Project Year Two Annual Report

Prepared for f sreview by the United States Agency for International Development under USAID Contract No72011418C00001,

The USAID Agriculture Program implemented by CNFA

The USAID Agriculture Program

Project Year Two Annual Report October 1, 2019 - September 30, 2020

USAID Contract 72011418C00001 Implemented by CNFA

Submitted to: USAID/Caucasus Mr. David Tsiklauri, COR

Submitted on October 30, 2020

Contents Acronyms ...... 5 Executive Summary ...... 7 Program Description ...... 8 Key Achievements in Project Year Two ...... 8 1. Cost-Share Grants to MSMEs, Cooperatives, Service/Information/Extension Providers, and Associations ...... 10 In-Kind Grants to MSMEs and Cooperatives ...... 10 Capacity Building Grants ...... 12 Innovation Grants ...... 15 2. Technical Assistance to MSMEs, Cooperatives, Service/Information/Extension Providers, and Associations ...... 16 Improved Access to New Varieties and Inputs ...... 16 2.1.1. Facilitate Nursery Certification ...... 16 2.1.2. Development of Modern Nurseries in Berry and Vegetable/Herb and Stone/Pome Fruits VCs ...... 17 2.1.3. Resource Materials for New Varieties ...... 18 2.1.4. Short Certificate Courses in Berry and Culinary Herbs...... 19 2.1.5. Improved Access to Modern Fertilizers and Plant Protection Products ...... 20 2.1.6. Raising Awareness of New Farming Machinery and Equipment among Farmers and Agri-businesses ...... 20 Improved Production Technologies ...... 21 2.2.1. International Consultancy in Berry Production ...... 22 2.2.2. International Training of Trainers Course in Raspberry, Strawberry, Blackberry, and Blueberry Open Field Production for Local Agronomists ...... 22 2.2.3. International Consultancy in Table Grape Production Technologies ...... 22 2.2.4. International TOT in Culinary Herbs Greenhouse Production for Local Agronomists ...... 23 2.2.5. Knowledge Plot Education Programs ...... 23 2.2.6. Digital Farms in Selected Value Chains ...... 24 2.2.7. GlobalGAP Certification ...... 24 2.2.8. Organic Farming Best-Practices ...... 25 2.2.9. Facilitate Organic Certification...... 25 2.2.10. Promoting Organic Production in Georgia ...... 25 2.2.11. Study Tours that Highlight Best-Practices in Production and Technologies...... 25 Improved Postharvest Handling and Processing ...... 26 2.3.1. Cold Chain Industry Survey ...... 26 2.3.2. Consultancies in Postharvest Handling Practices and Cold Store Operations ...... 26 2.3.3. International Consultancy in Pre-Cooling Practices ...... 26 2.3.4. International Consultancy in Freezing Techniques ...... 27 2.3.5. International Study Tour for Table Grape Cold Store Operators ...... 27 2.3.6. Modern Processing Techniques ...... 27 2.3.7. Facilitating Access to Modern Processing and Packaging Equipment ...... 27 2.3.8. Georgia Grown Spice Producers (Culinary Value Chain) ...... 28 2.3.9. Georgian Bay Leaf Producers (Culinary Value Chain) ...... 28 2.3.10. Modern Food Safety Standards ...... 29 Market Access...... 30 2.4.1. Improved Horizontal Collaboration at the Farmer Level ...... 31 2.4.2. Improved Vertical Collaboration ...... 32 2.4.3. Building Brand Awareness in Competitive Markets ...... 32 2.4.4. Brand Image for International Fairs ...... 33 2.4.5. International Trade Fairs ...... 33 2.4.6. Linking Farmers and Agro-Processors with Tourism and Catering Industries ...... 35 2.4.7. Promotional Events to Facilitate Market Access ...... 35 Capacity Building Activities ...... 35 2.5.1. Capacity Building Program for Agricultural Cooperatives ...... 35 2.5.2. Enhanced Capacity of Sectoral and Cross-cutting Business Associations ...... 36 2.5.3. Increased Capacity for Tax and Financial Reporting Among MSMEs ...... 36 2.5.4. Increased Capacity for Integrated Pest Management ...... 36 3. Cross-Cutting ...... 37

Inclusive Agricultural Value Chain Development ...... 37 Public Information and Outreach ...... 38 Environmental Compliance ...... 40 Access to Finance ...... 41 4. Donor and Host-Country Coordination ...... 41 5. Project Management ...... 43 Operations, Facilities, and Equipment ...... 43 Staffing ...... 44 International Subcontracting ...... 44 Monitoring and Reporting ...... 45 Financial Expenditure Summary ...... 57 Key Constraints ...... 57 Annex 1: The Ongoing, Initiated, and Completed Technical Assistance Projects ...... 58 Annex 2: Online Trainings Conducted in Project Year Two ...... 58

Acronyms ADA Austrian Development Agency AIAP Agri-Industry/Apprenticeship Program AIMP Agribusiness Innovation Matchmaking Platform AMG Agrarian Movement of Georgia APS Annual Program Statement AR Autonomous Republic B2B Business-to-Business BEO Bureau Environmental Officer BRC British Retail Consortium BSO Business Support Organization BSP Business Service Provider CNFA Cultivating New Frontiers in Agriculture COP Chief of Party COR Contracting Officer’s Representative COVID-19 Novel Coronavirus CQI Chartered Quality Institute DCOP Deputy Chief of Party DRDVE Department for Rural Development and Vocational Education EBRD European Bank for Reconstruction and Development EDA Export Development Association EOI Expression of Interest ERC Environmental Review Checklist EMMP Environmental Mitigation and Monitoring Plan ERP Enterprise Resource Planning EU European Union FAO Food and Agriculture Organization FDA Food and Drug Administration FDI Foreign Direct Investment FSC Farm Service Center FSMS Food Safety Management Systems FSSC Foundation Food Safety System Certification FTE Full Time Equivalent GAWB Georgian Association of Women in Business GBDC Georgian Business Development Center Caucasia GDP Gross Domestic Product GFA Georgian Farmers Association GFSI Global Food Safety Initiative GI Geographical Indication GIPA Georgian Institute of Public Affairs GITA Georgia’s Innovation and Technology Agency GNTA Georgian National Tourism Administration GoG Government of Georgia GRA Georgian Retailers Association GYAA Georgian Young Artists Association HACCP Hazard Analysis and Critical Control Point HORECA Hotel, Restaurant, and Café industry IAVCD Inclusive Agricultural Value Chain Development ICC Information-Consultation Center IFS International Featured Standards IMF International Monetary Fund

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INC International Nuts and Dried Fruit Council IPM Integrated Pest Management IQF Individual Quick Freezing IRCA International Register of Certificated Auditors ISO International Standards Organization IT Information Technology KMS Key Management Solutions KPI Key Performance Indicator LOP Life of Project M&E Monitoring and Evaluation MEL Monitoring, Evaluation and Learning MEPA Ministry of Environmental Protection and Agriculture MoESD Ministry of Economy and Sustainable Development of Georgia MSME Micro, Small and Medium Enterprise MSU Michigan State University NAO National Agriculture Olympiad NBG National Bank of Georgia NCDC National Center for Decease Control NFA National Food Agency NOP National Organic Program OCAP Organizational Customized Assistance Program OSHE Occupational Safety, Health and Environment PERSUAP Pesticide Evaluation Report and Safer Use Action Plan PIRS Performance Indicator Reference Sheet PMP Performance Monitoring Plan PPD Public-Private Dialogue PY1 Project Year One PY2 Project Year Two PY3 Project Year Three Q1 Quarter One Q2 Quarter Two Q3 Quarter Three Q4 Quarter Four RDA Rural Development Agency RFA Request for Applications SEEDEV The South-East Europe Development Organization SP Sole Proprietor SRCA Scientific-Research Center of Agriculture TA Technical Assistance TOC Terms of Cooperation TOT Training of Trainers UGT United Global Technology ULO Ultra Low Oxygen USAID United States Agency for International Development USG United States Government USDA United States Department of Agriculture VAT Value-Added Tax VC Value Chain VET Vocational Education and Training WFLO World Food Logistics Organization

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Executive Summary The USAID Agriculture Program used its first year of implementation to establish the program, test procedures and policies, and validate the Program’s direction. Project Year Two (PY2) started with the expansion of the Program’s scope and inclusion of new value chains (VCs), as well as the introduction of a new approach related to the engagement of private companies and the establishment of effective partnerships. The launch of the Innovation Grants program was the highlight of PY2. This initiative allows the USAID Agriculture Program to identify interventions which have a potential to significantly impact multiple agricultural sub-sectors and contribute to the sustainable development of the economy. In PY2, the USAID Agriculture Program was able to immediately respond to new tasks which were added to the Program’s scope and establish a number of important partnerships, including a joint program with McDonald’s Georgia. Within the framework of this collaboration, three lettuce growers launched implementation of GlobalGAP standards and one was successfully certified and included in McDonald’s supply chain, having already provided McDonald’s restaurants with 40 tons of lettuce during their first season. The USAID Agriculture Program also established another successful partnership with the Georgian Retailer’s Association (GRA). This collaboration will facilitate market access for Georgian producers in an initiative which will unfold in Project Year Three (PY3), providing assistance to more than 25 small producers to enter high-end markets in Tbilisi. In addition, the USAID Agriculture Program continued its long-standing, fruitful partnership with Trécé Inc. and implemented a joint project with the National Food Agency (NFA). The project aimed to introduce the detection and exclusion systems for three major pests. The USAID Agriculture Program’s strong performance was challenged by the major implementation and supply chain disruptions caused by the novel Coronavirus (COVID-19). To continue provision of services to its beneficiaries and ensure uninterrupted operations, the Program introduced an online tool for delivering trainings and technical assistance. This initiative has helped the Program mitigate the impact of local and international travel restrictions on the implementation. The series of AgriTalk live shows gained great traction immediately after its launch and has reached more than 6,000 farmers and entrepreneurs operating in different agricultural sub-sectors. In response to COVID-19, the USAID Agriculture Program also launched an online webinar ‘Occupation Safety during the State of Emergency’ for representatives of agribusinesses. This initiative helped Program beneficiaries to understand and interpret the Government of Georgia (GoG) requirements related to the novel Coronavirus. Through these training sessions, Program assisted agribusinesses received direction on how to create and maintain a safe working environment and continue operations in accordance with COVID-19-related GoG requirements. Despite challenges caused by the pandemic, and delays in most undertakings, another important activity that the USAID Agriculture Program was able to accomplish during PY2 was the authorized propagation of planting materials by a local nursery. Mza Chitili Ltd was granted a license by an Italian breeder to propagate the protected strawberry variety Malga and make it available for the Georgian farm community this season. Production of the Malga variety will increase the desirability of strawberry farmers crop in domestic and international markets and increase the price received. In PY2, the USAID Agriculture Program continued active cooperation with GoG agencies, including the Rural Development Agency (RDA), the Scientific-Research Center of Agriculture (SRCA), the NFA, and Enterprise Georgia, while jointly implementing activities, which have high impact on the sector development, as well as the company level operations.

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Program Description

The USAID Agriculture Program Life of Project (LOP) Targets . $7.4 million in matching grants disbursed to 120 enterprises leveraging at least $9.04 million in matching contribution . 3,680 new jobs created . $70 million increase in sales by supported enterprises including $23 million in exports and $11.3 million through new local markets . New cash markets in a value of $10 million available to producers . Consultancies/trainings provided to 170,000 individuals by supported enterprises

The USAID Agriculture Program is a five-year activity that aims to accelerate the growth of agricultural sub-sectors that demonstrate strong potential to create jobs and increase incomes and revenues of micro, small, and medium enterprises (MSMEs). In particular, the Program supports the development of VCs by assisting and strengthening relevant enterprises and organizations within the target agricultural sub-sectors, which include berries (including kiwi fruit), culinary herbs, stone fruits, perishable vegetables, pome fruits (apples), table grapes, mandarins, and nut crops (pistachios, almonds, walnuts). The USAID Agriculture Program is implemented through two integrated, mutually reinforcing components. Under Component One, the Program provides cost-share grants to MSMEs, cooperatives, service/information/extension providers, and associations, while Component Two focuses on demand-driven Technical Assistance (TA), including technical and/or business trainings, and a wide spectrum of customized consultancies aimed at building the capacity of targeted VC actors. Key Achievements in Project Year Two Throughout PY2, the USAID Agriculture Program continued to build on the systems put into place in Project Year One (PY1) and implemented the majority of activities proposed in its Year Two Work Plan, despite disruptions caused by COVID-19. The highlights of PY2 are as follows:

. The USAID Agriculture Program released four Requests for Application (RFAs) for its in-kind grants program, including two for processing enterprises, one for consolidation centers, and one for nurseries. The release of these RFAs was followed by outreach campaigns, with a total of 26 meetings and 680 participants. As a result, 101 candidates applied for in-kind grant support under the aforementioned RFAs. . In February 2020, the USAID Agriculture Program launched its Innovation Grants program and released an Annual Program Statement (APS) to solicit concept papers from interested entrepreneurs. To date, 11 applications were received in response to this APS and one project was submitted to USAID. The project has been approved and launched. . In PY2, the USAID Agriculture Program launched 31 new in-kind grant projects (including one innovation grant), thus committing an additional USD 1,905,061 and leveraging USD 3,749,905 of private sector funds. As of now, the Program has 43 ongoing in-kind grant projects. To date, USD 970,041 has been disbursed and USD 2,080,773 leveraged. . In PY2, the USAID Agriculture Program released two capacity building RFAs and launched three capacity building grant projects. . A capacity building grant recipient, Export Development Association, completed its project and launched Georgia’s first portal (www.CROP2SHOP.ge) for providing technical guidance to local exporters. The CROP2SHOP website offers comprehensive information on 21 agriculture commodities for 19 different markets.

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. As part of the ongoing nursery certification project, the USAID Agriculture Program, in cooperation with the SRCA, developed three different sets of nursery journals for three key directions of the nursery certification process: Phytosanitary, Nursery Operations, and Propagation Material Movement. These journals have been distributed to beneficiary nurseries within the Program’s priority VCs. . With the USAID Agriculture Program’s assistance, an Italian breeder registered the modern, certified strawberry variety, Malga, at the National Intellectual Property Center of Georgia (Sakpatenti) and signed a license agreement with a local nursery. The latter is now allowed to propagate and distribute Malga strawberry plants in line with the intellectual property protection requirements. . The USAID Agriculture Program and United Global Technology (UGT) developed and launched a mobile application for primary producers. Farmers can use this digital product to keep a detailed and accurate record of harvested produce and workers’ inputs. The application is already being used by several beneficiaries of the Program, including its grant recipients. . The USAID Agriculture Program continued its robust efforts to introduce international food safety and quality standards. The Program conducted gap analyses against Hazard Analysis and Critical Control Point (HACCP)/ International Standards Organization (ISO) 22000 and GlobalGAP requirements for 41 agribusinesses and supported beneficiary enterprises in the quality and standards certification process. Five agribusinesses have been certified and 11 are in-process for HACCP/ISO 22000 certification, two have been certified and eight in-process in GlobalGAP, and six have been certified in Organic. . In cooperation with Enterprise Georgia, Ministry of Economy and Sustainable Development (MOESD), RDA, Ministry of Environmental Protection and Agriculture (MEPA), and the National Wine Agency, the USAID Agriculture Program launched a new branding project to increase awareness of Georgia and its agricultural products in the international market, by positioning the country as a point of origin at trade fairs and events. . In cooperation with Enterprise Georgia, the USAID Agriculture Program assisted 10 companies from targeted VCs to participate in two international trade shows: Biofach 2020 and Gulfood 2020. As a result, four agribusinesses established linkages with international buyers and completed orders worth around USD 400,000. . The GoG and the USAID Agriculture Program launched a Pest Monitoring Program, implemented in cooperation with Trécé Inc. and the NFA. With the engagement of local entomologists and students, this project aims to detect and monitor three pests in west Georgia. . To cope with the drastically changed environment related with the COVID 19 pandemic, the USAID Agriculture Program launched its Facebook live show - AgriTalk - as a means of remotely providing extension services to farmers. To date, the Program has delivered 36 episodes, which have collectively reached 170,000 people and helped the Program to accumulate 6,500 new Facebook page likes. . In response to the new Law on Occupational Safety and Health, the Program delivered an intensive training program to representatives of Georgian agribusinesses from priority VCs. In total, 22 individuals obtained certificates as Qualified Occupational Safety Specialists. In addition, the Program provided practical guidance to 17 agribusinesses to enable them to implement these standards. In response to the COVID-19 outbreak, the USAID Agriculture Program trained 118 people in Occupational Safety during Emergency Situations to ensure smooth operations of these agribusinesses during the pandemic period.

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1. Cost-Share Grants to MSMEs, Cooperatives, Service/Information/Extension Providers, and Associations

Key Achievements in Project Year Two by Grant Projects:

 Four in-kind grant RFAs issued and 101 applications received  35 grant packages approved by USAID and investment projects launched  Seven investment grant projects in pipeline and pending USAID Approval  Two capacity building grant RFAs issued and three capacity building grant projects launched  One innovation grant approved and three projects are in pipeline  Additional $2,136,949 obligated in grant portfolio and actual $1,610,772 leveraged in private sector investment  $3,412,372 in new sales generate by grant recipients  414 jobs created by grant recipients  917 farmers trained/consulted by the grant recipients

In-Kind Grants to MSMEs and Cooperatives In-Kind Grant RFA 001: In PY1, the USAID Agriculture Program awarded in-kind grants to eight berry growers and three berry nurseries. Under this round, the Program has disbursed USD 526,877 and leveraged USD 583,204 of private sector funds. From the aforementioned eight berry growers, five established a total of 3.57-ha greenhouses. When these orchards reach their full production capacity, they will yield about 100 tons of berries annually. Blue Valley Ltd, a blueberry grower from Guria, covered 1-ha of its plantation in high tunnels. This project serves High tunnels at Blue Valley’s orchard as a replicable model, since high tunnels offer a number of benefits to berry growers. With this technology, the company will increase product yield, as well as protect the orchard from unfavorable weather conditions that can affect the entire production cycle and damage the crop. More importantly, the company can collect the harvest earlier in the season, giving them a tremendous advantage in terms of benefitting from off-season prices. Under this round, three berry growers applied for the grant to introduce necessary postharvest handling infrastructure, mainly pre-cooling equipment. Pre-cooling is a critical postharvest operation for berries since berries are easily perishable crops. Pre-cooling helps farmers sustain the quality and extend the shelf-life of their products. Starting from the next season, 350 tons of berries will be stored in these facilities annually. These projects also serve as replicable models for berry growers and demonstrate the importance and benefits of immediate postharvest handling technologies. In-Kind Grant RFA 002: In PY1, the USAID Agriculture Program announced a second in-kind grant round to strengthen postharvest and cold storage infrastructure within its target VCs. Out of 15 total investment projects, one was approved during PY1 and the remaining 14 were approved during the reporting period. The establishment of storage facilities is one of the most crucial factors in improving Georgia’s agriculture sector and achieving a broader impact in priority VCs. The majority of these enterprises will provide postharvest and storage services to primary producers based in their neighboring areas and will thus enable them to supply the market with higher-quality products. To date, the USAID Agriculture Program has disbursed USD 429,885 and leveraged USD 1,205,054 of private sector funds under this round. Facilities will be established in seven regions of Georgia with a total expected storage capacity of 18,400 m3. Collectively, these cold store operators will serve around 950 farmers. The distribution of cold storage capacity by regions is presented in Figure 1.

