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Visible Threats to Food Supply in Georgia

Sanctions in Action!

87% of the country's population thinks that "the war in Ukraine is our war as well."

Featured Insights
23.06.2022

Over time, the icon of the businessman has emerged in the public perception as serious men dressed in suits, with huge responsibilities, working in a stressful environment and applying a constructive dialogue format. Does such a perception of a business leader correspond to modern trends? It is essential that all businessmen speak the diplomatic language?


In the postmodern world, a businessman’s role was transformed, which influenced the style of communication accordingly. Business leaders are increasingly trying to position themselves as a part of society and use humor to communicate. This obviously is associated with positive emotion, having an immediate effect on a person’s attitude leading at the same time to a long-term effect. Consequently, strategic humor has become a trend in business communication.


What Is the Meaning of Strategic Humor?


Humor is a simply understandable spoken language focused on key messages. Jokes are easy to remember, while being spread quickly throughout the community they can easily relief a crisis situation. (Meyer, 1990). Result of humor can be instantly seen due to its indicator – an unmistakable emotion - a smile. The humor makes easy to harvest the desired feedback in the target audience, while the emotion received gives us the clear answer to the question of how the set strategy worked. (Hudson, 1979).



The unique qualities of humor and the fact that humor can have a serious influence on a person's attitude shape it into a convenient tool for communication.

Consequently, the area of application of strategic humor is quite wide. It is used in different fields for different purposes:


შესაბამისად, სტრატეგიული იუმორის გამოყენების არეალი ფართოა. მისი გამოყენება ხდება სხვადასხვა სფეროში სხვდასხვა მიზნით:


  • Diplomats apply the strategic humor to conduct successful negotiations;
  • Presenters use it to make interactive, productive and interesting presentations;
  • Leaders use it to demonstrate their self-confidence, high emotional intellect and humanity (Sourcehumor that works).


What Is a Purpose of Using a Strategic Humor by the Leaders?



"If we make people happy, they will write stories about us, so we will not have to spend a lot of money on advertising," said Elon Musk, one of the most influential businessmen and innovators of the XXI century.


Lately, Elon Musk's eccentricity and the way he is applying strategic humor is clearly observed by everyone. The use of contextual humor for a specific mission has become an authentic style for Musk. Creativity expressed in humor and simple way of communication make him one of the most popular persons of our times. Musk's laconic jokes can change a public agenda and make a business clock move counterclockwise.


Could you name another famous person who can just with a five-word joke bring financial benefits to a business, affect the currency exchange market, and/or significantly change the share value of the companies?!


Use of strategic humor and unique communication style makes Elon Mask:


1. The Strongest Business Influencer

The power of Musk's humor is translated into financial indicators. He can establish effective communication with customers, increase sales and share the value of the company at minimal costs. In addition to his own business, he manipulates the global business sector as well using strategic humor. Specifically, Musk's broken heart emoji significantly reduced the market value of the world's first cryptocurrency (see Twitter 1), and the price of one of the least known cryptocurrencies, Dogecoin, rose from 0.1 cents to 72 cents in 5 months (see Twitter 123). ). (Source: economictimes). In supplement, Twitter has also become the target of Musk's satirical humor. Posts on the social network significantly reduced the market value of the platform and eventually led to its acquisition. (See Tweet 12).


2. An Informal Political Leader 

Sharp wits give Elon Musk charisma along with his popularity, which makes him a strong political figure in the eyes of the public while valuing his other characteristics as a leader. Elon Musk can make political weather, as evidenced by recent developments. Musk played an important political role in the Russia-Ukraine information war, where he of course did not forget to use humor. Musk responded to the threat of Chechen President Ramzan Kadyrov against him with humor, and in response to the way he was addressed by Kadyrov, changed his name to Ilona on Twitter.


3. Optimistic Entrepreneur

It is worth mentioning that being one of the top entrepreneurs he is never discouraged even in case of failure and affords to ease the tense situation with creative humor. He is accustomed to acknowledging his own mistakes and looking at them in humor, while others may perceive them as a tragedy. (See Tweet 1)


What Conclusions Can We Draw from Musk's Example?


