How should a Georgian village become European?

Georgia's agricultural sector confronts fundamental economic challenges that distinguish it from developed nations, with experts identifying three critical differences: low productivity, substantial government subsidies, and overconcentration of the workforce. New data reveals that budget support to farming increased 74.6 percent over the past decade, yet the sector's real production failed to match these investments. Approximately 17.9 percent of the country's workers remain employed in agriculture despite earning roughly one-third less than the national average wage.

The existing policy framework relies on tax benefits and conventional subsidies, inadvertently distorting market mechanisms and limiting economic development opportunities. Rather than driving efficiency improvements, these measures effectively incentivize workers to remain in low-productivity agriculture. This approach mirrors policies that developed economies abandoned decades earlier, when protectionist strategies contributed to sectoral crises.

The European Union presents a compelling alternative model. Over the past decade, EU agricultural labor productivity climbed 41.8 percent following comprehensive reforms begun in the 1990s. Remarkably, total public support dropped 3.5 times despite these productivity gains. The reform period witnessed significant farm consolidation, with operations exceeding 100 hectares expanding 28.6 percent while those under two hectares contracted 47 percent.

The EU's reformed approach emphasizes market-oriented competition rather than production protection, redirecting emphasis toward direct farmer assistance instead of output subsidies. This methodology minimizes market signal distortion while maintaining essential rural support. For Georgia, adopting this European framework represents not merely an optional policy choice but a practical necessity, particularly if European Union membership is pursued.

Embracing European agricultural standards could unlock Georgia's farming potential while aligning the sector with proven economic principles that have strengthened developed markets worldwide.