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Currently two cold storage facilities are fully operational, Sole Proprietor (SP) Zurab Merebashvili and Agro Complex Ltd. Mr. Merebashvili’s facility is located in the Shida Kartli region and has five cold storage chambers, with a total capacity of 1,355 m3. Mr. Merebashvili provides services to neighboring fruit producers, as well as storing fruits harvested from his own orchards. Agro Complex Ltd owns and operates a cold storage facility in the Kvemo Kartli region. It is equipped with Ultra Low Figure 1: Distribution of cold storage capacity (m3) by regions Oxygen (ULO) technology that is crucial for long-term storage and has a total capacity of 5,760 m3. The company uses the facility to store apples and table grapes. This is a joint project between the USAID Agriculture Program and the RDA. The opening ceremony took place in June 2020 and was attended by the First Deputy Minister of Environment Protection and Agriculture of Georgia and USAID Mission Director (see section 3.2). In-Kind Grant RFA 003: On October 29, 2019, the USAID Agriculture Program released its third RFA offering investment opportunities to processing enterprises within priority VCs. The Program conducted an outreach campaign, which attracted 380 people (see section 3.2). A total of 57 applicants responded to this call and 21 were shortlisted. During PY2, USAID approved the launch of 16 investment projects, and the remaining five are under development. The grant recipients are engaged in dried fruit production, juice production, dried herb production, canned food production, etc. These enterprises will process 6.5 million kilograms of raw materials1 (see Figure 2) purchased from around 2,500 farmers. Figure 2: Distribution of the total volume (KG) by VCs In-Kind Grant RFA 003 (B): Because the USAID Agriculture Program released RFA 003 before nuts were added as a priority VC, the Program announced RFA 003B in February 2020 to solicit applications from nut (walnut, almond, pistachio) processing enterprises. From February 27 - March 6, 2020, the Program conducted an outreach campaign in Batumi, Kutaisi, Gori, Marneuli, Telavi, and Tbilisi and met 120 individuals interested in applying (see section 3.2). Initially, interested candidates were requested to submit their applications by March 31, 2020. However, taking into account the emergency situation caused by COVID-19, the deadline was postponed to April 30, 2020 to give the enterprises reasonable time to submit their applications. A total of seven applicants responded to this call and three were shortlisted. By the end of PY2, the Program submitted one grant package to USAID for review. In-Kind Grant RFAs 004/005: The USAID Agriculture Program released its fourth and fifth in-kind grant RFAs on July 22 and July 27, respectively. The fourth RFA offers investment opportunities to consolidation centers, while the fifth aims to support the development of modern nurseries in Georgia. In August, the Program organized an outreach campaign and met 180 individuals interested in applying (see section 3.2). A total of 18 consolidators and 19 nurseries have responded to the Program’s calls. The selection and subsequent initial site visits will be conducted early in PY3.

1 Bay leaf is included under culinary herbs data.

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Capacity Building Grants Capacity Building Grant RFA 001: In PY1, the USAID Agriculture Program awarded a capacity building grant to ISO Consulting to obtain International Featured Standards (IFS) and British Retail Consortium (BRC) accreditations that will enable their consultants to offer consultancy and audit services to local and international enterprises. In March 2020, four representatives of ISO Consulting completed a training course delivered by a consultant from Lloyd’s Register, a technical and business service provider and consulting firm based in the United Kingdom. The training program aimed to equip participants with the knowledge and skills necessary to perform first, second, and third-party audits of Food Safety Management Systems (FSMS). The program also helped participants gain a Lead Auditor’s qualification, either as a third or second-party auditor, allowing them to audit an organization’s FSMS to ensure they meet HACCP, ISO 22000, and Foundation Food Safety System Certification (FSSC) 22000 requirements. Three consultants successfully passed the final examination and were awarded certificates of completion recognized by Chartered Quality Institute (CQI), the International Register of Certificated Auditors (IRCA), and FSSC 22000 and are now authorized to perform third party certification audits worldwide. In early September 2020, five trainers from ISO Consulting attended an online training course in BRC v8 standards which had been delayed due to COVID-19 restrictions. Three consultants were awarded the status of BRCGS Lead Auditors and the other two became BRCGS Professionals, allowing them to offer consultancy in the implementation of these food safety standards. Once the company successfully passes four more training modules, which have also been delayed until December 2020 due to COVID-19, ISO Consulting will obtain full BRC accreditation and will be able to offer its services to private companies worldwide. Caucascert LLC is another capacity building grant recipient looking to receive accreditation from the United States Department of Agriculture (USDA). In PY2, Caucascert contracted an international consultant to assess quality control documents and identify GAPs against National Organic Program (NOP) requirements for certifying agents. The organization submitted its application to the National Organic Program in October 2019 for review and USDA assigned a relevant accreditation manager in January 2020. The purpose of the documentation adequacy review is to evaluate the documented quality manual’s compliance with the Organic Foods Production Act of 1990, the USDA organic regulations, the NOP Handbook, and other requirements. In accordance with the grant agreement, the above-mentioned review was scheduled to be completed by March 31, 2020 but the deadline was extended by USDA due to COVID-related restrictions. USDA notified Caucascert that their application was at the final review stage and would be completed soon. After the USDA review has concluded, Caucascert will address any non-conformities and, once the corrective actions are taken and approved, their application will move on to the next stage which is a pre-decisional, on-site assessment conducted by USDA auditors. Capacity Building Grant RFA 002: In PY2, the USAID Agriculture Program’s capacity building grant recipient, Export Development Association (EDA), completed a grant project. During the initial stage of the project, EDA conducted needs assessment workshops and presented their services in Tbilisi, Telavi, Kutaisi, Zugdidi, Batumi, and Ozurgeti. These workshops were attended by 77 established and start-up exporters operating in the priority VCs. Based on the information gathered in these workshops, EDA created Georgia’s first portal for providing technical guidance designed specifically to be easier to understand for local exporters.

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The online portal CROP2SHOP provides comprehensive information on 21 agriculture commodities for 19 different markets including Europe, the USA, the Gulf States, India, and Japan. Each commodity is linked with at least five markets, based on a number of criteria like export radius, trade benefits to Georgia, and level of awareness of the country. CROP2SHOP also provides helpful information about various market intelligence sources, additional relevant educational publications and useful sources of research. It also includes a customized and automatized EDA Export Readiness Test to help aspiring exporters determine and understand their export capacity. The CROP2SHOP launched in late August and has already gained significant awareness among local businesses, with 345 unique users by the end of September. WWW.CROP2SHOP.GE Union Agroservice is a capacity building grant recipient which was approved by USAID and received its grant during PY2. Within the scope of the project, the organization aims to facilitate Public-Private Dialogue (PPD) to improve access to modern agricultural inputs in Georgia. During the reporting period, Union Agroservice conducted six PPD meetings in Tbilisi, Kutaisi, Zugdidi, Batumi, Telavi, and Akhaltsikhe. These meetings gathered a total of 174 farmers, Farm Service Centers (FSCs), input suppliers, regional representatives of the NFA, and state and private extension specialists. To increase awareness of modern inputs and machinery, Union Agroservice hosted eight onsite and one online training sessions in registration and safe application of pesticides and agrochemicals, along with a further eight training sessions on modern agricultural machinery. These trainings were conducted in Imereti, Kakheti, Samegrelo-Zemo Svaneti, Shida Kartli, and Samtskhe-Javakheti and 283 farmers, FSC representatives, and state and private extension specialists attended. Additionally, Union Agroservice developed multiple one-pagers for new varieties of 11 commodities, all of which have high export potential, and for new small-scale machinery which can improve the beneficiaries’ technical knowledge. Agroservice’s meeting Due to COVID-related obstacles, the Program extended the grant project to December 2020. In the remaining period, Union Agroservice plans to conduct two more training sessions, upgrade their website, and conduct a final PPD conference to present their findings and discuss potential solutions to the existing challenges. Capacity Building Grant RFA 003: In late February 2020, the USAID Agriculture Program released its third capacity building RFA, which aimed to provide opportunities to woman-owned MSMEs and woman-led cooperatives in the horticultural sector, as well as facilitate youth engagement in rural economic activities. The Program received six applications and awarded grants to three organizations. In September 2020, one of the grant recipients, the Georgian Association of Women in Business (GAWB) launched a seven-month project to strengthen the capacity of women engaged in the production of dried fruits and wild plants/fruits/berries in Shida Kartli and Mtskheta-Mtianeti. Within the framework of this project, GAWB will support at least 60 women to upgrade their technical knowledge and assist at least 12 of them in starting microbusinesses and extending their micro and small businesses through acquired technical knowledge, improved market integration, and expanded

Page 13 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program market linkages within target VCs. Through this project, GAWB will also strengthen its institutional capacity by gaining new members and experts, offering new consultancy packages, streamlining its membership policy, and improving communication with members, as recommended by the Business Association Assessment, conducted by the USAID Agriculture Program in 2019. The Georgian Young Artists Association (GYAA) is another grant recipient, which anticipates to start the project in mid-October 2020, once the agreement is finalized. This six-month project aims to establish an Agro Art Club network in Kakheti and Shida Kartli, engaging 14 schools in Dedoplistskaro and Kareli municipalities and four professional colleges in Kakheti. The clubs are expected to unite around 150 member students, who will have an opportunity to gain practical knowledge and experience in conducting agribusiness activities by implementing various mini-projects. Agro Art Clubs and mini-projects, such as Agro Art gardens, research related to agrotechnology, photography, exhibition, and media-articles, will help young people learn how to plan, design, and manage small farms. The Georgian Business Development Center Caucasia (GBDC) is the third grant recipient, which anticipates to start the project in mid-October 2020, once the agreement is finalized. GBDC and its partner, Dusheti Farmer Club, plan to implement an eight-month pilot project in the Dusheti municipality to support youth engagement in agriculture and facilitate agribusiness startup opportunities. The project will provide tailored trainings and consultancies to youth interested in starting microbusinesses; train and engage students from Dusheti (currently studying at the Agrarian University, Tbilisi Ivane Javakhishvili State University, and other partner universities) in developing business plans and starting microbusinesses; and teach secondary school students (from 11th and 12th grade) about modern agriculture; and identify existing employment and business opportunities by organizing presentations and site visits to local commercial farms, agribusinesses, retailers, universities, and colleges. GBDC and the Dusheti Farmer Club plan to train at least 50 students and youth, assist 10 beneficiaries in obtaining funding, and coach 20 beneficiaries in extension and management areas. In addition, GBDC will work with the Dusheti Farmer Club to increase their institutional and technical capacity by establishing the Youth Agribusiness Resource Center at their premises. This center will provide trainings and consultancy services to the local youth. Capacity Building Grant RFA 004: In May 2020, the USAID Agriculture Program released capacity building RFA 004 to support the berry, greens, mandarin, and nut (excluding hazelnuts) clusters and VCs. The Program will assist relevant agricultural organizations to help them increase their capacity to network with their members and to upgrade their technical knowledge on pertinent topics, ranging from the introduction of new varieties to the establishment of new production and marketing channels. The Program shortlisted four sector associations. Once their proposals are fully defined, they will be submitted to USAID for approval. One shortlisted organization, Farmers Association Subtropiki, plans to increase its organizational and operational capacity to provide more efficient and tailored services to its members. This will be achieved through Training of Trainers (TOT) events, organizational development trainings, strategic action planning, public outreach activities, and active partnerships with key stakeholders. TOT events will be led by 14 experts, who took part in the USAID Agriculture Program’s TOT course delivered by an international consultant in 2019. A total of 30 people will participate in these trainings and will later disseminate the knowledge among the broader audience of farmers and agribusinesses from the Ozurgeti, Khelvachauri, and Kobuleti municipalities. The Almond and Walnut Producers Association is another candidate shortlisted by the USAID Agriculture Program. The applicant aims to strengthen its organizational and technical capacity, introduce membership fee collection mechanisms, and ensure greater sustainability. In the scope of the project, the Association will elaborate a strategic development plan and a joint sales strategy for the local almond and walnut industry. These documents will be key to successful operations in the mid- and long-run perspectives. The Association has a plan to join International Nuts and Dried Fruit

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Council (INC) and the US-based Blue Diamond Almonds. This will allow Georgian manufacturers to increase international visibility and enter new markets. As part of the project, the Almond and Walnut Producers Association will create a pool of six consultants, specializing in almond/walnut production, to offer technical guidance to its members. The Association will facilitate onsite and online consultancies for around 200 almond and walnut growers and organize four regional technical days, 16 practical training sessions, and a national conference that is to be held annually. The USAID Agriculture Program also shortlisted the Georgian Berry Growers Association, which aims to support the development of a competitive and export-oriented raspberry, blackberry, and strawberry industry by strengthening the Association’s institutional and technical capacity, offering market-demanded services to berry growers, providing training, networking, and business cooperation opportunities to its members, helping to improve quality and increase sales, and disseminating industry-related information on new varieties, technologies, products, and other modern trends. Within the framework of the project, the Georgian Berry Growers Association plans to increase the number of members to 150, establish a pool of four young agronomists to offer extension services to its members, train about 100 berry growers, arrange four demo plots to showcase new berry varieties, and conduct promotional events to further increase its visibility. The Georgian Greens Producers Association is the fourth candidate shortlisted by the USAID Agriculture Program. The Association will strengthen its technical and organizational capacity to provide enhanced services and quality support to its members. Specifically, the Association will assess the culinary herbs VC considering new challenges caused by COVID-19 and will develop an action plan for interventions. The Association plans to offer group trainings and individual consultancies to growers, consolidators and postharvest operators, as well as develop crop-specific leaflets to highlight new varieties, production practices, and market trends. The Association will also facilitate two model demonstration plots, one open field and one greenhouse, to showcase positive results of modern practices applied in herbs production. Lastly, the Association will create an electronic portal, Mtsvanili.ge, to serve as an instrument for strengthening linkages among VC actors. Innovation Grants In February 2020, the USAID Agriculture Program released an APS to award in-kind Innovation Grants and organized a launch event in Zugdidi (see section 3.2). Interested entrepreneurs were invited to submit concept papers with innovative ideas which can drive the development of one or more of the Program’s approved VCs and/or transform cross-cutting agriculture sub-sector through their activities. This call for applications is open until September 30, 2021. The Program will accept concept papers on a rolling basis and develop full investment proposals for the shortlisted candidates which demonstrate high potential. In PY2, the USAID Agriculture Program received 11 applications, of which eight were evaluated and four shortlisted by the selection committee. The remaining three applications were submitted in late Quarter Four (Q4) and will be assessed in the beginning of PY3. The Program started developing grant packages for shortlisted candidates and submitted one project to USAID. The project was approved and launched in Q4. The grant recipient, Agrobade Ltd, will establish an anti-hail net production facility in Shida Kartli. Anti- hail nets produced by the company will cover around 100-ha fruit orchards and vineyards annually in Kakheti, Shida Kartli, Samegrelo-Zemo Svaneti, and Imereti. This project is expected to significantly impact the USAID Agriculture Program’s priority VCs. Currently, Georgian farmers secure their orchards with imported nets, since there are no local factories that manufacture this product. The presence of a local facility will ease their access to anti-hail nets, make this investment less costly, and increase awareness about the importance and benefits of this risk management tool. As part of the project, the Program will commit USD 150,000 and leverage USD 397,960 of private sector funds.

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It was expected that the interest towards innovation grants would be greater even though innovations are usually considered as heavy investment and higher risk projects. However, due to COVID-19- related uncertainty and negative economic impact, only a few applications were received in response to the APS which was initially planned to be open until December 31, 2020. The deadline was extended to give an opportunity to more entrepreneurs to better assess their post-COVID conditions and make informed decisions with regards to their concept note proposals. 2. Technical Assistance to MSMEs, Cooperatives, Service/Information/Extension Providers, and Associations Improved Access to New Varieties and Inputs 2.1.1. Facilitate Nursery Certification In PY1, the USAID Agriculture Program began working with the NFA and the SRCA to implement a voluntary nursery certification project. The objective of this project is to help Georgian nurseries align their operations with international best-practices to produce and distribute high-quality, healthy, and pest-free planting materials. In December 2019, the USAID Agriculture Program, in cooperation with MEPA, organized a workshop to discuss the nursery certification project with all relevant agencies. The attendees included the Directors and leading specialists from different departments of the NFA and the SRCA. The meeting addressed the possible distribution of responsibilities between cooperating entities, which was necessary to finalize the voluntary certification scheme. Workshop on nursery certification project Following the workshop, the USAID Agriculture Program engaged its international consultant to assist partner agencies in their ongoing activities. As a result, the SRCA designed the certification scheme and developed the necessary documents such as an application form, an initial assessment form, regular inspection forms (for fruits, berries, and vines), and a labelling and traceability system. In cooperation with the Program, the SRCA also developed a journal to be filled by the nurseries willing to go through certification. The Program provided three different sets of journals corresponding with the three key directions of certification process: Phytosanitary, Nursery Operations, and Propagation Material Movement. In cooperation with SRCA’s Standards and Certification Unit, the USAID Agriculture Program delivered in-person and remote trainings to nurseries operating within six regions of Georgia and engaged in the priority VCs, including stone fruits, pome fruits, berries, table grapes, and nuts. Individual sessions were organized for each VC representative. A total of 39 nursery Training nursery representatives operators participated in this initiative and received detailed information about certification requirements and standards. To reach a broader audience of stakeholders, the Program and SRCA also dedicated an AgriTalk Facebook Live show to nursery certification requirements, covering important topics such as soil testing, traceability of planting materials, and the practice of keeping record of agricultural activities, among others. As a part of the nursery certification initiative, the USAID Agriculture program has been assisting the NFA in completing the list of regulated non-quarantine harmful organisms. As a result, the Program provided information about economically harmful diseases for stone fruits, pome fruits, raspberries, and blackberries. The Program worked with relevant government agencies throughout PY2 to

Page 16 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program complete this list, first at a regional level and eventually at a national level for all crops. In PY3, the Program will continue providing focused technical assistance to help nurseries meet certification requirements, thereby contributing to the development of a modern nursery network in Georgia. 2.1.2. Development of Modern Nurseries in Berry and Vegetable/Herb and Stone/Pome Fruits VCs The development of modern nurseries is one of the key components of agriculture and an essential milestone towards increased efficiency of primary production in Georgia. Because of its importance, support from the USAID Agriculture Program in PY1 included technical consultancies and the development of open-field and greenhouse berry nurseries. In PY2, the Program continued and expanded technical support through both local and international consultants, which included connecting local seedling producers with internationally licensed nurseries to supply them with quality inputs and technical expertise, while facilitating industry best-practices for propagation. Vegetable nurseries: Because of a general lack of technical knowledge, as well as a lack of proper regulations, and because of poor access to quality seeds and new varieties, vegetable seedling production in Georgia is under-developed. During Quarter One (Q1), the USAID Agriculture Program’s herbs and vegetables VC specialist, in coordination with the Information Consultation Centers (ICCs) of the MEPA, visited nine vegetable seedling producers in Adjara, Imereti, and Kvemo Kartli, to obtain information about their operations. The visits helped to identify their readiness to adopt new approaches and practices in seedling production. Based on findings, the Program selected three entities - SP Amiran Berdzenidze, SP Davit Bzekanava, and the Agricultural Cooperative Lage - for continued monitoring to address their needs and plan further interventions. The above consultancies covered the selection of seeds and varieties, as well as the production, handling, storage, and transportation of seedlings. The goal of these consultancies was to improve daily operations and production practices of farmers. To ensure a coordinated and consistent approach towards promoting the development of a modern vegetable nursery network in Georgia, the USAID Agriculture Program held meetings with MEPA and SRCA representatives and discussed existing and upcoming normative acts regulating vegetable seedling production in Georgia. In PY3, the USAID Agriculture Program will continue to work with the SRCA to communicate existing regulations to a wider audience of vegetable seedling producers and to address technical deficiencies and gaps in existing seedling production standards and requirements. This work will help lay a foundation for vegetable seedling certification. In Q4, the USAID Agriculture Program held discussions with Rijk Zwaan Ukraine Ltd, a Ukraine-based subsidiary of the Dutch breeding company, Rijk Zwaan. During these discussions, the Program identified several partnership opportunities that would result in and/or contribute to improved operations of vegetable growers. While focusing on access to market efforts within the framework of the pilot partnership scheme, this cooperation was designed to help achieve several important goals: . Improved knowledge and increased skills of Georgian vegetable/seeding producers. . Improved access to high quality seeds and varieties, suitable for both greenhouse and open- field production. . The establishment and expansion of commercial linkages between Georgian vegetable growers and international input suppliers and consulting companies. . Development of a modern nursery network throughout Georgia. Meanwhile, the USAID Agriculture Program continues to seek alternative cooperation opportunities to strengthen its efforts in the area of vegetable nursery development.

