products. About 50% of former-Members have traded their production with small retailers, around 44% of current-Members - with wholesalers, and approximately 46% of non-Members have supplied their production to open markets. Majority of growers have been delivering their production to buyers (64%). Collection of production by buyers at farm sites was more prevalent in case of former-Members (88%) and current-Members in Kvemo Kartli (55%) and Shida Kartli (73%), non-Members in the settlements without cooperatives in Kakheti (58%), and non-Members in the settlements with cooperatives in Kvemo Kartli (60%), and Shida Kartli (76%). Growers usually have collected payments upon conclusion of sales transactions (86%); the second most followed practice has been collection of payments after delivery (15%). On average, growers, who have been paid after deliveries, have been collecting receivables from the buyers within 30 days. On average, growers, who are paid after deliveries, collect receivables from the buyers within 30 days. This range is found to be somewhat shorter in case of current-Members but considerably longer in case of non-Members. Majority of growers have traded their output at local market (72%). The other market outlets included processing enterprises (5%) and sales through a marketing organization (4%); about 18% of the output was self-consumed. Among non-Members, much greater proportion of growers in the settlements without cooperatives sold their output at local market than those in the settlements without cooperatives. Non-Members, in both types of settlements, in all regions, mainly have either sold their output at local market or self-consumed. On average, growers have dealt with 11 buyers (±16). Across grower categories former-Members have transacted with the largest number of buyers (15; ±16), followed by current members (14; ±21.1) and non-Members in the settlements with (10; ±10.3) and without (8; ±15.8) cooperatives in a descending sequence. The largest variability in the number of buyers was observed in case of current- Members and former-Members. Growers in Kvemo Kartli have dealt with the largest number of buyers (30 buyers in case of former-Members, 29 – in case of current-Members, and 16-18 - in case of non-Members). About 43% of growers have been neither satisfied nor dissatisfied with the relationships with main buyers. The second largest category was represented by growers who have assessed terms and conditions of transactions with main buyers as more satisfactory than neutral (36%), followed by those having less adequate than neutral evaluation (16%). Prevalent proportions of former- and current-Members have assessed relationship with main buyers as more acceptable than neutral (75% and 41%, respectively), while neutral attitude was most prevalent among non-Members (46%), particularly those from settlements without cooperatives (50%).

33 In general, the majority of growers has assessed high price offered (75%), reliability of payments (69%), price stability (67%), and trust (64%) to be greater than reasonably important factors influencing buyer selection decisions; relatively small fraction of producers has evaluated extra services offered (38%) and contractual collaboration (25%) as important aspects underlying growers’ decisions in regard to a buyer choice. The majority of former-Members has considered high price offered (75%) and trust (63%) to be main issues influencing grower choice between options. The largest proportion of current-Members has assessed payment reliability (78%) to be more than moderately important, followed by that of price stability (77%), high price (74%), and a trust (74%) in a declining order of significance. In the settlements without cooperatives, the largest percentage of growers has considered high price (almost 80%). A largest part of growers in the settlements with cooperatives has indicated both high price and payment reliability (around 70% each) as more than moderately important factors defining a buyer choice. Cooperative membership duration has been 2 years (±1.6). In case of only former-Members, the figure stands at 3 years. In general, cooperative membership average size has been 8 persons (±2.1). Cooperatives comprising current-Members have been larger (9 members; ±5.5) than those including former-Members (6 persons; ±2.1). Majority of growers in descending order of frequency have coordinated production (81%), financing (58%), transportation (56%), and marketing (51%) activities through their cooperatives. Almost identical is the situation among current-Members, with the only difference being the extra activity (storage) that comes after marketing. Among former-Members, the growers commonly have coordinated input purchase (63%) and production (63%) activities. Approximately, 33% and 25% of all former- and current-Members respectively have received support in the frame of Government programmes and Donor projects. Former-Members only in Kvemo Kartli (50%) and Shida Kartli (100%) have been allocated with the Government support. Different from former-Members, current-Members in addition to Government support have also benefited from Donor assistance; approximately 33% and 27% of current-Members have been recipients of Government and Donor support respectively. The highest proportion of current-Members who have benefited in the frame of Donor or Government supported programmes are found in Shida Kartli region (41%) or Imereti region (50%). Around 73% of all former- and current-Members has been participating in cooperative decision making on a regular basis and have been satisfied with the extent of their involvement. The degree of current-Member (74%) involvement in cooperative decision making was greater than those of former-Members (63%). Joining of a cooperative, has resulted in at least moderately important change in improved access to PHH infrastructure (53%), finance (54%), and technologies et al. (59%), increased HH income (60%), decreased production costs (64%), increased production volume (67%), increased mutual support (68%), and improved quality of production (70%), and knowledge and skills (79%) in an ascending order. Larger proportion of current-Members than former-Members has conveyed at least moderately imperative change in improved access to PHP infrastructure (53% vs. 50%), finance (56% vs. 38%), and technologies et al. (60% vs. 38%), increased HH income (63% vs. 38%), decreased production costs (65% vs. 50%), increased mutual support (70% vs. 38%), increased production volume (69% vs. 38%) and improved quality of production (73% vs. 50%), and knowledge and skills (81% vs. 63%); while larger proportion of former-Members have decreased exposure to market (50% vs. 36%) and natural hazard (50% vs. 48%) risks than current-Members. Analysis of the factors that underlie occurred positive changes among current-Members after joining a cooperative has revealed availability of external support, member satisfactory participation in cooperative decision making process, and high extent of a member trust in a cooperative management, together, to have contributed significantly to observed changes.

34 Majority of growers in a descending sequence have thought better organized PHH and sales (58%), better organized production (56%), and access to finance (56%) and infrastructure (53%) to be factors that have motivated and/ or would motivate to join and/ or found a cooperative. Greater proportion of growers considered mutual support (47%), and improved knowledge and skills (56%) to be less inspiring rather than more to join/ establish a cooperative; the same proportion of growers (46%, each) has viewed better prices for inputs to underlie and not to underlie decision to join/ form a cooperative. In a descending sequence, for the majority of former-Members, main motivating factors has been better organized production (100%), and PHH and sales (88%), and access to finance (63%); for current-Members those comprised better organized PHH and sales (77%), mutual support (68%), better organized production (68%), improved knowledge and skills (63%), and access to finance (59%) and infrastructure (59%); between the non-Members, the majority, viewed access to finance (53%), access to infrastructure (51%) and better prices for inputs (51%) to be major motivating factors to join/ establish a cooperative. Among non-Members in the settlements with cooperatives, majority have assessed better organized production (69%) and access to finance (65%) as most motivating factors. Within non-Members in the settlements without cooperatives, majority of the growers did not have preferences (i.e. no topic has received over 50% of responses). About 28% of current-Members, each has assessed prospects of cooperative membership size growth as trivial and to remain unchanged, followed by those who projected membership size strong growth (20%), strong decrease (6%), and a slight decrease (1%). The prevalent outlook of current-Members in regard to cooperative membership size evolution has been at least to remain unchanged (68%). In general, according to the majority of growers (52%), management capability has been the most important factor that could endanger development of cooperation among farmers. About half of former-Members have stated that the lack of support policies (50%) to have negative effect on development of cooperation. Current-Members also, viewed the lack of support policies (45%) to jeopardize cooperative development, although their proportion did not represent the majority. Largest proportion of non-Members (57%) thought management capabilities to be crucial in development of cooperation. In addition to this issue, non-Members from the settlements with cooperatives have identified the lack of technical support that could negatively influence development of cooperation. Higher proportion of non-Members in the settlements with cooperatives has identified management capabilities as significant threat to the development of cooperation than that of non-Members in the settlements without cooperatives. The smallest proportion of all growers, with the few exceptions, has viewed poor communication among members (24%), and trust among members (31%) to be impending factors for the development of cooperation. Majority of growers (85%) have not had experience in joint efforts to tackle activity related challenges. Larger proportion of former-Members (25%) than non-Members (14%) have addressed activity related hindrances in cooperation with fellow farmers. Greater proportion of growers have cooperated with fellow farmers in transportation (31%) and input purchase (30%), while the smallest proportions - in the training (8%), packing (9%) and lobbying (9%). About 25% of former-Members have collaborated with other farmers in access to finances, input purchase, marketing, processing, production, storage, and transportation. Largest proportion of non-Members have cooperated with other farmers in transportation and input purchase (31%, each). The second most important area of cooperation has been in production (21%), and the third - in processing, access to finance, packing, and storage (19%, each). Between non-Members, in the settlements without cooperatives, the largest proportion of growers have collaborated in transportation and input purchase (roughly 30%, each). In case of the settlements with cooperatives, the largest proportion of growers has collaborated in input purchase (about 35%), transportation and access to finance (about 30%, each). In general, larger proportion of non-Member growers in the settlements with cooperatives have collaborated with fellow farmers compared to those in the settlements without cooperatives. About 30%-35% of growers expressed willingness to cooperate in different areas with other farmers exclusive of packing (27%) and storage (28%). About a quarter of former-Members have been interested to cooperate with other farmers in each access to finance, packing, processing, 35 production, storage and transportation. Between non-Members, the largest proportion of growers was interested to cooperate in processing , production and transportation (34% each). Among non- Members, in the settlements without cooperatives, growers give preference to input purchase and then to processing and transportation (30%-35%); amongst those in the settlements with cooperatives, the majority of growers was agreeable to cooperate in training, production, marketing and transportation (about 40%, each). Prevailing percentage of growers (67%) have confirmed presence of a cooperative leadership potential locally. A greater part of former-Members (75%) than non-Members (66%) has corroborated availability of cooperative leadership potential locally. About 38% of growers were interested to become a member of a cooperative and to start a new one. Among non-Members, in the settlements without cooperatives, almost 30% of growers have expressed rather high or very high interest in forming a cooperative, while about 50% held out an opposite position. In the settlements with cooperatives, over 50% of non-Members showed rather high or very high interest to form a cooperative, whereas low interest was exhibited by less than 20%. The equal parts of former-members and non-members (38% each) showed interest in joining a cooperative. About 35% of non-Members had the opposite view.

2. Grower Socio-Economic Characteristics The survey included 272 farmers in four regions of Georgia. Surveyed growers comprised former members of cooperatives, current members of cooperatives, and non-member growers residing in the settlements with and without cooperatives (Table 7).

Table 7. Grower category and geography coverage Former Non-member Region Member Total member No Yes coop Total Imereti 2 22 22 22 44 68 Shida Kartli 2 22 22 22 44 68 Kvemo Kartli 2 22 22 22 44 68 Kakheti 2 22 22 22 44 68 Total 8 88 88 88 176 272 Source: Cooperative field survey 2016, estimates

Average size of farmer households (HH) has been 4 persons (± 2). Mean HH size of current- Members (5; ±2.4) was slightly larger than that of non-Members, and smaller than that of former- Members (Figure 15).

Figure 15. HH size of surveyed growers

8 4.0 7 3.6 3.2 6 2.8 5 2.4 4 2.0 3 1.6 stdev 1.2 2 0.8 1 0.4

0 0.0 Average HH size, persons size, HH Average

mean stdev Source: Cooperative field survey 2016, estimates 36 About 65% of all the surveyed growers have been males. Among the categories of growers, the former-Members have consisted of the largest percentage of males, followed by those of current- Members and non-Members in a descending sequence. In all groups, the figure exceeded 50%. Across regions, more non-Member females than males were surveyed in Kakheti in the settlements with cooperatives, and in Shida Kartli, Imereti, and Kakheti in the settlements without cooperatives; female and male representations among former-Members in Kakheti and Kvemo Kartli were the same (Figure 16).

Figure 16. Gender of growers 100%

80%

60%

40%

20%

0%

male female Source: Cooperative field survey 2016, estimates

Average age of surveyed growers has been 52 years (±8). Mean age of non-Members (54 years) has been slightly higher than that of each of former- and current-Members; mean age of latter two, each has been 50 years (Figure 17).

Figure 17. Age of growers 60 20.0 50 15.0

40

30 10.0 Stdev 20 5.0 Average age, years age, Average 10 0 0.0

mean stdev Source: Cooperative field survey 2016, estimates

All surveyed growers, on average, have been involved in agriculture for 26 years (±8). Current- Members (24 years) have had greater experience than former-Members (16 years), and were less experienced than non-Members (28 years) (figure 18).

Figure 18. HH head experience in agriculture

40 20 35 30 15

25 20 10 15 Stdev 10 5 5

0 0 Experience in agriculture, years agriculture, in Experience

mean stdev Source: Cooperative field survey 2016, estimates 37 Highest proportion of growers has had technical high school level education, followed by high school, agriculture vocational school, mandatory education, no education, and elementary school level education in a descending order. Among groups, non-Members were found to have high-school education most often (Table 8).

Table 8. Education of growers Elementary Mandatory High Agr. voc Technical Group None Unievrsity nr school education school school high school All 3% 1% 13% 24% 21% 39% 0% 1% M 0% 0% 1% 14% 17% 68% 0% 0% M-IM 0% 0% 0% 23% 9% 68% 0% 0% M-K 0% 0% 5% 5% 0% 91% 0% 0% M-KK 0% 0% 0% 18% 23% 59% 0% 0% M-ShK 0% 0% 0% 9% 36% 55% 0% 0% FM 0% 0% 13% 0% 25% 63% 0% 0% FM-IM 0% 0% 0% 0% 0% 100% 0% 0% FM-K 0% 0% 50% 0% 0% 50% 0% 0% FM-KK 0% 0% 0% 0% 50% 50% 0% 0% FM-ShK 0% 0% 0% 0% 50% 50% 0% 0% NM 4% 1% 18% 30% 22% 24% 0% 1% NM-YC 0% 1% 9% 34% 28% 26% 0% 1% NM-YC-IM 0% 0% 0% 59% 9% 32% 0% 0% NM-YC-K 0% 0% 27% 9% 27% 36% 0% 0% NM-YC-KK 0% 0% 5% 50% 25% 20% 0% 0% NM-YC-ShK 0% 5% 14% 5% 52% 19% 0% 5% NM-NC 7% 1% 25% 26% 18% 23% 0% 1% NM-NC-IM 0% 0% 0% 73% 14% 14% 0% 0% NM-NC-K 21% 0% 45% 9% 6% 18% 0% 0% NM-NC-KK 0% 0% 0% 29% 42% 29% 0% 0% NM-NC-ShK 0% 4% 43% 4% 13% 30% 0% 4% Source: Cooperative field survey 2016, estimates

Majority of growers have had previous professions. The most frequently reported professions consisted of engineers, economists, drivers, teachers, and accountants. The three most often cited occupations across grower categories were as follows in declining order of regularity: former- Members – technologist, and philologist, economist, engineer; current-Members – engineer, economist, teacher; non-Members – engineer, driver, economist. There was no significant difference among non-Members in the settlements with cooperatives and non-Members in the settlements without cooperatives (Table 9).

38 Table 9. Previous professions of growers former non-member Profession All member member total no coop yes coop accountant 3.7% 3.4% 4.0% 3.9% 4.1% agronomist 0.4% 0.6% 1.0% cook 0.4% 0.6% 1.0% doctor 0.7% 2.3% dressmaker 0.4% 0.6% 1.4% driver 5.9% 2.3% 8.0% 9.8% 5.4% ecologist 0.4% 1.1% economist 8.5% 12.5% 14.8% 5.1% 6.9% 2.7% electrician 0.4% 0.6% 1.4% engineer 12.1% 12.5% 18.2% 9.1% 6.9% 12.2% entrepreneur 0.4% 0.6% 1.4% food technologist 1.5% 1.1% 1.7% 4.1% geologist 0.4% 1.1% laboratory technician 0.4% 0.6% 1.0% mechanical engineer 0.4% 0.6% 1.4% mechanist 2.6% 12.5% 2.3% 2.3% 2.9% 1.4% metal craftsman 1.8% 1.1% 2.3% 2.0% 2.7% nurse 0.7% 1.1% 0.6% 1.0% philologist 1.8% 12.5% 2.3% 1.1% 2.7% soldier 0.4% 0.6% 1.4% teacher 4.8% 5.7% 4.5% 4.9% 4.1% technologist 0.4% 25.0% 0.6% 1.4% winemaker 0.4% 1.1% wood industry 0.4% 1.1% pubic employee 0.4% 12.5% none 7.0% 12.5% 2.3% 9.1% 9.8% 8.1% nr 36.0% 29.5% 39.8% 38.2% 41.9% veterinarian 0.4% 1.1% public employee 2.2% 1.1% 2.8% 4.9% trader 0.7% 1.1% 0.6% 1.0% lawyer 2.2% 5.7% 0.6% 1.0% builder 0.4% 0.6% 1.0% laborer 1.1% 1.7% 2.0% 1.4% historian 0.4% 0.6% 1.0% livestock specialist 0.4% 0.6% 1.4% Source: Cooperative field survey 2016, estimates

About 18% of all HH heads have had income other than generated through the sales of agriculture products. The source of other income for all former- and current-Members has been employment in the public sector. Across non-Members in the settlements without cooperatives, with the exception of growers in Imereti (which has a diversity of sources), major source of income also has been public sector (Figure 19).

39 Figure 19. HH other income sources 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

public wage private wage non-agriculture employee agriculture employee family business pensioner

Source: Cooperative field survey 2016, estimates

Around 8% of farming HH also had income generated by HH members other than HH heads. Approximately, 50%, 45%, 50%, and 23% of growers representing former-Members in Kakheti, current-Members in Imereti, and non-Members in the settlements without and with cooperatives in Imereti have had additional income source from HH members other than HH heads, accordingly (Figure 20).

Figure 20. Farming HHs with additional sources of income

100%

80%

60%

40%

20%

0%

Yes No Source: Cooperative field survey 2016, estimates

Area of total utilized agricultural land of around 60% of growers has been in the range of 0-2 ha. Around 14% of growers have farmed on more than 10 ha area of land. About 57% of current- Members, 50% of former-Members, and 73% of non-Members, has farmed in the range of 0-5 ha, 0-5 ha, 0-2 ha area of land, respectively. No tangible difference was observed among the two non- Member sub-groups (Figures 21-26).

Figure 21. Distribution of total utilized area of land, All growers

35% 30% 25% 20% 15% 10% 5% 0% Proportion of growers,% 0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 >10 Area range, ha

Source: Cooperative field survey 2016, estimates

40 Figure 22. Distribution of total utilized area of land, current-Members

20%

15%

10%

5%

0% Proportion of growers,%

Area range, ha

Source: Cooperative field survey 2016, estimates

Figure 23. Distribution of Total Utilized Area of Land, former- Members

40%

30%

20%

10%

0%

Proportion of growers,% 0-1 1-2 4-5 5-6 >10 Area range, ha Source: Cooperative field survey 2016, estimates

Figure 24. Distribution of total utilized area of land, non- Members

50% 40% 30% 20% 10%

0% Proportionof growers,% 0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 >10 Area range, ha

Source: Cooperative field survey 2016, estimates

Figure 25. Distribution of Total Utilized Area of Land, non-Members (settlements with cooperatives)

50%

45% 40% 35% 30% 25% 20% 15%

10% Proportion of of growers,% Proportion 5% 0% 0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 >10 Area range, ha Source: Cooperative field survey 2016, estimates

41 Figure 26. Distribution of Total Utilized Area of Land, non-Members (settlements w/o cooperatives)

45% 40% 35% 30% 25% 20% 15% 10%

Proportion of growers,% 5% 0% 0-1 1-2 2-3 3-4 4-5 6-7 8-9 >10 Area range, ha

Source: Cooperative field survey 2016, estimates

Horticultural crops were cultivated on about 55% of area of total utilized land. Proportion of total land under horticultural crops was greater among former-Members (74%) than those between current-Members (54%) and non-Members (53%). Across regions, the largest proportion of land under horticulture crops in total land was in Shida Kartli, followed by those in Kvemo Kartli, Kakheti, and Imereti in a declining sequence (Figure 27).

Figure 27. Proportion of horticulture land area in total utilized land area

100% 0.5

80% 0.4

60% 0.3

40% 0.2 Stdev

20% 0.1

horticulture crops,% horticulture Proportion of area under area of Proportion 0% 0.0

mean stdev Source: Cooperative field survey 2016, estimates

In general, about 61% of growers have produced horticultural crops on the area of land ranging between 0-1 ha. Around 65% of current-Members, 50% of former-Members, and 72% of non- Members have farmed horticulture crops on the area ranging between 0-2 ha, 0-2 ha, and 0-1 ha, accordingly. Within non-Members, 61% of producers in the settlements with cooperatives, and 80% of farmers in the settlements without cooperatives, each has farmed horticulture crops on the area in the range of 0-1 ha (Figures 28-32).

Figure 28. Distribution of horticulture land area, All growers

70%

60% 50% 40% 30% 20%

Proportion of of growers,% Proportion 10% 0% 0-1 1-2 2-3 3-4 4-5 5-6 6-7 9-10 >10 Area range, ha Source: Cooperative field survey 2016, estimates 42 Figure 29. Distribution of horticulture land area, current-Members

50%

40%

30%

20%

10%

Proportion of growers,% 0% 0-1 1-2 2-3 3-4 4-5 5-6 9-10 >10 Area range, ha Source: Cooperative field survey 2016, estimates

Figure 30. Distribution of horticulture land area, former-Members

35% 30% 25% 20% 15% 10% 5%

Proportion of growers,% 0% 0-1 1-2 5-6 9-10 >10 Area range, ha

Source: Cooperative field survey 2016, estimates

Figure 31. Distribution of horticulture land area, non-Members

80% 70% 60% 50% 40% 30% 20% 10%

0% Proportion of growers,% 0-1 1-2 2-3 3-4 4-5 5-6 6-7 >10 Area range, ha

Source: Cooperative field survey 2016, estimates

Figure 32a. Distribution of horticulture land area, non-Members (settlements with cooperatives)

70% 60% 50% 40% 30% 20% 10%

0% Proportion of growers,% 0-1 1-2 2-3 3-4 4-5 5-6 6-7 Area range, ha Source: Cooperative field survey 2016, estimates 43 Figure 32b. Distribution of horticulture land area, non-Members (settlements w/o cooperatives)

100% 80% 60% 40% 20%

Proportion of growers,% 0% 0-1 1-2 5-6 >10 Area range, ha Source: Cooperative field survey 2016, estimates

Irrigation requirement is greater in the east part of the country than in the west. Around 22% (±0.4) of land has had irrigation water supply. The highest figure was observed in Shida Kartli and Kvemo Kartli regions (40%-60%), the lowest – in Kakheti (former-Members – 0%; current-Members - 1%, non-Members – 0-2%). Among grower categories, roughly equal proportions of land under current- and non-Member ownership has been irrigated (26% vs. 21%), while all former-Members have reported lack of irrigation supplies (Figure 33).

Figure 33. Proportion of land irrigated

60% 0.6 50% 0.5

40% 0.4

30% 0.3 Stdev 20% 0.2 10% 0.1

Proportion of land irrigated,% land of Proportion 0% 0.0

mean stdev Source: Cooperative field survey 2016, estimates

With the exception of non-Members in the settlements with cooperatives and current-Members in Shida Kartli, majority of growers (74%) have not had irrigation supply neither to farm plots, nor to house-adjacent plots. The largest proportion of growers both with irrigated farm plots and house- adjacent areas has been in Shida Kartli among non-Members in the settlements with cooperatives (29%), and that with available irrigation supply to at least one type of plot – also in Shida Kartli but among current-Members (45%) (Figure 34).

Figure 34. % of growers with irrigated farm and house-adjacent plots 100%

80%

60%

40%

20%

0%

None At least one Both Source: Cooperative field survey 2016, estimates

44 In general, growers have followed diversified production activities, and produced 31 types of horticultural crops including 13 types of vegetable crops, 12 types of fruit crops, 2 types of melons, and 3 types of berries (Figure 35).

Figure 35. Average number of horticultural crops produced

14

12 10 8 6 4

2 # of crops produced crops of # 0

vegetable crops fruit crops melons berry crops Source: Cooperative field survey 2016, estimates

The three major vegetable and fruit crops were potato (11%), tomato (17%), cucumber (8%), hazelnut (12%), grape (16%) and apple (6%). Major vegetable crops produced/ traded by former- Members, current members, and non-Members were potato (50%, each) and tomato (18%, 15%) respectively. Major fruits produced/ traded by former-Members have been grapes and peaches (13%, each), in case of current-Members and non-Members - hazelnut and grapes (14%, each) (Table 10).

Table 10. Proportion of growers involved in production and trade of specific horticultural crops

M

Crops All

FM

NM

M-K

FM-K

M-IM M-KK

FM-IM FM-KK M-ShK

NM-YC

NM-NC

FM-ShK

NM-YC-K

NM-NC-K

NM-YC-IM NM-YC-KK

NM-NC-IM NM-NC-KK

NM-YC-ShK

NM-NC-ShK Vegetables cucumber 8% 11% 27% 18% 6% 6% 25% 7% 18% 5% pepper 1% 1% 5% 1% 1% 4% herbs 3% 3% 14% 2% 1% 4% 4% 9% 5% tomato 17% 18% 27% 5% 23% 18% 16% 13% 5% 6% 33% 9% 22% 23% 18% 15% 29% potato 11% 25% 50% 50% 13% 5% 36% 9% 10% 3% 6% 4% 19% 50% 19% haricot 7% 13% 50% 6% 5% 18% 7% 9% 39% 4% 5% 10% carrot 1% 3% 14% beet 1% 3% 9% 5% onion 3% 13% 50% 5% 14% 5% 2% 1% 4% 3% 5% 5% garlic 1% 1% 5% 1% 1% 4% cabbage 2% 2% 9% 2% 1% 3% 4% 10% 5% taragon 1% 1% 3% 10% eggplant 1% 1% 2% 6% Fruits cornel 3% 2% 9% 4% 5% 22% 3% 10% plum 2% 1% 5% 2% 1% 4% 4% 5% 10% cherry 2% 2% 9% 2% 5% 19% grapes 16% 13% 50% 14% 14% 23% 5% 14% 17% 20% 45% 21% 4% 9% 14% 27% 36% fruits 0% 1% 1% 4% pear 1% 1% 3% 10% apple 6% 10% 5% 36% 3% 2% 5% 4% 5% 19% persimmon 1% 1% 5% 1% 3% 10% greenplum 0% 1% 1% 4% hazelnut 12% 14% 50% 5% 12% 11% 45% 4% 14% 45% peach 2% 13% 50% 1% 5% 2% 3% 6% 4% pomegranate 0% 1% 1% 5% Melons watermelon 1% 2% 9% 1% 3% 9% melon 0% 1% 5% Berries strawberry 0% 1% 5% berries 1% 1% 5% 1% 1% 5% blackberry 0% 1% 5% raspberry 1% 1% 5% 1% 1% 5% Source: Cooperative field survey 2016, estimates 45 About 21% of all growers have had full-time employees. Around 25%, 20%, and 21% of former-, current-, and non-Members, have had full time employees, respectively. Among the non-Member sub- groups there was no tangible difference observed. Across regions, in Imereti the highest figure came from non-Members in the settlements with cooperatives (5%), in Kakheti – from current-Members (23%), in Kvemo Kartli – from nearly all groups and subgroups (e.g. about 50% in case of former- Members, 32% in case of current-Members, 50% in case of non-Members in the settlements without cooperatives); in Shida Kartli – from nearly all groups (e.g. about 50% in case of former-Members, 48% in case of non-Members in the settlements without cooperatives, 33% in case of non-Members in the settlements with cooperatives). The average number of full-time employees among grower categories has been 6 persons (±3.5), and average number of full-time employees across grower categories has been as follows: former-Members – 12.5 (±3.5), current-Members – 9.3 (±12.4), and non-Members – 4.6 (±7.6) (Figures 36a-36b).

Figure 36a. Proportion of growers with full-time employees

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Source: Cooperative field survey 2016, estimates

Figure 36b. Average number of full-time employees 16 20.0

14

time time - 12 15.0

10

8 10.0

6 Stdev 4 5.0

employees, persons employees, 2

Average number of full of number Average 0 0.0

mean stdev Source: Cooperative field survey 2016, estimates

In general, greater proportion of all growers (36% vs. 21%) has had part-time employees than full- time employees. Approximately 63%, 47%, and 30% of former-, current-, and non-Members, have had full time employees, respectively. Across regions, in Imereti, 50%, 14%, 5%, and 5% of former- Members, current-Members, and non-Members in the settlements with and without cooperatives, each, have had part-time employees, accordingly; in Kakheti, 100% of former-Members, 72% of current members, 67% of non-Members in the settlements without cooperatives, and about 10% of non-Members in the settlements with cooperatives have had part-time employees; in Kvemo Kartli, about 50%, 59%, about 10%, and about 60% of former-Members, current-Members, non-Members in the settlements without cooperatives, and non-Members in the settlements with cooperatives have had part-time employees, respectively; in Shida Kartli, about 50%, 41%, 40%, and 20% of former- Members, current-Members, non-Members in the settlements without cooperatives, and non- Members in the settlements with cooperatives have had part-time employees, accordingly. Average number of part-time employees has been 11 persons (±11.3), and that across grower categories have 46 been the following: former-Members – 13.6 (±11.3), current-Members – 18.4 (±2), and non-Members – 5.7 (±8.2) (Figures 37a-37b).

Figure 37a. Proportion of growers with part-time employees

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Source: Cooperative field survey 2016, estimates

Figure 37b. Average number of part-time employees 35 50.0

30

time time

- 40.0 25

20 30.0 15 20.0 Stdev 10 10.0

5 employees, persons employees,

0 0.0 Average number of partl of number Average

mean stdev Source: Cooperative field survey 2016, estimates

Around 69% (±0.34) of total agricultural turnover of all growers was accounted by horticultural crops. Proportion of revenue generated through the sales of horticultural crops was greater among non-Members (70%; ±0.29) compared to those of former-Members (69%; ±0.34) and current- Members (67%; ±0.18). Across regions, proportion of horticulture revenue in total agriculture revenue was greater among growers in Shida Kartli and Kvemo Kartli than among those in Kakheti and Imereti. In Imereti this figure is lower in all groups and sub-groups (except former-Members – 70%) and ranges between 50%-60%. The Kakheti region gave similar results (former-Members scored the lowest – 25%). In contrast, the Shida Kartli region rolled out high percentages ranging from 81% to 100% all groups and sub-groups (e.g. 90% in case of current-Members). The Kvemo Kartli region mapped almost the same high rates (Figure 38).

Figure 38. Proportion of horticulture crop turnover in total farm turnover 100% 0.40 0.35

80% 0.30

60% 0.25

0.20 Stdev turnover,% 40% 0.15 0.10 Share of horticultural horticultural of Share 20% 0.05 0% 0.00

mean stdev Source: Cooperative field survey 2016, estimates 47 3. Marketing Open markets, small retailers, and wholesalers have been major buyers of horticultural products. Across categories of growers, about half of former-Members have traded their production with small retailers, around 44% of current-Members - with wholesalers, and approximately 46% of non- Members have supplied their production to open market (Figure 39).

Figure 39. Buyers of farm production 22 100% 80% 60% 40% 20% 0%

processing factory wholesaler large retailer open market collecting company small retailer cooperative other

Source: Cooperative field survey 2016, estimates

Growers have been delivering their production to buyers. Collection of production by buyers at farm sites was more prevalent in case of former-Members throughout the regions, and in Shida and Kvemo Kartli, among both current- and non-Members (Figure 40).

Figure 40. Mode of transaction with a buyer

100% 80% 60% 40% 20% 0%

brought to a buyer collected at the farm other Source: Cooperative field survey 2016, estimates

Growers usually have collected payments upon conclusion of sales transactions; the second most followed practice has been collection of payments after delivery, and collection of payments before delivery has been the least common method (Figure 41).

Figure 41. Mode of transactions 100% 80% 60% 40% 20% 0%

before delivery upon sales after delivery Source: Cooperative field survey 2016, estimates

22 “Other” market outlet in most cases represented sales from the field 48

On average, growers, who have been paid after deliveries, have been collecting receivables from the buyers within 30 days. The period was slightly longer in case of non-Members and somewhat shorter in case of current-Members. Growers in all grower categories, across all regions, collected their receivables within 15-33 days with the exception of current-Members in Imereti, and non-Members in the settlements with cooperatives in Kakheti; former, required a day, while latter over 60 days to collect receivables (Figure 42).

