Policy Briefs

Georgia's Input Subsidy Program
Monday, 02 May, 2016

Agricultural input subsidy programs are meant to increase crop production, contributing in this way to improved food security and the rise of incomes of smallholder farmers. An important goal of such programs is to develop efficient input supply systems, improving farmers’ access to inputs and adoption of new technologies (e.g., use of new seed varieties, fertilizers, and pesticides). Nevertheless, because of the high opportunity cost of subsidies for other public goods and social transfers, these programs are widely debated in the literature.

Georgia has been implementing the Agricultural Card Program since February 2013. Farmers received vouchers for plowing and purchasing agricultural inputs. The budget of the program was 290 million GEL in 2013. It was reduced to 90 million GEL in 2014 and to 50 million GEL in 2015 and 2016.

Our investigation shows that the program was not properly targeted, neither geographically nor by poverty considerations. Moreover, farmers worry about more severe problems than plowing and fertilizing; problems related to irrigation (mostly in East Georgia) and difficulties in the marketing of agricultural products (mostly in West Georgia) was stated to be the primary concern.

Since September 2014, the ISET Policy Institute has been working with the German Economic Team (GET). In May 2015 ISET-PI and GET extended their partnership and began working on a variety of policy briefs for Georgia's industrial development. These briefs will simultaneously advance research in the sector and provide the Georgian government a set of guidelines for the development of its own policy, exploring where Georgia's comparative advantages lie. The German Economic Team is a consulting group that provides advisory services to the Georgian government on economic policy and is supported by the German Federal Ministry for Economic Affairs and Energy.