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Berry nurseries: In PY2, the USAID Agriculture Program linked its grant recipient nursery - Mza Chitili Ltd - with an Italian breeder and helped the company start propagating the modern, certified strawberry varieties, Malga and Scala. The breeder provided mother plants, delivered onsite technical consultancies explaining how to set up a trellis system and prepare the soil for mother plants, and signed a licensing agreement to allow the company to become an authorized propagator and distributor of Malga and Scala strawberry plants. In PY2, Malga variety was registered at the National Intellectual Property Center of Georgia. As a result, Mza Chitili Ltd carries out business activities in line with the intellectual property protection requirements. 2.1.3. Resource Materials for New Varieties During PY2, the USAID Agriculture Program developed a series of Malga Strawberry seedlings informational guides to address gaps in the technical knowledge of farmers and relevant VC stakeholders and to help them implement new practices and make effective management decisions. Each guide features step-by-step production recommendations, from planting through harvest, as well as descriptions of specific cultivars deemed well-suited to local growing conditions and better aligned to both local and international buyer preferences. The guides have been disseminated among growers, RDA’s state extension centers, FSCs, and sector associations in order to properly distribute the knowledge and improve the competitiveness of selected VCs and the agriculture sector in general. The guides prepared during the reporting period cover the following VCs: . Berries: The USAID Agriculture Program’s international consultant developed production guides on the most demanded bearing and everbearing strawberry varieties. These guides focus on modern Integrated Pest Management (IPM) practices, such as new pest management and fertigation schemes, which are applicable worldwide. . Culinary Herbs and Lettuces: The Program’s local consultant developed an informational guide on greenhouse and open-field production of lettuce varieties, focusing on the most demanded varieties within the Hotel, Restaurant, and Café industry (HORECA) and export markets. An agreement was signed with the Program’s sub-contractor, the Israeli-based organization Farmentor, which planned, among other activites, the Resource materials on strawberries development of several short guides on selected culinary herbs which are in high demand on the international market and represent strong and sustainable export potential. However, Farmentor’s experts waited to finalize this plan until after visiting farms and seeing the farming practices on-site. The visits were canceled due to COVID-19 and the experts’ focus shifted to remote trainings. The remaining tasks will be performed within the framework of an extended or renewed agreement. The guides will cover greenhouse production, harvesting, and postharvest handling phases of the crop production cycle. They will also address important technical aspects, including the most common obstacles faced by herb growers, consolidators, and postharvest operators.

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. Mandarins: The USAID Agriculture Program’s short-term international consultant developed manuals for mandarin production. The materials cover primary production, harvesting, and postharvest handling phases while addressing key technical aspects and the most common (or frequently encountered) challenges of mandarin growers, consolidators, and postharvest operators. . Table Grapes: In cooperation with the SRCA, the USAID Agriculture Program developed a guide on modern, and in-demand table grape varieties. This is the first publication for table grape VC stakeholders. The Program plans to follow-up with more resource materials, such as instructional videos that will address existing knowledge gaps in table grape production. Resource materials on table grapes 2.1.4. Short Certificate Courses in Berry and Culinary Herbs In order to strengthen selected VC actors and achieve higher sector productivity, the USAID Agriculture Program prioritized the distribution of knowledge and the development of a more competitive workforce. In partnership with educational institutions, the Program is developing market-demanded short-term courses for agronomists and sector specialists with a focus on new varieties and production practices: Certificate program in greenhouse production of culinary herbs and specialty vegetables: In Quarter Two (Q2), the USAID Agriculture Program contracted the Department for Rural Development and Vocational Education (DRDVE) of the Georgian Institute of Public Affairs (GIPA) to develop and institutionalize a certificate program in greenhouse production of culinary herbs and specialty vegetables. DRDVE began implementing the program in close cooperation with experts from several US-based organizations: World Link, Woodland Community College, and University of California, Davis. This cooperation aims to ensure that the course curricula incorporates higher-level expertise, modern approaches, and innovative practices. COVID-19 related restrictions in the US effected the partner educational institutions significantly and delayed the development of appropriate course materials and the settlement of copyright issues. To minimize the impact of the delay, GIPA, in coordination with the USAID Agriculture Program and implementing partners, replaced project activities, starting with the selection of six local trainers from GIPA and its partner Akaki Tsereteli Kutaisi State University, who will participate in the rescheduled TOT course set for December 2020. During the reporting period, World Link organized several online meetings, via Zoom, with internal experts to discuss and come to an agreement on the details of the specific crops which will be covered by the training modules, as well as to select appropriate sections of the curriculum, assign training materials for use, discuss copyright regulations, and integrate crop specific information produced by US Extension Service. The team of US-based experts reviewed three different greenhouse management curricula used in community colleges and selected the Oklahoma curriculum as the one that is best suited to the project. A release was received from the Oklahoma Division of Career and Technical Education for use and translation of the materials. The team has started updating and adding specialty crop information to be made available for adaptation to Georgian conditions and translation into the Georgian language. The US team is collecting peer-reviewed production information from sources such as US Extension Service publications to add to the curriculum to fill in specialty crop information. Additional techniques and management tools will be collected from local growers in the state of California. It is anticipated that the full course curricula will be finalized by November 30 and followed by a TOT course and further trainings that will be delivered in a testing regime to the targeted audiences of farmers and extension agents in the regions of Georgia. In parallel, World Link has been working on a

Page 19 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program series of short video tutorials (with Georgian subtitles) to showcase open-field and greenhouse vegetable production practices that are commonly applied in the USA. Short certificate program in berry production: In Q2, the USAID Agriculture Program signed a contract with the Agricultural University of Georgia to develop a short certificate program in berry production to support the sustainability of capacity building programs for berry growers. During the reporting period, the Agricultural University completed a TOT course, delivered remotely by a Professor at the Department of Horticulture at Michigan State University (MSU) due to COVID-19 restrictions. This course incorporated six sessions that lasted for a total of 20 hours. The Professor Emeritus provided training materials for the program’s curricula. As a result, six local trainers improved their technical skills and were further engaged in the development of curricula for the certificate program. In Q4, the sub-contractor submitted the completed course curricula which includes a course description, learning materials, and presentations. The course covers key technical topics, all of which are essential for the production cycle of four significant berry crops: strawberries, blackberries, raspberries, and blueberries. During November-December 2020, the six trainers trained by the Professor Emeritus will deliver training sessions to approximately 40 representatives from Vocational Education and Training (VET) colleges and ICCs around Georgia. These trainings will test the program to ensure it fills the needs and expectations of its target audience. The course is scheduled to be made available to a broader audience starting in January 2021. 2.1.5. Improved Access to Modern Fertilizers and Plant Protection Products Over the past several years, Georgia established a well-developed network of FSCs that offer farmers imported fertilizers and plant protection products. However, due to the relatively small size of the market, prices are high and the choice of quality agricultural inputs is limited. Throughout PY2, the USAID Agriculture Program met with a number of input suppliers, such as Agrokartli Ltd, Agrovitae Ltd, and Cartlis Agrosystems, to discuss the main challenges existing within the sector. The above discussions were followed by PPD meetings organized by the USAID Agriculture Program’s capacity building grant recipient, Union Agroservice. The organization held six meetings in Tbilisi and the regions, which gathered a total of 179 people, including representatives of FSCs, ICCs, the NFA, the RDA, input suppliers, farmers, and agribusinesses (see section 1.2). The participants discussed the main challenges hindering the development of the agricultural inputs market, as well as ways to address them. Union Agroservice will conclude these meeting with a PPD conference, where the organization will share its main findings and recommendations. The conference will gather all major stakeholders, such as MEPA, NFA, and RDA. 2.1.6. Raising Awareness of New Farming Machinery and Equipment among Farmers and Agri- businesses Application of modern agricultural practices and the use of farm machinery significantly improves efficiency and increases productivity. For this reason, it is important that primary producers are aware of and have access to the latest farm equipment. In PY2, the USAID Agriculture Program’s capacity building grant recipient, Union Agroservice, organized several awareness raising trainings on modern equipment and smart farming practices. These trainings were conducted as part of the ongoing grant project (see section 1.2), which aims to increase access to quality agricultural inputs in Georgia. To date, Agroservice has delivered a total of eight trainings to 98 individuals in different regions of Georgia. These trainings gathered Awareness raising training farmers and FSC representatives.

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Improved Production Technologies Lack of understanding, as well as a lack of implementation of modern production technologies, remains a primary factor affecting yields and crop quality within the USAID Agriculture Program’s target VCs. In PY2, the Program engaged local and international experts in individual consultancies, trainings, and other activities to upgrade the knowledge of primary producers, agronomists, and extension specialists. Some activities were already identified during the work planning process and were thus included in the PY2 Work Plan (see sub-sections of this chapter). However, in addition to such activities, the Program delivered consultancies/trainings to address knowledge gaps which emerged over the course of PY2. These activities are summarized in Table 1. Table 1: Trainings/consultancies in best production practices Activity Description In Q2, the USAID Agriculture Program’s international consultant trained local agronomists and ICC representatives in winter pruning techniques applied on Trainings/consultancies in stone and pome fruit trees. Trainings took place in Shida Kartli and Kvemo Kartli. winter pruning As part of the assignment, the expert also delivered individual consultancies to six beneficiaries, including the Program’s grant recipients. In Quarter Three (Q3), the USAID Agriculture Program’s international consultant prepared production guides for stone and pome fruit producers. The expert recorded videos in fruit orchards and covered various topics, such as weed management, sweet cherry, plum, and pear production technologies, summer pruning of plum and sweet cherry orchards, and plum and pear tree formation Video guides for stone systems. and pome fruit producers A total of eight video guides were shared on the USAID Agriculture Program’s Facebook page. This activity was concluded with two online meetings, which gathered the expert and stone and pome fruit VC actors. The participants had the opportunity to ask questions and discuss the topics covered in the video guides. Throughout PY2, the USAID Agriculture Program’s local expert visited 25 cucumber, tomato, and pepper producers in Imereti, Samegrelo-Zemo Svaneti, and Adjara to share greenhouse production best practices, including soil Consultancies/trainings treatment, vegetation, and IPM. for vegetable growers In Q3, the same expert delivered two distance trainings to 18 cucumber growers and extension agents in west Georgia, sharing modern approaches in greenhouse and open-field production. In Q3, the USAID Agriculture Program’s local expert delivered tailored Tailored consultancies for consultancies to 27 mandarin growers. The expert observed their daily mandarin growers operations and provided recommendations related to pest management and disease prevention, plant formation, pruning, fertigation, and irrigation. In Q3, the USAID Agriculture Program’s international consultant delivered a remote TOT course in pest management to 18 mandarin growers and extension agents operating in Adjara and Guria. Trainings were followed by online Q&A TOT course for mandarin sessions with the expert and the Program’s technical staff. The consultant was VC stakeholders also assigned to provide on-site advisory services and a TOT course dedicated to postharvest handling and storage practices; however, due to COVID-19, this assistance will be rescheduled or replaced by remote capacity building activities. The USAID Agriculture Program, together with representatives of the Dutch Seed Producer Company and Ukrainian Firm, Agroanalysis, conducted a training Training for culinary in modern varieties and production technologies for herbs and perishable herbs/vegetable growers vegetable growers. The event took place in Kutaisi and gathered 25 farmers that produce tomatoes, cucumbers, rucola, salads, cauliflower, and broccoli.

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Activity Description As part of the training program, the participants visited herbs farms operated by Gejeti Ltd and Herbia Ltd to observe modern growing and postharvest handling practices. Representatives of the Dutch Seed Producer Company expressed their readiness to provide new variety seeds of perishable vegetables and greens, assist the beneficiaries in the establishment of demo plots in Imereti, and deliver needs-based trainings and consultancies, in cooperation with the Georgian Association of Herbs Producers. These initiatives were postponed because of COVID-19 situation and will be resumed in PY3. 2.2.1. International Consultancy in Berry Production Berries are relatively novel crops in Georgia, which is why many growers still lack knowledge of modern production practices. In PY2, the USAID Agriculture Program prioritized addressing these knowledge gaps by engaging international consultants in different activities. In April - June 2020, the Program hired two experts to train berry producers in strawberry, raspberry, and blackberry pest management and disease prevention. Due to the outbreak of COVID-19, trainings were conducted online. The invited experts delivered six sessions to a total of 25 individuals. In addition to distance trainings, the USAID Agriculture Program engaged an international consultant to prepare online educational content for a broader audience of berry producers. Together with a local consulting company, the Program hired an expert to develop a video guide on blueberry production. The consultant recorded videos in blueberry orchards, showcasing crucial elements, such as soil preparation and planting. In the video the expert also discussed the characteristics of different varieties. This topic is especially relevant for Georgian farmers, since many lack awareness of modern, productive varieties. The USAID Agriculture Program shared the video through its Facebook Blueberry production video guide page. 2.2.2. International Training of Trainers Course in Raspberry, Strawberry, Blackberry, and Blueberry Open Field Production for Local Agronomists Many smallholder and commercial berry farmers lack awareness or access to the latest agricultural technologies, berry cultivars, farm inputs, and operating practices. In response, the USAID Agriculture Program planned to invite international experts to deliver a theory and practice TOT course to selected local agronomists. The activity was scheduled for May 2020, but had to be postponed due to the COVID-19 outbreak. 2.2.3. International Consultancy in Table Grape Production Technologies Although the table grape VC is relatively under-developed in Georgia, there are opportunities to advance this sub-sector by increasing yields, improving quality, and introducing demanded varieties. In January 2020, a representative of an Italian nursery visited Georgia to meet with local operators, observe their grafting practices, and identify potential partners interested in modern varieties. In cooperation with the USAID Agriculture Program, the expert also held a workshop for 15 table grape growers to discuss market trends and modern varieties that are suitable to the Georgian climate. In Q4, the Program planned to engage an international expert in onsite technical consultancies for table grape growers; however, this activity had to be Consulting beneficiaries postponed due to the COVID-19 situation.

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2.2.4. International TOT in Culinary Herbs Greenhouse Production for Local Agronomists Because of a lack of knowledge related to agricultural best-practices among culinary herb growers, the USAID Agriculture Program, together with its subcontractor, Israeli-based Farmentor, designed a TOT course for selected local agronomists and extension agents of MEPA’s ICCs. Integrating theory and practices associated with soil treatment, pest and disease control, irrigation, and postharvest handling, the course aimed to equip the target audience with technical knowledge and expertise to further promote and teach agricultural best-practices throughout the farming community. In Q3, Farmentor delivered a distance TOT course in modern production technologies to a target audience of culinary herb growers and extension agents operating in the Imereti and Adjara regions. Comprised of 12 webinars, the course was delivered June 2 - July 8, 2020. A total of 18 growers and extension agents from MEPA participated in the sessions, which were conducted by five Israeli experts. The course incorporated three modules: (1) water-soil-plant relations; (2) pests and diseases in fresh herbs; and (3) growing herbs in greenhouses. In Q4, due to COVID-19 travel restrictions, Farmentor replaced on-site visits with a second round of remote trainings that started in September and will be concluded in October 2020. The second round of the TOT course was designed for culinary herbs growers and other VC actors operating in the Samegrelo-Zemo Svaneti, Imereti, and Adjara regions. The course covered key topics in the area of culinary herbs production. It was comprised of seven sessions that incorporated lectures and practical group activities. Tailor-made exercises and case studies helped participants to improve their skills in planning and calculating planting, nutrition, irrigation, and plant protection schemes while also considering the market demand and capacity of growers. A total of 12 culinary herb growers and extension specialists participated in the course, which was delivered through Zoom. In addition, Farmentor developed four videos dedicated to different phases of the culinary herb production cycle. These videos were aired through the AgriTalk platform to reach a broader audience of farmers. Because of the COVID-19 situation, certain activities covered by the agreement have been postponed and will be implemented within a renewed agreement. 2.2.5. Knowledge Plot Education Programs In PY2, the USAID Agriculture Program launched knowledge plot education programs to effectively showcase best practices to different VC stakeholders, including farmers and extension specialists. The Program organized four field days and hosted a total of 78 individuals (see Table 2). Knowledge plot activities were suspended in Q3 and Q4, due to the COVID-19 lockdown and restrictions. Table 2: Field days conducted in PY2 Activity Description The USAID Agriculture Program organized a lettuce field at a greenhouse in Adjara. This event gathered 22 participants, including farmers and consolidators. Lettuce field day The event was led by a local consultant, who discussed important topics, such as soil treatment, lettuce production technologies, and pest management. A mandarin field day was organized at a model orchard operated by the Ministry of Agriculture of Adjara Autonomous Republic (AR) and gathered 18 mandarin Mandarin field day growers and public extension specialists. The USAID Agriculture Program’s local consultants trained participants in modern pest management practices, disease prevention, and application of agricultural inputs. The USAID Agriculture Program organized a culinary herbs and vegetable field day at greenhouses in Imereti. The training was led by the Program’s short-term Culinary herbs and consultant, who discussed greenhouse production technologies and provided vegetable field day specific recommendations for effective use of greenhouse facilities. A total of 18 farmers and extension specialists participated in this event. The USAID Agriculture Program organized a perishable vegetables field day at a Vegetable field day greenhouse in the Samegrelo-Zemo Svaneti region. The training session was led by the Program’s local consultant, who showcased best practices for growing

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Activity Description tomatoes, cucumbers, and bell peppers and discussed important topics, such as land cultivation, fertigation, disease prevention, and access to seedlings/varieties and other agricultural inputs. A total of 20 local farmers and FSC/ICC network representatives participated in this event. 2.2.6. Digital Farms in Selected Value Chains In PY2, the USAID Agriculture Program and UGT developed a mobile application for primary producers operating within the Program’s priority VCs. This digital solution helps farmers systematize and streamline harvest accounting and inventorying during the harvest and storage periods. It has a database that syncs with the user’s phone to electronically store information. Farmers can use this application to keep a detailed account of each individual worker’s inputs and create incentives for their employees. It can also help them keep track of the quality of produce and reduce potential losses. One big advantage is that people of any age can use it because of its user-friendly interface. After developing the application in April 2020, the USAID Agriculture Program and UGT started promoting this innovative product among Mobile harvest primary producers from the Program’s target VCs and conducted online application presentations for interested farmers. To reach a broader audience, the Program and UGT prepared a short promotional video2 explaining how to download and use the new mobile application and shared it on their social media pages (see section 3.2). The partners also trained and coached two beneficiaries - Agricultural Cooperative Agrostore and Garneti Ltd - in the practical application of this digital product. In PY3, the Program plans to assist at least 20 beneficiaries from different VCs in using the application. 2.2.7. GlobalGAP Certification GlobalGAP is an essential certificate for export-oriented primary producer agribusinesses. It gives them an opportunity to enter higher-tiered markets and sell products for a better price. Recognizing this value, the USAID Agriculture Program provides cost-share financial support to help primary producers to introduce best practices and obtain the certificate. With the Program’s assistance, two companies became GlobalGAP certified in 2019. As for other beneficiaries, their certification consultancies were extended due to the COVID-19 situation in the country. As a result, eight producers are expected to obtain the certificate in 2021 (see Table 3). Table 3: GlobalGAP certification projects Beneficiary Activity Region Status Smart Logistics Ltd Lettuce grower Mtskheta-Mtianeti Completed in November 2019 FCO Ltd Blueberry grower Guria Completed in August 2019 SP Davit Robanishvili Raspberry grower Shida Kartli Anticipated in July 2021 Samegrelo-Zemo Drill Master Ltd Blueberry grower Anticipated in July 2021 Svaneti Agricultural Cooperative Raspberry grower Imereti Anticipated in July 2021 Agromomavali Agricultural Raspberry grower Imereti Anticipated in July 2021 Cooperative Chiri Biorasi Ltd Lettuce grower Kvemo Kartli Anticipated in July 2021 Green Crops Lettuce grower Mtskheta-Mtianeti Anticipated in July 2021 Distribution Ltd