Humor is acknowledged as a universal form of easily perceived communication that positively affects a person and creates a positive mood. Consequently, the strategic use of humor by a businessman can increase trust in him and supports in winning people's sympathy. All this leads to a positive effect not only on the personal image of the business leader, but also on his business activities, which ultimately helps to increase awareness and sales.


Considering that the use of strategic humor can bring a lot of benefits to a business leader, it is important to remember that it needs to be used correctly and contextually, as joking about sensitive topics can turn positive emotions into negative ones and lead to bad reviews.


In conclusion, we can say that simple and creative language of communication can establish an emotional connection with the audience and build the perception of a strong, successful business leader.

20.06.2022

To provide a European perspective and assess how Georgia meets the conditions for obtaining candidate status - this was the verdict of the European Commission of June 17, 2022, which all of Georgia was waiting for. But "Companions" Ukraine and Moldova, together with the prospect, also received a recommendation for granting the status of a candidate for EU membership.


According to the same recommendation, Georgia will become a candidate for EU membership if it manages to pull itself out of the quagmire and implement the already repeatedly demanded reforms in the judiciary, eliminate political polarization, achieve de-oligarchization, effectively investigate crimes, promote the creation of a free, professional and independent media, etc. 


The recommendation published by the European Commission on June 17 was a disappointment for many of our compatriots. The opportunity that arose against the backdrop of the Russian-Ukrainian war and the feeling of not using it; Anger at the government or at our own helplessness and a faint hope in our hearts that the Council of Europe will not heed the recommendation of the European Commission - this is probably an incomplete list of feelings and hopes that each of us experienced on June 17th.


The optimistic expectations regarding the status of the candidate for EU membership and the unconditional perception of the advantages of the European choice were once again demonstrated by the survey of 802 respondents conducted by ACT. It is noteworthy that the fieldwork on the study was completed the day before the meeting of the European Commission on June 17 and covered the period from June 11 to 16. The sampling error of the study was 4.2%.

 

Georgian people against Napoleon


Geography is destiny - this phrase is attributed to Napoleon Bonaparte. However, outstanding Georgians believed in changing this fate centuries ago and believe today when we are trying to become members of the European family, despite the fact that we do not have a direct border with it. Europe not only gives many advantages for us in specific areas, but also embodies values that bring us back to the path of our ancestors.


Therefore, the vast majority of respondents have no doubt that the status of an EU candidate - as a path to full EU membership - is important: 84% of respondents think so. The number of those to whom the status of a candidate for EU membership seems insignificant does not exceed 11%.


In your opinion, how important is it for Georgia to obtain the status of an EU candidate?




At the same time, every second respondent expects to receive the status of a candidate member of the EU in the coming months (50%). 33% do not hope to get the status, and 17% of respondents found it difficult to answer the question.


Associated Trio - Together Until the End


The associated trio of countries - Georgia, Ukraine and Moldova - along with their declared aspirations for European integration have a common heavy Russian legacy and lost territories. A similar context and a distinct orientation towards EU membership at first glance seem to have similar prospects, although the recommendations of the European Commission of 17 June confirmed a somewhat different perception of Georgia. Moldova, which has pulled ahead, has become a kind of disappointment against the background of the fact that the country does not participate in hostilities, and there is definitely no leap forward seen by the naked eye.


The fact that the chances for EU membership for Georgia and Moldova, from the point of view of the population, were very similar, was also confirmed by the study. According to the data, respondents emphasized Ukraine's high chances of obtaining candidate status, while Georgia and Moldova were rated roughly the same.


It can be assumed that in the case of Ukraine, which is at war and daily reflects Russian aggression, the decision could be taken for granted to some extent.


But in relation to Moldova, the perception of equal opportunities and the result contradicted the expectations of the population. They believed, that Georgia will also become a candidate for EU membership.


How do you assess Georgia's chances of obtaining EU member status? For Ukraine? For Moldova?



An indirect confirmation that the population was waiting for the EU candidate status is the response to the statement “Georgia is closer to EU membership than ever”, with which almost 4 out of 5 respondents (76%) agreed, and only 1 respondent disagreed ( 21%). 3% of respondents could not answer the question. It is possible that agreeing to the position would also mean seizing a favorable moment in the world political arena, which the country was unable to take advantage of. This is evidenced by the opinion of 2/3 of the respondents that “if Georgia does not receive the status of a candidate for EU membership in the near future, then it will not have such a chance for a long time” (66%).