Figure 42. Collection of receivables by growers 70 80.0

60 50 60.0

40 40.0

30 Stdev 20 receivables, days receivables, 20.0

Period for collection of of collection for Period 10 0 0.0

mean stdev Source: Cooperative field survey 2016, estimates

Majority of growers have traded their output at local market (72%). The other market outlets included processing enterprises and sales through a marketing organization (9% together); about 18% of the output was self-consumed or used in other type of consumption.

In general, among all groups, the largest percentage of growers who have traded their output at local markets, was accounted by current-Members, followed by non-Members and former-Members in a descending sequence. Among non-Members, greater proportion of growers in the settlements without cooperatives sold their output at local market than those in the settlements with cooperatives.

The majority of former-Members, in all regions exclusive of Imereti, have marketed production at local market. Small fractions of growers in Kvemo Kartli, has used output for self- and other type of consumption.

The same proportions of current-Members in Imereti have used output for self-consumption and other type of consumption and sold at local market; in Kakheti, growers in addition to local market sales, have supplied their harvest to the processing enterprises, traded through a marketing organization, and self-consumed and used in other type of consumption; in Kvemo and Shida Kartli, majority of growers have marketed their output at local market, and relatively small proportions have self-consumed and used their output for other type of consumption; only very small part of growers in Shida Kartli have traded their output through a marketing organization. The number of the type of uses of harvest has been more diverse among current members than between former- and non- Members.

Non-Members, in both types of settlements, in all regions, mainly have either sold their output at local market or self-consumed; only small proportion of farmers in Kakheti, both in the settlements with and without cooperatives, has supplied output to processing enterprises. With the exception of growers in Kvemo Kartli in the settlements without cooperatives and those in Kvemo and Shida Kartli in the settlements with cooperatives, the majority of farmers in the remaining regions have reported self-consumption and other type of consumption of their output (Figure 43).

49 Figure 43. Mode of output utilization 100%

80%

60%

40%

20%

0%

local market processing marketing organization self-consumption & other Source: Cooperative field survey 2016, estimates

On average, growers have dealt with 11 buyers (±16), and in general growers in Shida Kartli and Kakheti have transacted with a larger number of growers than those in other regions. Across grower categories former-Members have transacted with the largest number of buyers (15; ±16), followed by current members (14; ±21.1) and non-Members in the settlements with (10; ±10.3) and without (8; ±15.8) cooperatives in a descending sequence. The largest variability in the number of buyers was observed in case of current-Members, followed by that among former-Members and non-Members in declining order. Growers in Kvemo Kartli have dealt with the largest number of buyers (30 buyers in case of former-Members, 29 – in case of current-Members, and 18 and 16 buyers in case of non- Members in the settlements without and with cooperatives, respectively) relative to those in other regions (Figure 44).

Figure 44. Number of buyers dealt with

30 35.0 25 30.0 25.0 20 20.0 15 15.0 10 Stdev 10.0 5 5.0

0 0.0 Number of buyers, persons buyers, of Number

mean stdev Source: Cooperative field survey 2016, estimates

About 43% of all growers have been neither satisfied nor dissatisfied with the relationships with main buyers. The second largest category was represented by growers who have assessed terms and conditions of transactions with main buyers as more satisfactory than neutral (36%), followed by those having less adequate than neutral evaluation (16%).

Prevalent proportions of former- and current-Members have assessed relationship with main buyers as more acceptable than neutral, while that by non-Members was neutral.

All former-Members in Imereti and Kakheti considered contacts with main buyers as more acceptable than neutral. 50% of growers in Kvemo Kartli appraised interactions with main buyers as more adequate than neutral and neutral. The similar picture emerges in Shida Kartli too.

Larger percentage of current-Members in all regions with the exception of Shida Kartli, evaluated transactions with main buyers as neutral than those who have assessed business contacts as more- and less acceptable than neutral. In Shida Kartli prevailing part of farmers were content with terms and conditions of transactions with main buyers. Across regions, the largest fractions of growers who were not satisfied with dealings with main buyers were in Kakheti (18%) and Shida Kartli (18%). 50

Greater percentage of non-Members in the settlements without cooperatives in all regions exclusive of Kakheti, have assessed contacts with main buyers as neutral than those who have evaluated their dealings with main buyers as more and less satisfactory than neutral; in Kakheti, prevailing proportion of growers were content with the terms and conditions of transactions with buyers, followed by those with neutral satisfaction and less than neutral satisfaction in a descending sequence. Within regions, larger part of growers in Imereti, has appraised relationship with main buyers as less satisfactory than neutral (41%) than the farmers in other regions; while growers in Shida Kartli have been least disappointed with the terms and conditions of transactions with main buyers (9%).

Prevailing fraction of non-Members in the settlements with cooperatives in Imereti has discerned less than neutral satisfaction with the transactions with buyers (36%) compared to those in other regions; the least dissatisfied with the contact with main buyers were growers in Kvemo and Shida Kartli, and in each region the proportion of these growers has been about 5%. Majority of non-Members in all regions have evaluated business dealings with main buyers as moderately satisfactory (Figure 45).

Figure 45. Extent of satisfaction with the collaboration with buyers

100%

80%

60%

40%

20%

0%

dn know < neutral neutral > neutral nr/na Source: Cooperative field survey 2016, estimates

In general, the majority of all growers has assessed high price offered, reliability of payments, price stability, and trust to be greater than reasonably important factors influencing buyer selection decisions; relatively small fraction of producers has evaluated extra services offered and contractual collaboration as important aspects underlying growers’ decisions in regard to a buyer choice. Overall, current-Members have attached greater importance to different aspects on which growers base their choice preferences than that by former- and non-Members.

The majority of former-Members have considered high price offered and trust to be main issues influencing grower choice between options. All growers in Imereti have viewed high price offered to be an important factor underlying buyer selection decisions; those in Kakheti have assessed payment reliability, high price, and trust as key factors; in Kvemo Kartli all producers have evaluated extra services offered, price stability and trust to be most important factors underlying their preferences; in Shida Kartli, only half of growers have identified payment reliability, high price, price stability and trust to be motivating factors on which buyer selection has been based.

The largest proportion of current-Members assessed payment reliability to be more than moderately important, followed by that of price stability, high price, and a trust in a declining order of significance. Majority of growers in Imereti appraised payment reliability/ high price, trust and price stability as important factors underlying decision in regard to business partnerships. Those in Kakheti identified payment reliability/ high price, price stability and trust as significant factors affecting their choices; growers in Kvemo Kartli have considered price stability/ trust, payment reliability and high price as impacting their choices between options; and producers in Shida Kartli appraised price stability and trust/ payment reliability/ high price as key issues when selecting a buyer.

51 In general, non-Members in the settlements without cooperatives have assigned greater weight to the factors that underlie buyer selection decisions than those in the settlements with cooperatives. In the settlements without cooperatives, the largest percentage of growers has considered high price, payment reliability, price stability and trust as greater than moderately significant factors in a declining order. Within regions, in a descending order of significance, majority of farmers in Imereti have identified high price to be greater than moderately significant aspect; growers in Kakheti have evaluated high price/ price stability, trust and payment reliability; those in Kvemo Kartli have appraised payment reliability, trust, price stability, and high price offered; and producers in Shida Kartli have trust, high price, and payment reliability to be greater than moderately important aspects.

A largest part of growers in the settlements with cooperatives, similar to that in the settlements without cooperatives, assessed high price, payment reliability, price stability, and trust as more than moderately important factors in a declining sequence of importance. Majority of growers in Imereti has appraised high price as a key factor influencing farmer choices; those in Kakheti, have considered price stability, payment reliability, and trust to be more than moderately important aspects; growers in Kvemo Kartli have identified price stability, trust/ payment reliability, and contractual cooperation as important issues for considerations; and producers in Shida Kartli have appraised high price, payment reliability and price stability/ trust as essential elements (Table 5, Figures 46-51).

Table 5. Factors Underlying Grower Choices of Buyers moderate group payment high extra price payment high extra price payment high extra price trust contract trust contract trust contract reliability price services stability reliability price services stability reliability price services stability

All 7% 7% 38% 4% 7% 32% 18% 11% 28% 22% 23% 25% 69% 75% 28% 67% 64% 31% FM 13% 0% 25% 13% 13% 50% 25% 13% 38% 25% 13% 13% 50% 75% 25% 50% 63% 25% FM-IM 0% 0% 0% 50% 50% 50% 100% 0% 100% 50% 50% 50% 0% 100% 0% 0% 0% 0% FM-K 0% 0% 100% 0% 0% 50% 0% 0% 0% 50% 0% 0% 100% 100% 0% 50% 100% 50% FM-KK 50% 0% 0% 0% 0% 50% 0% 50% 0% 0% 0% 0% 50% 50% 100% 100% 100% 50% FM-ShK 0% 0% 0% 0% 0% 50% 0% 0% 50% 0% 0% 0% 50% 50% 0% 50% 50% 0% M 1% 3% 39% 2% 3% 22% 13% 14% 23% 13% 15% 20% 78% 74% 28% 77% 74% 50% M-IM 0% 0% 23% 0% 9% 23% 9% 9% 27% 36% 23% 27% 91% 91% 50% 64% 68% 50% M-K 0% 0% 41% 5% 0% 14% 14% 9% 9% 0% 18% 32% 73% 73% 27% 82% 68% 41% M-KK 0% 9% 41% 0% 0% 9% 14% 23% 32% 5% 5% 9% 73% 55% 14% 82% 82% 68% M-ShK 5% 5% 50% 5% 5% 41% 14% 14% 23% 9% 14% 14% 77% 77% 23% 82% 77% 41% NM 9% 10% 38% 5% 8% 36% 20% 10% 30% 27% 27% 27% 66% 76% 28% 63% 60% 21% NM-NC 10% 6% 32% 4% 7% 41% 20% 9% 32% 29% 27% 25% 64% 78% 28% 60% 59% 16% NM-NC-IM 18% 0% 55% 5% 23% 45% 41% 5% 41% 77% 68% 55% 41% 95% 5% 18% 9% 0% NM-NC-K 3% 0% 27% 0% 0% 39% 21% 9% 33% 9% 21% 27% 73% 88% 36% 88% 76% 24% NM-NC-KK 4% 4% 21% 4% 4% 46% 0% 13% 46% 8% 4% 17% 83% 71% 21% 75% 79% 25% NM-NC-ShK 17% 22% 30% 9% 4% 35% 17% 9% 9% 35% 22% 4% 52% 57% 48% 43% 61% 9% NM-YC 8% 15% 46% 5% 9% 28% 22% 12% 26% 24% 27% 30% 69% 72% 27% 68% 61% 28% NM-YC-IM 5% 5% 45% 9% 27% 32% 55% 5% 41% 59% 50% 32% 41% 91% 14% 32% 23% 14% NM-YC-K 9% 27% 45% 0% 9% 27% 9% 9% 36% 0% 9% 55% 82% 64% 18% 91% 73% 0% NM-YC-KK 10% 30% 55% 0% 0% 15% 5% 25% 10% 10% 15% 20% 85% 45% 35% 90% 85% 65% NM-YC-ShK 10% 5% 38% 10% 0% 38% 10% 10% 19% 14% 24% 24% 76% 81% 38% 71% 71% 24% Source: Cooperative field survey 2016, estimates

Figure 46. Reliability of payments 100% 80% 60% 40% 20% 0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates 52 Figure 47. High price offered 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na

Source: Cooperative field survey 2016, estimates

Figure 48. Extra services offered 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na

Source: Cooperative field survey 2016, estimates

Figure 49. Price stability

100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates

Figure 50. Trustworthiness 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates

53 Figure 51. Contractual collaboration 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na

4. Factors Affecting Grower Revenues and Sustainable Development Three major factors that have had at least moderately significant impact on farmer revenue and sustainable development have been natural hazards, market and price volatility, and access to finance. Reportedly, the trivial issues included insufficient knowledge and skills, negative impact of government policies and regulations, and underdeveloped social services.

Among former-Members, the most frequently referred factors having at least moderately important effect on farmer revenue and sustainable development consisted of natural hazards, low endowment with equipment et al./ low access to infrastructure/ access to finance, and low access to PHP infrastructure/ market and price volatility. Within regions, in Imereti, all farmers have identified access to finance, insufficient/ unskilled labor force, low access to infrastructure and PHP infrastructure, low endowment with equipment et al., and natural hazards; growers in Kakheti – natural hazards and market and price volatility; producers in Kvemo Kartli – access to finance, low access to infrastructure, low endowment with equipment et al., market and price volatility, natural hazards, negative impact of policies/ regulations, and underdeveloped social services; and those in Shida Kartli - access to finance, low access to infrastructure and PHP infrastructure, low endowment with equipment et al., market and price volatility, and natural hazards.

Amongst current-Members, issues having at least greater than moderately significant impact on grower revenue and sustainable development comprised natural hazards, market and price volatility, and access to finance. Across regions, the most commonly discussed factors, in Imereti consisted of natural hazards, low endowment with equipment et al., and access to finance; those in Kakheti included market and price volatility, natural hazards, and access to finance; in Kvemo Kartli these issues were natural hazards, market and price volatility and low endowment with equipment et al.; and those in Shida Kartli have been natural hazards, market and price volatility, and low access to PHP infrastructure/ insufficient/ unskilled labor force/ access to markets/ access to finance.

Among non-Members too three recurrently mentioned aspects were natural hazards, market/price volatility, and access to finance. Non-Members in the settlements without cooperatives most often identified natural hazards, low access to infrastructure, and access to finance as factors having at least moderately significant impact on their revenue and sustainable development, while those in the settlements with cooperatives – natural hazards, market/price volatility, and access to finance.

Throughout the regions, (a) in the settlements without cooperatives, in Imereti mentioned principal factors have been natural hazards/ access to finance/ low endowment with equipment et al., low

54 access to PHP infrastructure, and market and price volatility/ low access to infrastructure; those in Kakheti comprised natural hazards, market and price volatility/ access to finance, and low access to infrastructure; those in Kvemo Kartli consisted of natural hazards, low access to infrastructure, and access to finance/ low access to PHP infrastructure/ market and price volatility; and those in Shida Kartli included natural hazards/ low access to infrastructure, low endowment with equipment et al., and access to finance; (b) in the settlements with cooperatives, in Imereti the most frequently referred factors were access to finance, natural hazards, and market and price volatility; those in Kakheti have been natural hazards, access to finance, and market competition/ negative impact of policies and regulations; those in Kvemo Kartli included natural hazards, market and price volatility, and low endowment with equipment et al./ access to finance; and those in Shida Kartli comprised natural hazards, market and price volatility, and low endowment with equipment et al./ low access to PHP infrastructure/ low access to infrastructure (Table 11, Figures 52-64).

Table 11. Factors influencing grower revenue and sustainable development

group factor

PHH

et al. et

price

other social

& skills market natural

hazards services

finances markets

volatility

access to access to access to unskilled

knowledge knowledge labor force

insufficient of policies/ regulations

market and market

insufficient/ competition

low accesslow to accesslow to

infrastructure infrastructure

with equipment equipment with impact negative

low endowment endowment low

underdeveloped underdeveloped < moderate 13% 31% 40% 50% 17% 24% 20% 10% 28% 2% 46% 0% 47% All ≥ moderate 86% 67% 58% 48% 81% 73% 78% 87% 68% 96% 52% 0% 49% < moderate 13% 50% 50% 63% 13% 25% 13% 13% 38% 0% 50% 0% 50% FM ≥ moderate 88% 50% 50% 38% 88% 75% 88% 75% 63% 100% 50% 0% 50% < moderate 0% 50% 50% 0% 0% 0% 0% 50% 100% 0% 100% 0% 100% FM-IM ≥ moderate 100% 50% 50% 100% 100% 100% 100% 0% 0% 100% 0% 0% 0% < moderate 50% 50% 50% 100% 50% 50% 50% 0% 50% 0% 50% 0% 50% FM-K ≥ moderate 50% 50% 50% 0% 50% 50% 50% 100% 50% 100% 50% 0% 50% < moderate 0% 100% 50% 100% 0% 50% 0% 0% 0% 0% 0% 0% 0% FM-KK ≥ moderate 100% 0% 50% 0% 100% 50% 100% 100% 100% 100% 100% 0% 100% < moderate 0% 0% 50% 50% 0% 0% 0% 0% 0% 0% 50% 0% 50% FM-ShK ≥ moderate 100% 100% 50% 50% 100% 100% 100% 100% 100% 100% 50% 0% 50% < moderate 11% 23% 25% 25% 22% 22% 19% 7% 22% 5% 35% 0% 41% M ≥ moderate 83% 70% 69% 69% 73% 72% 75% 85% 70% 89% 58% 1% 51% < moderate 0% 14% 27% 9% 27% 0% 0% 9% 23% 0% 50% 0% 32% M-IM ≥ moderate 100% 86% 73% 91% 73% 95% 100% 91% 68% 100% 50% 0% 68% < moderate 9% 23% 18% 41% 14% 45% 41% 0% 18% 9% 14% 0% 32% M-K ≥ moderate 77% 59% 68% 45% 73% 41% 45% 82% 68% 77% 68% 5% 55% < moderate 18% 36% 32% 32% 18% 23% 14% 5% 23% 5% 18% 0% 50% M-KK ≥ moderate 73% 55% 59% 59% 73% 68% 77% 82% 68% 82% 73% 0% 32% < moderate 18% 18% 23% 18% 27% 18% 23% 14% 23% 5% 59% 0% 50% M-ShK ≥ moderate 82% 82% 77% 82% 73% 82% 77% 86% 77% 95% 41% 0% 50% < moderate 13% 34% 47% 62% 15% 26% 20% 11% 31% 1% 51% 0% 50% NM ≥ moderate 87% 65% 52% 38% 85% 74% 79% 89% 67% 99% 49% 0% 47% < moderate 13% 34% 53% 70% 11% 24% 21% 16% 39% 1% 60% 0% 54% NM-NC ≥ moderate 87% 65% 46% 29% 88% 75% 78% 84% 59% 99% 39% 0% 42% < moderate 0% 14% 41% 36% 9% 5% 0% 9% 45% 0% 41% 0% 36% NM-NC-IM ≥ moderate 100% 86% 55% 59% 91% 95% 100% 91% 50% 100% 55% 0% 59% < moderate 3% 39% 55% 91% 18% 39% 39% 3% 27% 0% 70% 0% 48% NM-NC-K ≥ moderate 97% 61% 45% 9% 82% 61% 61% 97% 73% 100% 30% 0% 48% < moderate 33% 58% 38% 46% 8% 29% 25% 33% 50% 0% 25% 0% 38% NM-NC-KK ≥ moderate 67% 42% 63% 54% 88% 67% 71% 67% 50% 100% 75% 0% 58% < moderate 17% 22% 78% 96% 4% 13% 9% 22% 39% 4% 100% 0% 96% NM-NC-ShK ≥ moderate 83% 74% 22% 4% 96% 87% 91% 78% 57% 96% 0% 0% 0% < moderate 14% 34% 39% 51% 20% 28% 20% 5% 20% 0% 38% 0% 45% NM-YC ≥ moderate 86% 66% 61% 49% 80% 72% 80% 95% 78% 99% 62% 0% 54% < moderate 0% 18% 32% 41% 18% 9% 5% 9% 32% 0% 55% 0% 41% NM-YC-IM ≥ moderate 100% 82% 68% 59% 82% 91% 95% 91% 68% 95% 45% 0% 59% < moderate 9% 36% 36% 82% 36% 100% 73% 0% 18% 0% 18% 0% 0% NM-YC-K ≥ moderate 91% 64% 64% 18% 64% 0% 27% 100% 82% 100% 82% 0% 100% < moderate 15% 40% 60% 55% 20% 25% 15% 5% 15% 0% 35% 0% 65% NM-YC-KK ≥ moderate 85% 60% 40% 45% 80% 75% 85% 95% 85% 100% 65% 0% 30% < moderate 29% 43% 29% 43% 14% 14% 14% 5% 14% 0% 33% 0% 52% NM-YC-ShK ≥ moderate 71% 57% 71% 57% 86% 86% 86% 95% 81% 100% 67% 0% 48% Source: Cooperative field survey 2016, estimates 55 Figure 52. Low endowment with equipment et al. 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates

Figure 53. Low access to PHP infrastructure 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na

Source: Cooperative field survey 2016, estimates

Figure 54. Access to finance

100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates

Figure 55. Low access to infrastructure 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na

Source: Cooperative field survey 2016, estimates 56 Figure 56. Access to markets 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates

Figure 57. Market and price volatility 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates

Figure 58. Natural hazards

100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates

Figure 59. Underdeveloped social services 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na

Source: Cooperative field survey 2016, estimates

57 Figure 60. Insufficient/ unskilled labor force 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na

Source: Cooperative field survey 2016, estimates

Figure 61. Negative impact of policies/ regulations 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na

Source: Cooperative field survey 2016, estimates

Figure 62. Insufficient knowledge and skills 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates

Figure 63. Market competition 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na

Source: Cooperative field survey 2016, estimates

58 Figure 64. Other factors 100%

80%

60%

40%

20%

0%

dn know < moderate moderate > moderate nr/na Source: Cooperative field survey 2016, estimates

Cooperative membership duration is found to be 2 years (±1.6). Only former-Members in Kvemo Kartli have been cooperative members for about 6 years (Figure 65).

Figure 65. Duration of a cooperative membership 6 8.0

7.0 5 6.0 4

5.0

3 4.0

3.0 Stdev 2

membership, years membership, 2.0

Duration of a cooperative cooperative of a Duration 1 1.0 0 0.0

mean stdev Source: Cooperative field survey 2016, estimates

On average, cooperative membership size has been 8 persons. In general, the quantities of current- Members have been larger than those of former-Members (Figure 66).

Figure 66. Average size of a cooperative 10 8.0 7.0 8

6.0

6 5.0

4.0 Stdev persons 4 3.0 2.0 2

Average size of a cooperative, cooperative, a of size Average 1.0 0 0.0 All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK mean stdev Source: Cooperative field survey 2016, estimates

59 5. Activities Coordinated through the Cooperatives Largely, majority of growers in descending order of frequency have coordinated production, financing, transportation, and marketing activities through their cooperative. Prevalent proportion of current-Members show the same tendency with a minor difference (storage comes up at the lower end of the list). Across regions, current-Members in a declining sequence of regularity in Imereti have coordinated production activities; those in Kakheti – trainings, other, input purchase, lobbying, and marketing; those in Kvemo Kartli – financing/ transportation, marketing, storage, trainings/ production, and input purchase; and those in Shida Kartli – production, financing/ transportation, trainings, input purchase and storage. Among former-Members, the growers commonly have coordinated input purchase and production activities. Throughout the regions in a descending order of occurrence, former-Members in Imereti and Kakheti have coordinated production activities; those in Kvemo Kartli – input purchase, marketing, packing, transportation, and financing; and those in Shida Kartli – input purchase. Only small proportion of those current- and former-Members who have not had experience in joint implementation of different activities, has been planning cooperation with fellow growers in the future (Table 12, Figures 67-76).

Table 12. Activities coordinated through a cooperative input group y/n production marketing storage packing transportation lobbying financing trainings other purchase Yes 42% 81% 51% 50% 26% 56% 27% 58% 42% 5% All No 51% 15% 41% 43% 65% 35% 67% 39% 52% 95% Yes, future 5% 3% 8% 7% 9% 8% 6% 3% 5% 0% Yes 40% 83% 52% 51% 24% 58% 25% 59% 42% 6% M No 52% 13% 39% 41% 66% 33% 68% 38% 51% 94% Yes, future 6% 3% 9% 8% 10% 9% 7% 3% 6% 0% Yes 27% 91% 36% 23% 14% 45% 9% 23% 23% 0% M-IM No 68% 5% 64% 73% 82% 55% 91% 77% 73% 100% Yes, future 0% 0% 0% 5% 5% 0% 0% 0% 0% 0% Yes 18% 91% 55% 59% 36% 32% 23% 59% 14% 23% M-K No 73% 9% 36% 36% 59% 50% 68% 36% 77% 77% Yes, future 9% 0% 9% 5% 5% 18% 9% 5% 9% 0% Yes 55% 59% 73% 68% 27% 77% 41% 77% 59% 0% M-KK No 32% 32% 14% 23% 64% 14% 50% 18% 32% 100% Yes, future 9% 9% 14% 9% 9% 9% 9% 5% 9% 0% Yes 59% 91% 45% 55% 18% 77% 27% 77% 73% 0% M-ShK No 36% 5% 41% 32% 59% 14% 64% 18% 23% 100% Yes, future 5% 5% 14% 14% 23% 9% 9% 5% 5% 0% Yes 63% 63% 38% 38% 50% 38% 50% 50% 38% 0% FM No 38% 38% 63% 63% 50% 63% 50% 50% 63% 100% Yes, future 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Yes 50% 100% 0% 0% 0% 0% 0% 0% 0% 0% FM-IM No 50% 0% 100% 100% 100% 100% 100% 100% 100% 100% Yes, future 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Yes 0% 100% 0% 50% 50% 0% 50% 50% 50% 0% FM-K No 100% 0% 100% 50% 50% 100% 50% 50% 50% 100% Yes, future 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Yes 100% 50% 100% 50% 100% 100% 50% 100% 50% 0% FM-KK No 0% 50% 0% 50% 0% 0% 50% 0% 50% 100% Yes, future 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Yes 100% 0% 50% 50% 50% 50% 100% 50% 50% 0% FM-ShK No 0% 100% 50% 50% 50% 50% 0% 50% 50% 100% Yes, future 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Source: Cooperative field survey 2016, estimates

60 Figure 67. Input purchase

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

yes no yes, future nr

Source: Cooperative field survey 2016, estimates

Figure 68. Production

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

yes no yes, future nr

Source: Cooperative field survey 2016, estimates

Figure 69. Marketing

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

yes no yes, future nr

Source: Cooperative field survey 2016, estimates

Figure 70. Storage

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

yes no yes, future nr

Source: Cooperative field survey 2016, estimates 61 Figure 71. Packing

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

yes no yes, future nr

Source: Cooperative field survey 2016, estimates

Figure 72. Transportation

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

yes no yes, future nr

Source: Cooperative field survey 2016, estimates

Figure 73. Lobbying

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

yes no yes, future nr

Source: Cooperative field survey 2016, estimates

Figure 74. Financing

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

yes no yes, future nr

Source: Cooperative field survey 2016, estimates 62 Figure 75. Trainings

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK yes no yes, future nr

Source: Cooperative field survey 2016, estimates

Figure 76. Other activities

100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK yes no yes, future nr

Source: Cooperative field survey 2016, estimates

6. External Support Approximately, 33% and 25% of all former- and current-Members have received support in the frame of Government programmes and Donor projects, respectively. Government support mainly has included allocation of cooperative members with small scale equipment of land cultivation under preferential terms and conditions, and that of the Donors consisted of procurement of different types of equipment. The source of former-Member support was solely Government programmes. Across regions, former –Members in Imereti and Kakheti have not received any type of support, while in Kvemo and Shida Kartli, about half and all growers, respectively, have received support from the Government.

Different from former-Members, current-Members in addition to Government support have also benefited from Donor assistance; approximately 33% and 27% of current-Members have been recipients of Government and Donor support, accordingly. Across regions, proportion of current- Members who have benefited from Government support excluding Imereti, has been greater than those who have benefited from Donor assistance (Figure 77).

63 Figure 77. Allocation of Cooperative Support by Source 100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK government donor Source: Cooperative field survey 2016, estimates

7. Participation in Decision-Making Around 73% of all former- and current-Members has been participating in cooperative decision making on a regular basis and has been satisfied with the extent of involvement. Approximately 24% of growers although have participated, but the extent of participation has not been sufficient, and only 3% of producers have stated that they have not participated in decision making despite the interest. The degree of current-Member involvement in cooperative decision making was greater than those of former-Members. Namely, the above said three responses netted the following percentages from among former-Members: participated and satisfied - 65%, participated and not satisfied - 23%, not participated - 13%. Across regions, all former-Members in Imereti have been involved in decision-making and all of them have assessed their involvement as satisfactory. In Kvemo and Shida Kartli, about half of former-Members, each have reported acceptable degree of involvement and insufficient participation, while in Kakheti, half of growers each have informed about satisfactory participation in decision making, and no participation despite a discerned interest.

Around 74% and 24% of current-Members have assessed their involvement in cooperative decision making as satisfactory and insufficient, respectively. Throughout the regions, all growers in Imereti and Shida Kartli have appraised degree of their involvement in decision making as satisfactory, while in Kakheti and Kvemo Kartli, 64% and 32% of current-Members, accordingly, have assessed their participation in decision making as insufficient (Figure 78).

Figure 78. Extent of member participation in cooperative decision making 100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

no, & not interested no, but interested yes, but insufficient yes, satisfactory

Source: Cooperative field survey 2016, estimates

64 8. Extent of the Trust in the Management Significant majority of all former- and current-Members has had greater than neutral confidence in the management of cooperatives. A higher proportion of current-Members has had more than neutral confidence in the management than that of former-Members.

The largest proportion of current-Members in Imereti (100%) has assessed their trust to the management greater than neutrally confident, followed by those in Kvemo Kartli, and Kakheti and Shida Kartli in a descending order. Also, amongst former-Members, the larger proportion of growers in Imereti has discerned greater than neutral confidence compared to those in other regions; in each other region about half of former-Members have reported more than neutral confidence in their management (Table 13, Figure 79).

Table 13. Extent of the trust

gourp n/k < neutral neutral > neutral

All 5% 10% 8% 76% FM 13% 13% 13% 63% FM-IM 0% 0% 0% 100% FM-K 0% 50% 0% 50% FM-KK 50% 0% 0% 50% FM-ShK 0% 0% 50% 50% M 5% 10% 8% 77% M-IM 0% 0% 0% 100% M-K 0% 23% 9% 68% M-KK 0% 14% 14% 73% M-ShK 18% 5% 9% 68% Source: Cooperative field survey 2016, estimates

Figure 79. Extent of the trust 100%

80%

60%

40%

20%

0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK dn know < neutral neutral > neutral na Source: Cooperative field survey 2016, estimates

9. Changes Occurred after Becoming a Cooperative Member Joining a cooperative, has resulted in at least moderately important change in improved access to PHP infrastructure, finance, and technologies et al., increased HH income, decreased production costs, increased mutual support, increased production volume and improved quality of production, and knowledge and skills in an ascending order; change in regard to decreased market and natural 65 hazard risks, has been less pronounced, and majority of growers has reported less than moderately essential change.

Larger proportion of current-Members than former-Members has conveyed at least moderately imperative change in improved access to PHP infrastructure, finance, and technologies et al., increased HH income, decreased production costs, increased mutual support, increased production volume and improved quality of production, and knowledge and skills; while larger proportion of former-Members have decreased exposure to market and natural hazard risks than current- Members. The most considerable positive effect of a cooperative membership had on current- Members in Imereti, Shida Kartli and Kvemo Kartli, while positive effect on farmers in Kakheti has been less pronounced, and mainly it was less than moderately essential. Like in case of current- Members, cooperative membership has resulted in a larger positive effect on growers in Imereti, Shida Kartli and Kvemo Kartli compared to those in Kakheti (Table 14, Figures 80-91).