2 https://www.facebook.com/apgeorgia.org/videos/770223870218068

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Beneficiary Activity Region Status RDA-supported Blueberry Farm Ltd Guria Anticipated in August 2021 blueberry grower RDA-supported Vartsikhe Plantations blueberry and plum Imereti Anticipated in August 2021 Ltd grower 2.2.8. Organic Farming Best-Practices In PY2, the USAID Agriculture Program contracted an international consultant to provide online trainings to a total of 63 berry growers. The webinar sessions were conducted in April and May and covered the following areas: . Spring diseases and pest management in blackberry and raspberry orchards - training was attended by 16 participants. . Best cover crops for raspberry and blackberry organic orchards - training was attended by 16 participants. . Raspberry and blackberry harvesting practices - training was attended by 23 participants. . Irrigation and pest management for organic raspberries and blackberries - training was attended by eight participants. 2.2.9. Facilitate Organic Certification In July 2019, the USAID Agriculture Program launched a 50/50 cost-shared program to support its beneficiaries in obtaining organic certification. In PY2, the Program targeted six primary producers, of which four - Agricultural Cooperative Agrostore, SP Elizabed Khmiadashvili, SP Aleksandre Vashakidze, and Shavra Ltd - obtained certificates. Other beneficiaries are expected to become certified in PY3. In addition to primary producers, the Program assisted a local juice producer - BPC Ltd and its Shavra Ltd.’s orchard supplier, Agricultural Cooperative Sharakhevi-1 - by providing a USDA organic certification package (according to NOP standard). BPC Ltd operates a processing facility in Tbilisi and produces organic rosehip, cherry, and pomegranate juices that are exported to the USA, Qatar, and Russia. Sharakhevi-1 collects wild rosehip in eco-friendly regions of Georgia. As a result of the Program’s assistance, both entities successfully obtained USDA NOP certification that will help them expand production and increase export sales. 2.2.10. Promoting Organic Production in Georgia In May 2020, the RDA launched a new program to support organic certification and the USAID Agriculture Program plans to cooperate with the agency in this area. The Program may expand its cost- share support to organic production and certification in PY3 and beyond. 2.2.11. Study Tours that Highlight Best-Practices in Production and Technologies Due to COVID-19, the USAID Agriculture Program was unable to conduct planned study tours for primary producers operating in target VCs. In early PY2, the Program’s Technical Assistance Director and Berry and Table Grapes VC Specialist travelled to Italy to visit berry, table grape, and stone fruit farmers and in-vitro labs and nurseries. During the tour, the Program’s staff met with the representative of a reputable nursery, BerryPlant, that later travelled to Georgia to establish linkages with Georgian berry growers and nurseries. In December 2019, the representative of BerryPlant visited seven beneficiaries from Shida Kartli, Kvemo Kartli, and Kakheti and conducted a workshop in propagation and production best practices. This event was attended by 20 participants, including the Program’s grant recipients. The Program continues collaboration with BerryPlant to facilitate linkages between them and Georgian nurseries that will enable access to high quality and modern berry varieties.

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Improved Postharvest Handling and Processing 2.3.1. Cold Chain Industry Survey Well-developed cold chain infrastructure is critical to maintain the quality of perishable horticultural commodities and minimize deterioration after harvest. Although the number of cold store operators have increased in Georgia, the majority face shortcomings related to modern postharvest handling practices, lack of qualified staff, poor logistics, weak organizational structures, minimal compliance with internationally recognized standards of operation, and lack of viable economic development and sustainability strategies. By the end of PY1, the USAID Agriculture Program and its subcontractor World Food Logistics Organization (WFLO) launched a nationwide cold chain survey to identify the industry dynamics and best-practices, as well as develop a suitable business model for local cold store operators. The survey was completed in PY2. As a next step, the USAID Agriculture Program invited WFLO Cold Store experts from Uzbekistan and the United States to train local cold store operators and upgrade their technical knowledge. Due to the outbreak of COVID-19, the experts were unable to visit the country and developed an online training program, which consists of 10 modules. To efficiently deliver the course, the Program and WFLO agreed on the following format: the participants will receive video lectures and will have an opportunity to submit their questions. Afterwards, the experts will conduct online trainings that will start with a brief overview of the topic and will proceed with answers to participants’ questions and online discussions. These trainings are planned to start in early PY3 and will include the USAID Agriculture Program and RDA beneficiaries. 2.3.2. Consultancies in Postharvest Handling Practices and Cold Store Operations Tailored consultancies for mandarin VC stakeholders: In PY2, the USAID Agriculture Program’s local consultants delivered tailored assistance to 18 mandarin growers and consolidators operating in Adjara and Guria. This assistance will build the capacity of farmers and postharvest operators in harvesting, postharvest handling, and storage practices. Informational guides, prepared as part of these consultancies, will enable stakeholders in the mandarin sector to easily access relevant technical information regarding primary production, harvesting, and postharvest handling practices. In addition, the USAID Agriculture Program’s consultant visited six cold storage facilities in Imereti and Adjara to assess their operations and provide recommendations. Individual consultancies for cold storage operators: In PY2, the USAID Agriculture Program’s technical assistance team, together with a Dutch consultant, visited six cold storage facilities in Imereti and Adjara including Georgian Herbs Ltd., Geguti Ltd., SP Gaga Lanchava, Herbia Ltd., SP Murad Bzekanava, and Agroexport Ltd. The consultant assessed operations and provided tailored recommendations for the facilities. The Program’s technical assistance team followed up with the cold-storage operators to ensure the fulfillment of these tailored recommendations in order to increase Visiting a cold store operator their operational efficiency. 2.3.3. International Consultancy in Pre-Cooling Practices Pre-cooling is a relatively new practice in Georgia. It is a postharvest operation which takes place prior to storage and plays a critical role in maintaining the quality and freshness of produce. In PY2, the USAID Agriculture Program identified an international consultant, who was scheduled to provide assistance to 13 beneficiaries in May and July 2020. However, due to COVID-19, the consultant delivered two trainings in an online format. A total of 35 individuals participated in these sessions, including the Program’s grant recipients. Trainings were followed-up with individual consultancies for three beneficiaries. The Program will continue trainings/webinars on pre-cooling practices to raise awareness about this critical link in postharvest handling operations.

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2.3.4. International Consultancy in Freezing Techniques Recognizing that Georgia has a poorly developed frozen food industry, the USAID Agriculture Program, engaged its subcontractor, WFLO, to support cold store operators in strengthening their freezing capabilities. This assistance will be delivered to the Program’s grant recipients and RDA-supported cold storages and will include videos, webinars, and onsite consultancies. By the end of PY2, the partners developed three videos on different freezing applications - shock, blast, and Individual Quick Freezing (IQF) - explaining the use of each technology, including volume needed, suitability to products, and size and cost considerations. These videos will be dubbed in Georgian and shared with cold store operators and extension specialists. The associated webinars and onsite consultancies were scheduled for Q4 of PY2, but will take place in PY3, due to COVID-related restrictions. 2.3.5. International Study Tour for Table Grape Cold Store Operators In early PY2, the USAID Agriculture Program assembled a group of eight table grape growers that participated in a study tour to Moldova. The tour was organized by the Food and Agriculture Organization (FAO) of the United Nations, jointly with the European Bank for Reconstruction and Development (EBRD). The goal of this tour was to improve high value crop trade opportunities in the horticulture sectors of Georgia, Moldova, Tajikistan, and Uzbekistan. As part of the tour, the participants visited model vineyards and attended a conference covering various topics, such as a sector overview and the production of viticulture planting material. Georgian table grape growers noted that the tour gave them useful insights on business development opportunities. 2.3.6. Modern Processing Techniques In Q1, the USAID Agriculture Program held consultations with dried fruit producers to identify their needs, plan necessary measures, and discuss the benefits of a cluster approach. In February 2020, the Program hosted an expert in the dried fruit industry who met with five producers in Shida Kartli, Mtskheta-Mtianeti, and Guria to provide individual consultancies in modern approaches to product development and marketing. In addition to these individual meetings, the expert also delivered the workshop to 18 small-to-large scale processing companies, which highlighted modern market trends and emerging opportunities for local agribusinesses engaged in the sector. The expert’s findings and recommendations helped the Program take practical steps in the stone and pome fruits VCs to better channel its resources towards strengthening the capacity of dried fruits producers. In Q3, the USAID Agriculture Program provided technical assistance which focused on exploring opportunities within the US market as well as on clearly defining export requirements. The Program’s dried fruits industry consultant helped a grant recipient, Kareli Fruits Ltd, identify and define terms and costs which are relevant to operating in the US market. The company planned to sell products in the United States through Amazon. The identified costs included US customs import fees, fees for registering with the Food and Drug Administration (FDA), and multiple quotes for packaging design fees (to comply with the regulations of the FDA). Tailored assistance improved the company’s understanding of the US market, but decision-making was delayed due to the COVID-19 situation. In addition, at the request of the Program’s beneficiary dried fruits producers, the consultant developed suggestions for the support and services the sectoral association could provide to its members (the Dried Fruits Association of Georgia was established in August 2020, by three founders, members of the Association’s Board, see 2.4.1). There are plans in PY3 for the Program to engage the same consultant, along with another consultant with technology-specific expertise, to help beneficiary processors improve their operations and grow sustainably. 2.3.7. Facilitating Access to Modern Processing and Packaging Equipment Early in Q1, the USAID Agriculture Program, along with Tuyap Georgia, organized a study tour for four Georgian enterprises: TMT Ltd, Natvit Ltd, SP Davit Janelidze, and Gigi Ltd. The tour was held in Istanbul and covered two international fairs related to the packaging industry and food processing technologies. These are two of the largest fairs in the aforementioned fields in the region. Visitors had access to state-of-the-art food processing and packaging equipment and established contacts with

Page 27 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program potential equipment suppliers. TMT Ltd, a food processing company from Shida Kartli, signed a contract and purchased packaging materials worth more than USD 100,000. 2.3.8. Georgia Grown Spice Producers (Culinary Value Chain) The growing global market for ethnic spices creates opportunities for spice producers and exporters in developing countries, such as Georgia. The country has great potential to commercialize its spice industry and enter higher-end markets. In PY2, the USAID Agriculture Program focused on strengthening the spice cluster through various activities. As an initial step, the Program and TBSC Consulting completed the ‘Georgian Spices Market study’. TBSC Consulting conducted a survey within the spice cluster (including spices, seasonings, and sauces) and developed a report, which describes prevailing dynamics, the size, and the structure of the industry, including import, export, domestic production, and key players. Based on the findings, the company developed a list of recommendations for export-oriented producers. The study findings and recommendations were presented to 18 Cover page of ‘Georgian leading spice producers, during the roundtable meeting in Spices Market Overview’ November 2019. After the presentation, the participants discussed the most demanded areas for assistance, including the establishment of a sector association, introduction of international food safety norms, and compliance with labelling requirements, Geographical Indications (GIs), and intensive PPD over customs, and other regulations. The study and the roundtable meeting informed the USAID Agriculture Program’s further activities in PY2. In December 2019, the Program invited an international consultant to conduct a marketing and branding workshop for 12 spice producers. The expert discussed modern trends within the spice industry and provided individual recommendations to participants regarding their current packaging, graphics, and labels in order to help them comply with the industry standards. In PY2, the USAID Agriculture Program developed resource materials on various topics that are relevant to spice producers. The Program found that the majority of spice producers lack knowledge of labelling requirements introduced by the new regulation. Thus, a local consulting company was contracted to develop an easy-to-understand one-pager, while five spice producers benefitted from individual consultancies in labelling requirements. Modern food safety standards are another challenge for the Georgian spice producers. There are only few companies with HACCP/ISO 22000 certifications. The Program contracted a local consulting company to develop plain-language, basic food safety guidelines for HACCP/ISO 22000, including the recommended facility layout, potential hazards in spice production, modern labeling requirements for spices, and the relevant legislation. The guidelines were shared with spice producers and relevant Food Safety Guidelines GoG agencies. 2.3.9. Georgian Bay Leaf Producers (Culinary Value Chain) Bay leaf is one of the top export commodities from the culinary VC in Georgia. For this reason, the USAID Agriculture Program offers technical assistance to both bay leaf producers and processors. In PY2, the Program implemented different activities to strengthen this cluster and started by developing a database of bay leaf producers (with at least one-hectare plantation) and processors. Throughout the process, the Program studied the existing needs and challenges within the VC and found that the majority of bay leaf producer and processors seek: . Financial support to purchase modern processing equipment and modernize their facility;

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. Assistance in modern food safety standards; and . Assistance in modern production and drying technologies. In close cooperation with the Association of Bay Leaf Producers and Exporters, the USAID Agriculture Program successfully advocated for the inclusion of bay leaves in the list of priority crops of RDA’s Plant the Future program, which co-finances the arrangement of new orchards/plantations. The Program also contracted a local consulting company to develop a bay leaf production guide to provide information on regions suitable for bay leaf production, based on their soil and other characteristics. Recognizing the export potential of Georgian dried culinary herbs and bay leaves, the USAID Agriculture Program contracted a local consulting company to develop plain language guidelines describing minimum quality requirements in the EU market. These guidelines cover specifications for sampling, contaminants, purity and sensory properties, chemical and physical parameters of products, and the EU’s legal requirements for culinary herbs and bay leaves. The Program shared the materials with relevant stakeholders and posted them on its Facebook page for a broader audience. As mentioned above, many agribusinesses requested support in the introduction of modern food safety standards. These norms and standards represent one of the major challenges in the bay leaf sector. In PY2, the USAID Agriculture Program completed onsite GAP analysis against HACCP requirements for 12 bay leaf processors and shared results and findings with beneficiary companies. In addition, with the Program’s assistance one bay leaf processor, SP Giorgi Melua, obtained a HACCP certificate (see section 2.3.10). Guidelines 2.3.10. Modern Food Safety Standards Certification projects: Improved food safety helps agribusinesses meet regional and export market requirements, attract investment, realize cost savings, and strengthen brands. Thus, it is one of the priorities of the USAID Agriculture Program to support cold store operators and food processors in obtaining necessary food safety certificates. As of the end of PY2, 11 beneficiaries are in the process of achieving the certification, while the five below-listed enterprises became certified during the year: . Eurofarm Ltd obtained ISO 22000 certificate in December 2019. The company operates a warehouse and storage facility in Tbilisi and has the capacity to store around 40 tons of different fruits and vegetables consolidated from 80-100 farmers throughout Georgia. . Farconi Ltd received ISO 22000 certificate for packaged spices and herbs. The company is a spice and medical plant processor, which established a modern drying facility with the United States Government (USG) support. Farconi Ltd.’s certificate is valid until 2023. . SP Giorgi Melua became HACCP-certified with cost-shared support from the USAID Agriculture Program. Mr. Melua is a bay leaf processor that established a processing plant in 2018, with the support of RDA’s Young Entrepreneur Project. The certificate is valid until 2023. . Agrokartli Ltd, a cold store operator from Shida Kartli, obtained an ISO 22000 certificate with cost-shared support from the USAID Agriculture Program and the RDA. The company operates within the perishable vegetables, stone fruit, and pome fruit VCs. . Fruit Export Company Ltd, another cold store operator from Shida Kartli, became ISO 22 000 certified with joint support from the USAID Agriculture Program and the RDA. The company operates within perishable vegetables, stone fruit, and pome fruit VCs. ISO 22000 Certificate

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Training in food safety certifications: In February 2020, the USAID Agriculture Program contracted ISO Consulting to conduct a training course for local food processors, including the Program’s grant recipient enterprises and RDA’s beneficiaries. Due to COVID-related restrictions, the training event and follow-up individual consultancies were delivered in August 4-5, 2020 in Batumi. The training focused on advanced food safety standards, such as FSSC 22000, BRC, and IFS that make a bigger impact on product certification and are recognized by the Global Food Safety Initiative (GFSI) established in 2000, bringing together stakeholders of the global food industry to collaborate on advancing food safety. The seminar was attended by 26 processors, of which 16 were offered follow-up individual consultancies. These consultancies will help companies prioritize the most appropriate standards and receive business-specific guidance. Training in food safety certifications Market Access Online platforms: In PY2, the USAID Agriculture Program was involved with several initiatives to provide increased market access for its target VC actors. These initiatives, among others, include online platforms, allowing representatives to easily provide and access important information, communicate with government agencies, register for trainings and events, and more. By cooperating with other relevant organizations, the Program has been able to develop and support two key platforms: . New GOG e-Portal: In cooperation with the USAID Economic Security Program, the USAID Agriculture Program supported GoG to develop a new e- Portal, www.programs.gov.ge, to bring together all services and programs offered by GoG agencies under one user-friendly interface. The portal was launched in August 2020 and supports beneficiaries who are looking to start or www.programs.gov.ge expand their business operations. By digitizing Enterprise Georgia, Georgian National Tourism Administration (GNTA), and RDA’s funding programs, interested entities are able to electronically complete forms or register for programs without requiring the physical completion of complex applications at community centers and public service halls. The official launch event took place in Ambrolauri and hosted the Prime Minister of Georgia, the Minister of Economy and Sustainable Development of Georgia, the Minister of Environment Protection of Georgia, and the Minister of Justice of Georgia. . TradeWithGeorgia Platform: In cooperation with the USAID Economic Security Program, the USAID Agriculture Program is supporting Enterprise Georgia in upgrading and adding new functions to the online platform www.tradewithgeorgia.com, which was previously developed with the USG assistance. TradeWithGeorgia is an online catalog which allows Georgian entrepreneurs to upload and display information regarding their companies and products. To gain access to this feature, companies are encouraged to www.tradewithgeorgia.com

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register with the platform and create their accounts. The upgraded platform is expected to be completed by the end of October and will make registration easier for companies by automatically integrating information. The platform will also increase access to registration forms which are needed for participation in international events. These forms will include pre- defined evaluation criteria and automatically generated scores to select companies, as well as a co-funding calculator. Only those companies which have registered with www.tradewithgeorgia.com will be eligible for financial support from GoG to participate in international events and trade shows. In PY3, the Program will assist Enterprise Georgia to develop a video guide for potential applicants, so they can easily utilize all functions available on the TradeWithGeorgia platform. Access to the US market: The USAID Agriculture Program shared the cost of laboratory testing of dried fruits produced by one of the Program’s grant recipients, FIT Ltd. Owned and managed by three young entrepreneurs, FIT Ltd operates a processing facility in the village Ditsi of Gori District, very close to the conflict area. FIT Ltd is the only enterprise in the village, offering significant employment opportunities to the local population. Initially, the company produced apple chips for the domestic market, but with increased demand and financial support from the Program, it plans to diversify production and target new trade channels in the US. Laboratory testing on content and ingredients of the products was requested by FIT’s partner importer NADI Ltd, which specializes in purchasing and selling Georgian products in the US. The tests, carried out by two Georgian laboratories - Multitest Ltd and Agrotest Ltd, proved favorable and, coupled with well-designed labeling prepared through the Program’s support, resulted in successful trial sales of 6,000 pieces of apple chips, valued at USD 5,520, in the US state of Georgia. It is anticipated that FIT will gradually expand its export sales within the US market by accessing organic and healthy product segments and online trade channels, including Amazon. 2.4.1. Improved Horizontal Collaboration at the Farmer Level Horizontal collaboration offers farmers a number of benefits, but most importantly, it helps them address common challenges and seize new market opportunities. In PY2, the USAID Agriculture Program organized roundtable meetings with primary producers from different VCs (see Table 4) in order to facilitate linkages, identify needs, and discuss challenges within the target sub-sectors. Table 4: Roundtable meetings with primary producers Activity Name Activity Description The USAID Agriculture Program organized a roundtable meeting with blueberry Roundtable meeting with growers in the Samegrelo-Zemo Svaneti and Imereti regions. In total, 38 people blueberry growers participated in these discussions. Roundtable meeting with Roundtable meeting with stone and pome fruit growers took place in the Shida stone and pome fruit Kartli region. The meeting gathered 20 farmers. growers The USAID Agriculture Program held roundtable discussions with kiwi fruit Roundtable meeting with producers in the Samegrelo-Zemo Svaneti, Guria, and Adjara regions. A total of kiwi growers 46 people participated in these meetings. Roundtable meeting with Meeting with almond and walnut producers and processors took place in Tbilisi almond and walnut and was attended by 55 people, including representatives of the Association of growers Almond and Walnut Producers.