Do you agree with the following terms:




Merits and Responsibilities for Expected Status


The question of whether the country will receive the status of an EU candidate and whose merit it will be, showed how discredited the political class in the country is and how much citizens remain confident only in themselves. In particular, in the case of the status of a candidate for EU membership, the majority of respondents see the merit of the people, not politicians (40%). In general, the role of the Georgian government in this process is 2 times less - 20% of respondents. 14% point to the role of the parliament, the prime minister and the president as a whole. 9% of respondents talk about the role of Western/European partners.


In the event that the country does not receive the status of a candidate member of the EU, the responsibility, according to 4 out of 10 respondents (38%), lies with the government of Georgia. According to 16% of respondents, the Parliament of Georgia, the President, the Prime Minister and Bidzina Ivanishvili are also responsible for the current situation. 12% of respondents also see the opposition parties as guilty.


In your opinion, if Georgia receives the status of a candidate for EU membership, whose merit will it be?




In your opinion, if Georgia does not receive the status of an EU candidate, who will be responsible for this?



EU membership is equal to the developed future of the country


The benefits of EU membership for the population are quite obvious. In particular, for 9 out of 10 respondents, EU membership directly means a developed future for the country (90%), greater interest and motivation of abkhazs and Ossetians citizens to join Georgia (72%), protection from Russian military aggression (66%). Moreover, not only membership in the EU, but even the status of a candidate for its membership for the vast majority of respondents (84%) is a clear signal for Russia that the country has chosen a Western course. It can be assumed that for this part of the respondents, the failure to obtain the status of a candidate for EU membership indicates, if not directly the opposite, then it may still indicate a dubious foreign policy orientation of the country.


Do you agree with the following terms:


As for the benefits of joining the EU by industry, the respondents most of all expect positive things in the economy (57%). This answer is far behind, although in terms of frequency of mention, the second or third place is occupied by education (42%) and the protection of human rights and the rule of law (41%). The top five also include benefits in healthcare (35%) and military (36%) – the perception of the EU's role in the latter is likely due to events in Ukraine.


It should also be noted that the absolute majority of respondents - 89% perceived the granting of the status of a candidate for EU membership in the near future as a fair decision in relation to Georgia. Therefore, it is important that the decision of June 17 does not increase the feeling of apathy, and that the country's authorities do everything possible to implement the package of recommendations and stand on the right side of history.

13.06.2022

For most companies 2022 started with the question – How to deal with post-pandemic and the war? 


To answer this question we firstly need to look closer to the challenges most companies are facing now: global crisis caused by pandemic resulted in limited operations in many companies; staff members stressed and exhausted due to pandemic situation - suffering by less sleep hours, lowered motivation and longing for live relationships, etc.; inner state of the people full with compassion towards the Ukraine – being present here physically and mentally, with their hearts beating for Ukraine; blocked trade channels and roads, etc. caused by the war.

 All the aforementioned and many other emerging challenges need to be confronted with the new approaches so far. Consequently, the number of companies with similar problems came up to understanding that now there is the right time for significant changes and put the Organizational Transformation issue on their agenda.

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Transformation in itself means making significant changes within the organization which inevitably will result in the effectiveness of the company. The question is how to ensure positive results? We would suggest a way similar to that of how you would increase the probability of conquering the peak of Everest – i.e. you need to go through the necessary preparational process and build a reliable team. Consequently, the people with whom we team together to conquer Everest, need to be exactly the ones we can rely on in the process of the company’s transformation!


The Team of Leaders will Unconditionally Conquer the Everest!


Following the organizational structure, we can only find the formal leaders, who in consideration of their obligations and responsibilities may have a specific positional impact. Though, we cannot even dream of making a step to the Peak Everest, backed up only with positional impact, can we?! Consequently, we need to extend the searching area and look for informal leaders among the employees in any positions.

Through spotting the informal leaders the company can afford to identify those employees who can leverage the transformational process. These persons:




  1. Are the opinion and competence leaders;
  2. Represent professional and social leaders;
  3. Can be the ordinary staff members with leadership potential;
  4. Already have impact on a certain number of company employees;


How to Spot the Informal Leaders?