Table 14. Changes after joining a cooperative decreased improved access to increased decreased improved increased group effect market natural PHH techn. HH production quality of knowledge mutual production other finance risks hazards infrast. et al. income costs production and skills support volume < moderate 60% 50% 45% 43% 39% 39% 35% 26% 20% 10% 28% 6% All ≥ moderate 38% 48% 53% 54% 59% 60% 64% 70% 79% 68% 67% 1% < moderate 50% 50% 50% 50% 50% 50% 38% 38% 38% 38% 50% 25% FM ≥ moderate 50% 50% 50% 38% 38% 38% 50% 50% 63% 38% 38% 13% < moderate 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% FM-IM ≥ moderate 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 50% < moderate 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 50% FM-K ≥ moderate 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% < moderate 100% 50% 50% 50% 50% 50% 50% 50% 50% 0% 50% 0% FM-KK ≥ moderate 0% 50% 50% 0% 0% 50% 0% 0% 0% 50% 0% 0% < moderate 50% 50% 50% 50% 50% 50% 50% 0% 0% 0% 50% 0% FM-ShK ≥ moderate 50% 50% 50% 50% 50% 50% 50% 100% 100% 100% 50% 0% < moderate 61% 50% 45% 42% 39% 38% 34% 24% 18% 8% 26% 5% M ≥ moderate 36% 48% 53% 56% 60% 63% 65% 73% 81% 70% 69% 0% < moderate 41% 27% 14% 14% 14% 9% 9% 9% 0% 0% 5% 0% M-IM ≥ moderate 55% 68% 86% 86% 86% 91% 91% 86% 100% 100% 95% 0% < moderate 86% 77% 68% 64% 64% 55% 50% 36% 32% 18% 50% 14% M-K ≥ moderate 14% 23% 32% 36% 36% 45% 50% 64% 68% 0% 45% 36% < moderate 73% 68% 59% 55% 41% 36% 36% 27% 27% 5% 36% 0% M-KK ≥ moderate 27% 32% 41% 45% 59% 59% 64% 73% 73% 68% 64% 0% < moderate 73% 50% 45% 45% 45% 23% 18% 14% 9% 5% 14% 0% M-ShK ≥ moderate 23% 45% 50% 50% 50% 77% 77% 73% 86% 91% 73% 0% Source: Cooperative field survey 2016, estimates

Figure 80. Increased production volume 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK dn know < moderate moderate > moderate nr Cooperative field survey 2016, estimates

66 Figure 81. Improved quality of production 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK dn know < moderate moderate > moderate nr

Source: Cooperative field survey 2016, estimates

Figure 82. Increased HH income 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

Figure 83. Improved access to finance 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

Figure 84. Improved access to technologies et al. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

67 Figure 85. Improved access to PHP infrastructure 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

Figure 86. Decreased exposure to market risks 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

Figure 87. Decreased exposure to natural hazards 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

Figure 88. Improved knowledge and skills 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK

dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

68 Figure 89. Decreased production costs 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

Figure 90. Increased mutual support 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

Figure 91. Other changes 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All FM FM-IM FM-K FM-KK FM-ShK M M-IM M-K M-KK M-ShK dn know < moderate moderate > moderate nr Source: Cooperative field survey 2016, estimates

10. Factors that Motivate to Join / Start a Cooperative Majority of All growers in a descending sequence have thought better organized PHH and sales, better organized production, and access to finance and infrastructure to be factors that have motivated and/ or would motivate to join and/ or found a cooperative. Greater proportion of growers considered mutual support, and improved knowledge and skills to be less inspiring rather than more to join/ establish a cooperative; the same proportion of growers as former, each, has viewed better prices for inputs to underlie and not to underlie decision to join/ form a cooperative.23

23 In a few cases growers have identified improved irrigation as a motive to join a cooperative 69

In a descending sequence, for the majority of former-Members, main motivating factors has been better organized production, and PHP and sales, and access to finance; those, for current-Members, comprised better organized PHP and sales, mutual support, better organized production, improved knowledge and skills, and access to finance and infrastructure. Between the non-Members, the majority, viewed access to finance, access to infrastructure and better prices for inputs to be major motivating factors to join/ establish a cooperative. Among non-Members in the settlements with cooperatives, majority have assessed better organized production, access to finance, better organized PHP and sales, access to infrastructure and mutual support to be major motivating factors in a declining order to join/ establish a cooperative. Within non-Members in the settlements without cooperatives, majority of the growers did not have preferences; however, larger proportion of growers thought motivating factor to join a cooperative to be better price for inputs, and access to finance and infrastructure; in regard to other factors the larger proportion of growers have not considered them as stimulating relative to those who considered them as motivating factors.

Across regions within grower categories the major factors that have/ would motivate becoming cooperative member or to form a cooperative have been as follows: a) former-Members: in Imereti – better organized PHP and sales, and production; in Kakheti – better organized production; in Kvemo Kartli – better organized PHP and sales, and production; in Shida Kartli – all factors exclusive of access to infrastructure; b) current-Members: in Imereti – access to finance; in Kakheti – better organized PHP and sales; in Kvemo Kartli – better organized production/ improved knowledge and skills/ mutual support; in Shida Kartli – mutual support; c) Non-members in the settlements without cooperatives: in Imereti – access to finance; in Kakheti – better prices for inputs; in Kvemo Kartli – access to finance; and in Shida Kartli – access to infrastructure; d) Non-Members in the settlements with cooperatives: in Imereti – access to finance; in Kakheti – mutual support/ better organized PHP and sales; in Kvemo Kartli – better organized production; in Shida Kartli – access to infrastructure (Table 15, Figures 92-98).

70 Table 15. Factors that motivate to join/ start a cooperative

access to better organized improved better price mutual group y/n PHH and knowledge finance infrastructure production for inputs support sales and skills yes 56% 53% 58% 56% 46% 36% 45% All no 37% 39% 34% 36% 46% 56% 47% yes 63% 38% 88% 100% 25% 38% 38% FM no 38% 63% 13% 75% 63% 63% yes 50% 0% 100% 100% 0% 0% 0% FM-IM no 50% 100% 0% 0% 100% 100% 100% yes 50% 50% 50% 100% 0% 50% 0% FM-K no 50% 50% 50% 0% 100% 50% 100% yes 50% 50% 100% 100% 0% 0% 50% FM-KK no 50% 50% 0% 0% 100% 100% 50% yes 100% 50% 100% 100% 100% 100% 100% FM-ShK no 0% 50% 0% 0% 0% 0% 0% yes 59% 59% 77% 68% 36% 63% 68% M no 41% 41% 23% 32% 64% 38% 32% yes 82% 45% 68% 73% 18% 55% 45% M-IM no 18% 55% 32% 27% 82% 45% 55% yes 27% 50% 77% 59% 41% 36% 55% M-K no 73% 50% 23% 41% 59% 64% 45% yes 68% 64% 86% 77% 59% 77% 77% M-KK no 32% 36% 14% 23% 41% 23% 23% yes 59% 77% 77% 64% 27% 82% 95% M-ShK no 41% 23% 23% 36% 73% 18% 5% yes 53% 51% 47% 48% 51% 23% 34% NM no 35% 37% 41% 40% 36% 64% 53% yes 45% 45% 37% 32% 46% 13% 20% NM-NC no 36% 34% 42% 47% 33% 67% 60% yes 77% 64% 45% 50% 59% 9% NM-NC-IM no 23% 36% 55% 50% 41% 91% 100% yes 15% 27% 27% 12% 48% 6% 18% NM-NC-K no 48% 36% 36% 52% 15% 58% 45% yes 46% 21% 42% 33% 33% 21% 38% NM-NC-KK no 25% 42% 21% 29% 29% 42% 25% yes 57% 78% 39% 43% 43% 17% 22% NM-NC-ShK no 43% 22% 61% 57% 57% 83% 78% yes 65% 58% 59% 69% 58% 38% 54% NM-YC no 34% 41% 39% 30% 41% 61% 45% yes 86% 36% 41% 64% 55% 23% 27% NM-YC-IM no 14% 64% 59% 36% 45% 77% 73% yes 27% 9% 36% 18% 27% 9% 36% NM-YC-K no 73% 91% 64% 82% 73% 91% 64% yes 80% 80% 80% 90% 75% 75% 85% NM-YC-KK no 15% 15% 15% 5% 20% 20% 10% yes 48% 86% 71% 81% 62% 33% 62% NM-YC-ShK no 52% 14% 29% 19% 38% 67% 38%

Source: Cooperative field survey 2016, estimates

71 Figure 92. Better price for inputs 100%

80%

60%

40%

20%

0%

Yes No NR/NA

Source: Cooperative field survey 2016, estimates

Figure 93. Access to infrastructure 100%

80%

60%

40%

20%

0%

Yes No NR/NA Source: Cooperative field survey 2016, estimates

Figure 94. Improved knowledge and skills 100%

80%

60%

40%

20%

0%

Yes No NR/NA Source: Cooperative field survey 2016, estimates

Figure 95. Mutual support 100%

80%

60%

40%

20%

0%

Yes No NR/NA Source: Cooperative field survey 2016, estimates

Figure 96. Better organized production 100%

80%

60%

40%

20%

0%

Yes No NR/NA Source: Cooperative field survey 2016, estimates

Figure 97. Better organized PHP and sales 100%

80%

60%

40%

20%

0%

Yes No NR/NA Source: Cooperative field survey 2016, estimates

Figure 98. Access to finance et al. 100%

80%

60%

40%

20%

0%

Yes No NR/NA Source: Cooperative field survey 2016, estimates

11. Membership Size Evolution About 28% of current-Members, each has assessed prospects of cooperative membership size growth as trivial and to remain unchanged, followed by those who projected membership size strong growth (20%), strong decrease (6%), and a slight decrease (1%). The prevalent outlook of current-Members in regard to cooperative membership size evolution has been at least to remain unchanged (68%). The largest part of current-Members who has foreseen strong growth in membership size was in 73

Imereti, followed by those in Shida Kartli, and Kvemo Kartli in a declining order. A larger proportion of growers has projected trivial increase in membership size compared to that of significant increase. In Kakheti none of the growers has projected strong growth; within Kakheti, a greater part of growers have estimated no change in the membership size compared to decline and growth projection; also, only in Kakheti current-Members have forecasted significant decline in a membership size (Table 16, Figure 99).

Table 16. Membership size evolution strong slight slight strong group nk unchanged decrease decrease increase increase All/ M 16% 6% 1% 28% 28% 20% M-IM 9% 0% 5% 9% 27% 50% M-K 27% 23% 0% 36% 14% 0% M-KK 27% 0% 0% 36% 27% 9% M-ShK 0% 0% 0% 32% 45% 23% Source: Cooperative field survey 2016, estimates

Figure 99. Membership size evolution 100%

80%

60%

40%

20%

0% All/ M M-IM M-K M-KK M-ShK nk strong decrease slight decrease unchanged slight increase strong increase

Source: Cooperative field survey 2016, estimates

12. Risk for the Development of Cooperation In general, according to the majority of growers, management capability has been the most important factor that could endanger development of cooperation among farmers. About half of former- Members have stated that the lack of support policies to have negative effect on development of cooperation. Current-Members also, viewed the lack of support policies to jeopardize cooperative development, although their proportion did not represent the majority. Largest proportion of non- Members thought management capabilities to be crucial in development of cooperation. Within non- Members, the largest fraction of those in the settlements without cooperatives assessed management capability to be important factor for the development of cooperation, while majority of those in the settlements with cooperatives in addition to management capabilities have identified lack of technical support that could negatively influence development of cooperation. Higher proportion of non- Members in the settlements with cooperatives has identified management capabilities as significant threat to the development of cooperation than that of non-Members in the settlements without cooperatives.

74

Across regions, between current-Members, the majority of farmers in Imereti have assessed the lack of technical support to represent a risk for the development of cooperation; in addition, half of growers viewed the lack of management capabilities to be a threatening factor. In Kakheti, majority of growers have identified challenges in coordination of joint activities as important factor that could negatively influence development of cooperation, and about half of them assessed management capabilities also as a risk factor. In Kvemo Kartli, the lack of support policies was assessed by the majority of growers to jeopardize development of cooperation. In Shida Kartli, the majority of growers have appraised the lack of support policies to be a risk factor; also, half of the growers, viewed, each the lack of trust among members and the knowledge of the concept of cooperation, to represent impending factors.

Throughout the regions, amongst former-Members, all growers in Imereti have identified management capabilities and the lack of success stories as main risk factors; in Kakheti, about half of farmers, have assessed the lack of coordination of joint activities and the lack of support policies, each to be an impending factor; in Kvemo Kartli, about 50% of growers have evaluated management capabilities and the lack of support policies, each to be a challenging factor; in Shida Kartli, all producers have appraised the lack of knowledge of the concept of cooperation as a main challenging factor, and about half of growers have identified each challenges in coordination of joint activities, status of cooperative asset ownership, lack of success stories, support policies, technical support, and trust among members to jeopardize development of cooperation.

Between regions, among non-Members, majority of those in the settlements without cooperatives in Imereti has identified management capabilities and the lack of success stories to be key factors influencing development of cooperation; those in Kakheti have assessed management capabilities; in Kvemo Kartli the majority has evaluated limited knowledge of the concept of cooperation, management capabilities, and the lack of technical support to be critical issues influencing cooperative development; also, half of growers in Kvemo Kartli has assessed the lack of trust among members to be a risk factor; In Shida Kartli, the majority of growers have evaluated the lack of management capabilities, technical support and trust among members as principal factors that could affect development of cooperation. Across regions, within non-Members, in the settlements with cooperatives, in Imereti the majority of growers have assessed the lack of management capabilities, technical support, and success stories as major impending factors for development of cooperation. In Kakheti, largest proportion of growers has identified the lack of support policies to have a negative impact on the development of cooperation; in Kvemo Kartli, the majority of growers have considered the lack of support policies, and management capabilities to be essential threats for the development of cooperation, and those in Shida Kartli, viewed the lack of management capabilities, success stories, support policies, and technical support to represent major risk factors.

The smallest proportion of all growers, with the few exceptions, has viewed poor communication among members, and the lack of the status of cooperative asset ownership and trust among members to be impending factors for the development of cooperation (Table 17, Figures 100-109).

75

Table 17. Threats to the development of cooperation lack of challenges in poor status of coordination knowledge and trust communication group y/n management cooperative success support technical other of joint the concept of among among capabilities asset stories policies support activities cooperation members members ownership yes 33% 32% 52% 20% 32% 40% 43% 31% 3% 24% All no 59% 60% 40% 72% 60% 53% 50% 61% 87% 68% yes 38% 38% 38% 25% 38% 50% 25% 38% 0% 25% FM no 63% 63% 50% 75% 63% 50% 75% 63% 100% 75% yes 50% 50% 100% 50% 100% 50% 50% 50% 0% 50% FM-IM no 50% 50% 0% 50% 0% 50% 50% 50% 100% 50% yes 50% 0% 0% 0% 0% 50% 0% 50% 0% 0% FM-K no 50% 100% 100% 100% 100% 50% 100% 50% 100% 100% yes 0% 0% 50% 0% 0% 50% 0% 0% 0% 0% FM-KK no 100% 100% 50% 100% 100% 50% 100% 100% 100% 100% yes 50% 100% 0% 50% 50% 50% 50% 50% 0% 50% FM-ShK no 50% 0% 50% 50% 50% 50% 50% 50% 100% 50% yes 39% 31% 43% 13% 24% 45% 44% 32% 1% 22% M no 53% 61% 50% 80% 68% 50% 48% 60% 80% 70% yes 32% 14% 50% 5% 36% 36% 64% 32% 0% 23% M-IM no 68% 86% 50% 95% 64% 64% 36% 68% 100% 77% yes 55% 18% 50% 14% 9% 27% 14% 45% 5% 32% M-K no 45% 82% 50% 86% 91% 73% 86% 55% 45% 68% yes 23% 41% 32% 23% 14% 55% 50% 9% 0% 5% M-KK no 45% 27% 41% 45% 55% 27% 18% 59% 73% 64% yes 45% 50% 41% 9% 36% 64% 50% 41% 0% 27% M-ShK no 55% 50% 59% 91% 64% 36% 50% 59% 100% 73% yes 30% 32% 57% 24% 36% 37% 43% 31% 4% 24% NM no 62% 59% 34% 68% 55% 54% 51% 61% 90% 67% yes 25% 31% 56% 26% 33% 32% 34% 32% 5% 23% NM-NC no 62% 56% 31% 61% 54% 55% 56% 55% 85% 65% yes 5% 18% 82% 9% 73% 41% 36% 9% 0% 18% NM-NC-IM no 95% 82% 18% 91% 27% 59% 64% 91% 100% 82% yes 18% 21% 30% 15% 0% 6% 3% 21% 0% 9% NM-NC-K no 52% 48% 39% 55% 70% 64% 67% 48% 70% 61% yes 46% 58% 54% 42% 46% 46% 58% 50% 21% 50% NM-NC-KK no 42% 29% 33% 46% 42% 42% 42% 38% 79% 38% yes 35% 30% 70% 43% 30% 48% 52% 52% 0% 17% NM-NC-ShK no 65% 70% 30% 57% 70% 52% 48% 48% 100% 83% yes 35% 34% 59% 20% 41% 43% 55% 28% 3% 27% NM-YC no 62% 64% 38% 77% 57% 53% 43% 69% 97% 70% yes 18% 9% 86% 14% 59% 27% 77% 14% 5% 5% NM-YC-IM no 82% 91% 14% 86% 41% 73% 23% 86% 95% 95% yes 18% 55% 18% 27% 0% 36% 0% 18% 0% 27% NM-YC-K no 82% 45% 82% 73% 100% 64% 100% 82% 100% 73% yes 50% 40% 55% 20% 30% 55% 40% 30% 5% 40% NM-YC-KK no 40% 50% 35% 70% 60% 35% 55% 60% 95% 50% yes 48% 43% 57% 24% 52% 52% 76% 48% 0% 38% NM-YC-ShK no 52% 57% 43% 76% 48% 43% 24% 52% 100% 62% Source: Cooperative field survey 2016, estimates

76

Figure 100. Lack of management capacities 100% 80% 60% 40% 20% 0%

yes no nr/na Source: Cooperative field survey 2016, estimates

Figure 101. Lack of support policies 100%

80%

60%

40%

20%

0%

yes no nr/na Source: Cooperative field survey 2016, estimates

Figure 102. Lack of status of cooperative asset ownership

100%

80%

60%

40%

20%

0%

yes no nr/na Source: Cooperative field survey 2016, estimates

Figure 103. Lack of success stories

100%

80%

60%

40%

20%

0%

yes no nr/na Source: Cooperative field survey 2016, estimates

77

Figure 104. Poor communication among members

100%

80%

60%

40%

20%

0%

yes no nr/na Source: Cooperative field survey 2016, estimates

Figure 105. Lack of trust among members

100%

80%

60%

40%

20%

0%

yes no nr/na Source: Cooperative field survey 2016, estimates

Figure 106. Challenges in coordination of activities

100%

80%

60%

40%

20%

0%

yes no nr/na Source: Cooperative field survey 2016, estimates

Figure 107. Lack of knowledge and the concept of cooperation

100%

80%

60%

40%

20%

0%

yes no nr/na Source: Cooperative field survey 2016, estimates

78

Figure 108. Lack of technical support

100%

80%

60%

40%

20%

0%

yes no nr/na Source: Cooperative field survey 2016, estimates

Figure 109. Other factors24

100%

80%

60%

40%

20%

0%

yes no nr/na Source: Cooperative field survey 2016, estimates

13. Joint Solution of Activity Relevant Challenges Majority of growers have not had experience in joint efforts to tackle activity related challenges. Larger proportion of former-Members (25%) than non-Members (14%) have addressed activity related hindrances in cooperation with fellow farmers. Between former-Members, growers in Imereti and Kakheti have not had any involvement in joint solution of problems, while half of growers in Kvemo Kartli and Shida Kartli each have had experience to address obstacles jointly with fellow growers. Within non-Members, those in the settlements with cooperatives (over 20%) have had greater practice than those in the settlements without a cooperative (under 10%) in joint activities. In the settlements without cooperatives highest proportion of growers with experience in joint handling of activity related problems have been in Kvemo Kartli and Imereti (15%-20%), while growers in Kakheti and Shida Kartli have not had any practice in joint efforts to tackle hindrances. In the settlements with cooperatives, non-Members in all regions have had experience to address challenges in cooperation with fellow growers. The most experienced growers were in Shida Kartli (under 40%), followed by those in Kvemo Kartli (25%), Imereti (nearly 15%) and Kakheti (nearly 10%) (Figure 110).

24 In general few feedback have been collected, and the most clear were two feedbacks as follows: not fulfilled promises and natural hazards. 79

Figure 110. Experience in Joint Efforts to Tackle Activity Related Challenges

100%

80%

60%

40%

20%

0%

yes no no recollection Source: Cooperative field survey 2016, estimates

In general, 9, 3, 2, and 1% of growers have reported cooperation with fellow farmers to address activity relevant challenges occasionally, once per year, permanently, and several times per year, respectively. Frequency of experience has been more sizeable among former-Members than between non-Members. Amongst former-Members, growers in Imereti and Kakheti were not able to assess frequency of experience, while 50% of growers in Kvemo Kartli and Shida Kartli each have assessed the frequency as permanent and several times per year, accordingly. Among non-Members, larger proportion of growers in the settlements with cooperatives than those in the settlements without cooperatives has had recollection of the frequency of experience (Figure 111).

Figure 111. Frequency of addressing challenges with joint efforts 100%

80%

60%

40%

20%

0%

nk occassional once per year several times per year permanently Source: Cooperative field survey 2016, estimates

14. Farmer Collaboration with other Farmers Greater proportion of growers have cooperated with fellow farmers in transportation and input purchase, while the smallest proportions - in the training, packing and lobbying.

About a quarter of former-Members have collaborated with other farmers in access to finances, input purchase, marketing, processing, production, storage, and transportation; former-Members have not had experience to cooperate in lobbying. Between former-Members, only those in Kvemo Kartli and Shida Kartli have had experience in cooperation.

80

Largest proportion of non-Members have cooperated with other farmers in transportation and input purchase. The second most important area of cooperation has been in production, and the third - in processing, access to finance, packing, and storage. Between non-Members in the settlements without cooperatives, the largest proportion of growers have collaborated in transportation and input purchase. Cooperation in the settlements without cooperatives was more pronounced in Kakheti and Kvemo Kartli than in Shida Kartli. Only small proportion of growers in Imereti has reported cooperation in transportation and training. Between non-Members in the settlements with cooperatives, the largest proportion of growers has collaborated in input purchase, transportation and access to finance. Cooperation with other farmers was more distinct among growers in Kvemo Kartli and Shida Kartli than in Imereti; majority of growers in Imereti has cooperated in processing. Growers in Kakheti have not had experience in cooperation with other farmers. In general, larger proportion of non-Member growers in the settlements with cooperatives have collaborated with fellow farmers compared to those in the settlements without cooperatives (Table 18, Figures 112- 122).

Table 18. Collaboration with other farmers group y/n finance input purchase lobbying marketing other packing processing production storage training transportation yes 20% 30% 9% 14% 1% 9% 20% 21% 19% 8% 31% ALL no 80% 70% 91% 86% 99% 90% 80% 79% 80% 92% 69% yes 25% 25% 0% 25% 0% 13% 25% 25% 25% 13% 25% FM no 75% 75% 100% 75% 100% 88% 75% 75% 75% 88% 75% yes 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% FM-IM no 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% yes 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% FM-K no 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% yes 100% 100% 0% 100% 0% 50% 100% 100% 50% 50% 50% FM-KK no 0% 0% 100% 0% 100% 50% 0% 0% 50% 50% 50% yes 0% 0% 0% 0% 0% 0% 0% 0% 50% 0% 50% FM-ShK no 100% 100% 100% 100% 100% 100% 100% 100% 50% 100% 50% yes 19% 31% 9% 13% 1% 9% 19% 21% 19% 8% 31% NM no 81% 69% 91% 87% 99% 90% 80% 79% 81% 92% 69% yes 12% 28% 10% 12% 1% 6% 17% 18% 15% 5% 31% NM-NC no 88% 72% 90% 88% 99% 93% 82% 82% 84% 95% 69% yes 0% 0% 0% 0% 0% 0% 9% 0% 0% 5% 5% NM-NC-IM no 100% 100% 100% 100% 100% 100% 91% 100% 100% 95% 95% yes 6% 45% 6% 9% 0% 0% 27% 18% 18% 0% 45% NM-NC-K no 94% 55% 94% 91% 100% 100% 73% 82% 82% 100% 55% yes 42% 50% 29% 38% 0% 21% 21% 50% 33% 17% 50% NM-NC-KK no 58% 50% 71% 63% 100% 75% 75% 50% 63% 83% 50% yes 0% 9% 4% 0% 4% 4% 4% 0% 4% 0% 17% NM-NC-ShK no 100% 91% 96% 100% 96% 96% 96% 100% 96% 100% 83% yes 30% 34% 8% 15% 0% 14% 23% 26% 24% 12% 31% NM-YC no 70% 66% 92% 85% 100% 86% 77% 74% 76% 88% 69% yes 5% 9% 5% 5% 0% 0% 32% 5% 0% 0% 18% NM-YC-IM no 95% 91% 95% 95% 100% 100% 68% 95% 100% 100% 82% yes 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% NM-YC-K no 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% yes 65% 70% 20% 35% 0% 20% 30% 55% 45% 25% 45% NM-YC-KK no 35% 30% 80% 65% 100% 80% 70% 45% 55% 75% 55% yes 38% 43% 5% 14% 0% 29% 19% 33% 43% 19% 48% NM-YC-ShK no 62% 57% 95% 86% 100% 71% 81% 67% 57% 81% 52% Source: Cooperative field survey 2016, estimates

81

Figure 112. Finance 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 113. Input purchase 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 114. Lobbying 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 115. Marketing 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

82

Figure 116. Other activities 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 117. Packing 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 118. Processing 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 119. Production 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

83

Figure 120. Storage 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 121. Training

100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 122. Transportation

100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

15. Farmer Willingness to Collaborate with Other Farmers in the Future In general, about the third of growers have expressed willingness to cooperate in different areas with other farmers exclusive of packing and storage; slightly less than the third of growers have expressed willingness to cooperate in latter two areas.

84

About a quarter of former-Members was interested to cooperate with other farmers in access to finance, packing, processing, production, storage and transportation. About a half of former-Members in Imereti was eager to cooperate with other farmers in all areas, while those in Kvemo Kartli were also inclined to collaborate in all areas excluding input purchase, lobbying, marketing, and training. None of the former-Members in Kakheti and Shida Kartli were interested in joint efforts in any area.

Between non-Members, the largest proportion of growers was interested to cooperate in processing, production, and transportation. Among non-Members of the settlements without cooperatives a majority of growers was interested in coordination in input purchase, processing and transportation. Compared to those in Shida Kartli, Kakheti and Kvemo Kartli in a descending order, a larger proportion of growers in Imereti were inclined to cooperate with other farmers in all areas. In Imereti the most sizeable part of growers was interested to cooperate in input purchase, in Kakheti - in access to finance and in processing, in Kvemo Kartli - in marketing, and in Shida Kartli - in input purchase. Among non-Members of the settlements with cooperatives, a majority of growers was agreeable to cooperate in training, followed by that in production, marketing and transportation in a declining sequence. Largely, more sizeable proportion of growers in Imereti was willing to cooperate with other farmers than those in Kvemo Kartli, Kakheti and Shida Kartli in a declining order. In Imereti a largest proportion of growers were interested to cooperate in training, in Kakheti – in production, in Kvemo Kartli - in training and in marketing, and in Shida Kartli - in processing. A larger proportion of non-Members of the settlements with cooperatives were inclined to cooperate with other farmers relative to those in the settlements without cooperatives (Table 19, Figure 123-133).

Table 19. Area of collaboration group y/n finance input purchase lobbying marketing other packing processing production storage training transportation yes 30% 32% 31% 30% 0% 27% 33% 33% 28% 32% 34% ALL no 45% 32% 52% 48% 2% 58% 41% 40% 48% 52% 33% yes 25% 13% 13% 13% 0% 25% 25% 25% 25% 13% 25% FM no 38% 38% 50% 38% 0% 50% 38% 38% 38% 50% 50% yes 50% 50% 50% 50% 0% 50% 50% 50% 50% 50% 50% FM-IM no 50% 50% 50% 50% 0% 50% 50% 50% 50% 50% 50% yes 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% FM-K no 100% 100% 100% 100% 0% 100% 100% 100% 100% 100% 100% yes 50% 0% 0% 0% 0% 50% 50% 50% 50% 0% 50% FM-KK no 0% 0% 50% 0% 0% 50% 0% 0% 0% 50% 50% yes 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% FM-ShK no 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% yes 31% 33% 32% 31% 0% 27% 34% 34% 28% 32% 34% NM no 45% 32% 52% 48% 2% 58% 41% 40% 49% 52% 32% yes 30% 34% 28% 25% 0% 23% 32% 29% 26% 26% 31% NM-NC no 57% 37% 63% 62% 2% 70% 52% 51% 58% 68% 37% yes 95% 100% 91% 91% 0% 91% 91% 95% 91% 95% 95% NM-NC-IM no 5% 0% 9% 9% 0% 9% 0% 5% 9% 0% 0% yes 21% 15% 9% 3% 0% 0% 21% 12% 9% 12% 15% NM-NC-K no 73% 36% 85% 85% 6% 94% 55% 64% 70% 88% 39% yes 0% 4% 8% 13% 0% 4% 4% 4% 4% 4% 4% NM-NC-KK no 54% 46% 63% 50% 0% 71% 71% 46% 58% 75% 46% yes 13% 30% 17% 9% 0% 9% 22% 17% 13% 4% 22% NM-NC-ShK no 87% 65% 83% 91% 0% 91% 78% 83% 87% 96% 61% yes 31% 31% 36% 39% 0% 32% 35% 39% 30% 41% 38% NM-YC no 30% 24% 38% 30% 3% 42% 27% 26% 36% 31% 24% yes 77% 73% 77% 77% 0% 77% 55% 82% 77% 82% 64% NM-YC-IM no 14% 14% 18% 14% 0% 18% 9% 9% 18% 14% 14% yes 18% 27% 9% 9% 0% 9% 18% 45% 9% 9% 55% NM-YC-K no 64% 55% 73% 64% 18% 73% 64% 45% 73% 73% 36% yes 20% 10% 45% 45% 0% 25% 40% 20% 20% 45% 25% NM-YC-KK no 10% 20% 35% 20% 0% 50% 30% 25% 35% 30% 25% yes 0% 10% 0% 10% 0% 5% 19% 10% 0% 10% 14% NM-YC-ShK no 48% 24% 43% 38% 0% 43% 24% 33% 38% 29% 29% Source: Cooperative field survey 2016, estimates 85

Figure 123. Finance 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 124. Input purchase 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 125. Lobbying 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 126. Marketing 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates 86

Figure 127. Other activities 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 128. Packing 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 129. Processing 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 130. Production 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

87

Figure 131. Storage 100%

80%

60%

40%

20%

0%

yes no nr

Source: Cooperative field survey 2016, estimates

Figure 132. Training 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

Figure 133. Transportation 100%

80%

60%

40%

20%

0%

yes no nr Source: Cooperative field survey 2016, estimates

16. Existence of Local Leadership Potential The majority of growers (67%) have confirmed presence of a cooperative leadership potential locally. A greater part of former-Members than non-Members has corroborated availability of cooperative leadership potential locally. All former-Members in Kakheti and Kvemo Kartli have confirmed existence of local leadership potential, while half of those in Imereti and Shida Kartli each have verified local leadership potential. Majority of all non-Members exclusive of those in Kakheti in the 88 settlements with cooperatives have corroborated presence of leadership potential locally. In the settlements both with and without cooperatives, greater proportion of growers have verified local leadership potential in Kvemo Kartli, followed by those in Imereti and Shida Kartli in a downward sequence (Figure 134).

Figure 134. Cooperative leadership potential locally 100%

80%

60%

40%

20%

0%

yes no nk nr Source: Cooperative field survey 2016, estimates

17. Farmer Willingness to Join / Start a Cooperative Roughly the same proportions of growers were interested to become a member of a cooperative and to found a new one. Approximately 61% of former- and non-Members, each has expressed at least neutral interest to start a cooperative.

Among former-Members about 28%, 13%, and 28% of growers have had less than neutral, neutral and greater than neutral appeal to set up a cooperative, respectively. There was greater interest to establish a cooperative among former-Members in Shida Kartli than among those in other regions; the lowest attraction was discerned by former-Members in Imereti.

Between non-Members, about 28% of growers have had rather high interest to form a cooperative followed by those with lower than neutral, neutral, very low and very high interests in a descending order.

Among non-Members, in the settlements without cooperatives, the largest proportion of growers has expressed low interest to start a cooperative followed by those with neutral interest, rather high interest, very low interest, and very high interest in a descending order. Majority of growers in Imereti and Kakheti have discerned more positive than neutral interest to establish a cooperative, while those in Kvemo Kartli, less positive than neutral. In Shida Kartli, about 35% of growers have conveyed neutral interest to form a cooperative, followed by those with less than neutral interest and more positive than neutral interest in a descending order.

Between non-Members, in the settlements with cooperatives, about 40% of growers have discerned rather high interest to form a cooperative, succeeded by those with neutral interest, very high interest, and a low interest in a declining sequence. Across regions, greater interest was expressed by growers in Shida Kartli relative to those in other regions. In Kakheti, Kvemo Kartli and Imereti, 45%, 45% and 50% of growers have discerned low, neutral and rather high interests to start a cooperative, accordingly. A greater proportion of non-Members in the settlements with cooperatives 89 expressed more positive than neutral interest than those in the settlements without cooperatives, and the proportion of former has been greater than 50% (Figure 135). Figure 135. Interest to found a cooperative 100%

80%

60%

40%

20%

0%

very low low neutral rather high very high nr Source: Cooperative field survey 2016, estimates

About 50%-60 of former- and non-Members has had at least neutral interest to become a member of a cooperative.