In addition to facilitating dialogue, the USAID Agriculture Program focused on supporting the establishment of associations (when initiated by the private sector) in order to help beneficiaries effectively address common constraints. With the Program’s assistance, local blueberry growers strategized and formulated VC needs and, in December 2019, registered the Georgian Blueberry Producers Council, which unites all key players. An association was also established by table grape

Page 31 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program growers. As with blueberry producers, the Program assisted them in identifying their VC needs that are mainly related to introduction of modern varieties. The Georgian Table Grape Growers Association was registered in February 2020. Lastly, the Program facilitated the establishment of the Dried Fruits Association of Georgia that was registered in August 2020 by three founders, who became members of the association’s board. 2.4.2. Improved Vertical Collaboration In PY2, the USAID Agriculture Program facilitated vertical collaboration through roundtable discussions between different VC actors. In February 2020, the Program organized a meeting with the Georgian Laboratory Association, local food safety consultants, EDA, State Laboratory of Agriculture, Bureau Veritas Georgian office, and agribusinesses to discuss the challenges Georgian primary producers and food processors face in terms of lab tests. The discussion focused on the most demanded tests for export and international food safety standards, international best practices to support and co-fund testing labs, and technical knowledge of lab personnel. A number of roundtable meetings were also organized by the USAID Agriculture Program’s capacity building grant recipient, Union Agroservice, which is implementing a project to improve access to quality agricultural inputs in Georgia. These meetings gathered different VC actors, including farmers and FSC representatives. Through these meetings the Program gathered valuable information and its PY3 interventions are designed to address challenges and are based on these data. 2.4.3. Building Brand Awareness in Competitive Markets A strong and well-positioned brand gives companies a competitive advantage, increases sales, and attracts customers. Recognizing this value, the USAID Agriculture Program offers its beneficiaries cost- shared support in the development of logos, labels, promotional materials, websites, and the like. Corporate brochures: With the USAID Agriculture Program’s assistance, nine beneficiaries developed corporate brochures for trade exhibitions and meetings with prospective buyers and clients. These beneficiaries include: Kakheti Bio Ltd (culinary herbs and wild plants processor), Georgian Berry Ltd (fresh raspberry and blackberry producer), Caucasan Ltd (medicinal and culinary herbs, teas, wild berries, and fruits producer), MNK Group Ltd (fresh blackberry producer), TMT Ltd (canned food producer), Geoflower Ltd (culinary herbs processor), Agrolane Ltd (blueberry grower and cold store operator), Agritouch Ltd (blueberry cold store operators), and Achinebuli Ltd (juice producer).

Corporate brochures Brand visuals: In PY2, the USAID Agriculture Program assisted both grantee and non-grantee agribusinesses and cooperatives in building a visual brand for their products. These include: . Caucasus Organic Fruits - a German-Georgian dried fruit producer, established with RDA’s financial support. The company built a visual brand for dried fruits and developed promotional materials. Their products can be found in one of Georgia’s largest retail stores: Europroduct. . Agricultural Cooperative Shamatia - the USAID Agriculture Program’s grant recipient strawberry producer from Samegrelo-Zemo Svaneti. The cooperative developed brand visuals and supplies branded packages to Agrohub. . Agricultural Cooperative Agrostore - the USAID Agriculture Program’s grant recipient raspberry producer and cold store operator from Kakheti. The cooperative developed a

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branding identity, including a logo, labels, and a website. Agrostore’s branded, organic raspberries are now sold in Carrefour, Europroduct, and Nikora supermarket chains. Website development: The USAID Agriculture Program assisted its grant recipient bay leaf processor, SP Giorgi Melua, in designing and developing a logo, a brand name, and a website. This assiatance will help the company increase its visibility on the international market and attract new clients. Consultancy in branding: In December 2019, the USAID Agriculture Program engaged an international agricultural marketing consultant to provide consultancy in brand visuals, packaging, and product names. Five agribusinesses benefitted from this assistance, including Fruit Paper Company Ltd (a fruit puree producer), TMT Ltd (canned food producer), Achinebuli Ltd (juice producer), SP Davit Janelidze (sauce producer), and Kartuli Agroprodukti Ltd (juice Branding support to SP Giorgi producer). Melua Ongoing branding projects: In PY2, the USAID Agriculture Program initiated new branding projects that will be completed during the first quarter of PY3. The beneficiaries include: . Georgian Nectar Ltd, a juice producer that plans to re-brand its products. . Geoflower Ltd, a culinary herbs processor that plans to launch a new line of packed products, including herbal tea, fruit tea, detox tea, black tea, and green tea. . Agrolane Ltd, a blueberry producer and cold store operator that plans to launch a new line of products, including frozen berries and fruits. In addition, the company plans to start an e- commerce website. . Okriba Ltd, a tea producer that plans to launch production of dried fruits with Program support. 2.4.4. Brand Image for International Fairs In PY2, the USAID Agriculture Program launched a branding project to increase awareness of Georgia and its agricultural products in the international market by positioning the country as a point of origin at different trade fairs and events. The project was assigned to a local branding and marketing company, TOP Group Ltd. However, to ensure a collaborative approach, the Program regularly coordinates activities with the private sector and state organizations, such as Enterprise Georgia, the MoESD, the MEPA, the Georgian Wine Agency, and the RDA. TOP Group Ltd has started developing a visual style, branding guidelines, and display structures for trade shows. In Q4, the company organized a number of brainstorming workshops with the above partners to develop taglines, wordmarks, and logo. The key tagline and wordmark concept have been developed and agreed with all stakeholders. The USAID Agriculture Program plans to organize a presentation for the private sector and media in early November 2020. TOP Group Ltd has also started developing the trade show display in close cooperation with Enterprise Georgia and the private sector representatives, namely those that have participated in international trade fairs and can provide valuable insights. Once the project is completed by the end of November 2020, the USAID Agriculture Program plans to launch an export promotion campaign, in close coordination with relevant GoG agencies. This campaign will use the new destination brand visuals to support increased penetration in key export markets and to improve sales performance of Georgian agriproducts. 2.4.5. International Trade Fairs Biofach 2020: With joint assistance from the USAID Agriculture Program and Enterprise Georgia, four local agribusinesses - Georgian Berry Ltd, Caucasan Ltd, Kakheti Bio Ltd, and Caucasus Organic Fruits Ltd - participated in Biofach 2020 trade fair, which took place on February 11-15, 2020, in Nuremberg, Germany. The event brought together exhibitors from around 130 countries and gave them an

Page 33 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program opportunity to market their products. As a result, the participants from Georgia received and expect trial orders from several international traders and importers:

. Caucasan Ltd, a producer of medical and culinary herbs, teas, wild berries, and fruits, shipped a total of 71.2 tons of licorice roots, worth around USD 172,000 to the USA, Germany, France, the UAE, and Morocco. The company expects additional orders for licorice roots (with total value of approximately USD 190,000) from the USA, the UK, China, and France. . Caucasus Organic Fruits Ltd, a producer of dried wild fruits and herbs, has been negotiating delivery terms and prices with five importers in Germany, Georgia’s stand at Biofach 2020 trade fair Switzerland, Lithuania, and France. Potential orders from these companies make up approximately 28 tons of dried products, including wild fruits, oregano, rosehip, and blackberry leaves. Decisions by potential buyers have been delayed due to the COVID-19 situation which caused uncertainty in business deals, especially with regard to pricing. However, the company anticipates four orders to be placed by the end of 2020. . Kakheti Bio, a producer of culinary herbs and wild plants, has been negotiating terms and prices to fulfill an order for around five tons of wild apples and dried rosehip from a German company, which is based in Turkey. Decisions have been delayed due to COVID-19.

Gulfood 2020: With joint support from the USAID Agriculture Program and Enterprise Georgia, six Georgian agribusinesses participated in Gulfood 2020 trade fair in Dubai, the UAE. Gulfood is one of the world's largest annual food and beverage trade exhibitions and attracts industry professionals from all around the world. The Program’s beneficiaries - TMT Ltd, Geoflower Ltd, Agrolane Ltd, Blue Valley Ltd, Georgian Nectar Ltd, and Campa Ltd - studied new business opportunities and networked with potential buyers to discuss future cooperation. In the reporting period, the following beneficiaries formalized initial agreements reached at Gulfood 2020:

. Georgian Nectar Ltd, a juice producer, exported 11,040 bottles of pomegranate, cherry, blackberry, and wild plum juices to Bahrain (worth around USD 35,000) and three 40-ton containers (worth around USD 64,500) to Kuwait. . Geoflower Ltd, a dried fruits and herbs producer, exported dried blueberries, worth around USD 68,300 to Spain. . Campa Ltd, a juice producer, has been supplying products to Azerbaijan’s leading supermarket chains after the fair and has already fulfilled orders worth around USD 60,000. The company expects to sign a long-term contract to become a regular juice supplier for the retailer.

Birmingham Food and Drink Expo: Together with Enterprise Georgia, the USAID Agriculture Program prepared to fund participation of six beneficiaries in the Birmingham Food and Drink Fair. The event was scheduled to take place on March 30 - April 1, 2020; however, due to COVID-19, it has been postponed to April 2021. Campa Ltd at Gulfood 2020

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2.4.6. Linking Farmers and Agro-Processors with Tourism and Catering Industries In December 2019, the USAID Agriculture Program contracted Key Management Solutions (KMS) Georgia LLC - one of Georgia’s leading consulting companies in tourism and catering industries - to conduct a HORECA Industry Survey and identify opportunities for strengthening linkages between local producers and HORECA businesses. In February 2020, KMS Georgia completed the assignment. The company interviewed 72 HORECA businesses in Tbilisi and the regions, including 40 international and local hotels and restaurant brands, 22 middle and upper-class hotels and food and beverage outlets, and the top 10 restaurants based on TripAdvisor’s reviews. KMS Georgia identified the most demanded products and developed recommendations to make this cooperation more effective and efficient. In early March 2020, the USAID Agriculture Program planned to organize the presentation of the survey for representatives of agribusinesses, farmers, cold store operators, HORECA companies, and relevant GoG agencies, such as Enterprise Georgia, the RDA, and the NFA. However, due to the COVID-19 and GoG’s restrictions, the event was postponed and will be organized once the situation is HORECA Industry Survey stabilized. 2.4.7. Promotional Events to Facilitate Market Access In PY2, the USAID Agriculture Program planned to cooperate closely with the Berry Producers’ Association for organizing the Berry Fair. The event was scheduled to take place in July 2020, but due to COVID-19, it was postponed and will be organized in July 2021 in the Guria region. This period coincides with berry harvesting and will give participants an opportunity to observe postharvest handling procedures including pre-cooling, sorting, and storage operations. The Spice Festival is another event that had to be postponed due to COVID-19. The festival will take place in PY3 in Tbilisi and will be organized in close cooperation with MEPA and Georgia Grown Spice Producers. Capacity Building Activities GlobalGAP Trainings: The USAID Agriculture Program, in partnership with the RDA, held a string of GlobalGAP trainings designed for the Program’s and RDA’s beneficiary primary producers engaged in selected VCs. The aim was to increase the capacity of primary producers and help them become competitive on the international market. These trainings were conducted through the Program’s partner Business Service Provider (BSP), Star Consulting, and took place in Telavi, Kutaisi, Zugdidi, and Batumi. A total of 46 primary producers took part in these sessions and increased their awareness of GlobalGAP requirements. The Program held follow up consultations with farmers and businesses to reassess their familiarity and understanding GlobalGAP Training in Telavi of GlobalGAP and to facilitate the certification process. 2.5.1. Capacity Building Program for Agricultural Cooperatives In order to address obvious needs for technical assistance among agricultural cooperatives, the USAID Agriculture Program designed a capacity building program focusing on key aspects of general business management, financial reporting, and marketing. The Program’s partner business service provider, Accents & Strategies, delivered capacity building trainings to 39 representatives from agricultural cooperatives operating in the Program’s priority VCs. These trainings took place in Tbilisi and Batumi and covered nine regions. The main goal was to help cooperatives improve their operations and planning. Participants were selected in cooperation with the RDA’s Agricultural Cooperatives Development Department.

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2.5.2. Enhanced Capacity of Sectoral and Cross-cutting Business Associations Capacity building grants represent the USAID Agriculture Program’s main tool for strengthening the institutional and technical capacity of sectoral and cross-cutting business associations (see section 1.2). However, the Program also seeks to engage its beneficiary associations in technical assistance activities, including those provided by its partner organizations/projects. In January 2020, Union Agroservice and the Association of Almond and Walnut Producers participated in Organizational Customized Assistance Program (OCAP) workshop, which aimed to build the capacity of Business Support Organizations (BSOs). The workshop was organized by the USAID Economic Security Program. 2.5.3. Increased Capacity for Tax and Financial Reporting Among MSMEs Starting from October 2019, Georgian law on accounting, reporting, and auditing requires enterprises of the 3rd and 4th categories to submit their financials on reportal.ge - the first public information resource in Georgia, which contains financial and management records from registered companies. In May 2020, the USAID Agriculture Program contracted a local consulting company to develop a plain language guide for beneficiaries with different legal statuses (including agricultural cooperatives). This guide will help them to understand the taxes they are required to pay, the benefits they can enjoy, and the financial reports they need to submit. The materials will be prepared and distributed by December 2020. The Program will share the publication with both grantee and non-grantee enterprises and will make available for beneficiaries of other donor-funded projects. 2.5.4. Increased Capacity for Integrated Pest Management Study visit to the USA: In the framework of a longstanding and fruitful partnership, Trécé Inc. hosted representatives from the USAID Agriculture Program, the NFA, and a local FSC, Agrovitae Ltd on a study tour in the USA from October 27 – November 2, 2019. The aim of the visit was to study exclusion and detection systems implemented for common pests that threaten high-value crops, such as leafy vegetables, berries, nuts, and stone and pome fruits. The visitors had an opportunity to observe modern practices and technologies the US farmers apply in primary production, postharvest handling, and processing of these crops. Scientific conference: In January 2020, with support from the USAID Agriculture Program, the NFA and Trécé Inc. organized a scientific conference, which gathered leading American entomologists and Tour to the US Georgian scientists. The participants discussed the control and management methods for Drosophila Suzukii and other pests. The spread of Drosophila Suzukii poses a serious threat to berries, fruit trees, vines, and other crops, which is why it is important to introduce preventive measures, such as continuous monitoring and control mechanisms. As a result of this conference, the NFA, with Trécé and the Program’s assistance, decided to pilot field trials on the identification of a few key pests with effective monitoring tools and systems. More details are described in the section below. Pest Monitoring Program: The USAID Agriculture Program has been strengthening its relationship with Trécé Inc., an American manufacturer of pheromone-based products, to introduce modern IPM and monitoring systems in Georgia. Also working with the NFA, the Program started a new project in PY2 to identify and monitor dangerous pests across Georgia. The project studied pest populations and evaluated the efficiency of the pheromones produced by Trécé Inc. in order to benefit the NFA’s strategy on detection and monitoring pests.

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The project was directly targeted at Drosophila suzukii (fruit fly), Popillia japonica (beetle), and Tuta absoluta (moth) in western Georgia. In June-July 2020, entomologists and students at Batumi Shota Rustaveli State University and Akaki Tsereteli Kutaisi State University installed monitoring traps and pheromone lures at a number of berry orchards in Adjara and Guria, and on land surrounding Batumi International Airport and the main seaport. Another set of monitoring traps and lures, specifically designed for Tuta absoluta, was installed in tomato greenhouses and open field orchards throughout Imereti. Entomologists and students monitored the traps and lures to identify pests and assess population sizes so proper preventive measures and IPM strategy could be developed by the NFA. The seasonal works were finalized by the end of PY2. The first results presented by national consultants were shared and discussed with Trécé Inc’s scientific unit and the NFA. The final report to be submitted to USAID is under development, and findings and recommendations provided in the report and suggested by Trécé will inform NFA and Program’s activities in modern IPM systems in Installing monitoring traps in a tomato orchard PY3. Pesticide-related legal framework: During Q3 of PY2, the USAID Agricultural Program started working with the NFA to draft amendments to the pesticide-related legal framework (laws, by-laws, regulations, and rules). The goal is to ensure that input supply businesses can operate across the country and maintain a safe working environment by following the best practices in the safe use, distribution, and storage of chemicals and pesticides. Working with USAID and the NFA, the Program established a team of qualified international and national consultants. This group of experts will contribute to the development of a set of recommendations regarding Pesticide Evaluation Report and Safe Use Action Plan (PERSUAP) and EU regulations on safe storage, transportation, sale, and use of pesticides and agrochemicals. Submitted applications have been reviewed and potential candidates have been shortlisted. The recruitment process is expected to finish by the beginning of PY3 and the activity will be implemented in the PY3. 3. Cross-Cutting Inclusive Agricultural Value Chain Development In PY2, the COVID-19 pandemic created additional challenges for women in all sectors, including the USAID Agriculture Program’s target sub-sectors. The Program’s Gender Specialist considered the eventual post-COVID-19 landscape when looking at activities related to Inclusive Agricultural Value Chain Development (IAVCD) and shifted the emphasis towards enhancing the resilience of women in business and young agricultural entrepreneurs in the post-COVID-19 era, as well as on stimulating innovation, e.g. by encouraging women agricultural entrepreneurs who lack technical skills, to engage in distance-learning by utilizing women’s and youth groups as service providers. PY2 already saw progress in this direction, as the USAID Agriculture Program held discussions with local women’s and youth groups. In PY3, the Program plans to release a separate Expression of Interest (EOI) targeting relevant stakeholders to act as allies in IAVCD interventions. During PY2, the USAID Agriculture Program established a new partnership with Georgia’s Innovation and Technology Agency (GITA). The partnership began with a survey and included an organized AgriTalk on Women, Young Adults and Agri-Tech Innovations. Future plans include cooperating on the creation of an Agribusiness Innovation Matchmaking Platform (AIMP), holding joint capacity building events and joint promotional campaigns, organizing a study visit to Israel, and other activities to help promote innovation among women and young adults in agriculture. As part of drafting IAVCD plans for potential grantees, the USAID Agriculture Program’s Gender Specialist studied each applicant’s intentions to engage youth, especially young women, as interns to