A number of companies may apply the different organizational researches, though none of the traditional internal organizational research is capable to solve this issue.


In order to spot genuine leaders in the company, the ACT team has invented a new innovative tool for the managers and HR specialists – A Leadership Scanner®.


However, one of the most important functions of the Leadership Scanner® is explained by the title itself – scanner of leaders – which on a basis of specifically designed query and ONA scans the company and reveals those employees who can be thought of as the most reliable during the crisis or transformation periods.


The query is designed in a way that requires the answers which are: 1) non-conflicting – no need in praising performance or efficiency of other employees; 2) objective – impossible to artificially put the informal leaders forward; 3) evidence-based – revealing the existing facts, not suggestions.


The results can be viewed based on easily understandable visual materials/schemes/networks and interactive platforms, enabling high flexibility of the analysis.

It is quite possible to view not only the total picture of the company but also to observe the results at specific departmental and individual levels while obtaining the unique insights and analytics (where rests the unrealized potential; which department is in more need of professional development; where are the weak delegation or micromanagement issues spotted; where the strain is observed; where does the company need the empowerment of the intermediate link, etc. )




Relying on the team of spotted informal leaders and based on insights and analytics, the company is well-positioned to inevitably conquer Everest or any other peak of success.

03.05.2022

Every morning my child starts the morning with a milk breakfast. Of course, when purchasing dairy products, I try to make the best choice, no matter how much they cost.


Well, in the evening, when purchasing repair materials for the house, I often give preference to those markets where there are various preferential promotions and where the price is acceptable to me. This is the best choice for me.


When buying, there are often cases when we physically or mentally sort the desired product by price and thus come to the optimal choice. Therefore, the price of a product is an important lever that a business can control.


Price, in addition to determining the market value of a product, is used as the primary means of communication in today's rapidly changing business environment. Depending on how the price is relevant to the solvency of the segment, brands interact with customers, "befriend" or, conversely, build a "wall" between the product/service and the customer.


Now, in times of war, inflation, and post-pandemic, price and related communications are becoming increasingly important for the modern market, as prices are constantly changing along with the global agenda. Prices are rising for everything: bread, fuel, gold, both basic necessities and luxuries, goods and services.


However, according to the latest market research conducted by ACT, in many industries, price is the leading factor for consumers. For example, if we look at the pharmaceutical market, then a quarter of its buyers (24-26%) decide to choose a pharmacy that offers an acceptable price. Thus, for almost a third of consumers in the retail market, price is the most important factor when making a purchase decision.


How do businesses manage this leverage today?


Price changes, of course, often lead to negative/critical feedback from the consumer, which business in Georgia, as well as in the world, in some cases tries to neutralize with well-known marketing "tricks":


  • Rule 9.99 - An incomplete indication of the price subconsciously signals to the buyer that 9.99 is a more affordable price than 10 ₾, while the difference is “more than” 1 tetri;
  • "Secret" price - often used by businesses to communicate a change/increase or a perceived high price. Brands prefer not to publicly announce the price and inform the customer in case of greater involvement on his part (often simply - “write me personally”);
  • Pricing communication of accessories - sometimes brands offer the buyer prices for individual parts (for example, for a bed frame, cabinet, etc.), rather than the price of the entire kit/product since such communication is associated with a more affordable price in the mind of the consumer.


These tactics are worn out in today's market and can be said to be "deciphered" by the user. For brands seeking to connect emotionally with customers, transparent and timely pricing information must be the key link.


How to use the price list for effective communication with customers?

5 golden rules:



Offer value, not price. The cost repeats the brand and its identity. The customer needs an idea, status, or emotional benefit that he will receive in exchange for paying a certain amount. Businesses that sell a product/service sell the benefits that the end-user will receive through it. Depending on the value of the product/service, brands tell customers what they can become the owners of after purchasing their product/service. This means that when buying Apple products, we buy status, when buying Nike boots, we buy victory and energy, and Reiban glasses for us are a journey and a good mood. When stating the price, we must emphasize what life/everyday problem the consumer will solve with it. At the same time, in branding and communications, the emphasis on values increases the consumer's resistance to possible price changes, making the segment more emotionally attached to the product/service. For example, Coca-Cola is a happiness/family holiday, do you remember its price?