Approximately 25% of former-Members had a very low appeal to become a member of a cooperative, followed by those with rather high, neutral, low, and very high interests in a descending sequence. Between former-Members, half of growers, in each in Kakheti and Kvemo Kartli, has have had very low and rather high appeal to join a cooperative, while in Imereti and Shida Kartli, half of growers, each has had low and neutral, and a very high interest to become a member of a cooperative.

Amongst non-Members, around 27% of growers were represented by farmers, each with neutral and rather high interests to join a cooperative ensued by those with low, very low and very high appeal in a downward order. 50%-60% of growers in the settlements without cooperatives in Imereti, Kakheti and Shida Kartli each has discerned at least neutral appeal to join a cooperative; while majority of growers in Kvemo Kartli (over 60%) have had lower than neutral interest to become a member of a cooperative. The majority of non-Members in the settlements with cooperatives in all regions were represented by those with at least neutral appeal to become a cooperative member; amongst those, the highest proportion of growers at least with a neutral interest to join a cooperative was in Kvemo Kartli (90%) followed by those in Imereti, Kakheti and Shida Kartli in a downward order. Non- members in the settlements with cooperatives discerned greater interest to join a cooperative than those in the settlements without cooperatives (Figure 136).

Figure 136. Interest to join a cooperative

100%

80%

60%

40%

20%

0%

very low low neutral rather high very high nr Source: Cooperative field survey 2016, estimates

90

18. Factors Underlying Occurred Changes after Becoming a Cooperative Member Regression model was developed to determine factors that could have led to changes among current- Members after joining a cooperative in regard to increased production volume, increased HH income, improved access to technologies et al., improved access to PHP infrastructure, and increased mutual support (1).

ln(CHANGEi) = β0 + β1 SUPPORTi + β2 DECISIONi + β3 ln(TRUSTi) +Vi (1), where, ln(CHANGEi) - is a natural logarithm of the sum of evaluation scores assigned by a grower i to the factors as follows: increased production volume, increased HH income, improved access to technologies et al., improved access to PHP infrastructure, and increased mutual support SUPPORT – is a dummy variable, and it=0, if a grower i has not received any external support; it=1, if a grower i has received support either in the frame of Government Programmes or Donor funded projects; and it=2, if a grower i has received support both from the Government and a Donor DECISION – is a dummy variable, and it=1, if a grower i is participating in cooperative decision making and assesses extent of his/her participation as satisfactory; and it=0, otherwise ln(TRUST) – is a natural logarithm of the a grower i evaluation score of the confidence in the management of a cooperative Vi - is an error term that captures the effects of unspecified explanatory variable

Results of regression analysis are presented in Table 15.

Table 15. Results of regression analysis Variable Parameter Coefficient t-stat25

Intercept β0 1.65 11.20*

SUPPORTi β1 0.13 2.17*

DECISIONi β2 0.42 4.50* ln(TRUSTi) Β3 0.43 3.49* R2 50.06 25.9* Source: Cooperative field survey 2016, estimates

Results of the regression analysis showed that (a) availability of external support to cooperatives, (b) satisfactory participation of members in cooperative decision making, and (c) high degree of confidence in the management of cooperatives, together, to underlie positive changes reported by current-Members after joining a cooperative.26

25 P<1%* 26 Variables included in the model, together, explain about 51% of variation in the occurred changes observed by a grower after becoming a member of a cooperative (increased production volume, increased HH income, improved access to technologies et al., improved access to PHP infrastructure, and increased mutual support); Geometric mean difference between the scores estimated for external support recipients and non-recipients is 14%; Geometric mean difference between the scores estimated for growers satisfied with the extent of participation in a cooperative decision making and those who were not, is 52%; 10% increase in the score evaluating confidence in the management of a cooperative, should lead to a 4% increase in the score assessing a change 91

Qualitative Research Findings

1. Introduction Focus Group discussion findings are grouped in two by type of FGD participants: 1. Cooperative members; 2. Non-cooperative respondents. The findings are structured by 11 FGD questions (see Annex 3), which in turn are grouped by 3 several major factors of influence on the farmer cooperation. For instance, the question about advantages, disadvantages and risks of cooperation goes under the heading of perceptions factor. These factors are based on similar factor listing given in the Methodology Guidance and constitute typical factors that are likely to influence any human economic activity (social, cultural, economic, etc.). Below we give the question-to-factor reference table (1. Cooperative Respondents [CR]; 2. Non- Cooperative Respondents [NCR]). It should be noted that such structuring is nominal is nominal and serves the technical need in organization of analysis, conclusions, recommendations in the report.

Question Text of the question (# of the question in Type of Factors #27 the IFAD question list for FGDs28) FGD 1 Please describe successes and failures of your Cooperati Perceptions on the organization. What are their causes? (11) ve advantages and disadvantages of Responde associations. nt (CR) Economic factors Do you cooperate with farmers within your Non- influencing cooperation. agricultural activities? If yes, in what direction? Cooperati What relations do you all have among each ve other? What are conditions of cooperation Responde among you? How long have you been nt (NCR) cooperating with each other? What are reasons that prevented you from forming or joining a cooperative? Or do you plan doing it? 2 Do you think cooperation among farmers should CR Socio-cultural factors enhance? If yes, please specify what could be (including internal relations, done in this regard. (9) cooperative issues, leadership role and alike29) influencing cooperation. 3 What kind of forms of cooperation among CR Socio-cultural factors farmers are you aware of? (formal, informal influencing cooperation. cooperation, production cooperatives, marketing cooperatives, marketing groups, bargaining associations, other forms) (3) 4 What are in your opinion main advantages, CR Perceptions on the disadvantages and risks of the cooperation advantages and disadvantages of among farmers? (2) associations. 5 What do you know about farmer cooperation CR Socio-cultural factors and how relevant do you find the issue of influencing cooperation; cooperation for your farming activity from the Economic factors

27 These are question numbers as per the FGD questionnaires adjusted by Elkana for the local peculiarities. Please also Annex 4 for these questionnaire templates. 28 Please see annex 1. 29 Please see the Guidance Methodology. 92

point of view of solving economic, technological, influencing cooperation. environmental, social, and other problems? (1) +(4) 6(+6a) Which are in your opinion the main barriers for CR Perceptions on the the cooperation among farmers and solutions to advantages and disadvantages of these problems? (5) + (6) associations; Socio-cultural factors influencing cooperation. 7 Is there a future for farmers’ cooperation in your CR Perceptions on the region (country) and why do you think so? (10) advantages and disadvantages of associations. 8 What do you know about farmer cooperation CR Economic factors support programmes and organizations in influencing cooperation. Georgia? (7) 9 How useful they are? Please name the most CR Economic factors useful one. (8) influencing cooperation. 10 Do any of these programmes need refinement / CR Economic factors improvement? If Yes, please specify. (9) influencing cooperation. 11 What new programmes or activities can be CR Economic factors implemented? Who is supposed to do it ?(9) influencing cooperation.

2. Cooperative Respondents 2a. Perceptions on advantages and disadvantages of associations Question 130. What are the causes of successes and failures of your organization? This question essentially echoes Question 6. Therefore, the reader is asked to refer to the paragraph dealing with Question 6 below.

Question 4. What are in your opinion main advantages, disadvantages and risks of the cooperation among farmers? Respondents repeatedly pointed to the following advantages: - More opportunities to receive technical and/or financial assistance for free (including capacity building trainings and coaching, fully or partially-paid grants, production assets), at a lower price (soil testing, machinery and other services) and/or under more beneficial conditions (credits, schemes, etc.), compared to individual farmers; - Material and intellectual resources of individual members pooled up for their cooperative complement each other, i.e. in the best case (a) each member is likely to be versed in particular area fill a gap in potential or actual knowledge and/or skills required for particular activity of a given cooperative, and (b) if a member happens to need seed, machinery or something similar, other members are expected to help the former to mitigate the loss; - Land resources of individual members pooled up for their cooperative attracts private machinery service providers because the latter prioritize larger orders; - Tax allowance for cooperatives, which is in force till the end of 2017.

They also gave a generalized assessment to being in a cooperative as being stronger together. Regarding disadvantages, risks and problems, cooperative members named the following: - Internal personal frictions and distrust of members towards each other is the risk that was most frequently point to;

30 These are question numbers in accordance to the questionnaire adjusted by Elkana for the local peculiarities. Please also Methodology Guidance in Annex 1 for the original questionnaires. 93

- If even one member has a bank’s debt, the bank may plainly refuse the cooperative a credit; - If a cooperative cannot collect required volumes of a harvest for re-sale or valued addition manufacturing, it can compensate the lack by purchasing the product from an outside source but under the restriction to handle at most 30% of total turnover sourced from non-Members (the same condition applies to services). The 30% restriction seems to cooperatives as too strict31; - A cooperative may perceive failure to get a much sought after grant assistance as nearly a backstabbing because it was encouraged to get formed and spent time, energy and other resources with a promise of subsequent assistance opportunities; - Finally, risk of a problematic behavior of a member may also be an issue occasionally (e.g., acting only out of self-interest disregarding needs and interests of other members).

Question 6. Which are in your opinion the main barriers for the cooperation among farmers and solutions to these problems? Respondents claim that the main barriers are: - Widespread lack of awareness of local population about the concept of cooperatives, purpose and benefits of being a cooperative member; - Many confuse (co-funding) grants with credits; - Low interest and extreme caution of local population (“let’s first wait and see how existing cooperatives will do”). The respondents propose the following steps to remove the above noted barriers: - State should publicize its programmes more to reach the target groups and explain properly member rights and obligations; - State should be more concentrated and determined on enabling a good number of successful cooperative cases and publicizing them; - State has to sort out the lingering land registry problem to ensure effective use of land resources by cooperatives at fair rent prices; the local government should adopt transparent procedures for renting out state owned land plots; - State should ensure that national companies and cooperatives win State tenders32.

Question 7. Is there a future for farmers’ cooperation in your region (country) and why do you think so? All the respondents believe that there is indeed a future for it in Georgia. What is more, they appeared more or less determined to continue with their own cooperative activities despite problems (noted elsewhere in the FGD findings) - at least for the nearest future. On the other hand, many of them think that it is premature to think of enlargements and especially creating second level cooperatives, which (both or either of the options) seem to be desirable courses of cooperative development for the State. The cooperatives assert that they do not consider accepting new members till they get stronger33.

2b. Socio-cultural factors Question 2. Do you think cooperation among farmers should enhance? If yes, please specify what could be done in this regard. Nearly all the respondents (except one) acknowledge the need in cooperation and its development in the form of a cooperative. Some people succeed in it. Others fail. In any case, the FGD participants

31 In fact, the State actually allowed this 30% condition instead of totally prohibiting outside product resale. 32 It’s a controversial statement but still conveyed to show a broad difference of ideas and perceptions. 33 This substantiation of the non-enlargement from farmers sounds superficial and does not explain so categorical non- acceptance of potential benefits from enlargement. Please see further criticism in the comparative analysis of FGD findings on page 104. 94 have a strong opinion that the State should do more to support cooperatives and that without the State’s support no newly formed cooperative will get on its feet independently.

Question 3. What kind of forms of cooperation among farmers are you aware of? (formal, informal cooperation, production cooperatives, marketing cooperatives, marketing groups, bargaining associations, other forms) The cooperatives named two main types of cooperation among farmers that they were aware of – in both cases they take advantage of the factor of pooled up resources or needs: - Machinery service cooperatives. It is when they use agricultural services supplied by private providers at lower rates (thanks to a larger cumulative land area to cultivate) or higher priority (first to benefit) compared to similar services provided to individual farmers; - Input purchase cooperatives. It is when they bulk-purchase seed or other materials at lower rates. Further to them, several farmers named also transportation, sales and primary production.

Question 5. What do you know about farmer cooperation and how relevant do you find the issue of cooperation for your farming activity from the point of view of solving economic, technological, environmental, social, and other problems? The first half of this question refers to non-cooperative farmers. As for the second half of the question, all the cooperative members interviewed at the FGDs assign high importance to cooperation among farmers in both social and economic terms. The social problems involve alcoholism and other phenomena related to unemployment, as well as depopulation, particularly urban migration of young people.

Question 6. Which are in your opinion the main barriers for the cooperation among farmers and solutions to these problems? In terms of socio-cultural factors, the following major problems listed by the cooperative members can be pointed out: - Some of them seem still have a prejudice that a today’s cooperative is still similar to a Soviet era collective farm; - Fear of local population of having problematic members (i.e. those motivated only by self- interest) in a future cooperative. To counter these issues, the respondents advise the State: - To reach every resident and drive home messages more insistently: “30-60 minute meetings are not enough. People go back and easily forget everything they heard at the meeting;” - Showcase successful cooperatives and instill long-term perspective and vision among potential, interested beneficiaries to dispel prevalent fear and distrust among farmers towards each other.

2c. Economic factors Question 5. What do you know about farmer cooperation and how relevant do you find the issue of cooperation for your farming activity from the point of view of solving economic, technological, environmental, social, and other problems? The first half of this question refers to non-cooperative farmers. As for the second half of the question, for their livelihoods, all the cooperative members interviewed at the FGDs assign high importance to cooperation among farmers in both social and economic terms. The economic problems involve problem of finding markets, poor sales, stability of sales, harsh competition with imported products. On the other hand, basically all the respondents seemed to have parallel income, i.e. income from other sources too.

95

Question 8. What do you know about farmer cooperation support programmes and organizations in Georgia? The respondent farmers were aware of assistance being offered to cooperatives by Elkana, Mercy Corps, GIZ, and farmers by State Programme “Produce in Georgia”, “10%:40%:50%” State co-funding programme, and State cheap credit.

Question 9. How useful they are? Please name the most useful one. “Produce in Georgia” appears to be well received by at least a part of respondents (others have no opinion). Interestingly, one respondent received funding from this program as amkhanagoba34 (as a cooperative they could not get any funding, so they now shift to operate as amkhanagoba). But no one said a good word about State-supported cheap credit program or “10%:40%:50%” State co-funding programme35. All the respondents express their frustration about it. They say that cheap credits should have a grace period, longer maturity period, and should not incur tangible charges other than interest repayment. Some of them have witnessed working examples of how effectively does State operate agricultural credit schemes (e.g. they claim that there is a grace period in Estonia) during their experience sharing visits to Europe. Some of the respondents are disgruntled about inability of local consultation centers to help with cooperative establishment formalities, others have nothing to say. Unless reminded, the respondents do not recall these centers when asked about what sort of agri-support programs they are aware of36. While respondents talk about ICCs in critical tones, they seem to be not quite aware of the infancy of the national ICC network. Indeed, ICCs came into existence just a couple of years ago. They are constantly evolving including staff rotation. Both direct research interviews of Elkana with them and feedbacks from experts attest to their extremely limited budget and staff resources but heavy work load (especially in case of regional ICCs which are actual municipal ICCs with double the regular tasks). Although the FGD respondents do not immediately recollect ICC assistance during FGDs, after a moderator’s reminder they nevertheless readily acknowledge that many of them actually do get various information from ICCs. Obviously, farmers expect more than ICCs can provide at this stage of development. But it is also obvious that ICCs are useful as information providers as acknowledged by the respondents themselves (the main obligation of ICCs is to disseminate information) and that their usefulness will only grow in time especially with more capacity strengthening in knowledge and management and larger budgets.

Question 10. Do any of these programmes need refinement / improvement? If Yes, please specify. The credits seem to be most acute issue that requires immediate action in the opinion of the respondents. They request the State to ensure low rates without considerable hidden charges and longer maturity period flexibility for agricultural credits. Farmers sometimes need shorter or longer maturity periods but they are offered rigid repayment by the banks. So much that the respondents voice frustration: “Agriculture is dying. State does nothing really to help.”

34 According to the Georgian legislation (Article 930, Civil Code), amkhanagoba is a union of physical persons brought together with an aim of implementing a specific economic or other activity on the basis of an agreement among them. Amkhanagoba is not a legal person. 35 These programmes draw critical views for their low use for cooperatives (see for instance page 8, Bulletin #4 of Georgian Agricultural Academy of Sciences at http://www.gaas.dsl.ge/pdf/macne/Ak_Macne_4-2015-K-1a.pdf) 36 Of course, the views presented here reflect only the stances of participants of FGDs. Till this point in the text, the report has not so far explained the role, effectiveness and positive aspects of ICCs, without which objective picture cannot be ascertained. Therefore, please see the comparative analysis of FGD findings on page 115 for counter-arguments about ICCs. 96

Besides, the State is expected to assist cooperatives with sales (e.g. by establishing open markets dedicated solely to primary producers), a chronic problem perhaps for the most of the farmers in Georgia, irrespective of their cooperative membership. Finally, the respondents wish the State consults them in the planning phase of establishing and/or further developing agricultural assistance programmes and services, including ICCs, for better inclusiveness, effectiveness and empowerment of farmers.

Question 11. What new programmes or activities can be implemented? Who is supposed to do it? A couple of FGD respondents entertained the idea of State-run Agriculture Development Bank that could issue real low-rate credits with initial grace periods.

3. Non-Cooperative Respondents 3a. Perceptions on advantages and disadvantages of associations Question 4. What are in your opinion main advantages, disadvantages and risks of the cooperation among farmers? Respondents repeatedly pointed to the following main advantages: - Together it is easier to control quality of purchased chemicals (via knowledge sharing) because a number of pesticides actually are harming plants; - Together it is easier to plan and analyze: “several heads are better;” - Together it is easier to introduce new varieties (via knowledge sharing), reach foreign markets and solve irrigation water problems by pooling products or demands respectively; - Machinery service providers prefer to operate on large plots at a discount rate/ or a priority basis; - If one member loses seeds, others may offer help from joint or individual resources; - As a cooperative you are “more official;” - Soil analysis is available for free for cooperatives. Regarding disadvantages, risks and problems, non-cooperative members named primarily internal problems: - The lack of a leader and a negotiator who will regulate internal relations by balancing off conflicting interests and prioritizing cooperative activities and so on; - Problems in decision making due to rigidity, ignorance and clash of interests; - Risk of unequal work load and performance among members which bring us to the question of fair distribution of income whatever the formal member shares; - Small number of grants for cooperatives and a large number of the latter. “It’s not right that only five out of 100 cooperatives get grants.” Most farmers then become discouraged. Some of them question the motivation of the State: is it prioritizing to assist big farmers, who are more capable of gaining grants? - Today’s agricultural markets are very unstable. Ups and downs may occur in one season. So, if you create a cooperative for a particular cultivar, it may lose purpose if the cultivar loses value. Further to the above noted problems, one person raised the motivation issue when a person joins or forms the cooperative for the sake of getting grant funding and if failed instantly loses the interest abandoning the cause. Another respondent remarked that some people cannot risk investing their land or similar large property as a cooperative share. One of the reasons is not just a heightened sense of caution but also

97 the rule that if a member leaves the cooperative, he/she cannot take his share along with him earlier two years after having become the member. Several farmers participating in FGDs noted the fact that farmers invest only the minimum amount in shares (i.e. no property), which leads banks to issue credits not to cooperatives (legal persons) but to their particular members (physical persons). Besides, they claim that banks are checking credit histories of every member and may refuse a credit to any member of a given cooperative if even one member is found to have a problem with the bank. In addition, at least one respondent pointed out the issue of frequent price fluctuations on hazelnut that considerably affect cooperative viability.

Question 6. Which are in your opinion the main barriers for the cooperation among farmers and solutions to these problems? Respondents claim that the main barriers are: - Lack of awareness - all the respondents say that people (women more than men) don’t know how to use cooperatives or even how to form it; In particular instances, more barriers emerge based on the respondent feedbacks: - Generally, there is a tangible material inequality among farmers who can be interested in forming or joining a cooperative; - Disinterest of young people towards not only cooperatives but agricultural activities as a whole. As a result, cooperatives are mainly formed by people aged 40-45 or above. Many of them are above 60, which implies certain limits to intensity of agricultural activities of farmers including those involved in cooperative activities; - Village population is shrinking. It’s getting hard to find a like-minded a person who you can trust. Even close ones cannot be trusted; - As with the cooperative FGDs, here too one response involves a farmer frustrated at the State’s allegedly unsupportive attitudes when the latter sets a terminally high rent price for the land requested by a group farmers from the State for vegetable production; - The requirement to comply with various standards in a cooperative may too scare off a couple of farmers in individual instances. What is more, one respondent noted that all food safety standards will be enforced in Georgia from 2020 and this fact may also be a factor that could potentially dishearten a couple of farmers towards cooperatives. The reason is that, in perception of farmer, compliance with standards may be lighter for individual physical persons than for legal entities37; - Similarly, the tax waiver which is currently in force for cooperatives expires at the end of 2017. There is a chance that the State will extend this favorable regime but this is not a foregone conclusion. So, some farmers may be in doubt whether to engage themselves in cooperatives or not; - If a farmer enters a cooperative with land and then decides to leave, two years should pass after the date of farmer’s joining the cooperative for her/him to be legally able to leave the cooperative with his share38. What is more, he/she must formally notify the cooperative governing board about his/her intention to leave at least 12 months before that intended date of leave. This fact may affect the positive decision to form or join a cooperative; - Farmers with a considerable bank debt may be refused the membership because banks may reject a credit to a cooperative, where members are found to be blacklisted or have large credit to repay. Mindset-related problems are behind many of the above listed barriers. Accordingly, the State or other stakeholders cannot have ready-made direct solutions. Instead, awareness changing or raising campaigns seem to be required at a larger scale and at individual levels, judging by the feedbacks from

37 The FGD respondents who made these statements about standards may have incomplete information about the situation. Legal persons already need to comply with the requirements while physical persons will have to start complying with them from the year of 2020 onward. 38 See Article 9 of the cooperative statute template (http://acda.gov.ge/res/docs/2014021915504976896.docx) 98 the FGD respondents: “People know nothing really. Ok, they go to such meetings but understand nothing in these 30 min – 60 min events. They go home and forget.” “Many farmers need help in very elementary things.”

Question 7. Is there a future for farmers’ cooperation in your region (country) and why do you think so? As with cooperative members, all the respondents believe that there is a future for cooperatives in Georgia. But all the respondents looked cautious about their own next steps. In this regard, one gave an excuse that cooperatives are needed only if you want large harvests. Several more assert that farmers should be strong, trained, given a vision and long term perspective, and only then form a cooperative. Even more, one respondent added a pessimistic observation to this mixture: “Judging by my experience, these unions are disintegrating after a while.” Only one of the respondents stated that he was in the process of cooperative formation. All in all, nearly every respondent considers the idea of joining or starting a cooperative positively but prefers to assume a wait and see attitude. Many of them exhibit fear and distrust towards other farmers for any joint activity.

3b. Socio-Cultural Factors Question 2. Do you think cooperation among farmers should enhance? If yes, please specify what could be done in this regard. Nearly all the respondents acknowledge the need in cooperation and its development in the form of a cooperative. The steps that should be done to facilitate cooperation among farmers are stipulated in 2a-2c sections.

Question 3. What kind of forms of cooperation among farmers are you aware of? (formal, informal cooperation, production cooperatives, marketing cooperatives, marketing groups, bargaining associations, other forms) The respondents named two main types of cooperation among farmers that they were aware of: - Machinery service cooperatives. It is when they use agricultural services supplied by private providers at lower rates (thanks to a larger cumulative land area to cultivate) or higher priority (first to benefit) compared to similar services provided to individual farmers; - Sales cooperatives. It is when they sell their products jointly via existing channels at wholesome (lower) rates (thanks to a larger cumulative volume of the product).

Question 5. What do you know about farmer cooperation and how relevant do you find the issue of cooperation for your farming activity from the point of view of solving economic, technological, environmental, social, and other problems? Only several respondents had experience in any kind of formal or informal farmer cooperation activities ever. They cooperate in terms of joint use of private mechanization services. Some of them had experience in employing traditional cooperation methods like nakhiri39 and alike. For their livelihoods, respondents do not assign high importance to cooperation among farmers in both social and economic terms.

Question 6. Which are in your opinion the main barriers for the cooperation among farmers and solutions to these problems? In terms of socio-cultural factors, the following major problems listed by the cooperative members can be pointed out: - Soviet legacy when some people still consider cooperatives as Soviet collective farms; - A strong desire among some farmers to be the top guy: ““Everyone wants to be a director;”

39 Shepherding of a village livestock to pastures and back by each resident of a village on a day-long rotational basis. 99

- The extreme caution and hence the excuse among some of the farmers: “I would go to a cooperative when I become strong.” To counter these issues, the respondents advise the State to intensify information campaigns and show cases successes.

3c. Economic factors Question 5. What do you know about farmer cooperation and how relevant do you find the issue of cooperation for your farming activity from the point of view of solving economic, technological, environmental, social, and other problems? Although the question was mainly covered in section 1.2, one important and perhaps characteristic remark of one of the respondents sums up both the importance of and attitudes towards the cooperation in the countryside: ““When I started the business, I asked a neighbor for advices but got no advice. I had to learn from practice. Now he tells me something but I don’t need them anymore.”

Question 8. What do you know about farmer cooperation support programmes and organizations in Georgia? Almost no respondent farmer could recollect any State or other program supporting cooperatives. Two or three of them just heard of State-run Plant the Future Program. Only after having reminded, they would remember Farmer Information and Consultation Centers (ICCs). It turns outs that at least some of them do use ICC services to get a variety of information or are contacted or even visited by ICC for familiarization and information exchange. One person did not know there was ICC in his municipality. In another case, a respondent expressed dismay on finding out from another one that he was not aware of the farmers congress held earlier this year. Asked about local authorities, one respondent replied: “they do nothing good but they nothing bad either.” Asked about ACDA, another respondent replied with only a short assessment: “ACDA looks weak so far.” To summarize the prevalent disposition, it is worth quoting one of the respondents: ““Support from various organizations is not reaching us.”

Question 9. How useful they are? Please name the most useful one. Basically, the respondents made no use of the programmes, judging by their feedbacks.

Question 10. Do any of these programmes need refinement / improvement? If Yes, please specify. Please see next question as the farmers were not properly aware of the existing programmes and activities.

Question 11. What new programmes or activities can be implemented? Who is supposed to do it? Respondents all say that without the State’s real help farmers will not be able to set up cooperatives. They enumerate tasks that the State should do (see below). These tasks are generally covering the entire agricultural sphere. Clearly, the respondents do not delineate between cooperatives and other issues and speak primarily about their problems without a focus on cooperatives. Still, the problems concern cooperatives too to varying extent: - State should control and test imported new pesticides, varieties; - State should do more to prepare agricultural specialists; - Agricultural reform will not succeed unless there is a complex integrated approach. State should show perspective to farmers – long-term vision, what would happen in several years ahead; - State should be more considerate of regional difference (e.g. severe water shortage in Eastern Georgia); - More demo plots should be there to showcase new approaches, techniques, technologies; - State should try to subsidize more cultivars, not only grape and mandarin;

100

- In addition to cultivation stage, State should try to introduce vouchers for other stages too – such as planting, processing; - Agricultural production costs are high while imported goods have zero import tax. So, the State should impose import taxes because current policy “…leads to death of national agriculture.” - State should support farmers in the latter’s negotiating of the conditions with insurance companies (“They [insurance companies – g.s.] try to pay you nothing”); - State should ensure really useful credits: “Chinese have 0% rate credits!;” - State should renovate the irrigation system in the country. Without irrigation water, future of many cooperatives can be bleak. In addition, two specific requests were also made. They both may have strong influence on cooperative activities: - Farmers need tractors in the vicinity. A commercial service provider does not send a tractor for a small job even to a place just 10km away; - There should be a dispatcher service to schedule a cultivation machine services for farmers.

4. Short Comparative Analysis

4a. Perceptions on advantages and disadvantages of associations Main advantages, disadvantages and risks of the cooperation among farmers It is interesting to note that neither cooperative respondents, nor non-cooperative respondents have pointed out capacity building opportunities that are available for cooperatives and farmer groups from various State and non-State actors. On the other hand, cooperative respondents emphasize financial and technical benefits, whereas non- cooperative respondents tend to give more diversified answers about material and soil quality control, team work, experimentation, markets, irrigation. These topics are all valid for the cooperatives, as they are more or less mentioned or touched upon by cooperative respondents - but when talking on other topics. Cooperatives seem to be more pre-occupied with immediate, daily, urgent issues and tend to be specific when talking on advantages. The above said means that non-cooperative respondents imagine internal and external dynamics of farmer cooperation very close to the reality. The credit here arguably goes to the FGD selection methodology which sought to engage the most active, eloquent, experienced farmers across the country. Regarding disadvantages, both groups point to (a) internal relations and personality problems, and (b) scarcity of grants and associated fear of fundraising failure, involving risk of discouragement. It’s just non-cooperative respondents are more concerned about the risk of distrust and fear of failure. There are indeed differences on other topics. For instance, FGD participants from cooperatives are sensitized to the possibility of bank credit rejections due to individual member debts.

Main barriers for the cooperation among farmers and solutions to these problems Regarding the barriers, non-cooperative members named a considerably larger number of them. Perhaps, this difference is based on the fact that for cooperative members this stage is behind. On the other hand, listing so many reasons may reflect the desire of non-cooperative respondents to fend off any suggestion to get into cooperatives (that they do not seem to favor) and shift the focus on their daily problems (from the very first minute, every one of them talked about their problems despite the different first questions that they were asked). While cooperative members mainly noted (a)

101 widespread ignorance of local population about the idea, purpose and benefits of being a cooperative member, and (b) their extreme caution, non-cooperative respondents highlighted a plethora of issues: - Mentality related barriers – starting from a “cooperative is a collective farm” prejudice and ending with the love of some people being the number one in everything; - Finances related barriers – starting from general material inequality and ending with the risk that the banks will not give money to cooperatives involving blacklisted members; - Social barriers – starting from youth outmigration and disinterest and ending with demographic collapse of countryside; - Internal regulations and policy-related barriers - starting from the problem of “I cannot take my share along with me if I leave the cooperative” and ending with a particular case of State’s perceived lack of foresight in setting land rent prices. As a means to tackle these barriers, respondents of both types of respondents advise the State to publicize its programmes more to reach the target groups individually and showcase as many cooperatives successes as possible. But there is more to it from cooperative members. They advise the State to protect interests of local producers in State tenders and boost local production in this way, and sort out land registry issue to know exactly what lands are available and what pricing should be employed for each given case of renting or selling a land lot.

Future for farmers’ cooperation in Georgia All the respondents believe that there is indeed a future for it in Georgia. While cooperative members looked high spirited enough to continue their cooperative activities despite problems, non- cooperative members stuck to the neutrality politics in the “I like it but thank you - maybe later” style. Cooperative members on their hand assert that it is premature to enlarge or create or join a second level cooperative. As far as enlargement is concerned, the substantiation of the farmers’ negative position sounds general and superficial. According to alternative explanations which do sound more logical, cooperative members do not want to share assets (received through different projects) with new members. This is why, according to respondent experts and ACDA, cooperatives tend to consist of only very close friends or family members and do not show any interest in larger membership, which allows farmers to gain economies of scale in production and marketing, and enhance their bargaining power in input and output markets.

4b. Socio-cultural factors Expediency in the enhancement of cooperation among farmers Nearly all the respondents from both flanks (except one cooperative member) favor development of cooperation in the form of a cooperative but obligate the State’s involvement in it if the cooperatives are to stay afloat and advance.

Forms of cooperation among farmers Both types of respondents said that they have mainly heard or seen two types of cooperatives. In the first case, there was a convergence of answers as nearly all the respondents said that had heard or seen mainly the cultivation form of cooperative. In the second case, the answer diverged: cooperative members named input purchase cooperatives, non-cooperative respondents – sales cooperatives. However, it has been noticed by the moderator that non-cooperative members were actually expressing their wish to see the widespread problem of sales be somehow mitigated (some respondents used the term “could be good” or similar). It is indeed well-known that not just farmers but also cooperatives do experience this nagging problem but the number of cooperatives where the subject of joint activities is specifically sales are very rare if no non-existent.

Knowledge of farmer cooperation and its relevance to one’s own individual social problems

102

In case of the first half of this question, which related to only non-cooperative farmers, only several of them had experience in any type of farmer cooperation (basically, informal). As for the second half of the question, there is a drastic divergence among the two types of respondents: cooperative members assign high importance to cooperation, while non-members do not.