Page 37 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program participate in the Program’s Agri-Industry/Apprenticeship Program (AIAP). The Program guidelines were developed to help grantees and young professionals better understand the goals set by the AIAP. COVID-19 restrictions delayed the launch dates of the AIAP and AgriBuzz Corps - another program, until November 2020. If further restrictions are implemented by the planned launch date, these programs may be limited to social media platforms only. The USAID Agriculture Program explored the opportunity of cooperating with Peace Corps Georgia to bring in short-term and long-term volunteers. However, COVID-19 restrictions caused delays in Peace Corps Georgia’s operations. If and when Peace Corps Georgia is able to resume pre-COVID-19 activities, the cooperation may restart with interested volunteers operating on a part-time basis. Public Information and Outreach USAID Annual Fair: In October 2019, the USAID Agriculture Program assembled a group of 15 USAID- supported enterprises to participate in USAID’s Annual Fair. During the fair, the US Embassy and USAID employees had an opportunity to meet with beneficiaries and purchase fresh products. The beneficiary companies sold fruits, vegetables, tea, Churchkhela, and dried fruits Launch of Innovation Grants Program: In February 2020, the USAID Agriculture Program released an APS to offer in-kind grants to entrepreneurs with innovative ideas, which can advance one or more of the Program’s priotity VCs and/or the agriculture sector as a whole (see section 1.3). The Program held Innovation Grants launch event in Zugdidi Tech Park. The event gathered around 70 people, including USAID Mission Director, the First Deputy Minister of Environmental Protection and Agriculture of Georgia, Deputy Chairperson of GITA, the Executive Director of Georgian Farmers Association (GFA), Deputy Director of RDA, representatives of donor organizations, ICCs, and the private sector. Innovation grants launch event Conference on Food and Food Additives Safety: With the support of the Coca-Cola Company, the USAID Agriculture Program and the NFA organized a scientific conference on Food and Food Additives Safety. The conference brought together experienced scientists from Turkey and Georgia, as well as representatives of governmental agencies, donor organizations, consulting firms, business service providers, and the private sector, including juice and spice producers and other food manufacturers. The participants shared their experiences and knowledge on different aspects of food and food additives safety, including food contaminants, food additives risk assessment, EU regulations, harmonized food safety regulations and standards, and the introduction of food safety standards in local companies, etc. The conference was attended by about 100 professionals from the private and public sectors. The Program aims to continue collaboration with the Coca-Cola Company on food safety topics once the pandemic situation allows uninterrupted operations and travel. AgriTalk: In PY2, the USAID Agriculture Program launched its new initiative, a weekly Facebook Live Show – AgriTalk, which is delivered by the Program’s VC Specialists and invited experts. Each episode covers important topics, such as modern technologies, certification, new varieties, and market analysis, among others. This initiative was one of the highlights of PY2, especially considering the challenges caused by COVID-19. The Program has received positive feedback from its followers and continues delivering new episodes. The first live show was recorded on February 7th AgriTalk Initiative and to date, 36 episodes have been shared on the Program’s Facebook page. These episodes have

Page 38 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program reached an estimated 170,000 people and have also helped the Prgram accumulate 6,500 new Facebook page likes. Terrace Garden Competition: In early May 2020, during government restrictions on movement due to the COVID-19 pandemic, the USAID Agriculture Program announced a Terrace Garden Competition, asking interested candidates to submit a sketch reflecting their idea of a garden in their own patio/balcony/terrace. The Program posted sketches on its Facebook page and selected six winners on the basis of the Facebook post likes and shares. The USAID-supported companies - Mza Chitili Ltd, Agrokartli Ltd., and Agroservice Ltd - gifted the authors of the winning sketches with herbs and vegetable seedlings, bio-fertilizers, small tools, and pots. In addition, the leading producers of garden inventory and equipment - GARDENA Georgia, Green Legion, Argo Solutions Ltd, and Agroha Ltd - selected their winners and awarded them with vouchers, which can be used in their showrooms. High Officials visit to Agro Complex Ltd: In June 2020, the First Deputy Minister of Environment Protection and Agriculture of Georgia, together with USAID Mission Director, attended the official opening of Agro Complex Ltd.’s cold storage facility in Kvemo Kartli. This facility is a joint project of the USAID Agriculture Program and the RDA. In addition to the newly established cold storage, the guests visited a 30-ha table grape vineyard, which was established with RDA’s assistance. Agro Complex Ltd.’s facility is equipped with ULO Technology, an advanced storage system, which helps to preserve the freshness, quality, taste, and aroma of products. This is an energy efficient, high-quality solution that can adjust to specific needs and conditions. Agro Complex Ltd.’s opening ceremony National Agricultural Olympiad: The FAO with support from the Austrian Development Agency (ADA), the USAID Agriculture Program, and CENN, and under the patronage of MEPA and the Agrarian Movement of Georgia (AMG), is preparing for a National Agriculture Olympiad (NAO)3. The goal is to identify knowledgeable agronomists, specialists, researchers, pupils, students, and farmers within the agriculture sector. NAO will motivate agricultural specialists, young professionals, students, mid- career fellows and farmers to reveal their expertise and professionalism in their respective fields and better position themselves on the labor market. High Officials visit to Mza Chitili Ltd: In August 2020, the Minister of Environmental Protection and Agriculture of Georgia and USAID Mission Director visited Mza Chitili Ltd, one of Georgia’s leading nurseries that produces ordinary and grafted vegetable and flower seedlings. With support from the USAID Agriculture Program, Mza Chitili Ltd has launched production of berry seedlings, which are in high demand among local farmers. As part of the project, the beneficiary established a laboratory, a rooting room, and a cold chamber and has already begun to propagate modern strawberry varieties - Malga and Scala (see section 2.1.2) Visiting Mza Chitili Ltd Outreach campaign: In PY2, the USAID Agriculture Program conducted four outreach campaigns to promote new in-kind grant opportunities among local agribusinesses and cooperatives. Through these campaigns, the Program met a total of 680 people interested in applying for the grant.

3http://www.agroolimpiada.ge/en

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Table 5: Outreach campaigns conducted as part of in-kind grant RFAs Date Round Direction Location Participants Supporting the development of Mtskheta, Gori, processing infrastructure within Kutaisi, Zugdidi, berry, culinary herbs, stone Marneuli, Akhaltsikhe, October 29, 2019 003 380 fruits, perishable vegetables, Batumi, Kobuleti, pome fruits, table grapes, and Ambrolauri, Ozurgeti, mandarin VCs Telavi, Tbilisi Supporting the development of Batumi, Kutaisi, Gori, February 14, 2020 003B processing infrastructure within Marneuli, Telavi, 120 nut VCs Tbilisi Supporting the development of July 22, 2020 004 consolidation infrastructure in Telavi, Marneuli, Gori, Georgia Kutaisi, Zugdidi, 180 Supporting the development of Batumi, Ozurgeti, and July 27, 2020 005 a modern nursery system in Tbilisi Georgia Environmental Compliance Environmental Safeguards: The USAID Agriculture Program continuously implements and monitors environmental safeguards to ensure compliance with USAID and Georgian environmental regulations. The Program ensures environmental compliance both before and after awarding grants. In PY2 the Program: . Conducted site visits to applicants shortlisted under new in-kind grant RFAs and APS. Respective Environmental Review Checklists (ERCs) and Environmental Mitigation and Monitoring Plans (EMMPs) were developed for selected candidates. . The Program conducted visits to round two grant recipients for monitoring purposes. Occupational safety: During Q1 and Q2 of PY2, the USAID Agriculture Program, in cooperation with the Occupational Safety, Health, and Environment (OSHE) Association of Georgia, delivered an intensive training program on Occupational Safety and Health to representatives of Georgian agribusinesses operating in priority VCs. This was initiated in response to the new Law on Occupational Safety and Health, which requires businesses to train staff in labor safety norms, emergency preparedness, and safe use of machinery and tools. These sessions helped beneficiaries improve employment conditions and workers’ health and safety. Training sessions were held in Tbilisi and Kutaisi and a total of 22 individuals became Qualified Occupation Safety Specialists. An additional 17 agribusinesses received practical guidance to implement the standards into their operations. Training in occupational Safety and Health The above activities were followed by online trainings which took place from April 22-June 1, during the first wave of the COVID-19 pandemic. The online trainings covered occupational safety during emergency situations and were delivered by OSHE Georgia to a total of 118 people, representing 84 companies. These included 36 grantee enterprises, 22 non-grantee enterprises, 32 representatives of FSCs, 24 individuals engaged in agricultural activities, and the Program’s four Grants Activity Managers. These five-day trainings lasted for a total of 15 hours and were delivered by qualified experts from OSHE Georgia and the National Center for Decease Control (NCDC). The courses focused specifically on the requirements and basics of occupational safety during the pandemic.

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The USAID Agriculture Program and OSHE Georgia also developed supplementary materials, including five informational posters and five animated videos that were printed and published online. The materials cover topics such as preventive measures during the COVID-19 pandemic, the safe use of pesticides, safety measures in food processing companies, risk identification and assessment, occupational safety regulations, state of emergency, and fire prevention. An occupational safety roadmap, along with warning sign templates, was created and distributed among grantees to serve as a guideline. By the end of Q4 of PY2, the Program began introducing occupational safety standards among Program beneficiaries. The goal of this consulting is to assist agribusinesses to identify, assess, and manage site-specific risks. The consultations also help beneficiaries to elaborate occupational safety guidelines regarding monitoring, mitigating, inspecting, and auditing health and safety standards, while also developing emergency response plans. The expected total number of beneficiaries/sites is about 60, located in different regions of Georgia. OSHE Georgia’s animated video Pesticide Evaluation Report and Safer Use Action Plan: In PY1, the USAID Agriculture Program contracted the international consultant who developed a PERSUAP and submitted it to USAID for the Bureau Environmental Officer’s (BEO) approval. During PY2, the PERSUAP was revised by the international consultant in cooperation with the Program’s Environmental Manager. The first draft of the document was revised according to BEO’s comments, was re-submitted for approval, and subsequently approved. Selected chapters of the PERSUAP were chosen for translation. The translated chapters will be distributed among the Program’s grantee and non-grantee beneficiaries as a guideline to ensure the safe use, transportation, storage, and disposal of pesticides. The document will also be used during PERSUAP trainings planned for PY3. Access to Finance In PY2, the USAID Agriculture Program started working with one of Georgia’s biggest fruits and vegetables consolidators, Georgian Products Ltd, which is also one of Carrefour’s main fruit and vegetable suppliers. The Program is supporting the company in optimizing its entire supply chain from farmers to shelf and in delivering high-quality products. Considering Carrefour’s growing demand for fruits and vegetables, Georgian Products Ltd faces the challenge of increasing logistical capacity and accessing financial resources. The USAID Agriculture Program facilitated the company’s negotiation with Gazelle Finance and participated in the business plan development process. Currently, Georgian Products Ltd is at the final stage of approval. Meanwhile, the USAID Agriculture Program also assisted Georgian Product Ltd in identifying technical and managerial constraints and seeks to help the company optimize its internal business processes and introduce Enterprise Resource Planning (ERP) and traceability systems. The USAID Agriculture Program in cooperation with USAID’s Economic Security Program launched a technical assistance project that aims to create an access to finance guidebook to be placed at Enterprise Georgia’s platform and will contain information about all financial products available on the Georgian market. 4. Donor and Host-Country Coordination Public Sector Partners The Ministry of Environment Protection and Agriculture of Georgia: The USAID Agriculture Program regularly coordinates activities with MEPA in order to ensure that the Ministry’s vision is considered in all major projects and initiative. The Program engaged representatives from MEPA in discussions

Page 41 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program related to the voluntary nursery certification project (see section 2.1.1), as well as workshops dedicated to positioning Georgia at international trade fairs and exhibitions, as part of the new branding project (see section 2.4.4). The Rural Development Agency: The USAID Agriculture Program established strong relations with RDA and cooperates with the agency in multiple directions. RDA serves as an important source of potential beneficiaries for different initiatives, as well as a means of disseminating resource materials through extension centers and regional ICCs. The Program has many ongoing and completed projects with the agency. These include joint food safety and quality certification projects (see sections 2.2.7 and 2.3.10), GlobalGAP trainings for primary producers, and branding and marketing projects (see section 2.4.3). Throughout PY2, representatives from RDA were invited to different meetings and workshops to share opinions and insights on important projects and initiatives, including the PPD on the challenges within the input supply market (see section 1.2). The Scientific-Research Center of Agriculture: In PY2, a fair share of joint activities with the SRCA were focused on the voluntary nursery certification project (see section 2.1.1). The USAID Agriculture Program and its sub-contractor SEEDEV assisted the agency in designing the certification scheme and developing different documents and materials, including nursery journals. In the second half of PY2, the Program and the SRCA organized in-person and online trainings for nursery operators to provide the necessary information about certification requirements and standards. The National Food Agency: The NFA is engaged with the USAID Agriculture Program on many aspects of environmental management, input supply, and quality certification. In partnership with the agency, the Program organized two conferences: one on Food and Food Additives Safety (see section 3.2) and another on control and management methods for Drosophila suzukii and other dangerous pests (see section 2.5.4). The NFA is an important partner in the area of IPM. In cooperation with the agency and Trécé Inc., the Program implemented the Pest Monitoring Program, which aimed to detect and monitor three pests that pose a serious threat to Georgia’s agriculture sector (see section 2.5.4). In PY2, the USAID Agricultural Program also started working with the NFA to draft amendments to the pesticide-related legal framework in order to ensure that input suppliers maintain a safe working environment and follow the best practices in the safe use, distribution, and storage of chemicals/pesticides. Enterprise Georgia: The USAID Agriculture Program works with Enterprise Georgia to facilitate the export of Georgian agricultural products and help local agribusinesses create new sales channels. Under this partnership, 10 beneficiaries participated in Biofach 2020 and Gulfood 2020 trade fairs (see section 2.4.5) and established relations with international buyers. The partners will continue their efforts in this direction and support local agribusinesses to take part in the Birmingham Food and Drink Fair in PY3. To help increase Georgia’s visibility at international trade fairs and exhibitions, the USAID Agriculture Program is also assisting the agency in developing a visual style, branding guidelines, and display structures for trade shows (see section 2.4.4). Private Sector Partners Trécé Inc.: In partnership with Trécé Inc., the USAID Agriculture Program implemented different initiatives aimed at the introduction of modern IPM and monitoring systems in Georgia. The company hosted representatives of the Program, the NFA, and a local FSC on a tour in the USA and enabled the visitors to study exclusion and detection systems implemented for common pests (see section 2.5.4). One of the most significant projects implemented in cooperation with Trécé Inc. was the Pest Monitoring Program. As part of the project, Trécé Inc. provided monitoring traps and pheromone lures to help detect pests threatening Georgia’s agriculture sector. United Global Technologies: The USAID Agriculture Program signed a TOC with UGT in February 2020. UGT is one of Georgia’s leading companies in the Information Technology (IT) sector. Within the scope of this TOC, the partners developed a mobile application for primary producers (see section 2.2.6) to help them systematize and streamline harvest accounting and inventorying during the harvest and

Page 42 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program storage periods. Shortly after launching the application, the partners joined efforts to raise awareness about this new digital product and delivered presentations/trainings and consultancies to interested farmers. The Program and UGT will continue promoting the application in PY3. Through this cooperation, the Program expects significant improvements in the efficiency of primary producers. McDonald’s Georgia: In October 2019, the USAID Agriculture Program signed a TOC with McDonald’s Georgia. This cooperation aims to support the development of a sustainable local food supply chain for the company and to facilitate market linkages between McDonald’s and the USAID Agriculture Program beneficiaries operating in the vegetables and culinary herbs VCs. In PY2, three local growers - Smart Logistics Ltd, Green Crop Distribution Ltd, and Biorasi Ltd - were linked with McDonald’s. Smart Logistics Ltd obtained a Singing TOC with McDonald’s Georgia GlobalGAP certificate (see section 2.2.7) with the Program’s assistance and has already supplied 40 tons of lettuce to McDonald’s restaurants in Tbilisi. The two other companies expect to become certified in the Summer of 2021 and will supply certified lettuce to McDonald's restaurants. Georgian Retailers Association: In July 2020, the USAID Agriculture signed a TOC with the GRA. Through this partnership, the Program seeks to develop strong marketing channels for selected VCs. To promote long-term, sustainable partnerships, the Program and GRA developed a market access initiative, which envisages the gradual promotion of Georgian products through well-tailored marketing and sales mechanisms. At the initial stage, roughly 10 Georgian producers and 25 retailer shops will be engaged to pilot supply chain, marketing, and sales schemes designed jointly by the Program, the GRA, and partner organizations. In addition to increased access to markets, and increased awareness of Georgian products and sustainable partnerships, the initiative will generate additional revenues for both retailers and local producers. GRA, in coordination with the Program, will monitor the implementation of the pilot project to identify impediments and inefficiencies, to make relevant adjustments/interventions, to scale up the initiative, and to ensure its sustainability in the TOC signed with GRA future. Other Donor-Funded Projects USAID Economic Security Program: The USAID Agriculture Program, in cooperation with the USAID Economic Security Program, assisted state agencies - Enterprise Georgia, the RDA, and the GNTA - in developing an online platform, www.programs.gov.ge, which unites all services and programs offered by these entities. In addition, the partners are assisting Enterprise Georgia to upgrade the www.tradewithgeorgia.com platform, which is an online catalog that allows Georgian entrepreneurs to upload and display information regarding their companies and products (see section 2.4). The two Programs are also joining efforts to develop an Access to Finance Guidebook that will be placed on Enterprise Georgia’s e-platform. 5. Project Management Operations, Facilities, and Equipment Contract modification: On November 14, 2019, the USAID Agriculture Program’s contract was modified to reflect the expansion of the budget by USD 4,915,697 and the addition of new priority

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VCs, including nuts (excluding hazelnuts) and kiwi fruits (under the berry VC). Early in Q2, the Program updated its PY2 Work Plan to incorporate activities envisioned in the proposed expansion. The updated Work Plan was submitted to USAID and approval was granted on February 10, 2020. Response to COVID-19: In early Spring of 2020, due to the COVID-19 outbreak and in line with GoG recommendations, the USAID Agriculture Program switched to remote working. The office re-opened on May 13 and the Program introduced a staff rotation plan to ensure a safe working environment. The plan was approved by the CNFA Home Office and was shared and agreed with USAID. The Program continues to maintain all safety standards: anyone entering the office is required to pass the disinfection barrier at the entrance, the central air conditioner is not used in the common area, all visitors are required to wear face masks, and the office undergoes daily disinfection procedures. The USAID Agriculture Program will continue implementing the recommendations provided by GoG and the NCDC to maintain a safe environment for its employees and visitors. Staffing New Leadership Positions: As it was envisioned by the transition plan, early in Q2, the USAID Agriculture Program’s former Deputy Chief of Party (DCOP) took over the Chief of Party (COP) responsibilities, while the Investment Director/Component One Lead became the DCOP. The position of the Investment Director/Component One Lead was undertaken by the former Technical Unit Lead. New staff positions: Due to an expansion in the Program’s scope to include new VCs as well as an increased emphasis on partnerships, early in PY2, the USAID Agriculture Program announced a competitive call to recruit new staff members in the positions of Public-Private Partnership Manager, Nuts Value Chain Specialist, and Grant Procurement Assistant. Candidates were shortlisted, interviewed, and selected by the relevant staff members. The Program recruited successful applicants in March 2020. Internship: Due to the COVID-19 related restrictions, the USAID Agriculture Program was not able to implement the in-house internship program to its full capacity. Only a limited number of interns were engaged in the following directions: Monitoring and Evaluation, Environment, Administration, and Finance. Additionally, the USAID Agriculture Program hired a US-national for the position of Technical Writer/Intern, who provides technical writing and editing support to the Program. As part of the pilot research project for detecting and monitoring pests, the Program hired six students from Kutaisi and Batumi State Universities (see section 2.5.4). Mariam Kutelia Research Grant Competition: In October 2019, the Program announced the Mariam Kutelia Research Grant competition for its interns. The goal of this initiative was to solicit research ideas that address existing constraints in the agriculture sector of Georgia. The Program received proposals from four groups of interns. As part of the selection process, the committee assessed the proposals and presentations delivered by the applicants and rewarded two winners with a USD 1,000 grant to carry out their research. The grant funds were provided by CNFA. Winners of the competition International Subcontracting SEEDEV: In PY2, the USAID Agriculture Program’s subcontractor, SEEDEV, worked closely with the NFA and the SRCA on the voluntary nursery certification project. SEEDEV consultants shared valuable insights, expertise, and methodologies with the agencies and helped them design the certification scheme and necessary certification documents (see section 2.1.1). The study tour to Serbia for the NFA and SRCA representatives was postponed due to COVID-related travel restrictions and will take place later in PY3. In PY3, the USAID Agriculture Program and SEEDEV will review the Sector Selection and VC Analysis report, once a more reliable post-COVID statistical data becomes available.

