Journal number 2 ∘ Rezo Manvelidze ∘ zanda meskhidze ∘
Problems and Possibilities of Sustainable Food Farming Formation in the Post-Pandemic Period

journal N 2. 2023

Economic development is influenced by various internal and external factors, including economic crises, however, there is a known crisis, which independently creates a delay in the development of various sectors, and it is not directly caused by economic, typical factors. A similar atypical crisis began at the end of 2019, and 2020 year turned out to be a turning point for the world economy, the Covid-19 pandemic created an economic crisis, which management depended not only on the economy, but also on the health sector, on the duration, scale, and values of various limiting factors.
Despite the significant disruption in various sectors of the economy, the pandemic, along with the challenges, created new opportunities in agriculture and gave farmers a kind of incentive to expand production, and searching for innovation.
It is a worldwide recognized fact that the production, organization, and management of agricultural products do not lose their relevance during any kind of crisis, because food security formation is a concern, especially the current level of world food security. The atypical world crisis and high inflation increased the prices of consumer products, which aggravates the social background of the country, accordingly, it becomes even more important to implement various targeted projects on the part of the state, to develop a strategy focused on the growth of local production, rational use of own resources.

Keywords: Sustainable, atypical, pandemic, food balance, sectoral structure, transformation.
JEL Codes: L60, L66, Q10, Q18,

Introduction

Considering the level of food production and world food security, agriculture is an important sector of the world economy. The mentioned sector experiences great losses during economic crises, which significantly reflects the socio-economic situation of the country. Obviously, identifying the type of crisis and its underlying causes is important for its timely elimination.However, there are cases when we are dealing with a crisis that is not caused by economic, typical factors and reasons, so that is an atypical economic crisis. In recent times, a similar crisis has been recorded in world history known as the Covid-19 pandemic, when the world economic order has changed dramatically, and its recovery has entirely depended on the health sector and state support measures.
The pandemic has affected almost all sectors of the economy. The economic breakdown is particularly noticeable in developing countries, which are resource-poor to implement more supportive policies, and the damage is much greater because their economies, agri-food production, are not ready to deal with such pandemic shocks. Economic recession is reflected in the reduction of per capita incomes, which leads to the deterioration of the social background of these countries. According to the report of the National Statistics Service of Georgia, the average monthly income per person in 2019 was 336.1 GEL, in 2020, it decreased by 4.3% and amounted to 321.4 GEL. In parallel with the inflation caused by the pandemic and the increase in the prices of products, the decrease in income complicates the country's overall economic and social background. However, the assessment of the country’s current situation in detail, and analysis of the trends in the period after the pandemic is important, which we will discuss in the present article.
The purpose of the article is to present the problems associated with an atypical economic crisis and to analyze its consequences in the food industry, to generate recommendations, and useful tips for the sustainable development of this sector. We will provide our readers with our opinion on the development of food security strategies, government programs, international relations, and other global trends, on the issues of development of mitigating negative consequences of hostilities between neighboring countries.
In this article, we will analyze and investigate how the atypical crisis has affected the agricultural sector of Georgia during the period from 2019 to the present, that’s why we will use various types of statistical data, diagrams, tables, research and opinions conducted by scientists in the field to demonstrate our opinions.

