3 March 2020
BRI and Climate Benefits See Georgia Emerge as Key Olive Oil Exporter
Enhanced nurturing of olive trees and high-speed connections to China set to boost country's commercial prospects.
A combination of its geographical and climatory advantages, together with its alignment with a primary route of the Belt and Road Initiative (BRI) – China's ambitious international infrastructure development and trade facilitation programme – is expected to see Georgia emerge as one of the world's key sources of olive oil. The likely ascendancy of this formerly Soviet republic has also been ascribed to its relative success in eliminating once-endemic corruption, while also conforming to international norms with regards to investment protocols, judicial concerns and commercial transparency.
Its success here is all the more remarkable given it's little more than 10 years since the country planted its first 20,000 olive trees. At the time, it was far from certain that these would lay the foundation for a new agricultural industry, one that would go on to provide a stable income for many in the country's rural economy. Essentially, it allowed such residents to diversify beyond grape planting and cheese production and start to make inroads into an industry where demand continues to grow on a truly global basis.
It was the country's eastern Kakheti region that became the hub of this nascent industry, and is now home to hundreds of hectares of olive trees. It was here that the project moved beyond being merely commercial and became established as a priority socially sustainable enterprise, geared to supporting local residents while not disrupting a traditional way of life that stretches back for the best part of 2,000 years.
It's the region's climate, however, that has ensured the success of the project. Kakheti is located on precisely the same latitude as Greece, Italy and Spain, the three global leading suppliers of olives and olive oil. While, in these long-established sources, an olive tree typically yields 60-80kg of olives, the high-tech approach adopted by Georgia's agriculturalists has resulted in average yields of about 100kg, an outcome that has again boosted the country's chances of success in the sector.
This enhanced yield is partly down to the emphasis on delivering effective irrigation laid down from the planning stage and the decision to maintain a wider than normal gap between individual trees. Much of the required know-how was imported from Greece and Italy, with experts from these countries also on hand to steer the nurturing of the trees through to their first harvests, some four years after they were planted. The input of these highly experienced individuals also helped ensure that the olives were subsequently processed and preserved in line with prevailing international standards.
Fortuitously, across the world, demand for olive oil has continued to grow, with Australia and China emerging as two of the leading markets. In the case of the latter, as the food preferences of its citizens have continued to evolve, Georgia is well-positioned to become one of its preferred olive-oil suppliers, largely because of its competitive pricing and a logistical connectivity that has been boosted by the BRI. With the Trans-Caucasian Baku-Kars Railway running through Georgia and connecting to the port of Baku, this makes it relatively straightforward to transport olives and their derivatives across the Caspian Sea to Aktau or Atyrau, Kazakhstan's key marine freight terminals. From there, they can be conveyed on a direct rail link to Khorgos, a dry port on the Kazakhstan-China border, and then onto the heart of mainland China via the Xinjiang-Uygur region.
In 2018, Georgia became the first former Soviet republic to sign free trade agreements with both mainland China and Hong Kong, a development that has since facilitated a number of successful partnerships between players in the three territories. This commercial relationship has been further enabled by the relative stability of the Lari, Georgia's domestic currency, with its ease of convertibility helping to streamline the export and import processes. With these factors also likely to come into play with regard to the olive-oil sector, Hong Kong-based distributors are well-placed to benefit from Georgia's commitment to expanding its export base throughout Asia.
Leonid Orlov, Moscow Consultant