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WFLO: The USAID Agriculture Program’s sub-contractor WFLO conducted a ‘Cold Chain Industry Survey’ to identify the industry dynamics and best-practices and develop a business model suitable to Georgian cold store operators. Based on findings and needs of Georgian cold storage operators, WFLO’s consultants have been working on development of training videos and webinars on postharvest handling best practices. In PY3, WFLO experts will provide online trainings to local cold store operators in order to help them upgrade their technical knowledge. Monitoring and Reporting The following section includes the USAID Agriculture Program’s PY2 Annual Performance Report and describes the progress the Program has been making towards its strategic goal, objectives, and sub- objectives. The performance is assessed though a set of indicators that were identified in early PY1, as part of the Monitoring, Evaluation and Learning (MEL) Plan. These performance indicators allow the Program to measure each level of results, including the output, sub-intermediate, and intermediate level results. They have been drawn from the standard indicators of the F Structure, the Feed the Future monitoring framework, and custom indicators. These indicators meet USAID data requirements and enable the Program to make timely management decisions and credibly reflect the actual performance. During PY2, the USAID Agriculture Program’s Monitoring and Evaluation (M&E) Team continued utilizing the monitoring system to track the progress and obtain systematic and meaningful feedback about successes and areas for improvement in its efforts. The performance and achievements of grant recipients represent the primary source of the Program’s impact. Currently, the Program is providing grant support to a total of 50 beneficiaries, including 42 in-kind grant recipient MSMEs and cooperatives, seven capacity building grant recipient service/information/extension providers, and associations, and one in-kind innovation grant recipient company. Throughout PY2, the Program’s Grants Activity Managers collected the initial data on a monthly basis, while the M&E Coordinator collected the data on a quarterly basis. By the end of the program year, the M&E Team, once again, visited all grant recipients and cross-referenced documents, such as purchase agreements, labor contracts, and invoices to ensure the validity of the data collected. The performance and achievements of beneficiaries, which participated in TA activities, such as group trainings and individual consultancies, represent the secondary source of impact. Throughout PY2, the USAID Agriculture Program worked with different enterprises to implement internationally recognized food safety standards, introduce new branding and packaging, and access new markets through international trade fairs and business-to-business (B2B) meetings. Unlike grant recipients, the performance and achievements of these enterprises cannot be fully attributed to the Program. Therefore, the M&E Team used an approved questionnaire to survey beneficiaries, assess the impact of TA interventions, and identify an appropriate level of performance attribution. As of today, the Program has worked with 262 non-grantee companies and 720 individuals. This data was subsequently aggregated and included in the Annual Report.

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Baseline data and projections for grant recipients: The USAID Agriculture Program has collected, reviewed, and analyzed data on the current status and activities of all 50 grant recipients. The breakdown of grant recipients by region is provided in Figure 3. As for the allocation of these beneficiaries to specific VCs, the M&E system methodology does not allow for disaggregation of all beneficiaries in this way, since several enterprises operate within two or more of the Program’s approved VCs and sector overlapping will lead to double counting. However, in PY3, upon USAID’s request, the Program can elaborate and agree on a certain methodology to capture and analyze the impact on the VC level and produce the most plausible sector development data. Figure 3: Grant recipients by regions Currently, 30 beneficiaries from the 1st and 2nd capacity building and in-kind grant rounds are operational, while the remaining 20 are in the project mobilization phase. The USAID Agriculture Program’s M&E Manager collected relevant performance data from these operational grant projects and analyzed their baseline data, milestone achievements, outcomes, and outputs. The Program follows 25 indicators, of which 12 are outcome level indicators and 13 are output level indicators. Outcome level indicators include: Performance Plan and Report (PPR), standard (F), and custom indicators. In-kind grant recipients from all three rounds have provided baseline data and three-year targets for each performance indicator, which were submitted to the M&E Team in electronic and hard copy forms. The M&E Manager has made sure that the submitted data was consistent, verifiable, and achievable in the time given. In addition, all operational grantees have filed quarterly data collection forms which were signed and submitted to the Grants Activity Managers and the M&E Manager, all of whom keep a copy of these forms. At the end of PY2, all projected data were compared to the actual performance numbers to identify any gaps and inconsistencies in the work done by beneficiary enterprises towards meeting their contractual targets. Initially, the baseline for all indicators was assumed to be zero. After selecting successful grant projects and analyzing investment proposals, the USAID Agriculture Program identified appropriate baseline data, along with future targets. The total baseline data and the three-year projections for in-kind grant recipients are provided in Table 6. The USAID Agriculture Program compared all projections to the LOP targets in order to ensure that the scale of grant recipients allows the Program to achieve these targets, as well as to identify the extent to which the current pool of grant recipients will contribute to each Key Performance Indicator (KPI) on the Program level. Drawing assumptions in a conservative manner, the Program anticipates higher numbers within most KPIs by the end of the project and will perform the same calculations by the end of each following year.

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Table 6: Baseline data and projections for 42 in-kind grant recipient MSMEs and cooperatives Estimated Reporting period Contractual targets Key performance indicators for grant recipient value chain enterprises achievement Total LOP for (42 company) Total LOP for value Baseline PY 1 PY 2 PY 3 other grant Life of Project % chain enterprises enterprises Permanent 265 193 77 32 302 40 1,679 seasonal jobs equal Seasonal 906 781 437 461 1,679 to 699.6 FTE (full time 1. Number of new jobs created within the program Women 805 768 360 408 1,536 - equivalent) jobs + permanent jobs (302+40) Men 373 288 194 121 603 - Total 1,178 1,056 554 529 2,139 40 3,500 29.8% 2. Value of cost share within the program (USD) USD - $ 3,075,036 $ 1,025,012 - $ 4,100,048 $ - $10,700,000 65.2% 2. 1 Value of new USG commitments (USD) USD $ 2,469,178 $ 412,232 Women 1,221 1,344 1,175 1,144 3,663 - 3. Number of farmers who have received short-term Men 550 1,109 945 804 2,858 - trainings /consultations within the program Total 1,771 2,453 2,120 1,948 6,521 - 170,000 3.8% Local market 4,387,028 5,847,306 16,059,739 19,667,101 $13,858,048 - New 223,395 4,360,705 9,282,232 7,850,228 $7,164,388 $915,364 $11,300,000 71.5% 4. Company sales (USD) Old 4,163,630 1,453,921 6,595,207 11,744,084 $6,597,737 - Export market 1,000,227 2,243,714 5,202,199 5,794,675 $4,413,529 - $23,000,000 19.2% Total $5,387,255 $8,091,020 $21,261,938 $25,461,776 $18,271,578 $0 $70,000,000.00 26.1% Value (USD) $ 518,987 $ 1,888,768 $ 2,803,652 $ 3,558,210 $2,750,210 - $10,000,000 27.5% 5. Locally purchased raw material from farmers Volume (kg) 2,725,994 4,544,137 5,732,624 5,963,152 16,239,913 - Unit price (USD) $0.19 $0.42 $0.49 $0.60 $0.50 - 6. Number of hectares under improved technologies or Ha 70 156 218 230 604 - 98,250 0.6% management practices within the program 7. Yield of targeted agricultural commodities Kg 39,223 29,223 26,296 25,927 27,149 25,000 11,854 225.4% 8. Number of individuals benefiting indirectly from the Women 541 2,472 2,709 2,769 7,950 - program (dissemination of new technology and Men 378 2,714 3,188 3,276 9,178 - management practices) Total 919 5,186 5,897 6,045 17,128 Key Performance Indicators: In Q4 of PY2, the USAID Agriculture Program’s M&E Team continued implementing activities proposed in the PY2 Work Plan and, most importantly, tracked the progress the grantee and non-grantee beneficiaries made towards the PY2 and LOP targets, under each contractual KPI (see Table 7). To assess the progress against the targets, the M&E Manager provided data collection templates to grantees and questionnaires for their beneficiary farmers. These templates have been used throughout PY2. The Program’s Grant Activity Managers and interns were actively involved in data collection and validation, and in analyzing each grant project. The Program conducted regular and random visits to maintain the quality of data assessment and reporting. Methodologies regarding the data collection were provided to USAID as part of the data quality assessment process and no comments have been received to date. The following methods were utilized for M&E data collection and verification:  Interviews: This approach helps collect information from stakeholder and beneficiary experiences, perceptions, opinions, and knowledge about USAID Agriculture Program funded activities.  Observations: This approach describes activities, behaviors, actions, and conversations that were directly observed by the USAID Agriculture Program M&E Manager during site visits. This results in detailed and descriptive field notes and data. These observations have been documented through photos and verified documents such as copies of sign-in data sheets on financial performance, new jobs created, trainings conducted and more.  File and Document Reviews: This approach is used in conjunction with the first two data collection approaches and includes written materials from organizational records and files, correspondences, official publications, letters, photographs, and more. This provides verification that the grantee’s own records have documented necessary evidence and data to support the reported achievements of their activities. The majority of KPIs demonstrate an average of more than 162% achievement rate against the annual target (PY2) and 25% against the LOP targets (see Table 7). The relatively low achievement rate against the USAID Agriculture Program LOP targets can be attributed to the global economic downturn caused by the spread of COVID-19. However, the Program has already adjusted all activities to the ongoing changes in the business environment and continues to work intensively with its grantee and non- grantee beneficiaries. Despite the challenges, the Program beneficiaries continue to operate and are

Page 47 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program monitored on a weekly basis to identify significant obstacles and respond accordingly. The Program’s management is also planning to propose that the USAID Georgia mission consider the current global force majeure circumstances and revise the LOP targets. Table 7: The progress made towards PY2 and LOP targets PY2 actual PY 2 Actual to LOP Indicator name PY2 targets LOP targets Grantees Non grantees Total Achievement % date Achievement % Cost-share leveraged from recipient organizations $1,610,772 $169,584 $1,780,356 $2,232,657 80% $2,320,649 $ 9,04 million 26% Value of new USG commitments and private sector investment leveraged $3,747,721 $660,603 $4,408,323 $4,799,924 92% $5,798,631 16,7 million 35% New full-time equivalent jobs created by program beneficiaries 414 276 690 165 418% 1,053 3,680 29% Increase in sales by Program assisted enterprises $0 $5,540,465 0% $3,900,512 $ 70 million 6% Increase in sales to new domestic markets/buyers $1,072,749 $530,774 $1,603,523 $465,000 345% $1,995,318 $ 11,3 million 18% Increase in sales to export markets/buyers $1,068,961 $225,806 $1,294,767 $1,327,164 98% $1,296,112 $ 23 million 6% Increase in purchases of locally produced raw materials by assisted MSMEs $458,222 $51,613 $509,835 N/A N/A $509,835 $ 10 million 5% Number of grant recipient organizations 35 35 55 64% 50 120 42% Number of TA recipient organizations 35 227 262 99 265% 472 600 79% Number of beneficiaries trained by assisted organizations 917 5,267 6,184 15,800 39% 7,494 170,000 4% Value of new USG commitments and private sector investment leveraged by the USG to support food security and nutrition [IM-level] EG.3.1-14: This indicator measures both commitment to new long-term capital investments (e.g., property, plant, equipment, and other fixed assets) and new operating capital investments (e.g., inputs or inventory) by USG and new investments leveraged by the private sector as a result of the USAID Agriculture Program’s assistance. Investment is defined as any use of resources intended to increase the future production, output, or income, etc. Hence, on the one hand, it counts spending made by the USAID Agriculture Program from Grants and TA components and on the other hand, it calculates the cost-share leveraged from all types of beneficiary enterprises, as a result of the Program’s technical support. Table 8: Value of USG commitments and private sector investment leveraged by the USG Achievement to PY1 PY2 Up to date LOP date $1,390,308 $4,408,323 $5,798,631 $16,740,100 35%

As mentioned above, in PY2, 30 out of 50 grant recipients became operational and managed to demonstrate considerable accomplishment in cost-share commitment. In PY2, the Program committed USD 2,136,949 in the Grants Component and leveraged USD 1,610,772 in private sector investment, as a grant cost-share. As stipulated in the PY2 Work Plan, both grantee and non-grantee beneficiaries continued to receive demand-driven technical assistance, such as technical and business trainings, along with a wide spectrum of customized consultancies aimed at building the capacity of beneficiary enterprises. In PY2, the Program committed USD 491,018 in support of grantee and non- grantee beneficiaries, leveraging USD 169,584 of private sector funds, including: . Cost-share by grant and TA recipient companies - USD 80,964 . TRECE Inc (actual) PPP - USD 34,620 . GRA (committed) PPP - USD 20,000 . Coca Cola - USD 34,000

Table 9: TA spending by the USAID Agriculture Program and its grantee and non-grantee beneficiaries PY1 spending by the Program and beneficiary PY2 spending by the Program and beneficiary companies companies Committed by the Program $174,554 Committed by the Program $491,018 Spent by grantee and non-grantee Spent by grantee and non-grantee $5,000 $169,584 beneficiaries beneficiaries Total $179,554 Total $660,603

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The USAID Agriculture Program has been cooperating closely with the GoG and USG agencies to leverage additional resources. As a result, the Program attracted public funds with the total value of USD 231,175 (see Table 10). To date, the value of USG commitments and private sector investment leveraged as part of grants and TA interventions make up USD 5,798,631, which is around 33% of the Program’s LOP target of USD 16,740,100 (see Table 7). Table 10: Other sources of funding for TA activities Source of funding Total amount GoG investment (committed) $204,815 Other (USAID/Economic Security Program) investment (committed) $26,360 Total $231,175

Value of agriculture-related financing accessed as a result of USG assistance [IM-level]- EG.3.2-27: In PY2, the USAID Agriculture Program’s Grant and TA recipients obtained USD 257,157 in additional commercial finance, as part of their cost-share capital and thus contributed to this Performance Monitoring Plan (PMP) indicator. With a total of USD 447,157 in new commercial finance in PY1 and PY2, the Program achieved its LOP target by 33%. During the next program years, commercial finance is likely to be in higher demand, due to decreased revenues, weakened national currency, and other local or global economic tensions caused by COVID-19. According to the World Bank, in 2020-2021, COVID-19 will continue to severely impact the Georgian economy, since transport restrictions affect many sectors of the economy, while containment measures dampen the local demand for many items from the consumers basket. However, the impact of COVID-19 will be partly cushioned by a fiscal stimulus of around two percent of Gross Domestic Product (GDP), containing acceleration of capital spending, tax deferrals, accelerated Value-Added Tax (VAT) refunds and sector support for the most affected businesses, as well as higher social spending. More direct financial support (both commercial and grant) is envisaged, as well as part of an anti- crises plan elaborated by the Government. Value of annual sales of farms and firms receiving USG assistance [IM-level]- EG.3.2-26: This indicator measures both farm level sales (cash market) and firm/company level sales (local and export). In PY2, the USAID Agriculture Program’s beneficiary MSMEs recorded more value in sales than in PY1. This is due to the fact that more grant recipients are shifting into higher gear and entering new markets, as a result of the Program’s assistance. Also, more cold storage and processing enterprises have attracted new commercial farmers, as either suppliers of raw materials or as clients utilizing postharvest handling and cold storage services. According the PY2 Work Plan, the USAID Agriculture Program anticipated a considerable increase of the sales indicator, particularly in export sales; however, due to the tension COVID-19 caused in the global market, sales of some commodities have dropped, both locally and internationally. In addition, the depreciation of the national currency pushed prices and increased demand for primary consumer goods. Therefore, some companies decided to follow the price uptrend and sell their products for higher prices; meanwhile, others have squeezed their profit margins, keeping the sales price more or less on the same level. The aforementioned and other factors in the local and global markets created considerable challenges for agribusinesses and decreased their revenues (a more in detailed analyses of the impact of COVID- 19 on the USAID Agriculture Program’s grant and TA recipients is presented in a separate paragraph). In PY2, the Program’s 17 grant recipients and 14 TA recipients reported a total of USD 3,412,372 in new sales, including sales by supplier farmers (cash market) to assisted MSMEs from the target VCs. To date, the Program has achieved its LOP target by 6%, with total sales value of USD 3,900,512 in PY1 and PY2 (see Table 7). In PY2, the contribution of the USAID Agriculture Program’s grant recipients made up around 78% of the total value of new sales. This includes the sales of USD 2,287,082 recorded by in-kind grant

Page 49 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program recipient value chains and the revenue of USD 368,710 generated by capacity building grant recipients (see Table 11). As for other beneficiaries, the Program has been providing TA to help them compete domestically and internationally and to adopt new technologies or management practices. In response to this objective, 14 TA recipient companies have reported USD 756,580 in value of sales. Table 11: Revenues generated by capacity building grant recipients Capacity building grant recipients Revenue from services ISO Consulting $182,258 Caucascert Ltd $128,387 Export Development Association $58,065 Total $368,710

As suggested by the Performance Indicator Reference Sheet (PIRS), this indicator should be disaggregated by: new local market, old local market, cash market, and export sales. As a result, out of the total new sales of USD 2,655,792, the Program’s capacity building and in-kind grant recipients generated USD 614,527 from new local markets, USD 514,082 from old local markets, USD 458,222 from cash markets, and USD 1,068,961 from export sales (see Figure 4). As for the 14 TA beneficiaries, they recorded USD 479,161 in new local markets, USD 51,613 in cash markets, and USD 225,806 in export sales. During the coming years, the Program anticipates to track more sales attributable to TA recipients, once they are visited for the impact attribution survey, in compliance to the approved methodology and the technical Figure 4: Disaggregated sales of grantee and non-grantee assistance schedule. beneficiaries The USAID Agriculture Program categorized sales of in-kind grant recipients and TA beneficiaries by VCs in order to identify which VCs accounted for the biggest share. In case of in-kind grant recipients, the berry VC generated the most sales, both locally and internationally. As for TA recipients, the culinary herbs VC accounted for the biggest share (see Figures below). It should be noted that USD 68,355 worth of dried fruits was exported by Geoflower Ltd to a new international market (Spain) and USD 64,516 worth of natural juices was exported by Georgian Nectar Ltd to a new international market (Kuwait), as a result of Program

Figure 5: Sales of in-kind grant recipients by VCs Figure 6: Sales of TA recipients by VCs assistance. The sales indicator counts all types of sales and thus includes another contractual indicator ‘increase in sales to export markets/buyers’; however, in compliance with the USAID Agriculture Program’s MEL plan, export sales were separated in the Annual Report. In PY2, beneficiaries generated a total of USD