Main social barriers for the cooperation among farmers and solutions to problems Both types of respondents highlight the barriers related to prejudices and lack of confidence and trust. To tackle them, major changes and efforts are required of farmers particularly towards cooperative development. From the State’s part, farmers appeal to the policy makers and authorities to go to every farmer and try more to re-shape its views and facilitate formation of positive attitudes in a complex, pre-informed manner.

4c. Economic factors Relevance of farmer cooperation to one’s own individual economic problems of FGD participants Non-cooperative respondents clearly distance themselves from cooperatives as a key tool for the solution of their economic and social problems. Regarding cooperative respondents, they in contrast flag the formal farmer cooperation as important in both social and economic terms. This importance is not critical however. All the cooperative respondents have parallel income.

Knowledge of respondents about farmer cooperation support programmes and organizations Unlike non-cooperative respondents, cooperative respondents were quite well aware of various State and international programmes, particularly Elkana, State Programme “Produce in Georgia,” and alike.

Usefulness of these programmes and organizations Whereas non-cooperative members were at pain recollecting properly at least a name of any cooperative assistance organization, cooperative members gave a good mark to the State-run Programme “Produce in Georgia” as an effective support to farmers and amkhanagoba (but not cooperatives!). While respondents talk about ICCs in critical tones, they seem to be not quite aware of the infancy of the national ICC network. Indeed, ICCs came into existence just a couple of years ago. They are constantly evolving including staff rotation. Both direct research interviews of Elkana with them and feedbacks from experts attest to their extremely limited budget and staff resources but heavy work load (especially in case of regional ICCs which are actual municipal ICCs with double the regular tasks). Although the FGD respondents do not immediately recollect ICC assistance during FGDs, after a moderator’s reminder they nevertheless readily acknowledge that many of them actually do get various information from ICCs. Obviously, farmers expect more than ICCs can provide at this stage of development. But it is also obvious that ICCs are useful as information providers as acknowledged by the respondents themselves (the main obligation of ICCs is to disseminate information) and that their usefulness will only grow in time especially with more capacity strengthening in knowledge and management and larger budgets. Respondents were not of high opinion about State-enabled agricultural credit scheme. They claim that the credits are not farmer-friendly enough.

Need in refinement / improvement of the these programmes The non-cooperative members did not have anything to say about this question. Regarding cooperative members, they pointed to three issues that require the State’s assistance: really farmer-

103 friendly agricultural credits, more targeted programmes to boost cooperative product sales and market linkages.

Suggested new programmes or activities Some respondents proposed the State to consider creation of the State-run Agriculture Development Bank that would offer low-rate tailor-made flexible credit schemes to both individual farmers, their groups and cooperatives.

104

1. Cases 1a. Case #1 – FIRST STEPS Vani currently enjoys a popularity of being a hazelnut production epicenter of Imereti Region. There is abundance of hazelnut but also fruits. It’s only the fruits are practically all mediocre in quality making them worth only for further processing. A number of international assistance organizations have been flocking to this municipality in a move to promote cooperation between the farmers in various field of both primary and secondary agricultural production including dried fruits or chiri in Georgian. But Chiri with a capital letter is a cooperative registered recently in Vani (early 2016). As the name has it, the cooperative plans to establish chiri production and ultimately enter the export market. The cooperative has no problem with the raw material for dried fruit production. All of its 12 members (8 of which are women) who are connected by years of work and personal relations and reside in different Vani villages, produce plenty of them. There is no problem with selling the chiri either. The income will be shared proportionally based on contributed volumes. It’s because the demand for druid fruit is vibrant. grows almost all types of fruit for chiri usually produced in Georgia such as apple, pear and persimmon, as well as black plum. The process of chiri production is complex and consists of several stages like collecting, transporting, sorting, washing, cutting, drying. Within a threshold co-funding sum, in 2016 a donor organization granted cooperative with a drying equipment worth of 45 thousand US Dollars, the most needed and critical for improvement of effectiveness in value addition. The cooperative owns 400 sq. m. of space where installation of a drier is planned. Premises require refurbishment, and reportedly, the donor organization intends to assist the cooperative in repairs. All members have basic knowledge in dry fruit production. At the same time they acknowledge that industrial dry fruit production practice, which they are striving now to establish in their premises, requires specific skills and management approaches that they may be lacking. So, while the commercial production base is currently being formed with one ton of chiri per day capacity (unprecedented for Georgia), the cooperative seeks the professional training to handle the equipment effectively. On top of it, they are in need of trainings in financial management, accounting, and taxation. Earlier this year, the cooperative benefited from a consultation of international fruit drying expertise provided to them by one of the Tbilisi-based NGO supporting farmers. Most of the tasks - like, washing and so on - can be done by any cooperative member because it’s a manual work and does not need special knowledge. There is a difference in what women do and what men do. The latter are now engaged with physically challenging stages like collecting the fruits, loading them into a truck and delivering to the place where further stages will be carried out. So far, in the capacity of the cooperative, its members have not finished the first round of production. At the moment, the process is in the fruit collection stage. Most of the work will take place in the coming autumn and even winter. The cooperative members have other sources of income also, from beekeeping that was learnt from a book. By profession, women cooperative members are school teachers. The cooperative realizes that their business produces processed food product which necessitates knowledge and compliance with relevant food safety and production standards and norms, including quality characteristics of finished products. If the cooperative is to export its products to domestic and EU countries, it should abide by the standards strictly. Last year, the cooperative was offered by two businessmen from European and Asian countries to export the dried fruit to their respective countries. However, the cooperative and its farmers separately did not have a gram of chiri that

105 would comply with the EU and international standards. This issue requires both modern technologies (machinery, infrastructure) and knowledge. It remains to be seen how the cooperative will solve it. In this critical period, they expect continuation of external assistance. In addition to the formidable task of construction of the production base and installation of various equipment there, their future plans foresee seeking of co-funding for washing and cutting equipment, as well as own means of transportation.

1b. Case #2 - ASCENDING Tusheti region is not only a wonderful place for tourism and livestock farming. It produces decent quantities of quality vegetables which unfortunately do not reach the country’s major markets due to its remoteness. Having heard of various cooperative support programmes, in early 2015 five women who worked at the same school in Zemo Alvani village of Kakheti region decided to join forces for a joint business. Together with their spouses, they registered the cooperative Nergebi in August 2015. The number of cooperative members is ten: 5 women and 5 men, all of them seasoned co-workers and neighbors living and working in Zemo Alvani. Initially, they thought of a flower greenhouse but later settled on a vegetable greenhouse. Around the time of registration they applied to ENPARD programme and gained 56 thousand GEL co-funding for the two greenhouses with the drip-irrigation system, while the cooperative members contributed 22 thousand GEL. The construction was carried out in November-December 2015. Cooperative members do same type of work activities in the cooperative: joint cultivation, application writing. In other words they take part in every kind of tasks needed to run and maintain the greenhouse and seek funds. Given the type of main work the women have at school, they work in a greenhouse according to the schedule and, therefore, and all production activities in the greenhouses are carried out in due time. Normally the greenhouse work starts in early and late hours of the day but never in the mid-day. These hours are convenient to the women, while their spouses take care of the greenhouse during the rest of the day. The first harvest of cucumbers was abundant, 3.5 tons from 1200 plants in one greenhouse. The harvesting period in several stages lasted from April to the end of August. What is most precious about the cooperative is that they follow biofarming practices, they produce bio-vegetables. No chemicals. Pure produce. The demand went beyond the offer. The greenhouse cucumber was sold locally, at a double the market price. They even took some of the harvest to Tbilisi and sold there too. Income generated from the seasonal operation of these two greenhouses with a total useful space of 600 sq. m. may not be enough for the cooperative of 10 farmers. Therefore the cooperative seeks further assistance to purchase its own minivan and to construct one or two more greenhouse(s) to rump up production to large enough levels that would make their transportation to Tbilisi and selling at higher prices very much reasonable. One should note that while bioproduction in a greenhouse may (but not always) offer more isolated space and security against pests and fluctuations in temperature and other environmental variables, it cannot ensure all-year round production without significant technological basis – namely with the heating system. This in its part requires additional investment. “Super-markets seek such year-round contract-based suppliers,” – one of the members notes. It is important to remark that 22 thousand GEL that the cooperative members put to use as co-share on top of the ENPARD 55-thousand GEL funding was obtained as a credit tied to their salaries. They

106 will have to repay it in the next year or two. And that weighs heavy on their household income. The income from the new cooperative is not continuous so far, it’s seasonal. It is supposed to be shared equally but in the first round the first money return was spent on re-investment. The cooperative members note that credits are not farmer-friendly. They say that agro credits should not have considerable hidden charges, longer maturity period (about 10 years) and a grace period. In their perception), agriculture is in dire straits but the State and non-governmental organizations employ a wrong approach when poor and moneyless farmers and cooperatives have to commit money from their side as a share by (no other way) taking high rate credits from banks. In reality, it is their pre- informed decision to take part in share-based grants programs and make use of credits of whatever rate. Basically, the farmers appeal to the State to come up with farmer-friendly agricultural crediting programmes. Apart from the Israeli-made greenhouses themselves, the ENPARD technical assistance also included a ventilation system. With the impressive first round of production, the cooperative decided to go for the second round in the summer and planted tomato. This decision did not turn out well. In the blistering heat of August, the ventilation system in the greenhouses could not ensure proper temperature for the plants. Weeks later a ventilator conked out in one of the greenhouses. The problem was resolved with the help of the donor organization. Growing tomato inside a greenhouse in the summer may not have been the optimal choice. The farmers claim that their decision to plant a tomato in the summer was based on the advice of their locally hired agronomist. But the problem probably lied in the specifics of the tomato variety that they introduced first time. Its vegetation period turned out to be too long than expected. Knowledge and skills of greenhouse vegetable production that they have are gleaned from years of growing their house gardens and were further enriched (considering the peculiarity of greenhouse production) with consultations from a local agronomist hired by them in the initial months (they paid a total of 3000 GEL to him) and by their own information search on the Internet. But the greenhouse production is known for its trickiness as every parameter and part of the system requires utmost care, attention and if needed immediate reaction if anything goes wrong. What is more greenhouse production is very sensitive to smoothness of operating conditioning or heating equipment, as well as irrigation and pest control, especially in bio-production. The past experience on the other hand helped them for instance to prepare a good soil mixture for the greenhouse. They used local fertile soil and enriched it with compost, poultry and cow manure, as well as nettle extract. This year the donor’s consultant has been visiting them and giving advices on cucumber production. On the other hand, lack of experience is offset by a good deal of innovative and experimentation stamina of the cooperative farmers. Apart from successful selection of the cultivar (cucumber) and its variety for the greenhouse (a specific new variety already known to flourish in the area), they decided to add a second cultivar (tomato of a specific new variety not known in the area) to the production to diversify the product range and reduce risks of income loss if any of the cultivars fails to deliver. Besides, they constructed a tiny screen house adjoining one of the greenhouses for the production of tomato plantlets. These greenhouses of bioproduction are unique to Alvani and it is no wonder that its residents are keen on knowing more about them. They visit the cooperative and ask questions about the production process. Some of them have set up their own bio-greenhouses within their self-educated skills. Because of the success of the first greenhouse round, many village residents now believe in the prospects of greenhouse production. Evidently, the cooperative is characterized by a strong teamwork capacity without a clearly distinguished leadership. The farmers note that they often engage themselves in lengthy discussions on every topic of their work and always converge on common points and further steps of action. At a human level, they point out that they are happy to come to the greenhouses every day and work together with others.

107

In addition to plans of finding money for a new greenhouse, the cooperative has applied to the same ENPARD programme to get 33 thousand GEL co-funding to buy a truck to transport the bioproducts, a natural gas-operated heating system for one of the greenhouses, an electric generator and a 5-ton water tank (construction of two greenhouses were already funded and a third one could not be requested). The latter will enable them to operate greenhouse in the winter too. There is more about the cooperative. The greenhouses are located at the premise of one of its members. Next to greenhouses, an old decrepit traditional building stands out somewhat. It turns out to be the house of the village planner Davit Abashidze who bought and lived in this house in early 20th century. The cooperative considers reconstructing the house retaining its traditional design and appeal and turn the place into a local attraction for tourists. But it’s an idea still. In all cases, the cooperative hopes to get external assistance to meet the essential needs noted in the text above. In conclusion, the case goes to show the lack of self-determination and strategic planning, which are crucial personal qualities for the cooperative survival. On top of it, the decision-making and leadership faculties are in their formative stages. To a great extent, these issues stem from the fact that the cooperative members are all enthusiasts without prior (pre-cooperative) experience of joint business activities. Apparently, the lack of professionalism cannot be easily offset with plain enthusiasm and energy, especially when the business is complemented with other job commitments.

1c. Case #3 – WELL GOING Fenced by Russian-made artificial borders from three sides, residents of Khurvaleti village keep living and working. It is here in the forefront territory, where one of the strongest cooperatives of Georgia has emerged in early 2014 and has been making slow but steady progress. 7 members of the cooperative Tiripona 201440 are all local people from different villages of , as well as one IDP resident hailing from the Tskhinvali region and one eco-migrant from Achara region. These are almost all men in their late forties and fifties, with many years of professional experience related to agriculture and mechanization, owning hectares of fertile agricultural land in different parts of the municipality. They knew each other for a long time. In fact, they had been doing the same agricultural business before they formed a cooperative. Mutual trust and real life knowledge of each other’s expertise are all present. All the members have a critical role and function in the cooperative. Besides, these functions overlap ensuring the constant opportunity of covering each other in case of any member’s absence. Selection of cooperative membership pivoted on the previous 10-15-year long work and friendship ties, pooled resources and required expertise to make the cooperative undertaking a viable self-reliant business. It started when they heard of farmer cooperation support being offered by international organizations. They went to the cooperative agency to register their cooperative. But the process proved to be a bit of a rugged 1.5-month long travail due to a number of important formal requirements stipulated by the law for a cooperative statute (such as like the need in clear statement of shares). It was not easy for the farmers to get a hold of all small but important formal details. But they persevered. The newly established cooperative needed more information and experience about how to operate and maintain books, how to seek funds and assistance. Members, particularly, their leadership (Soso Khuroshvili and Roin Poladashvili), who are very strong and self-determined with a vision, embarked on many rounds of visits to farmer information centers, cooperative agency and international organizations, as well as Internet search.

40 Tiripona is the name of quite a large valley where the villages of the cooperative members are situated. 108

The idea of cooperative formation came about due to the difficulty of cultivating a large land independently. Through a cooperative they had a chance to get machinery required for large-scale land cultivation as a co-financed grant. What is more, in the cooperative they would not be required to pay the tax till the end of 2017. Finally, in the cooperative they would be able to pool individual resources such as land, money, one’s own labor and sell their joint produce to large wholesale buyers. The cooperative originally had its own low powered old tractor. It was not enough apparently. In 2015 they succeeded in obtaining technical assistance from ENPARD via Elkana and received a 107 hp strong Belarus tractor with a powerful Italian-made reverse41 plough. The cooperative paid 26% of the cost. The rest came from ENPARD. The cooperative successfully used the tractor on 90 hectares of cereal land owned by its members around Shavsvhvebi community area42 (in addition, the cooperative farmers have 2 hectares of vegetable and tree plantations). In 2016, the cooperative had the first harvest: plenty of barley and wheat, as well as buckwheat and rye. Actually, buckwheat harvest hit the top because from just two hectares planted with this plant the farmers collected 5 tons, achieving a very high yield. The yields of barley and wheat were also decent: 4.0t/h and 4.5 t/h respectively. The success of abundant harvest is a result of good agricultural knowledge at work. For instance, cereal varieties were selected very carefully. Although there is no zoning of varieties underway in Georgia since nineties of the twentieth century, those cooperative members, who are long-standing agronomists, reviewed the zoned varieties of neighboring countries and chose closest matches in terms of climate and other natural factors. Also, in Marneuli there is a seed producer Mr Kakha Lashkhi who has been introducing such new varieties and the cooperative collaborates with him on the matter since at least 2010, after having met him through one of those conferences or forums organized by international donors. Then, provided that a test planting delivers promising results, the chosen varieties are planted by the cooperative farmers at an industrial level. Use of several different crops ensures lowering the risk of total harvest failure in case one of the crops would not perform well. In general, the decision on what to cultivate was based on previous experience and fully considered market demands. The cooperative even enjoys its own network of buyers. For instance, the barley sells well with Azeri livestock farmers in . “We have no problem with selling our products,” – Roin Poladashvili asserts. What is interesting, the technical support from ENPARD that started in 2015 continues these days too. For example, the cooperative in September is to receive a disc harrow. All these machinery will further mechanize the agricultural practice and hopefully make it more effective and efficient. In parallel, the cooperative has been benefiting from other sources of assistance (received industrial chemical applicator device from DRR Center). The cooperative members have equal shares in the foundation capital – 1 part with a nominal value of 50 GEL. Nevertheless, they divide revenues based on actual harvest share of every farmer. The joint work consists of the following types of activities:

- Planning (what to plant, where to plant, when to plant, etc.) - Land preparation, cultivation, planting, harvesting; - Selling to common buyers.

41 When cultivating the soil with this kind of a novel plough, the soil remains leveled, clear of furrow disruptions. 42 Municipalities in Georgia are further divided into communities which normally consist of several villages. The Shavshvebi community sits between the East-West Highway (EWH) and the Administrative Border Line and includes several villages like Khurvaleti, Shavshvebi and alike. This is where the ABL comes closest to the EWH (just few hundred meters away) and almost surrounds the Khurvaleti village, where the cooperative has its technical and operational base (machinery depot in the household of a cooperative director). 109

So, basically, the cooperative represents a joint work of its members at all stages of production: from planning to sales. Harvesting is a challenging stage because the cooperative does not have its own dedicated harvester. This machine is very expensive and practically all the industrial level farmers in the country have to hire them from either the USAID-funded Farmer Service and Mechanization Center or a private service provider. In the latter case, in Shida Kartli they hire combines from certain Kakheti businessmen for 100 GEL per hectare (compared to 120 GEL/ ha paid to the Mechanization Center). Depending on the service availability, the cooperative chooses either of the options (but prefers the second option because it’s allegedly easier and faster). Before the cereals and before the cooperative, its members used to cultivate fruit trees. Generally, the entire Shida Kartli valley has been a prominent center of fruit production in old times. But later the infrastructure deteriorated and much needed irrigation network was gone nearly everywhere. For instance, according to the cooperative director, 19 Gori and 10 Kaspi villages used to be irrigated from the waters of Nadarbazevi lake, which in its part was regularly filled with Liakhvi river waters using pumps. However, the channels that delivered water from the lake to the fields of these villages by gravity flow were dismantled in 90s and hence need to be rebuilt from scratch. Water shortage made the cooperative members abandon tree cultivation and opt for other cash generators like wheat and barley which grow on less water. The cooperative farmers have abundant yields this year – the first time as the cooperative members. Nevertheless, another problem prevents them to continue with cereals. It’s a harsh competition with cereal importers who in the perception of the farmers are bringing unfairly low priced and low quality products and are killing the local production. The farmers are intent on replacing a part of their crops (about 7 hectares) with vegetable production in the area of their lands where the water supply relies on local underground sources. But even this plan requires drilling a bore and installing a high power pump. “We are not able to partake in the State Programme “Plant the Future” because we have no water to plant trees!” – says Roin Poladashvili in exasperation. Although the joint activities are the main type of work for the cooperative farmers, each of them does have extra business like livestock, bee farm, agricultural product transportation service to prop up household revenues, which otherwise may not be good enough if a farmer thinks of reinvesting some part of cooperative income. The extra business of transporting agricultural products from Gori to Kaspi, for instance, generates 60 GEL net income per round to one of the farmers: “It’s enough to sustain a large family in a village for the whole one week because you have eggs and other food that you do not buy but have your own.” It is interesting to note that those 92 hectares of fertile land were obtained (by fact of use or purchased cheap after a long time rent from the State) by their owners partly in 90s and partly in 2000-2010. In other words, they did not cost much. This sheer size of the lands owned by the cooperatives means paying a cumulative high annual property tax (82 GEL per ha). So, the cooperative cannot allow any part of the land to rest. To this end, in case of cultivating cereals, there is no need in giving a rest to the land because cereals are good soil boosters and weed eliminators even in continuous rotation (e.g. , first wheat, then barley, then buckwheat). “To be successful, the cooperative should not be governed based on the one-person-does-it-all principle. Yes, I am the director but I do not make decisions without consultation with other members,” - Roin Poladashvili opines. Regarding the future plans, they want to apply to Mercy Corps and try to obtain from them the above said borehole and pumping equipment in efforts to partially convert to water-intensive agriculture (which is a preferred business due to higher income), that is vegetable production and to a lesser degree – new fruit varieties. But certainly they cannot replace the entire crops with vegetables or trees even in case of ideal water supply because a part of the cooperative lands is 110 situated at a relatively high altitude. On the road to realizing this objective, there lies a natural danger however: annual hail storms that often devastate entire region and all the vegetables and fruits, while cereals are slightly more spared. According to the cooperative farmers, apart from the interest of international organizations and donors to find ways of collaborating with this promising and strong cooperative, other cooperatives, especially those who are less successful, are offering a merger. But distrustful Tiripona owners look to be very careful about adding other members or merging with other cooperatives.

1d. Case #4 – FAILURE In Kvemo Kartli, the municipality has the largest number of cooperatives registered in the region compared to other municipalities. It is an ethnically mixed area with a significant Azerbaijani minority (43%), whose main livelihood is agriculture. Agropiri was founded in the spring of 2015 by five persons from Gardabani town, four Azeri men and one Georgian women. They hoped to get a grant assistance to set up a vegetable greenhouse. The main driving force behind the cooperative was Vidad Ismailov, an active entrepreneur in his 60s. The rest were hardened Azerbaijani peasants. In Soviet times, Vidadi used to work at an Agricultural Machinery Repair Base in Gardabani town for up to 30 years as a mechanist and agricultural technician-engineer. The decision to form a cooperative came after he heard of support being provided by the State and various organizations. Vidadi visited several organizations in the region and Tbilisi in search of funding. Finally, he was consulted by Mercy Corps and encouraged to take part in the cooperative grant contest in 2016. Agropiri passed the first stage of concept notes and successfully prepared and submitted a grant proposal on greenhouse construction to Mercy Corps. He wanted to raise the greenhouse in the former Agricultural Machinery Repair Base, which was purchased by his son (quite a large area). The proposal was turned down however. Vidadi says that he has not received an explanation from Mercy Corps but acknowledges that he received some letter from somewhere that he threw away. The letter may have been from Mercy Corps or other organization. He claims that he was told by someone that instead of glass greenhouse he should have sought to build a polyethylene covered greenhouse. He has no idea about why glass is “bad”43, while it should have been better. He cannot remember who told him that and from which organization he was. It is also interesting to note that the cooperative has not submitted any proposal in 2015. In fact, Vidadi cannot remember the year of cooperative registration. He thinks it was in 2014. But the official cooperative database says 2015. Perhaps, the cooperative was established in late 2014 and was registered several months later. Vidad said that after the rejection of his greenhouse proposal he was suggested to rent 20 ha of land and seek grant assistance for the cultivation of this land. He found such land but claims that he was let down and was not given a grant. And now he pays annual rent for 20 ha. Initially he also asserted that he was wrongly led to take a credit for the greenhouse and also to conclude a contract with local greenhouse construction firm only to be abandoned by some donor organization that he could not specify. Later he admitted that he took a bank credit for some other business. Regarding the

43 The allusion is to a price of glass greenhouse, which is higher than that of polyethylene greenhouse. 111

greenhouse construction firm, he had to shy away from them because he could not carry out the contract. Vidadi complains that his two colleagues from the cooperative left for Moscow and there are just three of them left. He was not interested in finding the reasons of rejection with Mercy Corps and in seeking more funds because of his age, because he anyway has other business too and because it is next to impossible to gain a grant without special contacts. The cooperative actually applied for a joint three person grant (3 x 5000 GEL= 15000 GEL) to a State cooperative / SME support programme operated by an NGO RDA but was similarly left on the sideline. Vidadi notes that the cooperative enquired with the programme about the reasons of rejection but the programme kindly referred him to the NGO shrugging off all the responsibility. The NGO in its turn did not replied to him with the explanation, in his words. So, considering all these, Vidadi decided to put an end to this string of unhappy turns. He claims to have suspended operation of the organization with the Revenue Office and told to the cooperative agency representatives who visited him this summer that he was going to wound the cooperative down. He believes that his cooperative has the status suspended by the agency. In fact, the official cooperative database says the cooperative is active (http://acda.gov.ge/index.php/geo/cooperatives/show/686). Although Vidadi considers closing the cooperative, at the same time he still would not mind receiving grant support with the greenhouse.

2. Comparative Review of Cases

FACTORS OF CASE #1 – CHIRI CASE #2 - Nergebi CASE #3 – CASE #4 – INFLUENCE TIRIFONA 2014 AGROPIRI First year of End of 2015 - early Early 2015 2014 Unknown actual operation 2016 Psychosocial Factors Leadership One women leader One women leader Two strong, One man leader supported by her visionary, with an insufficient spouse in her absence professional, farmer knowledge of what and in setting man leaders make cooperatives directions complementing each tick other and setting clear directions Decision-making Decisions are made Decisions are made Decisions are made Decisions are made collectively collectively collectively unilaterally Membership 12 members: 8 10 members: 5 family 7 members: nearly 5 members formation and women, 4 men couples all men originally; now 3 size members: 2 men, 1 women; Member Time-tested work Time-tested work and Time-tested work Time-tested work relations and personal personal relations and personal and personal relations dating over dating decades; high relations dating relations dating a decade; high spirited; happy to work over a decade; high decades

112

spirited; happy to together with each spirited; happy to work together with other work together with each other each other Distribution of Most of them can do Most of them can do Most of them do Leader vs. workers function similar tasks; similar tasks; perform strictly specific perform various various tasks as professional tasks as required; required; easily cover functions; overlap is easily cover each each other; no specific modest but enough other; no specific professional functions to cover essential professional functions if need be functions Determination Determined Determined Very determined Unsure Commitment Committed morally Committed morally Committed morally Demonstratively and materially (2- and materially (land for and materially (large disavows store building greenhouse; share in land resources and commitment requiring repairs and the grant covered with money from every share in the grant) a 2-year long bank member for a grant credit by every share) member) Intellectual Factors Professionalism Self-educated Self-educated Seasoned Professional in enthusiasts with a enthusiasts with a professionals in horticulture and certain agricultural certain agricultural horticulture, mechanization knowledge base in knowledge base in the beekeeping and the selected field; selected field; Quick to other agricultural Quick to new new knowledge and spheres, as well as knowledge and skill skill uptake; prone to mechanization; uptake; prone to experimentation and prone to experimentation and independent action; experimentation independent action; open to consultations and independent open to action; open to consultations consultations Entrepreneurial Self-educated Self-educated Seasoned Seasoned skills enthusiasts enthusiasts entrepreneurs entrepreneur Administrative, Unknown level of Unknown level of Unknown level of Unknown level of fund-raising skills administrative skills administrative skills administrative skills administrative skills (this is hard to (this is hard to (this is hard to (this is hard to measure), Fairly measure), Fairly skillful measure), fairly measure), skillful in fund-raising in fund-raising skillful in fund- seemingly weak raising fund-raising ability ICT Use the Internet Use the Internet Use the Internet Make little use of intensively to find intensively to find intensively to find Internet information and information and information and knowledge knowledge knowledge External Receive various Receive various Receive various Have not receives assistance with trainings and trainings and trainings and trainings apart from capacity building consultations but consultations but also consultations but perhaps the also need the one in need the one in also need the one in proposal writing financial financial management, book keeping, one within the management, cooperative document cooperative Mercy Corps cooperative management document programme; need

113

document management trainings in book management, keeping, industrial dry fruit cooperative production document technologies management, basic Georgian language, fund-raising, general management, marketing, etc. Economic Factors Estimated Dried fruits – huge Bio-vegetables –export Cereals - potential Vegetables – strong profitability and export potential, potential, potential of of strong local local demand and production rate fairly good local strong local demand demand; high profitability potential (in case demand, huge Vegetables – very potential of a processing volumes of locally strong local demand industry) available low quality and high profitability low price fruit potential harvests provides high dried fruit production rate possibility Current place of No role but Minor role but Major role but No role. Only the cooperative obtained production obtained production other sources of expenses in the revenues related installations facilities income may of cooperative occasionally be members dominant too Resource base Large enough Large enough land Huge production Large enough land harvest to provide resource to base - fertile resource; almost enough dried fruit accommodate the cultivated land no technological base material; almost production base; resource (up to 100 base; large, no technological minimum technological ha), of which a small fundamentally built base so far; relatively base; relatively weak part has abundant warehouse for weak financial base; financial base; salaried underground water storage; relatively salaried work in work in parallel source; good weak financial base; parallel technological side income from (mechanization) cutting plastic pipes base; probably fairly and walls and strong financial perhaps other base; side income activities registered on a Vidadi’s son Restrictive Strict food Strict bio- Competition No factors safety production from similar knowledge of requirements, requirements and imported low Georgian Technology- thereby very low quality products language among intensive, production base (in case of the cooperative Lack of (needs expansion), cereals), members except technology Technology- Irrigation Vidadi Ismailov, utilization skills, intensive water shortage Prejudice Competition (conditioning, drop- (vegetables), that they will not from similar irrigation, heating Neighbors get funding imported low systems), the occupied land whatever they do, 114

quality products, High price for and occupying Poor High price hired product forces understanding of for hired product transportation, grant-making transportation, Enthusiasts, process Enthusiasts Experimentation without vision, at the expense of the main plan (shooting in the dark), Developing management and leadership qualities Criticality of the Critical Critical Not critical but Critical restrictive significant factors Sales channels National and Local – well established National - well National international - but requiring expansion established and potentially diversified established External Receiving technical Received technical Received technical Has not received technical and assistance; needs assistance; set to assistance; set to any assistance financial much more technical receive more technical receive more assistance assistance to achieve assistance from the technical assistance; basic viability same donor; needs needs more more technical technical assistance assistance to achieve to improve viability basic viability Agricultural and Environmental Factors Geography, Near-Sea altitude Relatively low altitude Relatively high Relatively low climate, soil (60m), low hills, (420m), valley, ragged altitude (700-800m), altitude (310m), ragged terrain, terrain, continental valley, continental valley, rolling humid climate, climate, medium climate, high fertility terrain, continental medium fertility soil fertility soil soil climate, medium fertility soil Varieties / No need in specific No need in specific No need in specific No need in specific Zoning varieties; use locally varieties but the varieties but the varieties available regular cooperative resorts to cooperative resorts varieties much experimentation to experimentation and tests new specific and tests new varieties; no zoning of specific varieties; no vegetables underway in zoning of cereals Georgia since 90s of underway in 20th century Georgia since 90s of 20th century Political Factors Perceived State Conducive of Conducive of Conducive of Nepotism reigns policy cooperatives (tax cooperatives (tax cooperatives (tax waiver, etc.) but waiver, etc.) but agro- waiver, etc.); agro-credits may be credits may be in need irrigation in need of more of more customization; infrastructure needs customization; more more cooperative to be repaired

115

cooperative paperwork consultancy paperwork seems to be needed consultancy seems to be needed Health and Safety Factors Standards, Realize importance Realize importance and Realize importance The current critical Norms and pledge pledge compliance and pledge situation leaves this compliance (but will compliance issue for the better have to acquire time knowledge)

The four Cases were selected based on their stages of production base formation: - Recently registered and in the process of establishing the first production cycle; - First experimental production cycle ended; - First fully commercial cycle ended; - No production cycle or production base. As evident from above, the cases are similar by most of the listed factors despite the fact that the cooperatives operate in different fields of horticulture, altitude, climate zone, region and are at a different stage of production base formation. Factors arguably cover all types of major influences being experienced by the farmer cooperatives. Some factors are critical, others do not seem to be essential (size of the membership) but all the four cases are in need of serious further technical assistance to achieve basic sustainability, which in most part is being extended to them by various players. It is interesting to note that in the first and second cases cooperatives consist of motivated, committed and self-educated village people (at least half of them women) who are in daily contact with agriculture. The subject of the third case is a cooperative made of professionals. All the three cooperatives are receiving technical assistance from various donors (mostly ENPARD), intensively using internet resources for enrichment of their knowledge base, as well as seek trainings and participation of various knowledge exchange and publicity events including various conferences and forums related to agriculture. Level of success is a fluid concept in every given setting indeed. But in general the first three cases reflect tenacity and vigor. It does not mean that all the cooperatives who receive assistance are typical of any of the characterized cooperative. Rather, we may see a certain tendency that probably a major boost from donors in the form of technical assistance and follow-up consultations leads to strong and lasting invigoration of the beneficiaries.