The Main Part

The main reason for the decrease in the productivity of the sectors involved in the formation of the gross domestic product of Georgia is an atypical crisis. Obviously, any type of economic crisis has a negative impact on the development of various fields, however, when the crisis is caused by non-economic factors, the difficulty of dealing with it increases, because the management mechanisms are unknown and at the same time independent from the economy. Covid-19 appeared at the end of 2019and turned 2020 into a pandemic year for the world - a pandemic that caused disruptions to the economy and activities. The development of the economic sectors depended on healthcare. This type of economic crisis was called an "atypical economic crisis" by academician Vladimir Papava [4].
The virus spread in China (Covid19) and soon spread worldwide, and the area of its spread was increasing daily. In order to prevent and limit the spread of the virus, the mobility of people was restricted, which caused a delay in the development of the economy. Part of the business moved to remote services, but not all jobs could adapt to the principle of remote work, which ultimately led to a temporary suspension of businesses.
In the short term, the crisis leads to a decrease in the demand for existing food, the population begins to make various types of savings and reduce costs. Also, access to raw materials and other necessary resources becomes difficult, farmers' income and demand decrease, which in many cases leads to the closing of the enterprise. And in the long term, the economic crisis may affect agricultural productivity, as investments in research and development, technology, and infrastructure are reduced, which will hinder the advancement of this sector.
In 2020, the world faced a major health challenge as a result of the COVID-19 pandemic and the resulting global economic crisis. Since the key to getting out of this crisis was in the healthcare sector, academician V. Papava called the economy "hostage of healthcare". However, it is clear that "Coronomics" is a subject of economics and besides the fact that it should be managed by doctors, it is necessary to create different economic plans, strategic documents, which will be targeted at saving or promoting various sectors of the economy. [8]
Different countries responded to the challenges of the atypical economic crisis in different ways, among them, Italy received 80,000 migrant workers in agriculture because this sector becomes the most important during the crisis. Also, France allocated 300 billion euros for small and medium-sized businesses. The European Union has also created projects, which cost 100 billion dollars for its member countries for the agro-food sector and companies working in this direction. America has also allocated 19 billion to help farmers, and not only. The world has spent significant resources to mitigate the expected negative consequences of the crisis, especially for agriculture and agro-food production. Because in the background of deteriorating food security, in parallel with import restrictions and economic shutdown, feeding the population and local production becomes the priority that the economic sector of the state should start thinking about [2].
During the crisis, the Georgian government developed an "anti-crisis plan" focused on promoting agriculture,including helping small land farmers,providing grants for technicalequipment, implementing and promoting international standards, free land reclamation services, agricultural insurance benefits, and others (see Table 1)
Table 1

Source: Ministry of Environment and Agriculture of Georgia. Types of state support according to the anti-crisis plan

As we can see, our country tried to support agriculture in different directions, with detailed targeting of packages. The results of this support actually produced can be seen in the assessment of agricultural production and the share of this sector in the country's gross domestic product.In general, the pandemic background and the atypical economic crisis significantly changed the volume of the gross domestic product. If we take a look at the graph provided by the National Statistics Service of Georgia, we can clearly see the consequences of the crisis.

Gross domestic product at constant 2015 prices

In 2020, the volume of the gross domestic product decreased by 2.7 billion GEL, largely caused by the atypical economic crisis and the Covid-19 pandemic. In fact, a 6.8% decrease in the gross domestic productwas recordedin 2020, which turned out to be quite a severe turning point for the economy, because it was during the period when various activities were stopped and even bigger employment problems arose.
However, it is interesting to see what effect the crisis had on the agricultural sector in particular and how much its share in the gross domestic product changed, because during the crisis we saw the events caused by the pandemic shock in the population:Some were stockpiling and unwisely buying large quantities of products,which increased the cost of goods.Some farmers created local production and the population returned more to farming activities, the suspension of businesses in foreign countries led to the return of migrants and their involvement in agriculture, Instead of eating in restaurants, cooking at home has become popular, which is explained by the suspension of the restaurant sector. All this led to the fact that certain sectors continued to make profits, but some were completely stopped or reformed.
As it’s shown in graph 1, in 2020, the structure of the GDP has decreased, which is logical in the background of the pandemic, it has formed in accordance with the profits produced within the country, including industrial activities, construction or transport businesses, service fields, agriculture, etc.The 1 diagram clearly shows the specific share of industries in the GDP.

 

 

The sectoral structure of the gross domestic product in 2020

As we can see in diagram, in 2020, the share of agriculture in GDP was determined at 8.4%, and in 2021, agriculture, forestry, and fish farming made up 7.4% of GDP, and in 2019, it was 7.2%, which in 2020 is lower than the indicator, the mentioned information is clearly presented on graph N2, where it can be seen that in 2020, the share of agriculture in GDP
increased and exceeded the indicators of 2019 and 2021.