Find out the best price for your customers. To achieve this goal, price elasticity research is effective, which gives the business information about what price will be acceptable/optimal for its audience, in other words, in which case they buy a product/service. Research is critical:

  • Start-up/for new market players - provides information on the market penetration strategy, preferred price, and solvency of the segment;
  • In case of offering a new product or service to the consumer market;
  • In the event of a price change, how relevant is the change? Is there readiness in the segment? What are the benchmarks, upper and lower limits, and how much can the price change?




Remember the communication triangle. Price communication is just as important as the end-user:

  • With employees – often the company's employees are the strongest/most trusted representatives of the brand, transparent communication provided to them increases the positive evaluation of the product/service;
  • With partners - the business environment in which the brand operates, it is desirable to be aware of the price/price changes in order to spread the desired messages / value-value communication in the business community.




Tell the cause, not just the result. Now, with constant changes in public life, the economy, everyday life, and a sense of instability, price changes can be perceived by consumers more painfully than business thinks. In the event that a business changes its price/sets a new price, it is important for healthy communication to provide the customer with a reason for the new price. It is understood that the audience is interested in why the price is changing, will it change again? Because of what? This gives him emotional comfort and readiness. In order for communication to be as transparent as possible for him, the business should try to imagine that price communication is not a monologue of the brand, but a dialogue with the buyer. Follow the rules of the dialogue:

  1. The rule of truth - be open, and provide buyers with only reliable, verified, and real information about what caused the price increase;
  2. The rule of quantity. Provide the buyer with the required amount of information. For example, if pricing is associated with an increase in the cost of local production, it is not worth talking about global trends in this direction;
  3. Relevance rule - the client is interested in communication based on factors related to the topic/price. For example, do not use content that is irrelevant or inappropriate for communication.




Finally, it is important for businesses to be prepared for any feedback, since the audience, among other characteristics, is distinguished by its loyalty and degree of price stability. However, the dialogue should be ongoing and the next steps the brand should determine in addition to other important metrics based on the feedback received. Thus, price is an important communication channel. As a result of dialogue with customers, the business receives information for improvement, and this process is continuous and iterative.


14.04.2022

From the very beginning of the war in Ukraine, it was difficult for the whole world to imagine what courage, courage, patriotism, and desire for freedom the Ukrainian people have. Although the strategy of the Russian aggressors was to capture Kyiv within 72 hours after the invasion of Ukraine, and according to American experts, it should have taken 96 hours for the occupiers, Ukraine has achieved success and continues to fight for independence and national values for 4x days.


Thanks to their incredible courage and patriotism, they are able to repulse the enemy, and return objects of strategic importance, often at the cost of their own lives delaying or slowing down the advance of the Russian invaders. Beyond the perseverance and heroism of the Ukrainian people, we see the impact of effective leadership.


Every person has the potential to become a hero, and we see this every day in the example of Ukrainians. It is also important to note that in a crisis situation in the minds of every person there is a constant struggle between fear and courage, and in this case, the greatest importance is attached to leaders, i.e. people who show initiative and do not surrender to the enemy, fighting for their freedom and, in this case, their country. We can say that it was President Volodymyr Zelensky who turned out to be such a courageous and unshakable leader, who ignited in the Ukrainian people the desire and attitude to fight for freedom and the defense of the Motherland. In addition, regardless of our origin, social status, or any other data, watching the ongoing events, each of us is convinced that anyone has the opportunity to become a true leader.


Given the current situation, it is noteworthy that business industry leaders can see many interesting and useful insights in Zelensky's leadership style. If you observe Zelensky's actions during the hostilities, you can identify the characteristics of his leadership effectiveness, which strengthens the Ukrainian people and, despite the victims, does not reduce the fighting spirit.

 

Together with citizens for freedom

After the escalation of the situation, Zelensky’s negative response to the proposal to leave the country for security reasons became one of the cornerstones of the Ukrainian spirit. The President addressed the West with the following words: “The battle is going on here [in Kyiv]; I need ammunition, not help to escape" ["the fight is here [in Kyiv]; I need ammunition, not a ride" (source)]. It was a great opportunity to inspire others by your example. After all, the leader, inspiring his own courage, inspire others to show courage. It is clear that his attention is not focused on fear and fueling his own ego, but on strengthening the capabilities of Ukrainians.