116

1. Introduction Individual interview findings are grouped in two by type of respondents: - 3 senior representatives of cooperative-related agricultural authorities at central and local levels (Head of Agricultural Cooperatives Development Agency (ACDA); Heads of Regional Farmer Information Consultation Centers (ICCs)); - 4 key informants involved in the implementation of major international agricultural / cooperative development programmes in Georgia (Competent project managers at IFAD Georgia, Oxfam, Evoluxer and Elkana). The findings are structured by 5 main questions asked to every respondent. In addition, each of these questions contains several sub-questions. The questions are further grouped in three: 1. General Picture (Questions #1-2), 2. Problems (Questions #3 and #5), 3. Existing/Suggested Solutions (Questions #4 and #5). The findings are structured by these question groups. It should be noted that such structuring is nominal and serves the technical need in organization of analysis, conclusions, recommendations in the report. All the questions are more or less related to all the factors listed in the Methodology Guidance: - Policies and regulatory framework; - Overall horticulture sector development opportunities and challenges (including economic factors); - Socio-cultural factors; - Cross-cutting issues (such as gender, environment, etc.).

Question # Text of the question 1 (general picture) Please tell us about your organization and its activities: such as programmes and projects that you are implementing in support of agriculture and farmer cooperation in Georgia? What kind of specific support measures do you have in place? What is their scope? Who are your target groups and how large is the beneficiary pool? What are your achievements and challenges that you face?

2 (general picture) Characterize agricultural situation in Georgia, main fields, geographic and other peculiarities, prospects, advantages in the black sea and Caucasus regions? What is the current role and significance of horticulture for Georgian economic and social development in terms of its share in GDP and welfare, compared to livestock and other economic spheres? Please name particular examples of cultivars with highest actual or potential impact on employment and revenue generation, actual or future export potential in Imereti, Kakheti, Kvemo Kartli and Shida Kartli. Are their target markets local, regional and/or international? 3 (horticultural What are main problems of farmers in Georgia especially in horticulture in terms problems) of (a) knowledge and skills, (b) access to finances, (c) farm inputs, (d) infrastructure, (e) natural disasters, (f) climate change, (g) ecology, (h) health and safety? Please rank them What are their causes? Please rank them by impact. What factors influence them? What are regional differences?

5 (cooperation What are problems of farmer cooperation in Georgia? Are there problems problems) characteristic of only horticulture? Is there a difference in cooperation development momentum between

117

horticulture and livestock farming? What are internal and external causes of these problems? What are regional differences? Are any of them characteristic of horticulture only? 4 (solutions in What is done by your organization (and by others in the country in general) to help place) to the solution of any of these problems? How much time these steps may require in your opinion for the effects to materialize or become irreversible? Do these activities require policy level and/or local level decisions? What factors hamper or favor activities to solve the problems?

6. (solutions to be What more could or should be done in general to solve the problems? Please put in place) order the steps by priority as possible. How much time these steps may require in your opinion?

2. Authorities 2a. General Information (Questions ##1-2) Out of three respondents, two were from local authorities, heading regional farmer Information and Consultation Centers (ICCs) in Imereti (Zestaponi) and Kakheti (Telavi) respectively44. The centers are subordinate to the Ministry of Agriculture. They are supposed to upgrade the skills and technical capabilities of farmers and rural entrepreneurs to improve overall farm management and competitiveness. The centers are just few years old, still undergoing a capacity building process. Their staff should consist of 6 members but finding and hiring of 2 members is pending. No staff member handles the cooperative matters exclusively, despite the fact that for example roughly 30% of assistance requests received by the Kakheti regional ICC this year concerns the cooperative issues. Regional ICCs get 100-300 requests per month but in certain periods the intensity rises. For instances in August, the Imereti Regional ICC had to honor 385 enquires from farmers. As already noted above, formally there are no regional branches. The ICCs are actually municipality based but one of them in every region is given an extra task of regional coordination. What is more, the regional ICCs also are asked by other governmental structures to dissemination various information to farmers. In overall, the regional ICCs seem to be overloaded with tasks. They may need to be strengthened to serve the regional function in terms of the staff size and technical capabilities. It should be noted that although the statute of the ICCs45 assigns many functions to the ICCs, their capacity are too small for a municipality, let alone the region (in case of the regional ICCs). The main underlying factor is the lack of finances. To consult hundreds of municipality farmers, they need to hire the relevant number of agricultural experts and information dissemination officers and have relevant technical basis. These tasks require much more money than available in the State budget. This is perhaps the reason that their actual tasks are mainly information dissemination only, not professional agricultural extension activities. Regarding the Legal Entity of Public Law Agricultural Cooperatives Development Agency (ACDA), since 2013 it promotes rehabilitation of rural areas and agriculture through: - Development of agricultural cooperatives by giving them the status of an agricultural cooperative;

44 See the role of the centers in the Agricultural Strategy (Strategic Direction 3.1: Enhanced competitiveness of rural entrepreneurs): http://www.moa.gov.ge/Download/Files/92 45 https://matsne.gov.ge/ka/document/view/1365291

118

- Consulting and monitoring cooperatives; - Stripping cooperatives, which fail to conform to the rules, of an agricultural cooperative status. From the outset, the ACDA staff size remains unaltered and consists of 28 persons, of which 7 are monitors. ACDA has no municipal or regional branches, just the one – central – office in the capital Tbilisi. ACDA developed a template statute for cooperatives (http://acda.gov.ge/res/docs/2014021915504976896.docx), which farmer groups are using for cooperative registration. ACDA keeps the online database of cooperatives. If a cooperative has its agricultural cooperative status stripped off, a relevant note appears in the online profile. However, the research found that some working cooperatives do not immediately appear on the database list. At the moment, ACDA has given the status of an agricultural cooperative to 1644 cooperatives, which altogether count 14132 member farmers. The average size of the cooperative therefore is 8-9 farmers. ACDA states that a great majority of cooperatives are small and appear to be family-based rather than community-based, consisting of only 5-10 members. ACDA encourages farmers to try creating larger cooperatives or enlarging existing ones whatever is the case because large cooperatives are more resourceful, representative, effective and capable of fundraising. What is more, ACDA strives for the development of second level cooperatives too. According to ACDA, currently there are seven second level cooperatives in Georgia. ACDA believes that farmer cooperation is the agenda of the day because a great majority of these farmers own small parcels of land (less than 1ha). Separate cultivation is not very productive and normally does not deliver competitive products in commercial quantities. Georgia has a great potential in industrial level horticultural farming due to special zones that are favorable for cash crops like citrus, hazelnut and alike. The potential is further boosted by availability of ground water in many parts of the country. ACDA notes that regions of Georgia have their own cash crops like hazelnut in Samegrelo, khurma in Imereti, plums and berries in Shida Kartli, potato in Kvemo Kartli, grapes, berries and walnut in Kakheti.

Problems (Questions #3, #5) Basing their conclusions on the requests they receive during field visits and in their offices, the respondents from ICCs pointed out the following main problem faced by current or soon-to-be cooperative farmers: - Preparing, sorting out not only cooperative registration but also operation-related documents. The problem is explained by the respondents by (a) different mentality of farmers who are not accustomed to paperwork and (b) the lack of knowledge of accounting procedures and even document writing and filing. ICCs do not see complexity in the registration and operation procedures as such but believe that the problem arises from the fact that farmers are no accustomed to paperwork.

The Kakheti Regional ICC also noted low proportion of youth participating in cooperatives because of widespread socio-cultural-economic phenomenon of low youth interest in agriculture. In this regard, the ICC recalled only one cooperative with youth involvement in the region.

119

Both respondents note fast increase in the number of new cooperatives in their respective regions. They credit this surge to various State and non-State cooperative grants and related cooperative assistance programmes available today across Georgia. In contrast to ICCs, Agricultural Cooperatives Development Agency (ACDA) observes a broader range of problems that farmers experience in cooperative development: - Soviet prejudice about cooperatives; - Lack of understanding and knowledge of cooperative formation and operation; - Accessibility of finances; - Accessibility of technologies; - Mutual distrust among farmers. On top of it, ICCs and ACDA note general problems across the board. In case of ICCs, it’s food safety. Apparently, ICCs are first hand witnesses to the quality of agricultural produce. As for ACDA, again it highlights a larger range of issues that generally affect the entire agricultural sector and particularly cooperative formation and development efforts such as: - Fundamental and allegedly widespread issue of information and knowledge acquisition caused by the lack of internet, e-mail and computer skills among farmers and peasants; - Infrastructural problems such as mainly the lack of irrigation water; - Poor accessibility of seed material for various cultivars; - Poor accessibility of machinery; - Poor availability of credits; - Wind breaks; - Weather anomalies like spring freezes; - Non-coverage of non-dropped but damaged fruits and certain weather anomalies by insurance companies (e.g. spring freeze).

Solutions (Questions #4, #6) The respondents suggest to the State and international and other non-State organizations assisting farmer cooperation development in Georgia the following steps to resolve the problems noted above: - Subsidizing and stimulating cooperative product sales (e.g. via bulk transportation, setting up dedicated open markets, marketing of cooperative products, attracting potential investors into cooperatives, etc.) - Trainings on Internet, computer, accountancy and other related topics; - Creation of an association or federation of cooperatives which would lobby their rights, organize information and knowledge sharing, etc.; - Assignment of one dedicated staff member per ICC to cooperatives entirely; - Increasing the budget for the regional ICCs to handle cooperative problems, the higher number of assistance requests from farmers compared to municipality ICCs, and hire more agricultural specialists to meet demands of independent and cooperative farmers. The Imereti regional ICC named Achara State Agroservice LEPL as an interesting model to consider for the rest of Georgia46. It was established in 2011, runs a network of 100 local experts and consultants and assists the entire Achara region with extension, technical (e.g. soil analysis) and other services. ACDA goes further and offers a holistic approach and suggest more systemic programmes that could be done by both the State and donors in the following directions: - Supporting entire value chains;

46 http://www.agrosc.ge 120

- Proper introduction and enactment of standards; - Technology transfer and capacity building; - Supporting formation of sales networks; - Support development of warehouses and logistical centers.

ACDA noted that there is no essential difference between horticulture and livestock farming in terms of their prospects and development needs.

Although ACDA points out that one of the main achievements of ACDA is reportedly enabling the change in the mentality of those farmers who compare a cooperative with a Soviet collective farm, it is also clear that the change is not overwhelming and is not secured. ACDA cautions policy-makers that any development programme in agriculture should take account of the fact that changes take root slowly in this sector, and therefore these programmes would require the minimum of 5 year-long cycles to enact the intended changes. What is more, irreversible fundamental changes take even longer to materialize. On its part, ACDA has been working on the above said problems within its modest resources but also with the help of various stakeholders such as Spanish expert company Evoluxer that leads one of the ENPARD consortia focusing on capacity building of cooperatives with comprehensive package of free-of-charge needs-based trainings47.

3. Key Informants General Information (Questions ##1-2) The research sought the expertise and unbiased information to verify data and information obtained from other data collection methods. Therefore, senior international-level experts with long-term cooperative-related experience were chosen as key informants from four organizations respectively: - Lali Durmishidze, Manager of the IFAD Agriculture Modernization, Market Access and Resilience Project (AMMAR) in Georgia; - Elene Shatberashvili, Manager of several projects under EU ENPARD Programme48 and of other agricultural cooperative projects being implemented in Georgia by a local non- governmental farmers organization Elkana49; - Levan Dadiani, Manager of cooperative development and other agricultural projects at the international development assistance organization Oxfam50 in Georgia;

47 Evoluxer is one of the key individual interviewees of the present research. 48 The European Neighborhood Programme for Agriculture and Rural Development (ENPARD) was launched in Georgia in 2013 with the aim to reinvigorate the agriculture and the rural sector in the country by supporting the Government’s Agriculture Sector Strategy, strengthening small farmer’s organizations and enabling sustainable rural development. ENPARD is composed of a variety of aid modalities, from direct budget support to the Government, through technical assistance and small grants to NGOs. The total budget for ENPARD in Georgia, covering the period of 2013-2019, is € 102 million (over GEL 265 million). ENPARD operates through several groups (consortia) of international and national development assistance organizations such as Elkana, Oxfam, Care International, Mercy Corps, ACF, People in Need, GIPA and so on (basically, all the organizations active in the agricultural support sphere in Georgia). ENPARD is the largest international agricultural support programme in Georgia currently. One of its main directions is the cooperative development. 49 Elkana’s assistance to cooperative development includes not only technical, financial and capacity building aspects but also advocacy efforts and mass events like farmer congresses. Since early 90s of the 20th century Elkana has been encouraging formation of credit unions and cooperatives (cooperatives in those days were different from the current one). 121

- Kote Kobakhidze, Coordinator of ACDA & cooperatives capacity building project51 by Spanish consultancy organization Evoluxer which heads one of the consortia under the EU-funded ENPARD Programme. What is unique about the ENPARD programme is that by involving almost all the agricultural development organizations active in Georgia it ensures their geographic (horizontal) complementarity and long continuum of harmonized and structured cooperation, as well as critical mass of efforts and joined international-national expertise. Altogether, these organizations have been working with hundreds of cooperatives, central and local authorities, donors, service providers, end users, offering a thorough package of services (trainings, certifications, grants, other assistance) as per needs of farmer cooperation.52 Elkana, which undertakes the current survey, has greatly facilitated development of the largest cooperative in Georgia - Darcheli’s Hazelnut - which consists of 599 members. Other significant agriculture programmes in Georgia are operated under USAID53 and UNDP54, IFAD55. Key informants both asserted each other on certain points (i.e. said the same): - A few key problems and their causes such as the problem with access to capital. But they also complemented each other on other points (i.e. talked on different aspects as per their competence and particular activities): - IFAD Georgia gave a generalized take on the situation; - Elkana highlighted policy and formal operation issues and generally gave comprehensive characterization of problems specific to cooperatives and those of the entire agricultural sector; - Oxfam concentrated more on a comprehensive package of specific solutions but highlighted a couple of critical problems haunting the agricultural sector; - Evoluxer named specific professions and capacity problems that are crucial for the fully legalized56 operation of cooperatives.

Problems (Questions #3, #5) In the opinion of the key informants, although intensity of agricultural activities is on the rise in the countryside and that certain State or non-State programmes like the Plant Future Programme57 deliver tangible results, it is not satisfactory to raise agriculture to a qualitatively different level due to a myriad of problems. Few millions spent on cooperatives per year is seen by the experts as a drop in the sea as opposed to dozens of millions spent on land cultivation.

50 In Georgia, Oxfam works to boost agricultural production, improve access to health care, empower women: http://www.oxfam.org.uk/~/media/Files/OGB/What%20we%20do/Countries%20we%20work%20in/New%20brand%20PDF s/georgiaNEW.ashx?la=en 51 “Capacity Building to the Agriculture Cooperatives Development Agency (ACDA):” http://enpard.ge/en/eu-funded- programme-enpard-and-its-implementer-partner-evoluxer-announces-a-new-call-for-the-individual-experts-and- consulting-organizations/ 52 Please see the review part of the present report for details about major stakeholders and programmes active in the agricultural sector of Georgia. 53 https://www.usaid.gov/georgia 54 http://www.ge.undp.org/content/georgia/en/home/presscenter/pressreleases/2016/08/02/undp-and-government-of- georgia-commit-to-gel-6-8-million-rural-development-initiative-funded-by-eu-and-government-of-/ 55 https://webapps.ifad.org/members/lapse-of-time/docs/english/EB-2014-LOT-P-9.pdf 56 It can be repeatedly seen in the report that cooperatives are not knowledgeable in taxation, accountancy and cooperative administration and operation rules and may be operating informally to a great extent. It may mean informal sharing of revenues in a different proportion than foreseen in their statute. 57 http://apma.ge/projects/read/plant_future/2:parent 122

The problems discussed below are categorized in line with the methodology: policy, socio-cultural aspects, economic aspects. The respondents noted that there is no difference between horticulture and livestock development as far as problems and solutions are concerned.

Policy making and implementation problems First thing to note about the policy-making is the unanimous opinion among the respondents that the State should do more to help cooperatives even if the State is quite active. There should be more incentives (IFAD Georgia), more targeted programmes and customizable solutions (Oxfam, Elkana), and less hurdles and predicaments of formal and informal nature (Elkana, Oxfam). Some of the respondents point to rigidity, ambiguity and a lack of customization of State’s assistance to cooperatives58.

Specific problems start already with the legislation, namely, the law on cooperatives59 adopted on 12 July 2013. It is seen as cumbersome, unnecessarily complicated, too detailed, vague and thus in need of refinement and simplification. So much that authors of the law may have utilized some provisions of the Soviet law on cooperatives. What is more, the law is actually not permanent. It will operate till 1 January 201860. Cooperatives are at pain to operate in full compliance with the legislation.

For clarity, the respondents identify a few key specific issues: - It is not clear why there is the need in two cooperative statuses (1. Cooperative status; 2. Agricultural Cooperative status) and in double registration in two separate places (as a cooperative at the public registry and as an agricultural cooperative at ACDA); - It is not clear why the agricultural cooperative status should be suspended at all and why this can happen on the basis of, for instance, a cooperative’s failure to implement the planned activities (point b, paragraph 9, article 3, Law on Awarding and Recalling Agricultural Cooperative Status61); - If an agricultural status of a given cooperative is taken away by ACDA, the status of a cooperative remains and that creates a legal and operational void; - There are too much details around the pies and hence the problem of their understanding among cooperative farmers. Pies are supposed to be contributed by cooperative members to the statutory cooperative capital. It is not clear from the current law as to how cooperatives should decide on having either turnover- or pie-based sharing of revenues. Furthermore, the registry or book of pie holders (cooperative members) stipulated by the law has been adopted only in 201662.

Further problems arise in the policy implementation: - Monitoring and status stripping functions are so fundamental and duly enforced that ACDA is seen by cooperatives as a control rather than assistance. This creates resentment among many farmers. It appears as if ACDA is trying to slow down or stop rapid increase in the number of small cooperatives and encourage only stronger and larger ones to survive. This approach, if real, may mean supporting not farmer cooperation development but competitive business development (something of the functions of State Enterprise Development Agency and Agricultural Projects Development Agency); - The registry (book) of cooperative pie holders has no indication of the revenue sharing. Also, it is not clear what are procedures of applying changes to the registry or statute;

58 “The rototiller should be given to small cooperatives of say 5 members, not large ones because the latter have much larger areas under cultivation and accordingly need a tractor instead” 59 https://www.matsne.gov.ge/ka/document/download/1972742/3/ge/pdf 60 https://matsne.gov.ge/ka/document/view/3318347 61 http://acda.gov.ge/res/docs/201402191757477850.pdf 62 https://www.matsne.gov.ge/ka/document/view/3174914 123

- The cooperative statute template63 contains a number of items that are not defined in the law but nevertheless may be required in the statutes of cooperatives (e.g. the obligation to make decisions on property by 9/10 of votes). Accordingly, cooperatives are not really given room for the creation of flexible management structure or adopt slightly changed template as their cooperative statute; - The 30% limit problem: cooperatives can purchase products from outside for resale but no more than 30% of the cooperative’s own cumulative product volume. According to some respondents, this is a prematurely introduced rule. Actually, it’s an unnecessary restriction at this stage and hinders development of cooperatives. There is also easy way round as cooperatives can simply not take record of products purchased and sold outside64; - The State “cheap” credit scheme is not tailor made to the most of cooperatives. Finance accessibility is the fundamental problem in agriculture in general indeed. Economic problems The characteristic issues faced by cooperatives are - Lack of knowledge and skills in financial management and accounting; - Lack of finance / admin officers and accountants. This is a critical gap for the proper operation of every cooperative. Cooperatives tend to fail in recording expenses; - Weak practice (or its absence) of minute and record keeping, and generally poor culture of cooperative administration among its members. Most of the economic problems are understandably not restricted to cooperatives and are characteristic of the entire agricultural sector: - No effective extension system in the country; - Lack of infrastructure (irrigation, roads); - Weak accessibility of modern technologies and expensiveness of machinery; - Lack of agricultural product storage facilities in the country; - Lack of marketing and distribution support to farmers; - Lack of latest market information among farmers; - Undeveloped land market and no system on effective use of the land; - Undeveloped agricultural insurance system; - Lack of professional (agronomy) advice; - Quality nursery plants are hard to come by and should be ordered from abroad that entails its own logistical and other problems; - Low competitiveness of farmers and low quality of their products caused by inadequate access to finances and inadequate knowledge and skills as 98% of rural population consists of smallholders. These all add up to high prices on domestic products and hence import dependency; - Problem of cultivar production continuity around the year. Therefore, import is filling the gaps.

Socio-cultural problems Problems that are specific to cooperatives are few, as with the economic problems, but fundamental: - There is an issue of real intention behind creation of cooperatives because many of them are informal limited companies in reality, taking advantage of a tax waiver, or are created for the sake of grants. This means that most of the cooperatives may not make it eventually because there is just not enough grants and assistance from the State and non-State assistance programmes. This is probably one of the reasons that ACDA encourages cooperative enlargements or larger cooperative formation and enforces monitoring and control over a rapidly increasing number of cooperatives to stem this rapid growth and direct the growth

63 http://bit.ly/2dIdv4x 64 On the other hand, the State could indeed prohibit outright the outside product resale. This 30% allowance actually was meant to be encouragement. 124

more into a qualitative channel. But the respondents acknowledge that even such situation helps to the development and viability of at least some cooperatives; - Many farmers use unregistered land and do not hurry to register it out of fear losing various assistance. Unregistered land parcels however create problems for granting agricultural machinery to cooperatives; - Lack of interest of many cooperative members in capacity building trainings (organization, management, finances, etc.) despite the fact that they are dearly needing them to properly and legally manage their newly formed entities. This circumstance indicates at the possible real motive behind the creation of at least some of the cooperatives: to get financial assistance or machinery and leave. So, in such cases cooperatives will not be interested in long-term development plans which necessarily involve strong capacity building efforts. This atmosphere can be particularly felt among small cooperatives that are more household economies than commercial or especially industrial scale undertakings. The general socio-cultural problems include: - Aging population and urban migration of youth leaving behind extreme age misbalance in the rural areas. That’s why cooperatives are made by farmers who almost all are over 40 (many are over 50); - Very conservative village population, hardly responsive to novelties and innovations, especially senior generations. This issue is further exacerbated by the aging and outmigration problems noted above.

Cross-cutting problems The following general issues were observed during the interviews: - Small number of youth in cooperatives caused by dire demographic situation in rural areas: aging and youth urban migration; - Widespread soil erosion due to both anthropogenic and natural factors; - Natural weather extremes, especially, hail that affects most of the country.

Solutions (Questions #4, #6) Whatever the problems and transfer of international experience, without going through first-hand experience and exerting one’s own strenuous efforts, cooperatives cannot establish themselves. This is an opinion of the Elkana representative. Main solutions to the problems suggested by the respondents are: Policy - Comprehensive refinement and simplification of the legislation and procedures. The law on cooperatives should be extended till 2021; - General tax waiver should be replaced with customized tax waiver, i.e. when only new cooperatives are freed from paying the tax for the first 3-4 years of operation; - The State should direct those large financial resources that are currently spent on land cultivation towards smallholders. The State should provide investment assistance to them: money (e.g. Oxfam offers 50,000 euro through its investment package) for infrastructure and machinery, skills and marketing support – everything together. But the beneficiaries too should show motivation and contribute money to such assistance. Such programmes should be at least for two seasons (first one as a pilot cycle; second one for the refined cycle); - More focused, clearer agricultural policy; - Development of customized programmes to help startups. Economy - Formation of the effective extension system; 125

- Comprehensive refinement of the agricultural crediting system; - More accessibility of agricultural inputs; - Creation and publicizing of much more success stories / demo plots which are critical for mental change. But showing unsuccessful case will also be useful; - It is better to have informal groups as the first stage of cooperative development. The group should feel confident before deciding to go ahead with transforming themselves into the cooperative; - Particular attention should be given to groups that have a pre-history of joint work; - Permanent legal and tax consultations should be introduced for cooperatives. As an option, ICCs can assume this function; - Current cooperatives in Georgia are mainly created for joint purchase of materials, while modern cooperatives in the world are formed for joint use of services (hiring machinery, storing at commercial industrial fridges, etc.); - More subsidies on particular cultivars (not just citrus and grapes) should be introduced. Society and culture - There is a feeling of distrust ingrained in hearts and minds of rural people. Often it is counter- productive to push for the agenda among them without a preliminary work. So, stakeholders should consider this factor when scheduling interventions; - It is right from the State to continue in advising the potential beneficiaries that ultimately cooperatives should be community-based, not household-based; - When technical resources allow, cooperatives should enlarge to use these resource capacity to the full.

As follow up notes, the respondents pointed out that Georgia is a small country and it cannot be competitive on international markets in terms of product volumes. Therefore, high priority should be given to producing and exporting specific organic, ecologically pure, highly priced products with geographic denomination. Also, various nuts, plums and citruses are very promising. As for internal market, berries (which do not require large parcels to generate decent income), walnut, annual crops, almond, non-timber forest products (such as wild apple, etc.), particular local fruit varieties like Pshavi Borbala peer (extremely delicious when dried), wheat (currently, only 12% of the national demand is met by local wheat), greens, dried fruits. They are especially promising to replace import.

In Georgia, cooperatives appear to be more engaged in horticulture and beekeeping than livestock (for the exception of diary production). Therefore, State support to horticulture automatically means supporting cooperatives too.

Certainly, the interviewed organizations undertake important activities to deal with the problems, especially in the customizable strengthening of knowledge and technical bases of cooperatives and ACDA (in case of Euroluxer), the lack of an overarching, conducive legislative and policy framework means a systemic problem that requires attention and relevant actions on the part of the State. All the key experts noted that the State has been receiving such recommendations from them and other similar actors in the past.

126

Meta-Analysis

The problems of cooperatives analyzed below are divided in two: 1. Main barriers to the creation of cooperatives; 2. Main barriers to the development of formed cooperatives.

1. Main Barriers to Creation of Cooperatives It should be noted that over 25 years since the breakup of the Soviet Union, the memory of collective farms still remains, if only in a vague form, among many farmers, including those in cooperatives65. This is however enough for many of them to view a modern cooperative through the lenses of the past, identifying them with collective farms in negative connotations. The first attempts at creating cooperatives after the break-up of former Soviet Union were made in early 90s but did not go down well. According to the 2004 agriculture census, there were just 84 agriculture cooperatives throughout the country66. But they were different from the current cooperatives (although the latter did inherit certain legislative traits from the former judging by one of the key interview respondent). This wave quickly faded away leaving no lingering mark on the collective memory. One should keep in mind that the current, i.e. member-managed cooperatives started just about 3 three years ago following the adoption of the Law on Cooperatives. Therefore, all the current cooperatives are no more than two years old as reconfirmed by the research survey. Nevertheless, there was already about 1400 cooperatives in Georgia in the late summer of 2016, and the number has swelled to 1644 by October 2016. The rapid rise is credited by key informants to a number of significant State and non-State cooperative grants and related cooperative assistance programmes. So, the agricultural cooperative business is a new phenomenon that has attracted many farmers across the country. Nevertheless, formation of many cooperatives in terms of commercial viability is still underway. Not surprisingly, all the cooperative respondents of FGDs have parallel income (as they should). Therefore, it is not surprising to learn from the research that current cooperatives in Georgia are mainly created for joint use of input provider services, while modern cooperatives in the world are formed for joint use of much more services like hiring machinery, storing at commercial industrial fridges, etc. While it can be said that cooperatives have been mushrooming in Georgia, for many rural (and urban) people the cooperative still seems to be a big unknown. This is a fundamental finding of the qualitative survey. A great majority of independent farmers participating in FGDs turned out to have poor to zero experience in any – either formal or informal - type of farmer cooperation in the past67. More than that: they clearly distance themselves from cooperatives as a key tool for the solution of their economic and social problems. Regarding cooperative respondents from both FGDs and Case Studies, almost all of them (two exceptions out of several dozen in total) in contrast flag the formal farmer cooperation as important in both social and economic terms.

65 Judging by the research survey, the average age of cooperative farmers is 52. 66 http://geostat.ge/cms/site_images/_files/english/agriculture/census/section1.pdf 67 According to the survey, only 14% of non-cooperative respondents have ever cooperated with other independent farmers, the most often named reason being either transportation or input purchase. 127

At the same time, nearly all the qualitative research respondents including both farmers and stakeholders in general are in favor of development of cooperation in the form of a cooperative. Unlike more confident cooperative members, non-cooperative members chose a wait-and-see policy regarding possibility of getting involved with cooperatives in the nearest future. Not least important is the finding that independent farmer respondents themselves and also reportedly the entire rural populace (as indicated by these respondents) tend to be insufficiently aware of both significance and benefits of being a cooperative member and of various assistance programmes and activities being implemented by State and non-State actors in the country. It does not mean that the assistance- providing organizations do not disseminate information among them. The problem is likely related to both the need in delivery of simple and easy-to-catch information to every resident and a conservative state of mind which is arguably widespread among farmers, who are unaccustomed to drastic changes to the way they earn for life (actually, many of them have to struggle) and may often need repeated delivery of information not to forget it next moment or not to misinterpret it. In contrast, cooperative members, especially, their leaders have broad and up-to-date information about the assistance programmes. Another question is to what extent they are satisfied with these programmes. The answer is: to a modest extent. For one thing, as noted above, actual volume of financial and machinery assistance cannot cover the needs of every cooperative. It is also fair that raising funds requires certain skills and background competence, which many cooperatives lack. Another reason can be the fact that grant programmes do not give grants for everything. There are rules, conditions, areas, fields and types. So, on the one hand, frustration for not getting assistance they want is understandable because it is needed by cooperatives to get off the ground and survive, and they get nothing for the spent time and energy (add to it the emotional aspect of losing hope). On the other hand, it is logical that the State and donors have their respective agenda reflected in strategies and yearly programmes. What is more, judging by the qualitative research analysis, farmers tend to create the cooperatives more out of desire to get immediate revenues and property in the form of grants rather than for the jump-starting long-term ascension to economic and social stability and prosperity from a qualitatively higher octave. This finding is fortified by the widespread fact that cooperative members often lack vision, leadership and/or technical knowledge more than one should expect from news starters as they are, and may change direction any time under the influence of a variety of factors but above all by specific grant awarding conditions. It’s an established fact that many cooperative members are not professional, seasoned farmers but enthusiasts with unrelated specialties like teachers, drivers, economists and accountants.68 Going back to the desire of creating a cooperative, we should note the findings of the research survey, which reveal that access to finance (53% of the respondents), access to infrastructure (51%) and better prices for inputs (51%) are major motivating factors for the surveyed non-members to join/ establish a cooperative rather than improved knowledge and skills which require considerably longer time to attain. If a cooperative gets external assistance69, it is as likely as not that it may tend to become dependent on it. On the other hand, cooperatives which so far have not been successful in fundraising tend to find themselves in dire straits and in time may run risk of being stripped of the agricultural cooperative status70 (but would remain as a “cooperative”).