Share of agriculture in GDP

 

 

It is clear, that agriculture had a relatively higher share of the total GDP than in the period when all branches were performing their activities in equal conditions.Besides, can we assume that the crisis did not hinder the development of agriculture?! That’s why it is necessary to review various circumstances, including state policy, anti-crisis plan, foreign trade issues, and climatic factors among them. During the Covid 19 pandemic, government regulations restricted a lot of economic activity and banned various jobs, however, the government has not stopped the activities of agriculture and related fields. Even when the country was under curfew and movement was restricted across the country farmers had special permits to carry out their activities. While the demand for food products has increased against the background of various restriction policies, there was no restriction on the export of products from Georgia, and imports decreased, which reduced the negative balance in foreign trade by almost 18% in 2020 compared to 2019 (See Table 2).

foreign trade

Table 2

 

Since 2019, the Rural Development Agency has been offering various support programs to farmers, such as the “State Program for Support of Beekeeping Agricultural Cooperatives“ „State Program for Co-financing Storage Enterprises of Agricultural Cooperatives“ „Agricultural Machinery for Harvesting Co-financing Program“,“ State program for Support of Agricultural Land Owners“,“ Co-financing program for harvesting agricultural machinery“,“ State Program for Rational Use of State-Owned Pastures in Mountainous Regions“,“ Program for supporting hazelnut production“,“ Preferential Agrocredit Project“,“ „Bioproduction Promotion Program“,“ Integrated Development Program for the Pilot Regions“,“ State Co-financing Program of Refrigerated Storage Facilities for Berry Crops of Agricultural Cooperatives“etc.
In 2019, various companies in the Autonomous Republic of Adjara were financed in terms of berry cultivation, specifically, in the direction of blueberry growing, among them is LLC "Noma", which received more than 100,000 GEL co-financing from the Rural Development Agency for the purchase of various necessary equipment, cold storage, seedlings, and irrigation facilities and benefited from preferential agro-credit. It should be taken into account that blueberry culture is becoming popular day by day and more farmers are involved in growing the said berry, however, there are also a number of problems, such as product warehousing, storage, and timely sale, which indicates the necessity of integrating farmers and creating cooperatives.
LLC "Noma" is engaged in the collection and processing of medicinal plants, including wild blueberries, which are obtained in the highlands of Adjara. During the year, about 120 tons of blueberries are harvested and processed for export, local residents are mainly employed in the process, and the harvested blueberries are purchased from them. Obviously, the said blueberry syrup has its losses, but the company has implemented the so-called efficient production technology, which means that the juice left over from the extracted forest blueberries is processed and makes a unique Georgian product in the form of blueberry wine, the remaining leaves are dried and bilberry tea is produced, that allows the company to work without loss and achieve the maximum possible profitability. A similar type of approach needs to be implemented in different directions so that farmers can use the resources to the maximum and get more benefits.
The production of honey in Adjara is quite relevant, the natural environment, climate, ecology, and flora give Adjara honey a special taste and popularity,, the mentioned product may become a business card and find its place in export as well. At first, beekeeping was only a family activity and beekeepers sold their products according to the demand. However, today the mentioned activity has gone much further; the "Union of Beekeepers of Georgia" was established. An organization founded in October 2018 by nine legal entities (7 sector associations and 2 companies) and nine individuals, the organization is developing and at this stage 13 sectoral organizations (10 associations and 3 companies) have already joined it. There are more than four thousand beekeepers throughout Georgia. Adjara is the most developed in this regard, especially the honey of "Jara", which was the first to enter the international arena and paved the way for other beekeepers.
In Georgia, agriculture is considered as one of the priorities, and the amount of production of various crops is gradually increasing,for example, 195 thousand tons of potatoes are produced in 2019, 209 thousand tons in 2020, and 235 thousand tons already in 2021. We have a positive indicator in meat production, the rate of self-sufficiency has increased from 48% to 51%, and an increase in wheat production. The pandemic and the war situation have made it clear that relying entirely on the import of this culture is illogical and counterproductive, therefore, targeted spending to promote this culture has been partially effective, and in 2021, 136 thousand tons of wheat were already produced, which is 33% more compared to the previous year. The increase in production has also increased the self-sufficiency rate and already in 2021 it is 22%,while only 15% was recorded in previous years, the state of food balances in 2018, 2020, and 2021 are presented in the tables below.

