USAID Supports Georgia’s Hazelnut Farmers to Reach the World Market

Tuesday, February 18, 2020
A USAID-supported hazelnut processing facility near the Administrative Boundary Line with Abkhazia.

USAID supports Georgia’s hazelnut producers to increase their commercial viability and deliver high-quality products to the world market.

 When USAID first started supporting hazelnut production in Georgia in 2011, the sector was known for disorganization and inefficiency.  Despite Georgia being the world’s sixth-largest producer of in-shell hazelnuts, its farmers and processors lacked commercial viability.  Most production came from small-scale farmers producing less than one ton of hazelnuts annually.  Demand was unstable, with most of the product being sold to market speculators at low prices.  Quality varied tremendously and uncertainty was the norm.  As one farmer put it, “the only thing you can trust is the price.”  Inadequate transportation and storage were significant barriers to the sector’s development. In many cases, by the time the nuts reached processors, they had already been damaged and lost a lot of their value. 

Despite these problems, USAID recognized a sector with untapped potential – with greater efficiency and higher-quality yields, hazelnuts could drive economic growth and generate exports.  Given that hazelnut production sustains more than 50,000 smallholders and microenterprises, most of whom are located near the Administrative Boundary Line with Abkhazia, developing the sector could also help build resilience in vulnerable communities. 

Since 2011, USAID has partnered with AgriGeorgia/Ferrero and the Government of Georgia to leverage more than $5 million in investment from the private sector and $2 million from the Government of Georgia to build long-term capacity.  USAID support has led to larger, higher-quality harvests, a modern network of processing facilities, and a grading system that ensures that hazelnut prices reflect their quality.  USAID has also helped build the capacity of the Georgian Hazelnut Growers Association (GHGA) and the Hazelnut Exporters and Processors Association (HEPA), two industry associations which play critical roles supporting the sector’s commercial sustainability. 

USAID support has also helped farmers build resilience against pests.  Over the past three years, USAID has partnered with the Ministry of Environmental Protection and Agriculture, the National Food Agency, and local government bodies to effectively combat the brown marmorated stink bug, a pest that has caused approximately $200 million in damage to the hazelnut sector since 2015.  This assistance has helped the Government of Georgia and local farmers to mitigate the damage posed by pests in the future, putting the hazelnut sector on stronger footing.

Over the next five years, USAID will support the hazelnut sector to become self-sustaining, and no longer require foreign assistance.  To reach this goal, USAID will: assist the two hazelnut industry associations -- GHGA and HEPA -- to become financially independent and effectively serve the needs of their members; catalyze investments in hazelnut processing infrastructure and related technical expertise; establish a hazelnut traceability system; and pilot a warehouse receipts system that will expand smallholders’ access to finance. 

With this support, Georgia’s hazelnut sector will deliver high-quality products to the world market, generate higher incomes for Georgia’s smallholders and microenterprises, drive economic growth and rural development, and serve as a model for other high-potential agricultural sectors in Georgia.

 

Last updated: February 19, 2020

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