Abstract
The potential of the Georgian wine industry is not fully utilized. High fragmentation of agricultural land leads to limited production that restricts farmers' access to capital resources, finances, and markets, and prevents further development of the Georgian wine industry. Grape collectors and wine makers need help to join their capital and efforts, to gain economies of scale in production and marketing by jointly accessing agricultural inputs. This study aims to identify the importance of farmer cooperatives for grape producers in the Georgian wine industry in order to overcome inefficiency in the sector. Furthermore, this research project investigates the barriers and driving forces of smallholder grape farmers or wine makers to join cooperatives. Semi-structured interviews were conducted with stakeholders of the Georgian wine industry in order to assess different perspectives on the importance and benefits of farmer cooperatives in the local context. The interview results permit economic analysis of transaction costs, agency theory and property rights in the context of the nascent cooperative movement in the Georgian wine industry. The interviews revealed that development of agriculture cooperatives in the Georgian wine industry is strongly dependent on both farmer enthusiasm and governmental support.1
Highlights
The wine industry is one of the most important sectors of the Georgian economy and the second most important export commodity
This study aims to identify the importance of farmer cooperatives for grape producers in the Georgian wine industry in order to overcome inefficiency in the sector
The interviews revealed that development of agriculture cooperatives in the Georgian wine industry is strongly dependent on both farmer enthusiasm and governmental support
Summary
The wine industry is one of the most important sectors of the Georgian economy and the second most important export commodity. The share of Georgian wine exports is expected to be 6% of total exports in 2014. After Moldova, Georgia is the second county in the world when it comes to the share of wine in total merchandise exports [2]. Despite the Russian embargo on beverage imports in 2006, Georgia could find new markets and expand its exports. Russia was Georgia’s main market for beverage products over the past few decades and along with postSoviet countries, it was the main destination of almost all of Georgia’s wine exports. In 2006, Georgian wine exports fell by 64 percent compared to the previous year. From 2008 to 2012 wine exports grew by 18 percent on average, which was caused by exports expanding to new markets [1]. Since 2012, after the Russian market for Georgian wine reopened, Russia has been soaking up the majority of Georgia’s wine exports
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