 

Food balances 2018-2021

 

Table 3

Self-sufficiency ratios

Graph 3.

The increase in the production of the wheat source is very much necessary, especially when the food basket of our country consists mainly of bread products and at the same time the two largest importing countries are in a state of war.
It is also worth noting that in the post-pandemic period, grape production decreased by 14%,namely 317 thousand tons were produced in 2020, and 272 thousand tons in 2021, which is caused by the losses received during the pandemic and a kind of fear that farmers will not be able to export their products, meanwhile, grape production is the only crop with the highest self-sufficiency rate, at 173% in 2021, which means that this culture has the most potential to exploit export markets, so it is necessary to deeply study the challenges in this direction and take measures to stimulate farmers.
In the agro-food sector, it is necessary to implement various strategic programs and to implement a number of projects for sustainable development. The Covid-19 pandemic has shown us that local production and increasing self-sufficiency ratios are essential for the country's economy; meanwhile, the pandemic has created different types of opportunities in the field, including remote jobs, in terms of various digitization and implementation of digital technologies. Various projects have become more accessible to the population, among them; the website and hotline of the Rural Development Agency are actively working. During the pandemic Covid-19people became more interested in hygiene and natural production,discussions on food safety have increased and there is a lot of involvement in standardization of production(HACCP, Global GAP, ISO), without whichit is difficult to sell manufactured products in Europe or the Gulf countries.
Despite the increase in the production of some products and the increase in the share of agriculture in the GDP, the country faces a major challenge in terms of price increases,the selling price of daily consumption products has been increased, and this is one of the negative factors of the global pandemic, the suspension of certain productions led to an increase in prices and high inflation, which is obviously very difficult to stabilize in a short period of time. That is why we are talking about promoting local production because imported goods are already coming in at an increased price, which can be explained by the increase in the foreign currency exchange rate along with the increase in cost. If we take a look at the price changes from 2018 to 2021, we will see that the prices of almost all items have increased, including products such as bread by 24%, beef by 31%, eggs by 41%, fish by 56%, oil by 98%, etc. (see Table 4).

Average annual prices of food products

Table 4.

Georgia is one of the food importing countries. The share of imported food in the consumer basket is high and is about 80% of consumed food. According to National Statistics Service of Georgia data, (Table N3) in 2020, the self-sufficiency rate for wheat was 15%, for meat in general - 49%, for vegetables - 63%, and for poultry meat - 34%.Due to the high demand for food imports, food prices in Georgia are more sensitive to exchange rate changes and international price fluctuations.
The dynamics of the exchange rate:The main reason for the increase in food prices in the last two years was the devaluation of the Georgian lari against the US dollar. In 2020, compared to 2019, the Georgian lari depreciated by 10.3% against the US dollar, when the exchange rate of the Georgian lari against the US dollar increased from 2.82 to 3.11.The devaluation of the Georgian lari affected the prices of imported food and raw materials, including poison chemicals, fertilizer, fuel, and milk powder. the exchange rate of the Georgian lari is already decreasing, in 2022 it was 2.9156 and in April 2023 it is 2.5461, however, the price of most of the food was not reduced in accordance with the rate. It should be noted that the mentioned issue needs more research and study, but one thing is a fact - the mentioned situation shows the need for the development of agriculture and domestic production. The field of agriculture, both throughout the country and in the region, has been in a state of crisis for years, which was caused by inappropriate attitudes towards the field. As a result, agricultural production has turned into an unprofitable sector. The population's interest in agriculture decreased sharply, and the domestic market of the country was saturated with imported goods. In fact, there has been no introduction of new technologies for years, which would have ensured the production of competitive products, the result of all this was reflected in the economic and social situation of the population, the labor resource has moved from the countryside to the city and even beyond the borders. In 2011, there were 87,700 cattle in the highland region of Adjara, and in 2019, this indicator decreased to 53,600 (1/3).The reason for this is the outflow of the local population and labor force.
The government's attitude towards agriculture has changed dramatically in recent times, however, the development of this field is quite a difficult and long process. The complex events are planned with the involvement of the Ministry of Agriculture and with the financial and technical support of international donor organizations, but to perfect the processes, it is still necessary to carry out a number of measures and to focus on the right result