 

Simple and effective communication

Amid misunderstandings and misinformation by Russian propaganda, Zelensky and his team are actively trying to stop any attempts at speculation and deliberate misrepresentation of people, as Russian leaders are constantly trying to bring confusion and chaos into society. The President of Ukraine and members of the government team are broadcasting live from the streets of different cities in order to directly inform citizens about what is really happening. Thus, they call on the citizens of their country to show courage and show their support and support not only in words but also in deeds. And they point out to the enemy that no one is going to run away from the front line, because not imperial goals are at stake, but the democratic state of Ukrainians.


The form of communication between Zelensky and his team is also characterized by a very direct, constructive, and leitmotiv style in the international arena. Whether it is online participation in parliamentary meetings of different countries, speeches at the summits of international organizations or just being active - the fact that the Ukrainian government team is well aware of the importance of strategic communication and is actively spreading the message - Ukraine will not stop fighting Russian aggression.

 

Empathy and authenticity

It is important for leaders to show empathy and perceive the emotions of other people. One only needs to listen to one speech to notice Zelensky's charismatic manner of speech and emotional words, which are even more acutely perceived in the crisis situation Ukraine is currently in as a result of the actions of Russian imperialism.


Despite the seriousness of the situation, President Zelensky retains his face, and remains authentic in any situation without any show or formality - whether it is a briefing with journalists, a speech in a military T-shirt at international summits, or a harmless joke about the phone calls he wants. He simply shows the Ukrainian people and the whole world that he is an ordinary person and experiences the usual emotions for everyone, which echoes with any person and also causes an emotional connection.


It is clear that this is not a complete picture and description of what leadership qualities Vladimir Zelensky showed, and much more can be said. However, for today's business leaders, you can really see interesting and powerful insights. Using the example of Ukraine, we can conclude that the charisma of leaders attracts attention, their courage is admired, and their dedication and perseverance inspire people to fight for their ideals and values. It is also clear that people support leaders who fight for them, but make sacrifices for the leaders who serve them.

28.03.2022

In the light of the ongoing Russia-Ukraine war, due to the geopolitical and economic challenges, it is becoming critical to assess the probability of provision of Georgian population with a sufficient food supply. It is important to use the existing agri-food supply potential, maximizing its effective use while accurately planning for the country’s food supply chains.


It is known that the National Statistics Office of Georgia determined the following basic food products to be of strategic importance and essential for the human organism: wheat, corn, potatoes, vegetables, grapes, meat (including beef, pork, lamb, goat, poultry), milk, dairy products, and eggs. Analysis of existing data on the mentioned highly nutritious products, the current situation, and predictions enable us to answer the questions on whether the country has the potential to deal with the existing challenges and whether it should take steps to put a crisis plan in action.


The Self-sufficiency Ratio 2020


According to the Food and Agriculture Organization (FAO), food security can be assessed by the self-sufficiency ratio, which measures whether to what extent is the country capable to meet the demand for the given product by relying on local production. Food security is influenced by the economic and natural resources of the country.


While food makes up the highest portion (30.23%) of Georgia’s consumer basket (Geostat; Consumer basket product category weights 2022), it is of most interest to know whether the local economy can meet the supply-demand of the population on food containing the essential nutrients? How much does the country rely on imports, and for which products?


The self-sufficiency ratio is calculated by the following formula: Local production divided by, local production plus import, minus export, multiplied by 100.

In the case of a positive trade balance (if the export value exceeds the import value), where other variables remain constant, the local production growth has a positive effect on the self-sufficiency ratio. In a configuration as such, an increase in imports causes a decrease in the self-sufficiency ratio, making us more dependent on other countries. As for the exports, the self-sufficiency ratio rises in line with the increase in export volumes.