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1,294,767 from export sales and to date, the Program has achieved 6% of its LOP target under this indicator (see Table 7). Some observations and reasons for the Program’s underperformance in all type of sales, particularly in export sales, is given in a separate section of this report. Full-time equivalent employment of firms receiving USG assistance - EG.5-2: In PY2, the USAID Agriculture Program’s beneficiaries created significant number of both permanent and seasonal jobs. In case of seasonal jobs, the Program observed the same trend as in the previous reporting year, namely: each individual was employed for an average period of five months per year and around 29% of employees were women. To date, grant recipients have created a total of 575 jobs, of which 414 were created in PY2. The latter includes 252 full time equivalent (FTE) and 162 permanent jobs. In PY1, the beneficiaries mainly employed seasonal workers, while in PY2, the number of permanent jobs increased, mostly in the berry sector, which indicates on the demand for skilled labor within this VC. As for non-grantee beneficiaries, to date, they have created a total of 478 jobs, of which 276 were created in PY2 (see Table 12). These include four permanent and 272 FTE jobs. Non-grantee beneficiaries mainly employed seasonal workers (402 people) within the berry and culinary herbs VCs and 84% of these workers were women. Table 12: Jobs created by the grantee and non-grantee beneficiaries Grantees Non-grantees VCs Total to date PY1 PY2 To date PY2 To date Berries 161 334 495 204 406 901 Pome fruits 33 33 33 Stone fruits 24 24 24 Culinary herbs 72 72 72 Vegetables 5 5 5 Capacity building 18 18 18 Total 161 414 575 276 478 1,053 As mentioned above, the majority of jobs were created within the berry VC - 901, followed by culinary herbs VC - 72, pome fruits VC - 33, stone fruits VC - 24, and vegetables VC - 5. A further 18 permanent jobs were created by the USAID Agriculture Program’s capacity building grant recipients (see Figure 7). In addition to the demand for skilled labor, the berry sector can be characterized as labor-intensive (in terms of seasonal workers), since the same plant needs to be re-picked multiple times. Sometimes, fields are harvested 40 to 50 times during the season. This could explain the contribution of the berry VC to this indicator. With a total of 1,053 new jobs created in PY1 and PY2, the USAID Agriculture Program has fulfilled 29% of its LOP target of 3,680 jobs (see Table 7). Figure 7: Jobs created by Program beneficiaries Number of individuals participating in USG food security programs [IM-level] - EG.3-2: This EG indicator corresponds to another PMP custom indicator: Number of individuals who have received USG supported short-term agricultural sector productivity or food security training, under which the USAID Agriculture Program reports all individuals (employees of grantee and non-grantee beneficiaries, commercial and self-subsistent farmers, members of farmer’s associations, etc.) who have participated in any capacity building activity, training, and consultancy organized by the Program during the given year. By tracking the above indicator, the USAID Agriculture Program demonstrates it approach towards improving the knowledge and practices of those involved in agricultural activities. The majority of farmers, who represent direct beneficiaries of the Program’s grant recipients (either as clients or

Page 51 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program suppliers), have received short-term training in agriculture-related topics and will thus improve their crop yields and incomes. During PY2, the number of such individuals was slightly lower compared to the anticipated figure. This was mainly due to the lockdown and unforeseen restrictions resulting from COVID-19. However, the Program’s grant recipients still managed to work with 917 individuals, while non-grantee enterprises worked with about 595 farmers in PY2. Understanding the abovementioned obstacles, USAID Agriculture Program diversified its activities by offering online trainings/consultancies, such as the Facebook live show AgriTalk and Zoom sessions, to achieve a positive impact. As a result, around 5,000 individuals have benefited from attending online sessions and Facebook video posts. To date, the Program has reached a total of 7,494 individuals (4% of the LOP target), of which 6,184 were engaged in PY2 (see Table 7). During the next years, the USAID Agriculture Program will continue providing online consultations to grant and TA recipients and will attract new individuals. At the same time, the Program anticipates engaging a greater number of supplier farmers in selected VCs, once more grant recipients become fully operational and once new TA recipients are identified. To track these positive changes attributable to the USAID Agriculture Program, the M&E Team has visited 79 individuals and obtained baseline data through the survey, which was approved in PY1 and which serves as a tool for measuring the Program impact. In PY3, the Program will revisit these 79 beneficiaries to fill the end-line survey and to plausibly demonstrate the outcomes of TA activities. The value of this indicator also includes the individuals who participated in work safety - 143 (25 onsite and 118 online) training sessions and the estimated number of those attending Facebook broadcasted AgriTalks – 4,700. Through these activities the USAID Agriculture Program provides opportunities to different VC actors, including nurseries, farmers, cold storages, food processors, and input suppliers to raise their profiles, exchange knowledge about best practices, establish B2B links, and identify new clients. Number of firms receiving USG-funded technical assistance for improving business performance - EG.5.2-1: According the USAID Agriculture Program’s MEL plan, this indicator covers all technical assistance activities, including the transfer of knowledge and/or expertise by staff, formal or informal skills trainings, and research work to support the quality of program implementation and impact, support administration, management, representation, publicity, policy development and capacity building. In PY2, the USAID Agriculture Program identified 262 new enterprises operating in selected VCs and started delivering targeted technical assistance to improve business performance, in terms of profit, revenue, and employment, through better management practices, and industry and market-specific knowledge and skills. The following technical directions have been identified within the scope of the Program and the needs of beneficiaries: HACCP, GRASP, branding, ISO 22000, GlobalGAP, local market Linkages, GAP analysis, export facilitation, work safety, organic certification, consultancy in organic farming and study tours. Of the total number of participants, 14 have accomplished all recommended tasks and improved their performance in a tangible way. The USAID Agriculture Program captured attributable results within their activities through the TA survey and aggregated data entered under the corresponding indicators in the MEL Plan. During the next year, once certain time passes after the assistance, the Program will visit more companies to conduct the survey. As for the beneficiaries of occupational safety trainings, 10 group sessions were organized for 24 companies, including four grant recipients. Following the outbreak of COVID-19, the Program delivered several online trainings/consultations to 118 individuals to strengthen their capacity in work safety standards imposed by the new state regulations (a more detail analysis and expected outcomes of this assistance is described in paragraphs below).

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Number of hectares under improved management practices or technologies with USG assistance [IM-level] - EG.3.2-28: This indicator measures the area (in hectares) of land cultivated using USG- promoted improved technology(ies) or management practice(s) during the reporting year. Here the USAID Agriculture Program is looking at agriculture-related, land-based technologies and innovations, such as: crop genetics, pest management, disease management, soil-related fertility and conservation, cultural practices, and irrigation. In PY2, the total area under improved management practices or technologies made up 166.5-ha. This includes, 97.3-ha berries, 44.5-ha pome fruits, 18.7-ha stone fruits, and 6-ha vegetables Occupational safety and health trainings: One of the most important TA directions the USAID Agriculture Program initiated in PY2 was training in occupational safety and health for interested grantee and non-grantee enterprises. In cooperation with OSHE Georgia, the Program assisted 24 agricultural entities (four grantees, one state agency, and 19 non-grantees), on a cost-share basis, allocating USD 8,251 to this activity and leveraging USD 4,620 of private funds. A total of 25 individuals, including one employee of the NFA, participated in this initiative. Onsite training courses were delivered in two directions: . Accredited program of labor and health safety specialist. . Training in implementation of labor and health system in organizations operating in the agriculture sector.

During PY2 the Program anticipated engaging more grantee and non-grantee beneficiaries in this initiative. Therefore, in response to COVID-19, the Program launched a new online training program - Occupational Safety during the Emergency Situation. These trainings were also delivered by OSHE Georgia and were fully funded by the Program. The purpose of this five-day course was to increase beneficiaries’ awareness and knowledge of occupational safety standards during the emergency situation. It covered various topics, such as safe use of pesticides, machineries, risk assessment, mitigation, emergency measures during COVID-19 pandemics, etc. The training was conducted remotely through the Zoom platform. A total of 114 people, representing 84 companies, participated in these trainings. The sessions were also attended by the USAID Agriculture Program’s four Grants Activity Managers. Out of 114 people, 36 represented grant recipient enterprises, 22 represented non-grantees, and 32 were FSC representatives. As for the remaining 24 participants, these include individuals engaged in the agricultural activities (see Table 13). While supervising the training process remotely, the USAID Agriculture Program’s M&E Team reached out to all participants from 84 companies and interviewed them in order to collect the baseline data and assess their knowledge of occupational safety standards, as well as their expectation from the point of view of the companies they represented. The end line survey of these participants will be conducted five to six months after the accomplishment of this training course. This will allow the Program to capture the improvements in the competitiveness of assisted companies. Table 13: Participants of the training on Occupational Safety during the Emergency Situation Number of Number of Beneficiary type companies individuals Grantees 36 36 Non-grantees 10 22 Farmer Service Centers 16 32 Others 22 24 The USAID Agriculture Program’s Grants Activity Managers 4 Total 84 118 Number of baseline survey participants 84 114 The USAID Agriculture Program’s funds $38,258 The private sector funds $4,620

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At the end of PY3, the USAID Agriculture Program plans to analyze and aggregate the data from this particular activity, designed to improve the competitiveness of the beneficiary enterprises, and add up to the value of the Program’s KPIs, such as: 1. Number of individuals who have received USG supported short-term training 2. Number of individuals in the agriculture system who have applied improved management practices or technologies 3. Number of firms receiving USG-funded technical assistance for improving business performance 4. Number of private sector firms that have improved management practices or technologies 5. Number of organizations with increased performance improvement 6. Value of new USG commitments and private sector investment leveraged 7. New full-time equivalent jobs created by program beneficiaries 8. Increase in sales by Program assisted enterprises 9. Number of TA recipient organizations 10. Number of beneficiaries trained by assisted organizations

AgriTalks and online sessions: Due to travel restrictions posed by COVID-19 during PY2, the Program has adapted its interventions according to new challenges and diversified its activities to achieve a more positive impact by offering online training/consultancies like the Facebook live show AgriTalk and zoom sessions. The USAID Agriculture Program’s M&E Team has remotely followed the aforementioned weekly activities in order to capture the involvement of targeted beneficiaries and plan future interventions. To obtain the desired information, the Program’s M&E Team and consultant have exported Facebook Insights and all other relevant data for each group of indicators, as required by the MEL plan. . The total number of people who have liked the USAID Agriculture Program’s Facebook Page reached around 6,000 unique users. . The total number of people who have followed the Page reached 5,500 unique users.

The average reach for each of the 36 AgriTalk posts was about 4,700. Table 14: Facebook activity per each post (top 10) # of times the post appeared The content of the Facebook post Shares Likes Comments on a person’s screen AgriTalk episode on connecting farmers and agribusinesses 1,658 70 548 40 with representatives of tourism and food sector A post dedicated to discussing the achievements of a 1,655 46 391 110 beneficiary company, Georgian Nectar Ltd Link to the USAID article on Innovation Grants Program 3,131 72 363 22 A post dedicated to Biofach 2020 exhibition 3,373 60 336 49 A video on best practices for growing strawberries 10,506 60 336 49 A video of the representative of Caucasus organic Fruits Ltd 5,361 10 287 39 discussing Biofach 2020 exhibition A post summarizing Caucasan Ltd.’s experience at Biofach 1,409 40 286 50 2020 exhibition The USAID Agriculture Program wrapping the Terrace Garden 5,548 39 236 18 Competition A post dedicated to the USAID Agriculture Program’s 2,630 64 188 24 activities in the area of food safety

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# of times the post appeared The content of the Facebook post Shares Likes Comments on a person’s screen A video guide on modern pear growing systems, delivered by 6,732 13 181 19 the USAID Agriculture Program’s international consultant Link to the USAID Agriculture Program’s technical assistance 3,263 19 105 9 program

Impact of COVID-19 on Grant and TA recipient performance: The novel coronavirus affected the Georgian economy immediately after its outbreak in March 2020. In May 2020, the Ministry of Finance of Georgia announced that about 100,000 citizens lost their jobs during the pandemic and that the economic prognosis would not be high, as forecasted. However, according to Galt & Taggart’s research paper4 published on September 17, 2020, the economic recovery in Georgia has been positive despite the significant lack of international trade and tourism. According to experts, the economy has maintained its overall growth forecast (-5.1% in 2020) but the forecast for the national currency, GEL, is weaker than previously anticipated (GEL 3.1/USD in 2020). This supports further adjustment in imports and a current account deficit of below 9% of GDP in 2020. On September 16, the National Bank of Georgia (NBG) maintained its key rate at 8.0% despite the pullback in inflation, as the regulator remains cautious of the weakness of the GEL and a possible lack of sentiment due to the recent increase in COVID-19 cases. The goods trade balance improved, with exports performing better than expected. In August 2020, exports decreased by 14.7% and imports decreased by 17.5%, a trend that is expected to continue. Remittances rebounded strongly in June, seeing a 22.1% increase after a significant decrease in April. This rebound was supported by growing transfers from the EU (accounting for around 42.0% of total inflows), as well from other countries like the USA, Turkey, Ukraine, and more. Notably, the absence of international tourism is partly counterbalanced by Georgians traveling within the country, rather than internationally, as local tourism is expected to compensate for 30% of lost international tourism revenues. Decent fiscal stimulus has supported domestic demand, along with strong growth in remittances since June 2020 and continuation of bank lending. Notably, VAT revenue growth turned positive in August 2020 for the first time since March this year, suggesting that recovery dynamics may be better and expected. According to Geostat data from September, overall prices rose by 3.8% compared to the same period last year. Food and non-alcoholic beverages have risen in price by 6.3% on average. Prices increased for the following subgroups: coffee, tea and cocoa (14.4%), fish (11.7%), oils and fats (11.1%), bread and baked products (8.7%), fruits and grapes (8.2%), milk, cheese and eggs (6.1%), meat and meat products (5.7%), mineral and spring water, soft drinks and natural juices (5.1%), and sugar, jam and other sweets (4.1%). Apart from this, group prices also rose for health care (7.5%), alcohol and tobacco (8.9%), personal items (9.1%) and personal hygiene (13.0%). Goods and services like clothing and footwear (2.5%), utility costs (1.6%), furniture, household items and home care (8.4%), communications (0.2%) and hotels, cafes and restaurants (5.7%) also increased in prices.

4 https://galtandtaggart.com/research/research-reports/economy/all-all/1/

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Based on current trends of economic activity in the country, the USAID Agriculture Program’s M&E Team, in cooperation with a local consultant5, has conducted an overall analysis of agriculture sector and is able to present some findings: . In the tourism sector, reducing spending on food and beverages by 30-40% could lead to a reduction in revenues from agricultural activities of GEL 68-90 million (compared to 2019) resulting in a reduction of GDP in agriculture by GEL 74-99 million (compared to 2019). . A reduction in household spending by 5-20% can lead to a decrease of revenues from agricultural activities by GEL 13-49 million (compared to 2019), resulting in the decline of GDP in agriculture by GEL 14-54 million (compared to 2019). . A 1% increase in household consumption expenditures may lead to a 0.43% reduction in the share of food expenditures (from total consumer expenditures). . Reducing remittances should have a more significant impact on non-food expenditures than on food expenditures. . The GEL/USD exchange has a significant impact on consumer and food price indices. . Household food demand is generally not elastic - demand increases less rapidly in proportion to income. . The elasticity coefficient of household demand for food varies with food prices - it is elastic with respect to the prices of pork, eggs and chicken (demand decreases more rapidly as prices increase), while it is non-elastic with respect to beef, potatoes and beans (demand decreases less rapidly as prices increase). . According to production forecast results, a significant increase in the production of pome and stone fruits is possible, while a decrease in the production of vegetables, nuts, subtropics and grapes is expected. Small increases in wheat, potato, and all-meat production are also expected, while milk, egg and corn production volumes are not expected to change from the previous year.

In addition to the general forecasts of the country’s economic activity, the USAID Agriculture Program’s M&E Team conducted targeted focus group interviews and online surveys of about 20 grant and TA recipient enterprises operating in following VCs and directions: vegetables, berries, fruits, culinary herbs, canned fruits and vegetables, and juice production. Three main questions were asked to those companies and their aggregated responses (average) are presented in Table 15. Table 15: The survey topics % Change against Questions Reasons for change three-year average Because of depreciation of national currency, prices of raw Production costs (means materials and packaging increased. +22 % of production and labor) Transportation costs increased; cost of hygiene increased. Logistics have become difficult and expensive because of cancelled flights. Sales price +8 % Depreciation of national currency. Market demand for these products has dropped because of COVID- Market demand -19 % 19 restrictions (shops, restaurants and hotels have been closed, tourist season cancelled).

5 Assessment of the impact of COVID-19 on Georgian Agricultural Sector by Mr. Rati Shavgulidze

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During PY3 the USAID Agriculture Program will continue to observe the performance of its beneficiary companies from the standpoint of ongoing COVID-19 implications on the country’s economy and will ensure that these enterprises will consider adopting recommendations proposed to the them from sector experts and Program consultants Financial Expenditure Summary USAID Contract No.: 72011418C00001 Date of Issuance: 9/24/2018 Total Potential Amount: $23,140,394.00 Amount Obligated to date: $12,518,484.00 Total Project Funds Expended through: 09/30/2020 $6,824,811.64

Key Constraints In early 2020, and within the second quarter of PY2, COVID-19 started to spread in Georgia and worldwide. GoG took immediate and quite severe measures and implemented restrictions to ensure increased levels of social distancing and limit the spread of the virus. The majority of State agencies closed-down and shifted to remote working, public transport shut down, and inter-city travel was restricted. The lockdown lasted from mid-March to the end of May and even after reopening, some restrictions have remained in place. Most business activities were suspended for the 2.5 months period from March to May. Although agricultural activities were allowed, GoG introduced new rules for transportation of the workforce and operations in the fields, which affected full-scale operation of agribusinesses. The COVID-19 outbreak and related restrictions and lockdown have resulted in a substantial negative impact to the economy. The sectors that have been most affected include tourism, HORECA, construction, banking and finance, and agriculture. The novel Coronavirus also substantially reduced remittances from foreign countries (around 40% drop in April 2020, compared to the same period in 2019), halted new investments in the Georgian economy (Foreign Direct Investment (FDI) reduced from USD 760 Million to USD 410 Million in the first two quarters of 2019 and 2020, respectively) and led to further devaluation of the local currency (GEL has devaluated from 1 USD – 2.86 GEL in January to 1 USD – 3.22 GEL in October, a 12.6% decline). As a result, the expected decline of the Georgian economy for year 2020 is around 4.8% - 5.1% according to the International Monetary Fund (IMF) and World Bank, respectively. One immediate impact of the pandemic on the agriculture sector was the change in demand trends due to a drastic decrease in the number of visiting tourists, reduction in foodservice activities, and limited availability of agricultural inputs, especially in early 2020, before logistical issues adapted to the new reality. The price of agricultural inputs has also increased, as most of these inputs are imported, and this increased cost of import, coupled with currency devaluation, has resulted in higher prices. Reduction in liquidity within the economy and increased operational risks have also resulted in difficulties with access to finance and the lockdown has increased the cost of labor force movement. All of these factors led to the reduced liquidity of farmers and agricultural entrepreneurs and undermined their ability to invest in new projects. All of these factors have had direct influence on the USAID Agriculture Program implementation. The Program received a much lower than anticipated number of applications in the grant solicitation rounds that were announced after the start of pandemic. In RFA rounds 003B, 004, and 005 the Program received seven, 18, and 19 applications, respectively, even though the numbers were expected to be higher, given the interest observed during the outreach sessions. As the economic impact is likely to have a lag after the actual pandemic events, this problem is expected to continue. Should there be a second wave, these challenges could worsen. Thus, farmers and agricultural entrepreneurs will experience the economic effect of the virus outbreak more severely in the

Page 57 | PY2 Annual Report Contract 72011418C00001/ The USAID Agriculture Program upcoming months. To be able to meet its in-kind grants targets, the Program might need to review the terms of grant financing. Cash shortages, which can only partially be compensated for by the State’s anti-COVID support schemes, have already resulted in a reluctance of entrepreneurs to invest in new ventures, and offering them more favorable terms might be necessary to ensure the smooth implementation of the grants program. COVID-19 substantially impacted the USAID Agriculture Program’s technical assistance activities as well. Due to the lockdown, closure of borders, and restricted international and local travel, the Program had to switch to the online formats and cancel several of the planned activities, including participation in international fairs and exhibitions and berry and spice festivals. These issues are described in the respective chapters of this document. Annex 1: The Ongoing, Initiated, and Completed Technical Assistance Projects Submitted as a separate document. Annex 2: Online Trainings Conducted in Project Year Two Submitted as a separate document.

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