Page 41 - GEORptJul18

Georgia’s dairy sector. The Tbilisi-based research centre compiles the index, considered the Georgian equivalent to the international Big Mac index, based on the prices of the ingredients of the traditional cheese filled bread, namely Imeretian cheese, flour, yeast, milk, eggs, and butter.
Each year there are strong seasonal fluctuations in the price of the cheese, which in turn depends on the availability and price of milk, which rises sharply in the winter. Typically, the index peaks in January and reaches its lowest level in July; last month — in line with usual seasonal trends — the index declined to GEL3.28 (€1.14), down 7.4% m/m. This was largely driven by a 13.5% m/m fall in the price of Imeretian cheese.
“Georgian milk prices exhibit high seasonal volatility, mainly related to structural inefficiencies in the country’s dairy production. Poorly planned calving periods (for most cows, in the winter months) limits the milk supply in winter, which in turn sharply increases milk prices during the winter months,” explained ISET experts.
However, they added in a May 14 blog post , “somewhat lower fluctuations in the Khachapuri Index were observed in 2017.”
“More time is needed to observe if this change is actually happening in Georgian dairy sector. However, a first look at the graph, as well as some recent developments in the Georgian dairy sector, give some hope for the increased modernisation of this sector,” ISET experts said.
They also note recent FAO data indicating that dairy farming in Georgia is becoming more “productive and profitable”, while another factor bringing down cheese prices — they were down 0.9% y/y) in April 2018 — is the wider use of imported milk powder in winter.
9.1.7 Renewable energy sector news
The board of directors of the European Bank for Reconstruction and Development (EBRD) has unanimously approved a $214mn loan to finance a 280-megawatt hydropower project in Georgia, the multilateral lender has announced. In addition, the EBRD will make a $15mn equity investment in Nenskra Hydro, the company that will build the Nenskra hydropower plant. Local residents, who are mostly subsistence farmers, have opposed the project because reduced river flows will affect their crops and some residents will lose their land. Meanwhile, Bankwatch, a network of environmental organisations, has criticised the Georgian government for the secrecy surrounding the project, and for not making public its total cost. The project will be carried out by South Korea's Water Resources Corporation, K-water, and the Partnership Fund, an investment fund that was set up by
41 GEORGIA Country Report July 2018 www.intellinews.com