As of data from 2020, in the list of the aforementioned highly nutritious products, grapes have the highest self-sufficiency ratio of 145%, as well as the highest export rate, which seems quite reasonable, as, in case of surplus production, the product can be exported abroad. Wheat takes the last position at the bottom of the list, with a self-sufficiency ratio of not more than 15%, compliant with the same 2020 data. While placing these data in a logical chain consisting of the following: (i) the raw material values and the frequency of their use; (ii) the negative expectations born by the war; (iii) the sanctions imposed on Russia being our main importer at this stage; and (iv) the new economic environment built in our country. Based on the aforementioned, it can be assumed that to avoid a sharp increase in bread price, it might be necessary to look for a new trading partner to compensate for the product shortfall.


According to the Food and Agriculture Organization (FAO), food security can be assessed by the self-sufficiency ratio, which measures whether to what extent is the country capable to meet the demand for the given product by relying on local production. Food security is influenced by the economic and natural resources of the country.


While food makes up the highest portion (30.23%) of Georgia’s consumer basket (Geostat; Consumer basket product category weights 2022), it is of most interest to know whether the local economy can meet the supply-demand of the population on food containing the essential nutrients? How much does the country rely on imports, and for which products?


The self-sufficiency ratio is calculated by the following formula: Local production divided by, local production plus import, minus export, multiplied by 100.

In the case of a positive trade balance (if the export value exceeds the import value), where other variables remain constant, the local production growth has a positive effect on the self-sufficiency ratio. In a configuration as such, an increase in imports causes a decrease in the self-sufficiency ratio, making us more dependent on other countries. As for the exports, the self-sufficiency ratio rises in line with the increase in export volumes.


As of data from 2020, in the list of the aforementioned highly nutritious products, grapes have the highest self-sufficiency ratio of 145%, as well as the highest export rate, which seems quite reasonable, as, in case of surplus production, the product can be exported abroad. Wheat takes the last position at the bottom of the list, with a self-sufficiency ratio of not more than 15%, compliant with the same 2020 data. While placing these data in a logical chain consisting of the following: (i) the raw material values and the frequency of their use; (ii) the negative expectations born by the war; (iii) the sanctions imposed on Russia being our main importer at this stage; and (iv) the new economic environment built in our country. Based on the aforementioned, it can be assumed that to avoid a sharp increase in bread price, it might be necessary to look for a new trading partner to compensate for the product shortfall. 


Should We Re-evaluate the Major Consumer Products?


According to research conducted by ACT in 2021, the majority of Tbilisi residents consume bread and breadstuff, vegetables, fruits, dairy products, and eggs on a regular basis (every day / multiple times a week). The consumer basket consisting of these products matches with most of the highly nutritious products on the list. The most significant factor here is the frequency of consumption of bread and breadstuff. Most individuals consume bread daily. Taking into account wheat’s low self-sufficiency ratio and the current scenario which makes the prospects related to wheat even more unpredictable, it is quite possible that individuals will either have to change their consumption patterns or pay a higher price for this essential consumer product.



The same applies to vegetables, which are the runner-ups in terms of frequency of consumption in the consumer basket. The self-sufficiency ratio does not get our hopes up either: according to 2020 data, the ratio is 63%, with imported goods making up one-third of all stocks.


Georgia's Two Largest Trading Partners Are at War


The war between Russia and Ukraine brought to the table the importance of the role of the two warrior countries as our top food suppliers. As seen in the preceding data, Russia and Ukraine are often among the top importers and exporters of highly nutritious food products and appear as operating trade partners for Georgia. With economic activity plummeting since the beginning of the COVID-19 Pandemic in 2020, businesses and individuals have experienced steep economic plunges. Predictably, Georgia dealt with a few export countries. By 2021, businesses became capable of gradually adapting to the pandemic, responding to challenges, and increasing their economic activities as evidenced by the real GDP growth of 10.4% in 2021 (Geostat).


Russia still continues to be Georgia's primary wheat and corn supplier. In 2021, 94% of our wheat and 79% of our corn supply came from Russia.




Ukraine supplies Georgia mainly with dairy products (milk powder). Imports of these products from Ukraine and Belarus accounted for 37% in 2021. Ukraine is Georgia's third-largest importer of eggs and poultry and the second-largest importer of meat.




At this point, we have to consider the current state of both countries, as well as their potential as importer countries.