68 See the survey summary of the present report. 69 According to the research survey, 27% have benefitted from various State and non-State assistance programmes of not just financial but also technical nature. Surely, majority of 1644 cooperatives will never get any substantial much-hoped financial or machinery assistance as the State budget and that of donors cannot cater for such a sheer mass (two months after the end of the research field work the number of cooperatives have surged from 1400s to 1644) with anything other than capacity building activities, such as trainings, consultancies, coaching. 70 Courtesy of ACDA, which awards and controls the status of an agricultural cooperative and can take it away any time on the ground of law, norm or cooperative statute non-compliance. 128

By design, the research does not seek to calculate the extent of success for cooperatives in Georgia because it targets only a part of the cooperatives – those active in horticulture at the time of the research. According to the survey, for current cooperative members, joining of a cooperative led to improved knowledge and skills (81% of them agree to this statement), improved quality of production (73%), increased mutual support (70%), increased production volume (69%), decreased production costs (65%), increased HH income (63%), and improved access to technologies (60%), finance (56%), PHH infrastructure (53%). But quality of the stated changes is an evasive notion. In simple words, one can only imagine what respondents must have implied when they chose “improved knowledge and skills” (maybe they meant only proposal writing skills?) Analysis of factors that underlie the positive changes among current-Members revealed that external support, member participation in cooperative decision making and high extent of a member trust in cooperative management together contributed significantly to the changes. Qualitative research respondents confirm the importance of external support saying that without the State’s help farmers will not be able to set up cooperatives. Interestingly, more former cooperative members than current members indicated “decreased exposure to market” (50%, as opposed to 36% of current members). It is hard to know individual reasons that forced former members to leave cooperatives or stop their operations but in general terms we can observe here the farmer perception that terminal problems in marketing and selling his/her products was caused or increased due to the cooperative membership. It is not so easy to differentiate between stages of success or failure because all the cooperatives came into being two years ago or so, which is a short time to see and feel about where most of the cooperatives are heading. On the other hand, it is a general notion among respondents that most of the cooperatives do not fare well so far. One of the main reasons can be the small size of most cooperatives71. To this end, ACDA has been encouraging cooperatives to consider merging with others hopefully to achieve a critical mass of own joined resources (land, financial and technical, networking), rather than being perpetually dependent on external help, i.e. for cooperatives (1) to gain economies of scale in production and marketing, and (2) increase bargaining power in input and output markets. In addition, ACDA promotes cooperatives to unite into second level cooperatives for value addition. Another main reason is the lack of capacity. This problem has been observed by Elkana among cooperative farmers during FGD and case studies, and confirmed with all the interviewees. Surprisingly though, neither cooperative respondents, nor non-cooperative respondents have named capacity building opportunities that are available for cooperatives and farmer groups from various State and non-State actors when asked about types of such assistance they want. It is highly probable that cooperatives do not see the need in building their capacities as important as the need in finding investment money (grant, credit). Many tend to prefer money over trainings (instead of looking for both), which is counterproductive an attitude because sooner than later knowledge and skills (technical, transferrable) will be the most critical factor in the survival of cooperatives. It goes to show that many cooperatives seek material type of benefits rather than knowledge and skills.

In this regard, it is interesting to see the difference in perception of advantages and disadvantages from being a cooperative member among cooperative farmers and independent farmers participating in FGDs. In terms of advantages, cooperative respondents point to financial and technical benefits due to resource (land, machinery, knowledge) pooling, bulk orders and grant/credit opportunities, while non-cooperative respondents are more general by indicating a broader range of (expected) advantages on top of those named already named by cooperative respondents (such as access to

71 The average size of the 88 surveyed cooperatives was 8 persons. This number is precisely in the range of what other respondents and ACDA contemplates for the average size of a cooperative in Georgia. 129 infrastructure, and more solid status and stronger voice in relation to the State, etc.)72. But the difference in perception is profound here: the former judges by the actual experience (what they are getting from the assistance programmes), while the latter can only conceptualize on the matter. This is probably why non-cooperative respondents believe that cooperatives are sales-based (and/or cultivation-based), while in reality, according to cooperative respondents, they are cultivation-based and purchase-based, not sales-based. Yes, sales issue can be solved through cooperatives by gaining economies of scale in marketing and increasing bargaining power but so far cooperatives have not achieved the full potential. Regarding disadvantages of being a cooperative member, everyone agrees that members are constrained by and vulnerable to opinions and behavior of other members. So, if any member freaks out, it would unavoidably reverberate in relations among the entire membership and probably on the cooperatives economic affairs. This fear is more profound among independent farmers. When it comes to how farmers themselves see the process of cooperative formation, compared to cooperative members, non-cooperative farmers name a larger number of barriers to this process73. Cooperative members mainly noted (a) widespread ignorance of local population about the idea, purpose and benefits of being a cooperative member, and (b) their extreme caution. In contrast, non- cooperative respondents highlighted 1. Mindset related (cultural) barriers – starting from a “cooperative is a collective farm” prejudice and mutual distrust and ending with the love of some people being the number one in everything; 2. Economic barriers – starting from general material inequality and ending with the risk that the banks will not give money to cooperatives involving blacklisted members; 3. Social barriers – starting from youth outmigration and disinterest and ending with demographic collapse of countryside; 4. Policy-related barriers - starting from the problem of “I cannot risk investing my land in the cooperative because cannot take my share along with me if I leave the cooperative” and ending with a particular case of State’s perceived lack of foresight in setting land rent prices. The (a) and (b) problems stated by cooperative members fit into the 1st barrier named by non- cooperative farmers. The first three types of barriers are confirmed as serious by all the experts and regulators interviewed during the research individually. Regarding the fourth barrier, it is not mentioned by regulators - themselves a part of the authorities. They assert that farmers, who are in the process of establishing cooperatives, are often lost in paperwork despite the fact that registration procedures and requirements are not complex. In this regard, this problem represents the first group of barriers. On the other hand, non-State expert respondents explain that there are indeed certain facets about the legislation and ACDA rules that are hard for farmers to understand, implement or agree. From this angle, the problem belongs to the fourth group of barriers. Talking of the policy-related problems, for a part of independent farmers who participated in FGDs, a history of negative encounters74 with authorities represents the food for cultivating a protestant attitude towards State initiatives. A large part of these independent farmers reprimand the State for not protecting its own farmers against foreign competitors. This grievance engenders sense of

72 Interestingly, over 50% of the survey respondents from non-cooperative villages were not able to name any advantage from cooperatives (as a motivating factor to join or create a cooperative). 73 Most probably, it’s because for cooperative members the formation stage is behind. On the other hand, listing so many reasons on the part of non-cooperative respondents may reflect the desire among many of them to fend off any immediate suggestion to get into cooperatives. 74 E.g.: farmers “obtained an investor and asked the State to rent them a poor, uncultivated land for livestock and pasture business but the State set a very high price for it and the farmers backed off.” 130 apprehension towards initiatives of the State directed at the wellbeing of the same farmers. However, it cannot be deduced from FGD results that this position is prevalent among independent farmers in general population. Rather, we observe here one of the barriers. In addition to barriers, the research looked into the perceived risks of being a cooperative member. Asked about various risks, most of non-member respondents (52%) of the survey pointed to the lack of proper management abilities of managers. Judging by the qualitative responses from non- cooperative farmers participating in FGDs, such a risk arguably stems from (a) the lack of leaders who can regulate complex internal relations and ensure balance of interests and (b) the lack of leadership skills. Come to it, key informants assign higher importance to the capacity problem. They warn that cooperatives face an existential threat for neglecting the need in sorting out finances and administrative affairs in line with the legislation and procedures as sooner or later the State will go and enforce all the financial and administrative rules to the full. It should not be surprising that given no experience in management of member-driven profit oriented organizations, farmers often create cooperatives without any concern for how they should be run. Interestingly though, neither former, nor current cooperative members do see this as the top concern. About half of them actually pin the lack of support policies as the top risk for a cooperative. No wonder then that some 2/3 of surveyed non-members from non-cooperative villages were either neutral or non-receptive to the idea of either joining or forming a cooperative. There is nevertheless a reason for modest optimism as some 50% of non-members living in cooperative villages were found to be positively disposed to the idea of forming a cooperative (but not joining it). It’s only if they are to be in a cooperative, they prefer to set up their own one, rather than to join an existing cooperative. To the discontent of most of the FGD respondent farmers, it transpires to them that the State seeks a landscape dominated by larger and fewer cooperatives made of agricultural professionals, with larger resource bases and stronger voices. Finally, regarding the cross-cutting issues climate change and frequent weather extremes such as hails and spring freezes were found to be most prominent factors that indirectly affect cooperative development by driving down harvest size and quality of many farmers especially in hazelnut and grape production but also fruits and so on, so much that certain joint cooperative actions like joint sales lose sense. However, this global issue at the same time offers an opportunity to farmers to get together and seek prevention and/or mitigation of the harm being sustained during such extreme weather spells.

2. Main Barriers to Development of Formed Cooperatives The challenges that agricultural cooperatives face today in Georgia are many. Some are specific to cooperatives, others are characteristic of the entire agricultural sector and even the economic and social aspects of life in the country. The research fieldwork gathered multitude of evidence from respondents about all of these kinds of issues and challenges. But for the purposes of the current report, the research focus only on problems that are specific to cooperatives and general problems that have a crucial impact on their development. As in previous section, specific problems can be grouped in the following way: 1. Mindset related (cultural) barriers; 2. Economic barriers; 3. Social barriers; 4. Policy-related barriers. Cultural barriers to the development of cooperatives are basically same as the barriers to their formation. Internal personal frictions and risk of their exacerbation are noted by farmers themselves

131 as one of the serious issues that may hinder or even ruin the cooperative’s development. Causes of the frictions can be many: unequal volume of work performed by two different farmers, unfair overuse of machinery by any of the farmers, unbalanced drive for leadership and decision-making, unauthorized use of cooperative resources by any member, etc. An important cultural barrier is the rejection phenomenon observed during the research (FGDs, Case Studies) among cooperative (and also independent) farmers who have repeatedly applied but failed to get any grant assistance. In such circumstances, the farmers tend to be overwhelmed by feelings of distraught, pessimism, abandonment and gloom. As a result, they are likely to see no future in cooperatives. While such feelings are natural in response to this kind of failures, there are two problems worth noting: 1. A number of grant seekers who repeatedly apply but get rejected are looking elsewhere for explanations and do not try to question oneself75; 2. A number of farmers claim that they were encouraged to form a cooperative to get assistance but were misled because after they formed the cooperative and applied for a grant assistance, their efforts ended in nothing. In this second case, it is hard to make out the real pattern behind the claims because there is also a real risk that many farmers may be understanding messages from donors somewhat differently. On the other hand, such claims are not rare and do not arise on the empty rock. Economic barriers are related to financial inequality of farmers and the lack of investment money (i.e. accessibility of finances) which are not so far offset by State-facilitated “cheap” credit schemes. Farmers and other types of respondents akin assert that conditions of the agricultural credits mean that the crediting schemes do not really cater the interests of farmers and particularly cooperatives. They claim that banks do not give credit to a cooperative if even one of its members is found to have a problem with banks. However, regular bank procedures include organizational assessment of cooperatives, which often find the cooperatives materially weak, a potentially sound reason to reject a credit. The material weakness is when cooperative members do not risk investing considerable material and human resources in the cooperative. So, banks have reasons for credit rejections. Compared with a number of European countries like Estonia, interest rates on agro credits in Georgia are seen as unacceptably high to farmers. Also, both farmers and experts point out that the maturity period is long and there is no grace period. Social barriers to the development of cooperatives are basically same as the barriers to their formation. Aging population and urban migration of youth leave behind extreme age misbalance in the rural areas. That’s why cooperatives are made by farmers who are over 40 almost always (many are over 50). This peculiarity in turn adds further weight to the conservative mindset of farmers. Regarding policy-related barriers, first to note are indeed the legislation on cooperatives (primarily the law adopted on 12 July 201376) and ACDA orders. Some cooperatives see them as cumbersome. Plus, the law is not permanent (in force till 1 January 201877). For instance, it is not clear from the legislation how cooperatives should decide on having either turnover- or pie-based sharing of revenues. Furthermore, the registry of cooperative members stipulated by the law has been adopted only in 201678. And it has no indication of the revenue sharing. The template79 of the cooperative’s statute introduced by ACDA contains a number of items that are not present in the law but are necessary for farmers to fulfill. According to one expert with a legal background, some of these items sounds too strict and/or should be in the law than in the template (e.g. the obligation to make decisions on property by 9/10 of votes). Some cooperatives feel they are not given room for the creation of flexible management structure or adopting a slightly changed template for fear of encountering a problem when passing the ACDA’s agricultural cooperative status

75 At least judging by how they react and what they say during the qualitative survey. 76 https://www.matsne.gov.ge/ka/document/download/1972742/3/ge/pdf 77 https://matsne.gov.ge/ka/document/view/3318347 78 https://www.matsne.gov.ge/ka/document/view/3174914 79 http://bit.ly/2dIdv4x 132 awarding process. As for procedures of applying changes to the registry or statute are not clearly defined anywhere. Talking of the fear mentioned above, whereas the control function of ACDA is important to ensure that benefits from the State bring out the best of cooperatives, enforcement of this function is perceived by some cooperatives as something of prosecution rather than assistance, especially considering the ambiguity or complexity of certain legal or normative provisions. Another issue that may exacerbate in time is the 30% limit problem: cooperatives can purchase products from outside for resale but no more than 30% of the cooperative’s own cumulative product volume. On the one hand, this rule is supposed to ensure that no trader tries to use the cooperative tax waiver by purchasing agricultural products from others, reselling them for a better price via a cooperative and paying zero tax. What is more, this 30% limit is expected to induce cooperatives to accept more members to raise the legally allowed maximum amount of produce that they can purchase outside on top of their own harvest. But according to the research, only 20% of cooperatives project membership growth. In fact 7%, anticipate decrease even. It was already seen that due to a new phenomenon, cooperative farmers tend to be wary of risking accepting new members due to the issue of personal distrust and fear of increased internal tensions among farmers (but perhaps also because of the desire to concentrate grant benefits in fewer hands). Ultimately, cooperatives may instead consider purchasing >30% external products informally, i.e. by dodging formal financial procedures, especially when most of the cooperatives are in a precarious financial state and are not sure if they would stay afloat (if they receive a grant). Why accepting new members every time if by the next year the cooperative is to fail after all?

133

The present recommendations are based on the cumulative, comparative analysis of the research findings. They do not represent mechanical duplication of solutions proposed by various stakeholders who took part in FGDs, case studies and individual interviews. Neither have perceptions, views and sentiments of the farmers participating in the research influenced the objectivity of overall conclusions and recommendations of the research. Every set of recommendation below is preceded by a problem statement. Recommendations are grouped in three: - Socio-cultural sphere; - Economic sphere; - Policy sphere.

1. Socio-Cultural Sphere Awareness, perceptions Problem Statement: Wrong perceptions and prejudices among farmers are still so much widespread that many farmers themselves advise the policy makers and authorities to go to every farmer and try insistently doing more to facilitate meltdown of prejudices and formation of positive attitudes, and to engrain long- term perspective and vision among farmers, that is – to improve effectiveness of awareness raising actions.

Recommendation(s): o The State is therefore advised to publicize its programmes more to reach as much individual farmers as possible, explain to them all the cooperative member rights and obligations, set up much more demo plots and showcase as many cooperative successes as possible. o Personal change takes time to occur. The State and non-State programmes aiming at it should be long enough and be recapitulated after various time periods, with due consideration of high and low agricultural seasons. o The State also should target the widespread feelings of mutual distrust by publicizing success stories of farmer friendship and mutual support.

2. Economic Sphere Credits Problem Statement: Access to finances, i.e. availability of investment finances and particularly the credits seem to be the most acute issue for cooperatives (and the entire agricultural sector) that requires immediate action. Although the State runs a cheap agricultural credit scheme, farmers and other respondents request the State to ensure more useful and tailor-made agricultural credits from banks.

Recommendation(s): o It is therefore strongly recommended to the State to work on the fast introduction of more farmer-friendly agricultural credit schemes (availability of grace period, longer maturity period, no significant hidden charges, etc.). If need be, the State could establish a 134

temporary work group consisting of farmers and experts to this and other cooperative development ends.

Capacity building Problem Statement: Both cooperatives and farmers intending to create cooperatives are found by the research to be in pressing need of various capacity building interventions. Cooperatives lack administrative and financial skills, as well as business and strategic planning skills and the relevant personnel to run their organizations properly, i.e. in line with the law and various norms. Farmers, who plan to create a cooperative, tend to prioritize other questions like fundraising to the detriment of this problem during the cooperative formation process. On the other hand, the knowledge and skills transferred by the trainings also require further consolidation and individual on-the-work lessons in the form of consultations and coaching. Although there are various capacity building activities by the State and especially ENPARD, they all lack long-term and/or integrated elements (consultation, training, coaching together; or capacity building integrated in other kind of assistance). Besides, while farmers are taught administrative, financial and fundraising skills that require own computers and the Internet connection, many farmers actually lack both. On the better side, the State has been rapidly expanding the Internet network coverage in rural areas of the country80.

Recommendation(s): o Regarding trainings, the State and non-State actors are advised to assess (a) the content of currently used cooperative management training materials and revise if required (to ensure that topics like international relations, cooperation principles are also covered on top of administration and finance management), and (b) the impact of implemented trainings in cooperative management on cooperative performance and the extent of member participation in decision-making. o Regarding consultations and coaching, the State and non-State actors are advised to help cooperatives develop uniform organization development benchmarks and cooperative marketing plans. Such assistance should be structured, ideally in the form of a multi-year capacity development programme covering skills, knowledge and means of production. o It seems a must to introduce permanent legal and tax consultations for cooperatives. As an option, Farmer Information Consultation Centers (ICCs), which are present in every municipality, could assume this function with the relevant budget top up and by enhancing capacities of specialists assigned to cooperative support tasks81.

Marketing, sales Problem Statement: As seen from the research findings, one of the main factors that can or may motivate farmers into cooperatives is sales via cooperatives. The problem of finding a reliable wholesale buyer is fundamental for farmers in general82. One of the main reasons behind farmers’ attraction to

80 Please see the latest news about the Internet to All Villages Programme launched by the State in 2014: http://www.economy.ge/ge/media/news/saqartvelos-yvela-regionis-mosaxleobas-maralxarisxiani-interneti-eqneba 81 Although it is not the subject of the current research, it should be noted here that availability of professional agricultural specialists in the country is a well-recognized problem that indeed cannot be solved in a year or two but needs raising the whole new generation of professionals through high school studies, practice and real field work. Therefore, the current research intentionally bypasses here the widespread need in agricultural specialists. 82 The research survey shows that cooperative farmers tend to sell their products more to wholesale buyers, while non- members mainly operate on local markets. 135 cooperatives is the opportunity to find such sales outlets jointly or with the help of donors through value chain or marketing support projects which are available for cooperatives through programmes like ENPARD. But more harmonized and State-level approach is required. Yet, the State has no specific programme dedicated to stimulate sales and marketing of local agricultural products on local, regional and international markets.

Recommendation(s): o Therefore, the State and non-State actors are advised to develop the cooperative product sales and marketing support programme with a strong flexibility element that would pilot, study and improve effectiveness of particular targeted actions like bulk transportation, setting up dedicated open markets, attraction of potential investors into cooperatives via financial and other stimuli, formation of sales networks and market linkages, development of warehouses and logistical centers, etc.).

3. Policy Sphere Policy Problem Statement: With limited grant resources available to State and non-State organizations, the State seeks to control and filter the ongoing fast growth of cooperative numbers by targeting procedural and legal compliance of existing cooperatives and encouraging enlargements and mergers. On the other hand, cooperative members do not want to share assets (received through different projects) with new members. This is why, according to respondent experts and ACDA, cooperatives tend to consist of only very close friends or family members and do not show any interest in larger membership from the community, which normally brings more joint resources, weight, voice and opportunities. The researchers conclude that there is a serious State weakness of current cooperative support effort. Neither donors nor the government seem to be paying much attention to that. Finally, while the State encourages creation of both first and second level cooperatives, the research shows that the idea and the role of second level cooperatives are not duly understood by all the stakeholders. All the respondents tend to loath the idea. The State believes there should be more second level cooperatives and presses for it even though first level cooperatives are just starting to take off. Various organizations assisting farmer cooperation often tend to ignore the need in the correct positioning of first and second level cooperatives (a) towards each other and (b) in the strategic and phase-wise development of the farmer cooperation.

Recommendation(s): o Therefore not only State but also donors and other assistance organization need to counter concentration of benefits into small groups of farmers by calibrating technical and financial assistance by not only the available land and other resources of the cooperative (i.e. needs based approach) but also by the size (and perhaps other criteria that need to be developed) of a cooperative membership (size-based approach). In addition, the State and donors could consider introducing pilot programmes to fund projects on cooperative membership enlargement to cover costs of legal and other consultancy, transportation and alike. o The State should consider strengthening first level cooperatives (become viable businesses) and only then introducing specific measures to assist first level cooperative members from different cooperatives establish second level cooperatives. Establishment of the second level cooperatives should be natural, and the idea

136

should be coming from cooperative members.

Legislation Problem Statement: Although the State worked hard and developed the comprehensive law on cooperatives and related rules, procedures, norms and template documents for cooperatives, farmers seem to have a different take on them, especially when certain provisions on topics like farmer pies look objectively uncanny. People working on the land all day and weekends to survive may not fancy complex procedures and documents. What is more, the temporary nature of the law – in force till the end of 2018 – also creates suspension and affects decision of farmers about establishing cooperatives.

Recommendation(s): o The State should try to either simplify legal and normative provisions or try more to assist the farmers in understanding and using them by permanent individual consultations. Also, it could be useful for the State to run periodic consultations with farmers on possible ways of improving various procedures when required.

Overall Strategy Framework Problem Statement: The research respondents unanimously call for the State to do more to help cooperatives, even if State does make considerable efforts. Regarding non-State actors like ENPARD program implementing organizations, it should be pointed out that they too do their best and greatly complement and enhance State activities but their assistance is still confined to their programmatic priorities and current State legislation and policy. In money terms, few millions spent on cooperatives per year is seen by the experts as a drop in the sea as opposed to dozens of millions spent on land cultivation. All the respondents agree that agricultural reform will not succeed unless there is a complex, integrated approach and that State agricultural development plan and programmes require the minimum of 5 year-long cycles to enact the intended changes.

Recommendation(s): o In light of the above said, the State is recommended to develop a comprehensive legislative and policy framework in consultations with not just experts but also farmers, create a temporary or permanent farmers (or mixed farmer-expert) work group (or transform ACDA into it) that could be involved on the development and/or refinement of particular major topics such as cooperative development, etc. o The State should develop a multi-year cooperative support programme that would offer funds, technical assistance and services to cooperatives conditionally, i.e. if the cooperatives (1) meet organization development benchmarks, (2) have real operational marketing plan and (3) be marketing member production. o Non-State actors are advised to consider facilitation (bottom-up approach) of an association(s) or federation(s) of cooperatives which would lobby their rights, organize one-window information and knowledge sharing, etc. The same effect can be achieved by transforming ACDA into an entity of similar nature (top-down approach).

137

Annexes

The guidance methodology for country desk and field research on development of the association and partnership of agriculture producers The goal of the research is to provide valuable information on producers' cooperation in all three regions and provide analytical material for supporting elaboration of the policies, recommendations and learning documents. Objectives The research will provide a mapping of collective action groups and approaches supported by IFAD, other donors and national governments. The research will provide an analysis of socio-economic and environmental conditions that enable vulnerable groups engage in collective action groups; potential partnerships for innovation and knowledge transfer in agriculture; success stories on collective action groups and approaches supported by IFAD and others. Based on the project objectives, the research study will focus on horticulture83 sector and producers, and a focus on cross-cutting issues such as, poverty, gender and women empower, climate change and environmental issues should be kipped in all chapters and stages of the research. The structure of the research paper and methodological guidelines for research activity I. Introduction II. General description of the agriculture sector The chapter should provide an overview on:

- Trends and development of the agro-food sector of the country, structure of agriculture sector, farm structure, agricultural products trade patterns, tendencies of development, review of environment and natural recourses, knowledge transfer system, major challenges for sector development, - State policies and strategic priorities for the development of the horticulture sector and rural development, sector oriented support measures.

III. The state of play in the development of the agriculture producers association. Based on the desk research the chapter should provide comprehensive information on the dynamic of cooperation among producers, support activities provided by the donor organizations and government, legal and normative basis affecting producer’s cooperation through the value chain, including taxation, support measures and financing. Based on the evaluation, the chapter will provide an assessment on competitive position of cooperatives related to their potential competitors among other forms of farmer organizations. A. Collective actions and approaches supported by the donors The sub-chapter will provide a detailed overview on actions and approaches for collective actions and cooperation trough the value chain implemented by IFAD and other donor’s organizations. The sub- chapter should consider the multiple forms of the impact of the activities implemented, direct, through

83 Garden crops (fruits, nuts, vegetables, culinary herbs and spices, beverage crops, and medical plants, ornamental plants), as well grains, oilseeds, fiber crops and industrial crops. Pasture grasses and forage crops are excluded taking in consideration the strong connection with livestock sector, which is not targeted by the project. 138 the support to establishment and consolidation of the activity of the producer’s cooperation, but also the impact on policy and public service, environmental, social and human development impact. B. State policies, support measures, and regulation of the producers cooperation initiatives and activity The overall objective of the chapter

- State policies, strategic documents and measures developed and implemented for the support of the producers association. The analyses should provide an overview and impact analyses of the strategic and support policies adopted by the government, mandates of the financial allocations and support measures implemented and planed, according to the development strategies and plans. In consideration should be taken cross- cutting impact of the policies in the other field like agro-food products promotion, market regulation and intervention, environment, innovation, knowledge transfer and extension, rural development, social inclusion, competition, state aid, food safety and social protection on producers’ cooperation.

- Legislation and regulations on producers cooperation and affecting the collective actions Analysis of existing legal and normative framework referring to the producers’ cooperation, legal form of business organization, internal governance of the associations, registration and recognition procedures, administrative and regulatory barriers for cooperation development and activities, taxation (including social one, referring to the whole sphere of collective action – production, movement of goods, selling, VAT and other taxes, etc.). IV. Driving factors with impact on developing collective actions of the agriculture producers The chapter will be developed based on field research methods. The overall objective of the chapter is to determine, based on producers experience, the opportunities and major challenges, and constrains for producers’ cooperation. The chapter will provide valuable knowledge for the design of the field support activities. The research tools for the chapter will be:

- Interviews with key stakeholders - Semi-structured interviews of agriculture producers - Focus group interview - Case study Monitored groups of factors:

- Subjective factors driving the cooperation (socio-cultural, leadership role, perceptions on the advantages and disadvantages of associations, related to main challenges to the sector) - Internal governments (transparency towards members, internal democracy and members involvement in decision making, finance management, goods flow, logistic and acquisition) - Economic factors and empowerment. Sampling will be based on the specific 'segmentation' or fragmentation for each country. The decisions for each country will be adopted based on the consultations. Generally, it should cover representative country regions, horticulture sectors and should target women and particular ethnic or national minorities, and focus on both, farmers that have experience of cooperation and farmers that does not have such experience. For Semi-structured interviews of agriculture producers two suggested general groups of respondents to be involved: cooperative or producers' group members and non-members. The non-members should

139 be selected from two regions: in the villages with functioning farmers' cooperation organization or were such organization existed in the near past (ex members and non-members) and village where no producers groups or cooperatives were registered. The 3 formed sub-groups are suggested to have equal number of respondents, which will allow comparing collected data.

There are three proposed forms of the questionnaire, based on the relationship to producer group or cooperative of the respondent: - The respondent (or his/her household member) is member of a producer group or cooperative; - The respondent (or his/her household members) have no experience of being members of an agriculture producers group or cooperative; - The respondent (or his/her household members) which are not member of an agriculture producers group or cooperative but have had such experience in the past. The investigator should select the form of the questionnaire using two filtering questions:

1. “Are you (or other household members) member of any agriculture producer group or cooperative?”

If the answer is negative: 2. “Have you been (or other household members) member of any agriculture producer group or cooperative in the past?” The guidelines and draft questioners are attached.

140

V. Overall assessment, conclusions and recommendations The conclusions and recommendations will be elaborated based on the results of the desk and field research. It should comprise the main findings and process them based on SWOT analysis by grouping the findings based on the following criteria: policies and regulatory framework, overall horticulture sector development opportunities and challenges, socio-cultural factors, cross-cutting issues (environment, innovation, gender etc.). Assessment of the learning process that happened before and after project should be provided.

141

Annex 1 Guideline for focus groups with agricultural producers

I. Organizational aspects The recommended number of the participants per focus group is 10 persons. Focus group participants should not be the same as respondents to Semi-structured interviews of agriculture producers. Focus group should be organized both with groups experienced in cooperative development and those without such experience. Additionally/optionally, could be organized focus groups with persons having negative experience of involvement in cooperative activities. It is recommended to have minimum 30% women, heads of a farm. Preferable, to have representatives of different age groups and education level.

The total number of focus groups organized, should be established to cover the representative zones of the country, ethnic groups, if is the case, types of main production activity. At least 10 focus groups should be organized with members and no members of various associative forms of producer organization. The basic data referring to the participants should be collected.

II. Survey questions Introduction: Thank you for the opportunity to speak with you. We are a research team interested in learning more about farmer cooperation in this area. We assure you that all the information that you provide to us will be used exclusively for our research and analysis. We will record the session but all responses will appear anonymously. This is not a test, and there are no right or wrong answers. The most important thing is that you should feel comfortable and contribute as much as you can. You can express opinions and discuss issues freely. 1. What do you know about farm cooperation and how relevant do you find the issue of cooperation for yourself? 2. What are in your opinion main advantages, disadvantages and risks of the cooperation among farmers? 3. What kind of forms of cooperation among farmers do you know? (formal, informal cooperation, production cooperatives, marketing cooperatives, marketing groups, bargaining associations, other forms) 4. How relevant is the cooperation for your farming activity from the point of view of solving economic, technological, environmental, social, and other problems? 5. Which are in your opinion the main barriers for the cooperation among farmers? 6. Which are in your opinion main solutions for these problems? 7. What do you know about support measures and facilities that a partnership organization of farmers can benefit? (Access to financing sources (credits, grants, subventions, etc.), Tax reduction, access to specialized training courses and extension services, support from central and local public administration, etc.) 8. What do you think about efficiency of these support measures and facilities? 9. How can be improved these support measures and facilities and what other measures could be implemented? 10. How do you think, is there a future for farmers’ cooperation in your region (country) and why do you think so? 11. Could you briefly describe a successful/unsuccessful story of cooperation (association) among agricultural producers? Note: The follow up, prompt and probating questions should be used depending on each individual case.

142

Annex 2 Case study approach This qualitative case study is an approach to research that facilitates exploration of a phenomenon within its context using a variety of data sources. This ensures that the issue is not explored through one lens, but rather a variety of lenses which allows for multiple facets of the phenomenon to be revealed and understood. The goal of case study research is to understand the complexity of a case in the most complete way possible. For this reason, case study research often involves the use of multiple methods for collecting data. By using multiple sources of data (and both qualitative and quantitative data) researchers may attain the richest possible understanding of a case. The qualitative methods described below are all likely to be used in case study research. This approach has the potential to deal with simple through complex situations. It enables the researcher to answer “how” and “why” type questions, while taking into consideration how a phenomenon is influenced by the context within which it is situated. The case study is an excellent opportunity to gain tremendous insight into a case. It enables the researcher to gather data from a variety of sources and converge the data to illuminate the case. Participant Observation. This will involve studying the daily lives and routines of described cooperative/ association. This observation will provide insight into the behavior patterns and social organizations that operate and constitute a particular bounded system or case. Interviewing. Researchers will learn about the person or persons that are part of the case by speaking with these people. The types of interviews conducted by researchers will vary in degree of formality (informal interview to semi-structured to structured interviews). Collection of Artifacts and Texts. Researchers can also learn about a described cooperative/ association by collecting and studying artifacts (e.g. written protocols, charts, flow sheets, educational handouts) and other materials used by or describing members of the cooperative/ association.

143

Annex 3 Questionnaire for interview of agricultural producers, members of an agriculture producers group or cooperative

Loc. Village: Region: d d m M DM. Interview date 2 0 1 6 h h m M TS. Time started of the interview TE. Time ended of the interview TL. Duration of the interview INTNAME. Interviewer’s Name Surname INTERVIEWER, READ AS FOLLOW! In the framework of a project financed by IFAD, we would like to carry out this interview with you to collect information about your experience in developing associative activities with other agricultural producers. This information will be useful for improving policy-making process. I ensure you that the information you share with us is entirely confidential. You have the right to refuse and to interrupt the survey in any case, or to choose not answering any question asked. Do you have any question? Thank you.

Section 1. What is your main field of agricultural production (please underline )

1.1 Fruits (apples, plums, cherries, apricots, peaches, other fruits (please Yes 1 mention) ______1.2 Berries (strawberries, raspberries, blackberries, currant, other berries Yes 2 (please mention) ______1.3 Vegetables (tomatoes, cucumbers, paper, cabbage, potatoes, other Yes 3 vegetables (please mention) ______1.4 Cut flowers, pot flowers, decorative plants, other plants (please mention) Yes 4 ______1.5 Seedlings, seeds, bulbs Yes 5

1.6 Culinary herbs and spices, beverage crops, and medical plants, ornamental Yes 6 plants (please mention) 1.7 Cereals, oilseeds, fiber crops and industrial crops (please mention) Yes 7

1.8 Others ______Yes 8

1.9 Are you personally involved on farm activities including Yes 1 No production and sales, related to the main product? If Q1.1 – 1.9 is No, than close the interview.