The conclusion

An atypical economic crisis has changed the socio-economic order of the world; increased prices and high inflation aggravate the social background of the Georgian population. The crisis has shown that local production and self-sufficiency of the country is a necessary factors, because the level of food security is deteriorating and the demand for food is increasing day by day, and on the other side, the pandemic has shown how importing countries reduce the import of raw materials during the crisis, so the country's dependence on imports leads to difficult consequences. Accordingly, there were programs supporting agriculture, which partially gave the sector a boost to development. Obviously, it does not allow us to calm down while a large share of the grocery basket comes from bakery products and the self-sufficiency rate of wheat is still 22%,but the process has started and it is necessary to support it again and develop the right strategic, targeted plans.
As of today, Georgia has a difficult and challenging period. The world market is attractive with its experiences and high purchasing power but also has quite high standards, which remains a difficult challenge for our country. For years, Georgia did not haveappropriate plans, standards, and necessary technical knowledge to increase its production and the competitiveness of its products.Today, several steps have already been taken towards producing more and producing standardized quality products,accordingly, it is necessary to deepen and refine this direction,various projects, awareness-raising training, and more involvement from the state are needed.
With the help of the government and various non-governmental sectors, investments were made in infrastructure and research to support the development of the agriculture sector.This included building new irrigation systems, establishing research institutes, and developing new technologies to improve productivity and sustainability.Despite these efforts, the challenges facing Georgia's agricultural sector remain significant. To deal with those challenges, it will be important for policymakers to take a more holistic approach to agricultural development, which takes into account the complex relationship between economic, social, and environmental factors.
Both the private sector and the state should make equal efforts for the progress of the country and the increase of local production, an entrepreneur as a manufacturer and product creator, the state as a defender of the country's interests, with the right strategic vision and support at the national or international level. When we talk about support from the state for business, we mean:
• co-financing targeted and result-oriented projects;
• Training and sharing the right experience;
• Providing information and raising awareness among farmers;
• Formation of the tax system and adjustment to real possibilities;
• Approaching European standards and supporting organizations in improving these standards;
• Intermediation with the financial sector in terms of "cheap credit";
• And solving other (according to production) specific issues.
The governing and self-governing bodies of the municipalities should timely develop commercial proposals for the rational use of all the possibilities of social and economic benefits of agriculture, for the accelerated development of amateur and innovative industries,carry out structural changes in the determination of investment priorities in important areas, optimal opportunity, adequate development of income and financial resources, rational placement and management of resources.
Modern technologies are fundamentally changing the situation of environmental protection and a healthy environment in terms of room capacities, service, production, management, and marketing.The main requirement is an adequate response to the challenges of producers and consumers, demographic and social changes, and the formation of a stable and safe environment, based on best practices.
In the conditions of an atypical crisis, the inevitable process and opportunities for potentialeconomictransformation presented the problems of the formation of food farming in a new way.Among them, it is important to use innovative forms of management, continuity of these processes, comply with the advanced standards of local and international businesses, develop legal, organizational, and economic parameters for the regulation of the agrarian industry,and develop adapted and useful programs.
On the other hand, the private sector, should create quality products in compliance with standards and take care of customer satisfaction, taking into account appropriate marketing and social activities.
To sum up, the fate of the country's development depends on the increase in the production of domestic products and its competitiveness. Georgia has the potential to be able to provide the country with the main products that can be found in the agro-food basket and also export quality products outside of the country. Therefore, it is necessary to study, complete and implement appropriate measures for the above-mentioned issues. In my mind, this will be the best way to increase competitiveness and the opportunity to strengthen the country, preserve the national identity and take care of future generations.

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