The major issue in Russia's case is the severe economic sanctions imposed on the country, the effects of which are already visible in Russia (disruption of the production chain, shortage of products, devaluation of national currency). Furthermore, a ban on other countries’ currency circulation in one of the trade partner countries creates a trade barrier. Here rises a question, which currency should we pay for the imported products?


Beyond the economic concerns lies the moral dilemma facing the country and pushing it to speed up the process of exploring alternative channels of import. The dilemma is obvious: the West believes that trading with Russia is what keeps the Russian army afloat, and it urges others to join the sanctions and cut off their economic ties with Russia to exclude dependency.


In the case of Ukraine, the nation being at war, it is logical that the chain of imports from the country can be interrupted, and in the long run, we could expect reduced volumes of supplied raw materials or increased prices. . In an interview with the BBC, the president of France Emmanuel Macron noted that a food crisis may be expected. According to him, "Ukraine and Russia are the two key players in food exports, but production has been hampered by the war. Because Ukrainian farmers may become disabled to sow new crops and the situation may deteriorate in 1-1.5 years." Particularly notable is the statement of Ukraine's Minister of Agriculture, Roman Leshchenko, who stated that the 2022 spring crop sowing area could be halved because of the Russian invasion.


A study by Galt & Taggart predicts that, in the worst-case scenario (considering the restrictions imposed by the US and the EU, including the cutting of Russia from the SWIFT system and the sanctions on Russian oil and gas, plus repercussions of the prolonged war situation), by 2022 in Georgia, imports may be reduced by 504 million dollars, with real GDP decrease (-1%) and inflation increase from its baseline of 4.9% to 9%.


Export Potential


Georgia's export activities face challenges of different scales, though with identical contexts. For example, grapes and grape products (including wine) are marked with high domestic production and export rates. Russia accounts for the majority of these products' total exports (up to 60%), while Ukraine and China claim significant shares (on average between 10% and 8%, respectively). It's worth noting that the share of other countries in the export of grapes and grape products, in general, is steadily increasing (from 21% in 2018 to 28% in 2021). Given current challenges, it becomes of utmost importance to look for more diversified export markets for grape products and move toward more intense trade patterns with other countries around the world.


The vegetables are also marked with a high level of export. The top exporter of vegetables (excluding potatoes), has been Russia (64%); Exports of potatoes (85%) and corn (39) have been heading to Russia as well.





When it comes to exports, based on the same study by Galt & Taggart, it is anticipated that in the worst-case scenario discussed earlier (restrictions imposed on Russia by the US and the EU, including the cutting off Russia from the SWIFT system and the sanctions on Russian oil and gas, plus repercussions of the prolonged war situation), Georgia may face a reduction in exports by 462 million US dollars by 2022 in comparison with 2021. At the same time, the current account deficit is expected to increase from a baseline of 7.9% to 10.9%. According to Galt & Taggart, the overall external flows from Russia and Ukraine (exports, remittances, tourism, and FDI) constituted 9.6% of Georgia's GDP in 2021. According to the assessment of these flows, exports and tourism may be exposed to the largest negative impact. As for the remittances, Russia's share of remittances has dropped drastically in recent years, while Russia and Ukraine's shares in foreign direct investment (FDI) in Georgia remain at an average annual low indicator.


Anticipated Threats and the Ways of Insurance


The fact is that, even in the case where the supply of the foreign product does not shrink, the prices will still undoubtedly increase, as it will be much more expensive to build an alternative supply chain. As a result, it is critical that the essential consumer basket, stocked with highly nutritious food, is somehow maintained.


This graph displays that the Self-sufficiency ratios of the key agri-food products, such as wheat and poultry rank below 50% representing the main challenge for Georgia in ensuring sustainable food security. In a pre-pandemic or pandemic context, observations in dynamics reveal that the Self-sufficiency ratio for the majority of products keeps floating around the same benchmark.


The choice is ours – (i) we can be optimistic and assume that food security and the Self-sufficiency ratio in 2022 will remain at least unchanged and the population will not have challenges related to their daily consumer basket due to product shortages or higher prices; or, (ii) we can be realistic and start insuring against the risks retroactively.


Please download the document:


The present material is prepared by ACT's team of economists:


Lika Goderdzishvili

Nestan Gaprindashvili

Akaki Mosakhlishvili

& Nino Kalandia
Strategic Communications Expert

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