Section 2. Socio demographic background

2.1 Gender a) M b) F 2.2 Age ______years

2.3 Position: 1. household head, 2. husband/wife, 3. child, 4. parent/parent

144

in law, 5. other relative, 6. non relative

2.4 Number of household members? 2.5 How many years is the farm household head ______involved in agriculture? ______

2.6 Number of year you are involved in horticultural production on your farm? ______

2.7 Previous profession of the household head:

2.8 Main employment of the household head 2.9 Education level of the household head: (Choose only one)

a) Wage employment in public sector a) No education b) Wage employment in private sector b) Elementary school (4 years) c) Self-employed in non-agricultural sector c) Mandatory education (up to 9 years) d) Self-employed in farming sector d) General high school e) Employee in family business e) Agricultural vocational school f) Other (please mention): f) Agricultural or other (to be specified) technical high school g) Agricultural or other (to be specified) university education 2.10 Does your household benefit of other revenues sources than agriculture Yes/No (leasing equipment and machines, providing services, trade, others) ? If Yes please specify:

Section 3: Farm characteristics and miscellaneous

3.1 Please complete the table on the characteristics of your farm in the year 2016:

a) Amount of total land owned (ha)

b) Amount of total land rented (ha)

Structure of the land used (ha)

Main horticultural crops (please mention______)

Cereals (wheat, barley, maize, oat, rise, millet, other etc.)

Technical crops (sun flower, rape, sugar beet, tobacco, soya, etc.)

Forage crops

Other (please mention)

Unused (fallow) land

In case of existence of unused (fallow) land please specify, why don`t you cultivate it?

145

Section 3: Farm characteristics and miscellaneous

Which part of the land used is irrigated (of which homestead land plots and arable lands)?

e) Number of full-time farm employees

f) Number of part-time farm employees

g) Turnover of the farm (national currency)

h)The proportion of turnover accounted for by main horticultural production ______%

Section 4 Your main market outlet, Buyer relationships

4.1 Is your main market outlet? A processing factory (unit) 1 A collecting firm 2 A wholesale company (market) 3 Small scale retailers 4 Retailing chains 5 Co-operative 6 Open air agricultural market 7 Other (please state)______8

4.2 How is your main product(s) (______) collected? You bring your products to 1 The main buyer collects 2 Other (please 3 the main buyer it from your farm state)______

4.3 When are you paid for the product supplied to your main buyer (s)? Paid before the delivery, 1 On delivery 2 After delivery 3 including credits and (record how many inputs days _____)

4.4 What proportion of the total volume of production of your main product (s) ______you sell to different types of buyers and how many you dealt with in 2015. % of output sold on No. of firms dealt with contract

Local markets ______% ______

Food processors ______% ______

Marketing co-operative / organizations ______% ______Household / family / non-marketed consumption ______% ______

Other ______% ______

146

4.4 What proportion of the total volume of production of your main product (s) ______you sell to different types of buyers and how many you dealt with in 2015.

Total 100% ______

4.5 Overall how satisfied are you with the relationship with your main buyer?

Very dissatisfied Dissatisfied Neither satisfied Satisfied Very satisfied / dissatisfied

1 2 3 4 5

4.6 How important are the following factors in your choice of main buyer? No Slight Moderate Very Most importance importance importance important important a) Reliability of payments by buyer 1 2 3 4 5 b) Higher prices offered by buyer 1 2 3 4 5 c) Extra services offered by buyer 1 2 3 4 5 e.g. credit, input supply, etc.) d) Price stability 1 2 3 4 5 e) Buyer is trustworthy 1 2 3 4 5 f) Contractual collaboration (long 1 2 3 4 5 or short term) g) Other (please state) 1 2 3 4 5 ______

4.7 How many potential commercial buyers do you think there realistically are for your products? ______insert number

147

Very Difficult Neither Easy Very difficult easy nor easy difficult

4.8 How easy is it for you to switch to another 1 2 3 4 5 main buyer for your products?

4.9 How easy do you think it would be for your 1 2 3 4 5 main buyer to replace you as a supplier?

4.10 How in your opinion these factors affect the revenue and sustainable development of your agriculture activity? No Slight Moderate Strong Very impact impact impact impact strong impact

a) Low endowment with equipments and 1 2 3 4 5 machines

b) Low access to postharvest and processing 1 2 3 4 5 infrastructure

c) Low access to the infrastructure (e.g. 1 2 3 4 5 roads, irrigation, energy)

d) Access to markets 1 2 3 4 5 e) Access to the finance

f) Market and price volatility 1 2 3 4 5

g) Natural hazards 1 2 3 4 5

h) Underdeveloped social service in the 1 2 3 4 5 community

i) Insufficient or unskilled labor force 1 2 3 4 5

j) Negative impact of State policies and 1 2 3 4 5 regulations that affect sector

k) Insufficient knowledge and skills (e.g. 1 2 3 4 5 regarding market, regulations, financing opportunities, novel practices and technologies)

l) Market competition 1 2 3 4 5

m) Other (please state) ______1 2 3 4 5

Section 5: Association 5.1 Please mention the duration of being a member of a producer group or cooperative _____years 5.2 What is the number of members of your producer group or cooperative _____

5.3 What is the legal status of your agriculture producer group?

148

NGO/non-commercial legal entity 1 Ltd 2 /Association Non-formal union of farmers 3 Cooperative 4 Other (please state)______5

5.4 What are the activities that are coordinated through the your agriculture producer group? a) Input purchasing 1 2 3

b) Production 1 2 3

c) Processing 1 2 3

d) Marketing 1 2 3

e) Storage 1 2 3

f) Packing 1 2 3

g) Transportation 1 2 3

h) Lobbing 1 2 3

i) Financing 1 2 3

j) Trainings 1 2 3

k) other (specify) 1 2 3 ______

5.5 Did your producers group/cooperative get any support (financial or in-kind )

From the government? 1 2

From donors? 1 2 If “Yes”, please specify

5.6 Do you participate in decision making processes of your cooperatives? No, and I don’t 1 No, but I am 2 Yes, but insufficient 3 Yes, I am 4 consider it interested to be satisfied with relevant involved the level of involvement

5.7 How much do you trust (are confident in) the decisions made by the management of cooperative or producer group? Very unconfident Unconfident Neither confident Confident Very confident or unconfident

1 2 3 4 5

149

5.8 What changes has occurred in your activity after becoming member of a producer group or cooperative? No Slight Moderate Important Very important changes changes changes changes changes

a) The volume of production increased 1 2 3 4 5

b) The quality of production was improved 1 2 3 4 5

c) The income of the household increased 1 2 3 4 5

d) The access to the finance and credit has 1 2 3 4 5 improved

e) The access to the farming technologies, 1 2 3 4 5 equipment and machines was improved

f) The access to postharvest and processing 1 2 3 4 5 infrastructure was improved

g) The exposal to the market risks decreased 1 2 3 4 5 (market and price volatility)

h) The exposal to the natural hazards 1 2 3 4 5 decreased (frost, droughts, hail etc.)

i) The knowledge and skills were improved 1 2 3 4 5

j) The production cost decreased and 1 2 3 4 5 become more efficient

k) The communication and mutual support 1 2 3 4 5 within the producer group become more efficient

l) Other (please state) ______1 2 3 4 5

5.9 Which factors has motivated you to establish or join a cooperative or association? Better prices for inputs (seeds, 1 Better organized agricultural production 2 fertilizers etc.) Access to infrastructure (machinery, 3 Better organized post harvest activities 4 storage, irrigation equipment, seeds, and sales fertilizer) Improvement of knowledge and 5 Access to credits / grants 6 skills Mutual support and assistance 7 Other (please specify): 8

5.10 How in your opinion will evolve the number of members of your producer group or cooperative in the proximate future? Strong decrease Slight decrease Remain the same Slight increase Strong increase

1 2 3 4 5

5.11 What are in your opinion the main risks of the cooperation (association) among farmers?

1) Lack of proper management abilities (managers) for cooperative/association in 1

150

my village (locality)

2) Lack of supporting policies at central and/or local level 2

3) Unclear statute of the proprietorship over the cooperative assets 3

4) Lack of success stories of cooperation in my field of horticultural production 4

5) Poor (insufficient) communication between members of the cooperative or 5 association

6) Lack of mutual trust between agricultural producers 6

7) Difficult coordination of the common production and marketing policies 7

8) Lack of knowledge about advantages and disadvantages of the cooperation or 8 association among agricultural producers

9) Lack of technical support (trainings, study tours, consulting) for members of 9 cooperatives or associations

10) Other risks (please specify)______10

Thank you for your collaboration!

151

Annex 4 Questionnaire for interview of agricultural producers, having no experience of being a member of an agriculture producers group or cooperatives

Loc. Village: Region: d d m M DM. Interview date 2 0 1 6 h h m M TS. Time started of the interview TE. Time ended of the interview TL. Duration of the interview INTNAME. Interviewer’s Name Surname INTERVIEWER, READ AS FOLLOW! In the framework of a project financed by IFAD, we would like to carry out this interview with you to collect information about your experience in developing associative activities with other agricultural producers. This information will be useful for improving policy-making process. I ensure you that the information you share with us is entirely confidential. You have the right to refuse and to interrupt the survey in any case, or to choose not answering any question asked. Do you have any question? Thank you.

Section 1. What is your main field of agricultural production (please underline )

1.10 Fruits (apples, plums, cherries, apricots, peaches, other fruits (please Yes 1 mention) ______1.11 Berries (strawberries, raspberries, blackberries, currant, other berries Yes 2 (please mention) ______1.12 Vegetables (tomatoes, cucumbers, paper, cabbage, potatoes, other Yes 3 vegetables (please mention) ______1.13 Cut flowers, pot flowers, decorative plants, other plants (please mention) Yes 4 ______1.14 Seedlings, seeds, bulbs Yes 5

1.15 Culinary herbs and spices, beverage crops, and medical plants, ornamental Yes 6 plants (please mention) 1.16 Cereals, oilseeds, fiber crops and industrial crops (please mention) Yes 7

1.17 Others ______Yes 8

1.18 Are you personally involved on farm activities including Yes 1 No production and sales, related to the main product? If Q1.1 – 1.9 is No, than close the interview.

Section 2. Socio demographic background

2.1 Gender a) M b) F 2.2 Age ______years

2.3 Position: 1. household head, 2. husband/wife, 3. child, 4. parent/parent

152

in law, 5. other relative, 6. non relative

2.4 Number of household members? 2.5 How many years is the farm household head ______involved in agriculture? ______

2.6 Number of year you are involved in horticultural production on your farm? ______

2.7 Previous profession of the household head:

2.8 Main employment of the household head 2.9 Education level of the household head: (Choose only one)

g) Wage employment in public sector h) No education h) Wage employment in private sector i) Elementary school (4 years) i) Self-employed in non-agricultural sector j) Mandatory education (up to 9 years) j) Self-employed in farming sector k) General high school k) Employee in family business l) Agricultural vocational school l) Other (please mention): m) Agricultural or other (to be specified) technical high school n) Agricultural or other (to be specified) university education 2.10 Does your household benefit of other revenues sources than agriculture Yes/No (leasing equipment and machines, providing services, trade, others) ? If Yes please specify:

Section 3: Farm characteristics and miscellaneous

3.1 Please complete the table on the characteristics of your farm in the year 2016:

a) Amount of total land owned (ha)

b) Amount of total land rented (ha)

Structure of the land used (ha)

Main horticultural crops (please mention______)

Cereals (wheat, barley, maize, oat, rise, millet, other etc.)

Technical crops (sun flower, rape, sugar beet, tobacco, soya, etc.)

Forage crops

Other (please mention)

Unused (fallow) land

In case of existence of unused (fallow) land please specify, why don`t you cultivate it?

153

Section 3: Farm characteristics and miscellaneous

Which part of the land used is irrigated (of which homestead land plots and arable lands)?

e) Number of full-time farm employees

f) Number of part-time farm employees

g) Turnover of the farm (national currency)

h)The proportion of turnover accounted for by main horticultural production ______%

Section 4 Your main market outlet, Buyer relationships

4.1 Is your main market outlet? A processing factory (unit) 1 A collecting firm 2 A wholesale company (market) 3 Small scale retailers 4 Retailing chains 5 Co-operative 6 Open air agricultural market 7 Other (please state)______8

4.2 How is your main product(s) (______) collected? You bring your products to 1 The main buyer collects 2 Other (please 3 the main buyer it from your farm state)______

4.3 When are you paid for the product supplied to your main buyer (s)? Paid before the delivery, 1 On delivery 2 After delivery 3 including credits and (record how many inputs days _____)

4.4 What proportion of the total volume of production of your main product (s) ______you sell to different types of buyers and how many you dealt with in 2015. % of output sold on No. of firms dealt with contract

Local markets ______% ______

Food processors ______% ______

Marketing co-operative / organizations ______% ______Household / family / non-marketed consumption ______% ______

Other ______% ______

154

4.4 What proportion of the total volume of production of your main product (s) ______you sell to different types of buyers and how many you dealt with in 2015.

Total 100% ______

4.5 Overall how satisfied are you with the relationship with your main buyer?

Very dissatisfied Dissatisfied Neither satisfied Satisfied Very satisfied / dissatisfied

1 2 3 4 5

4.6 How important are the following factors in your choice of main buyer? No Slight Moderate Very Most importance importance importance important important a) Reliability of payments by buyer 1 2 3 4 5 b) Higher prices offered by buyer 1 2 3 4 5 c) Extra services offered by buyer 1 2 3 4 5 e.g. credit, input supply, etc.) d) Price stability 1 2 3 4 5 e) Buyer is trustworthy 1 2 3 4 5 f) Contractual collaboration (long 1 2 3 4 5 or short term) g) Other (please state) 1 2 3 4 5 ______

4.7 How many potential commercial buyers do you think there realistically are for your products? ______insert number

Very Difficult Neither Easy Very difficult easy nor easy difficult

4.8 How easy is it for you to switch to another 1 2 3 4 5 main buyer for your products?

4.9 How easy do you think it would be for your 1 2 3 4 5 main buyer to replace you as a supplier?

4.10 How in your opinion these factors affect the revenue and sustainable development of your agriculture activity?

155

No Slight Moderate Strong Very impact impact impact impact strong impact a) Low endowment with equipments and 1 2 3 4 5 machines b) Low access to postharvest and processing 1 2 3 4 5 infrastructure c) Low access to the infrastructure (e.g. 1 2 3 4 5 roads, irrigation, energy) d) Access to markets 1 2 3 4 5 e) Access to the finance f) Market and price volatility 1 2 3 4 5 g) Natural hazards 1 2 3 4 5 h) Underdeveloped social service in the 1 2 3 4 5 community i) Insufficient or unskilled labor force 1 2 3 4 5 j) Negative impact of State policies and 1 2 3 4 5 regulations that affect sector k) Insufficient knowledge and skills (e.g. 1 2 3 4 5 regarding market, regulations, financing opportunities, novel practices and technologies) l) Market competition 1 2 3 4 5 m) Other (please state) ______1 2 3 4 5

156

Section 5: Association

5.1 Which factors could motivate you to establish or join a cooperative or association? Better prices for inputs (seeds, 1 Better organized agricultural production 2 fertilizers etc.) Access to infrastructure (machinery, 3 Better organized post harvest activities 4 storage, irrigation equipment, seeds, and sales fertilizer) Improvement of knowledge and 5 Access to credits / grants 6 skills Mutual support and assistance 7 Other (please specify): 8

5.2 What are in your opinion the main risks of the cooperation (association) among farmers? a) Lack of proper management abilities (managers) for cooperative/association in my 1 village (locality) b) Lack of supporting policies at central and/or local level 2 c) Unclear statute of the proprietorship over the cooperative assets 3 d) Lack of success stories of cooperation in my field of horticultural production 4 e) Poor (insufficient) communication between members of the cooperative or association 5 f) Lack of mutual trust between agricultural producers 6 g) Difficult coordination of the common production and marketing policies 7 h) Lack of knowledge about advantages and disadvantages of the cooperation or 8 association among agricultural producers i) Lack of technical support (trainings, study tours, consulting) for members of 9 cooperatives or associations j) Other risks (please specify)______10

5.3 Do you have ever experienced solving any kind of production, marketing or Yes 1 other type of problems by joining efforts of several agricultural producers? No 2 5.4 If “Yes”, could you specify the frequency of this experience? Occasionally, from Once per year Several times per year On a permanent basis case to case

1 2 3 4

157

5.5 Do you collaborate (cooperate) with other farmers on any of the following activities? Yes No If No, would you be willing to collaborate in future?

a) Marketing 1 2 1 2

b) Processing 1 2 1 2

c) Input purchasing 1 2 1 2

d) Lobbing 1 2 1 2

e) Storage 1 2 1 2

f) Packing 1 2 1 2

g) Transportation 1 2 1 2

h) Financing 1 2 1 2

i) Production 1 2 1 2

j) Trainings 1 2 1 2

k) other (specify) 1 2 1 2

5.6 In your neighborhood, do you think that there is anyone who you trust and Yes 1 who can lead the group/association? No 2

5.7 How could you appreciate your willingness to create a cooperative/association? Very low Low Neither low, nor Rather high Very high high

1 2 3 4 5

5.8 How could you appreciate your willingness to join a cooperative / association? Very low Low Neither low, nor Rather high Very high high

1 2 3 4 5

Thank you for your collaboration!

158

Annex 5 Questionnaire for interview of agricultural producers, ex-members of the producers groups and cooperatives

Loc. Village: Region: d d m M DM. Interview date 2 0 1 6 h h m M TS. Time started of the interview TE. Time ended of the interview TL. Duration of the interview INTNAME. Interviewer’s Name Surname INTERVIEWER, READ AS FOLLOW! In the framework of a project financed by IFAD, we would like to carry out this interview with you to collect information about your experience in developing associative activities with other agricultural producers. This information will be useful for improving policy-making process. I ensure you that the information you share with us is entirely confidential. You have the right to refuse and to interrupt the survey in any case, or to choose not answering any question asked. Do you have any question? Thank you.

Section 1. What is your main field of agricultural production (please underline )

1.19 Fruits (apples, plums, cherries, apricots, peaches, other fruits (please Yes 1 mention) ______1.20 Berries (strawberries, raspberries, blackberries, currant, other berries Yes 2 (please mention) ______1.21 Vegetables (tomatoes, cucumbers, paper, cabbage, potatoes, other Yes 3 vegetables (please mention) ______1.22 Cut flowers, pot flowers, decorative plants, other plants (please mention) Yes 4 ______1.23 Seedlings, seeds, bulbs Yes 5

1.24 Culinary herbs and spices, beverage crops, and medical plants, ornamental Yes 6 plants (please mention) 1.25 Cereals, oilseeds, fiber crops and industrial crops (please mention) Yes 7

1.26 Others ______Yes 8

1.27 Are you personally involved on farm activities including Yes 1 No production and sales, related to the main product? If Q1.1 – 1.9 is No, than close the interview.

Section 2. Socio demographic background

2.1 Gender a) M b) F 2.2 Age ______years

2.3 Position: 1. household head, 2. husband/wife, 3. child, 4. parent/parent

159

in law, 5. other relative, 6. non relative

2.4 Number of household members? 2.5 How many years is the farm household head ______involved in agriculture? ______

2.6 Number of year you are involved in horticultural production on your farm? ______

2.7 Previous profession of the household head:

2.8 Main employment of the household head 2.9 Education level of the household head: (Choose only one)

m) Wage employment in public sector o) No education n) Wage employment in private sector p) Elementary school (4 years) o) Self-employed in non-agricultural sector q) Mandatory education (up to 9 years) p) Self-employed in farming sector r) General high school q) Employee in family business s) Agricultural vocational school r) Other (please mention): t) Agricultural or other (to be specified) technical high school u) Agricultural or other (to be specified) university education 2.10 Does your household benefit of other revenues sources than agriculture Yes/No (leasing equipment and machines, providing services, trade, others) ? If Yes please specify:

Section 3: Farm characteristics and miscellaneous

3.1 Please complete the table on the characteristics of your farm in the year 2016:

a) Amount of total land owned (ha)

b) Amount of total land rented (ha)

Structure of the land used (ha)

Main horticultural crops (please mention______)

Cereals (wheat, barley, maize, oat, rise, millet, other etc.)

Technical crops (sun flower, rape, sugar beet, tobacco, soya, etc.)

Forage crops

Other (please mention)

Unused (fallow) land

In case of existence of unused (fallow) land please specify, why don`t you cultivate it?

160

Section 3: Farm characteristics and miscellaneous

Which part of the land used is irrigated (of which homestead land plots and arable lands)?

e) Number of full-time farm employees

f) Number of part-time farm employees

g) Turnover of the farm (national currency)

h)The proportion of turnover accounted for by main horticultural production ______%

Section 4 Your main market outlet, Buyer relationships

4.1 Is your main market outlet? A processing factory (unit) 1 A collecting firm 2 A wholesale company (market) 3 Small scale retailers 4 Retailing chains 5 Co-operative 6 Open air agricultural market 7 Other (please state)______8

4.2 How is your main product(s) (______) collected? You bring your products to 1 The main buyer collects 2 Other (please 3 the main buyer it from your farm state)______

4.3 When are you paid for the product supplied to your main buyer (s)? Paid before the delivery, 1 On delivery 2 After delivery 3 including credits and (record how many inputs days _____)

4.4 What proportion of the total volume of production of your main product (s) ______you sell to different types of buyers and how many you dealt with in 2015. % of output sold on No. of firms dealt with contract

Local markets ______% ______

Food processors ______% ______

Marketing co-operative / organizations ______% ______Household / family / non-marketed consumption ______% ______

Other ______% ______

161

4.4 What proportion of the total volume of production of your main product (s) ______you sell to different types of buyers and how many you dealt with in 2015.

Total 100% ______

4.5 Overall how satisfied are you with the relationship with your main buyer?

Very dissatisfied Dissatisfied Neither satisfied Satisfied Very satisfied / dissatisfied

1 2 3 4 5

4.6 How important are the following factors in your choice of main buyer? a) No Slight Moderate Very Most importance importance importance important important b) Reliability of payments by buyer 1 2 3 4 5 c) Higher prices offered by buyer 1 2 3 4 5 d) Extra services offered by buyer 1 2 3 4 5 e.g. credit, input supply, etc.) e) Price stability 1 2 3 4 5 f) Buyer is trustworthy 1 2 3 4 5 g) Contractual collaboration (long 1 2 3 4 5 or short term) h) Other (please state) 1 2 3 4 5 ______

4.7 How many potential commercial buyers do you think there realistically are for your products? ______insert number

Very Difficult Neither Easy Very difficult easy nor easy difficult

4.8 How easy is it for you to switch to another 1 2 3 4 5 main buyer for your products?

4.9 How easy do you think it would be for your 1 2 3 4 5 main buyer to replace you as a supplier?

4.10 How in your opinion these factors affect the revenue and sustainable development of your agriculture activity?

162

No Slight Moderate Strong Very impact impact impact impact strong impact a) Low endowment with equipments and 1 2 3 4 5 machines b) Low access to postharvest and processing 1 2 3 4 5 infrastructure c) Low access to the infrastructure (e.g. 1 2 3 4 5 roads, irrigation, energy) d) Access to markets 1 2 3 4 5 e) Access to the finance f) Market and price volatility 1 2 3 4 5 g) Natural hazards 1 2 3 4 5 h) Underdeveloped social service in the 1 2 3 4 5 community i) Insufficient or unskilled labor force 1 2 3 4 5 j) Negative impact of State policies and 1 2 3 4 5 regulations that affect sector k) Insufficient knowledge and skills (e.g. 1 2 3 4 5 regarding market, regulations, financing opportunities, novel practices and technologies) l) Market competition 1 2 3 4 5 m) Other (please state) ______1 2 3 4 5

163

Section 5: Association 5.1 Please mention the duration of being a member of a producer group or cooperative _____years 5.2 What is the number of members of the producers group/cooperative you was a member _____ 5.3 Please provide the basic reasons to not be a member of the producer group or cooperative at the moment

5.4 What is the legal status of agricultural producers' group/cooperative you was a member? NGO/non-commercial legal entity 1 Ltd 2 /Association Non-formal union of farmers 3 Cooperative 4 Other (please state)______5

5.5 What are the activities that were coordinated through the agriculture producers' group/cooperative you was a member? l) Input purchasing 1 2

m) Production 1 2

n) Processing 1 2

o) Marketing 1 2

p) Storage 1 2

q) Packing 1 2

r) Transportation 1 2

s) Lobbing 1 2

t) Financing 1 2

u) Trainings 1 2

v) other (specify) 1 2 ______

5.6 Did the producers group/cooperative you was member get any support (financial or in-kind )

From the government? 1 2

From donors? 1 2 If “Yes”, specify

164

5.7 Did you participated in decision making processes of your producer group/cooperatives? No, and I did 1 No, but I was 2 Yes, but insufficient 3 Yes, I was 4 not consider it interested to be satisfied with relevant involved the level of involvement

5.8 How much did you trust (was confident in) the decisions made by the management of cooperative or producer group? Very unconfident Unconfident Neither Confident Very confident confident or unconfident

1 2 3 4 5

5.9 What changes had occurred in your activity after becoming member of a producer group or cooperative? No Slight Moderate Very Most relevance relevance relevance relevant relevant

a) The volume of production increased 1 2 3 4 5

b) The quality of production was improved 1 2 3 4 5

c) The income of the household increased 1 2 3 4 5

d) The access to the finance and credit has 1 2 3 4 5 improved

e) The access to the farming technologies, 1 2 3 4 5 equipment and machines was improved

f) The access to postharvest and processing 1 2 3 4 5 infrastructure was improved

g) The exposal to the market risks decreased 1 2 3 4 5 (market and price volatility)

h) The exposal to the natural hazards decreased 1 2 3 4 5 (frost, droughts, hail etc.)

i) The knowledge and skills were improved 1 2 3 4 5

j) The production cost decreased and become 1 2 3 4 5 more efficient

k) The communication and mutual support within 1 2 3 4 5 the producer group become more efficient

l) Other (please state) ______1 2 3 4 5

5.10 Which factors had motivated (or could motivate) you to establish or join a cooperative or association? Better prices for inputs (seeds, 1 Better organized agricultural production 2 fertilizers etc.)

165

Access to infrastructure (machinery, 3 Better organized post harvest activities 4 storage, irrigation equipment, seeds, and sales fertilizer) Improvement of knowledge and 5 Access to credits / grants 6 skills Mutual support and assistance 7 Other (please specify): 8

5.11 What are in your opinion the main risks of the cooperation (association) among farmers?

1) Lack of proper management abilities (managers) for cooperative/association in 1 my village (locality)

2) Lack of supporting policies at central and/or local level 2

3) Unclear statute of the proprietorship over the cooperative assets 3

4) Lack of success stories of cooperation in my field of horticultural production 4

5) Poor (insufficient) communication between members of the cooperative or 5 association

6) Lack of mutual trust between agricultural producers 6

7) Difficult coordination of the common production and marketing policies 7

8) Lack of knowledge about advantages and disadvantages of the cooperation or 8 association among agricultural producers

9) Lack of technical support (trainings, study tours, consulting) for members of 9 cooperatives or associations

10) Other risks (please specify)______10

5.12 Do you have ever experienced solving any kind of production, marketing or Yes 1 other type of problems by joining efforts of several agricultural producers No (excepting period of being member of the producer group/cooperative)? 2 5.13 If “Yes”, could you specify the frequency of this experience? Occasionally, from Once per year Several times per year On a permanent basis case to case

1 2 3 4

166

5.14 Do you collaborate (cooperate) with other farmers on any of the following activities? Yes No If No, would you be willing to collaborate in future?

a) Marketing 1 2 1 2

b) Processing 1 2 1 2

c) Input purchasing 1 2 1 2

d) Lobbing 1 2 1 2

e) Storage 1 2 1 2

f) Packing 1 2 1 2

g) Transportation 1 2 1 2

h) Financing 1 2 1 2

i) Production 1 2 1 2

j) Trainings 1 2 1 2

k) other (specify) 1 2 1 2

5.15 In your neighborhood, do you think that there is anyone who you trust and Yes 1 who can lead the group/association? No 2

5.16 How could you appreciate your willingness to create a cooperative/association? Very low Low Neither low, nor Rather high Very high high

1 2 3 4 5

5.17 How could you appreciate your willingness to join a cooperative / association? Very low Low Neither low, nor Rather high Very high high

1 2 3 4 5

Thank you for your collaboration!

167

Internal Internal relations before and after cooperative formation Leader, decision-making Internal problems Socio-cultural Number of women, other representatives of vulnerable groups such as IDPs, eco-migrants The way of reasoning on various topics, industrial quality, entrepreneurship Vision, commitment, determination Socio-cultural problems Economic Length of operation Number of members Joint formal and informal resources Pies Geographic location Climatic peculiarities Main cultivar(s) External assistance Production peculiarities (cycle, technology..) Marketing channels Achievements Specific plans, outlook Material, technical, financial, other problems

168

1. Please describe successes and failures of your organization. What are their causes? (11*) 1. Do you cooperate with farmers within your agricultural activities? If yes, in what direction? What relations do you all have among each other? What are conditions of cooperation among you? How long have you been cooperating with each other? What are reasons that prevented you from forming or joining a cooperative? Or do you plan doing it? 2. Do you think cooperation among farmers should enhance? If yes, please specify what could be done in this regard. (9) 3. What kind of forms of cooperation among farmers are you aware of? (formal, informal cooperation, production cooperatives, marketing cooperatives, marketing groups, bargaining associations, other forms) (3) 4. What are in your opinion main advantages, disadvantages and risks of the cooperation among farmers? (2) 5. What do you know about farmer cooperation and how relevant do you find the issue of cooperation for your farming activity from the point of view of solving economic, technological, environmental, social, and other problems? (1) + (4) 6. Which are in your opinion the main barriers for the cooperation among farmers and solutions to these problems? (5) + (6) 7. Is there a future for farmers’ cooperation in your region (country) and why do you think so? (10) 8. What do you know about farmer cooperation support programmes and organizations in Georgia? (7) 9. How useful they are? Please name the most useful one. (8) 10. Do any of these programmes need refinement / improvement? If Yes, please specify. (9) 11. What new programmes or activities can be implemented? Who is supposed to do it?(9)

*# of the question in the IFAD question list for FGDs

169

Please tell us about your organization and its activities: such as programmes and projects that you are implementing in support of agriculture and farmer cooperation in Georgia? What kind of specific support measures do you have in place? What is their scope? Who are your target groups and how large is the beneficiary pool? What are your achievements and challenges that you face?

1. Characterize agricultural situation in Georgia, main fields, geographic and other peculiarities, prospects, advantages in the black sea and Caucasus regions? What is the current role and significance of horticulture for Georgian economic and social development in terms of its share in GDP and welfare, compared to livestock and other economic spheres? Please name particular examples of cultivars with highest actual or potential impact on employment and revenue generation, actual or future export potential in Imereti, Kakheti, Kvemo Kartli and Shida Kartli. Are their target markets local, regional and/or international?

2. What are main problems of farmers in Georgia especially in horticulture in terms of (a) knowledge and skills, (b) access to finances, (c) farm inputs, (d) infrastructure, (e) natural disasters, (f) climate change, (g) ecology, (h) health and safety? Please rank them What are their causes? Please rank them by impact. What factors influence them? What are regional differences?

3. What is done by your organization (and by others in the country in general) to help to the solution of any of these problems? How much time these steps may require in your opinion for the effects to materialize or become irreversible? Do these activities require policy level and/or local level decisions? What factors hamper or favor activities to solve the problems?

4. What are problems characteristic of farmer cooperation in Georgia? Are there problems characteristic of only horticulture? Is there a difference in cooperation development momentum between horticulture and livestock farming? What are internal and external causes of these problems? What are regional differences? Are any of them characteristic of horticulture only?

5. What more could or should be done in general to solve the problems? Please order the steps by priority as possible. How much time these steps may require in your opinion?

170

Shida Kartli Focus Groups

171

172

Kvemo Kartli Focus Groups

173

174

Kakheti Focus Groups

175

176

Kutaisi Focus Groups

177

178

Imereti region Pirveli Sviri village, Zestaponi municipality Kvakhchiri village, municipality

Kvemo Kartli region Tsereteli village, Teleti village,

Shida Kartli region Igoeti village, Kaspi municipality Atotsi village,

Kakheti region Tsodniskari village, Iliatsminda village, Sighnaghi municipality

179