SURVEY OF SELECTED FARMER ORGANIZATIONS IN GEORGIA...In 2011, a small survey was carried out by FAO with support from the Ministry of Agriculture to study Farmer Organizations (FOs)

SURVEY OF SELECTED FARMER ORGANIZATIONS IN

GEORGIA

Tbilisi September 2012

EC/FAO Programme on Information Systems to Improve Food Security Decision-Making in the European Neighborhood Policy (ENP) East Area (2010-2012)

T AB L E OF C ONTE NTS

AB B R E VIAT IONS .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

E X E C UT IV E S UMMA R Y .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

1. INT R O DUC T IO N... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1.1. B AC K G R OUND OF T HE AG R IC UL T UR AL S E C T OR IN G E OR G IA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.2. OR G ANIZAT IONS AS S E S S E D .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.3. APPROACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2. R E S UL T S OF T HE S UR VE Y 2.1. S T AT US ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.2. ME MB E R S AND ME MB E R S HIP .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.3. G OVE R NANC E .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

2.4. MAR K E T ING .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2.5. DONOR S UP P OR T .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2.6.P E R C E P T ION OF F AR ME R OR G ANIS AT IONS B Y T HE G E NE R AL P UB L IC .. . . . . . . . . . . . . . 22 3. C ONC L US IONS .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

ANNE X I. P R OF IL E S OF F AR ME R AS S OC IAT IONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ANNE X II. P R OF IL E S OF F AR ME R C OOP E R AT IVE S .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

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AB B R E VIAT IONS AI Artificial Insemination EC European Commission EU European Union FAO FA FC

Food and Agriculture Organisation Farmers Association Farmer Cooperative

FO GEL

Farmer Organization Georgian Lari

GoG Government of Georgia HH Household LTD Limited Liability Company MoA NGO TA

MoA Non-Governmental Organization Technical Assistance

VAT

Value Added Tax

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E X E C UT IV E S UMMAR Y Farmers’ organizations are essential institutions for the empowerment, poverty alleviation and advancement of farmers and the rural poor. Farmers’ organizations (FOs) refer to independent, non-governmental, membership-based organizations with part-time or full-time employees or self-employed smallholders gathering farmers, pastoralists, artisanal fishers, landless farmers, women, small entrepreneurs and indigenous peoples. They range from formal companies governed by commercial legislations, such as cooperatives, to national farmers unions and self-help groups and associations. In Georgia, farmers’ organizations (FOs) are the most appropriate institution to enhance the productivity and commercialization of small family farms, to realize economies of scale and increase their bargaining power in input and output markets. It is often the only institution which can provide essential goods and services to the rural poor, trying to help them to break away from the poverty cycle. FOs reduce the risk to which individual farmers are exposed during seasonal shocks, assist in the mobilisation of capital and contribute to the growth of the local economy and the development of rural areas. The establishment of FOs started in Georgia over a decade ago. Farmer organizations are present in almost all regions and municipalities. Although more than 200 FOs were established in the country, only about 20 percent of them currently have significant operations. In 2011, a small survey was carried out by FAO with support from the Ministry of Agriculture to study Farmer Organizations (FOs) in Georgia. The survey covered 16 FOs - associations and cooperatives - throughout Georgia and confirmed or revealed many of the aspects that characterize FOs in Georgia. The analysis concluded that the establishment and development of FOs is donor driven and shows significant donor dependency. The general environment in Georgia is not favourable to the development of FOs. Government plays no role in the development and operation of the FOs, while the local authorities are marginally involved. The FOs in Georgia have negligible impact in terms of contribution to the economy or share of population involved at national or regional levels. FOs’ activities are largely unknown to the rural population or to the Government. The cost/benefit ratio is often negative for FOs’ members. Farmer organizations are sometimes perceived negatively due to disappointing experiences during the post communism transition period. However, despite some “resistance” towards joint agricultural activities, farmers show high interest in activities that can potentially improve their livelihoods and generate income. There is significant need in Georgia for developing appropriate understanding of the role and potential benefits of farmer cooperation for all groups of stakeholders (Government, local authorities, farmer organisations and farmers), including through the provision of input/output services needed to increase farm profitability and provide opportunities to generate household incomes. More efforts should be made to provide support to FOs which achieve sustainable results, to coordinate the activities and approaches of donor organizations and promote the participation of farmers' organizations in the policy-making processes. The Government could play a significant role in implementing and institutionalizing mechanisms to coordinate partner organizations. In a country with limited experience in open market economy and in farmer-owned FOs, it is crucial that the projects provide significant technical expertise in the following areas:

• the democratic representation of farmers in the FOs; • the sustainable management of the farmer organizations; and • the institutional development of the FOs.

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1. INT R O DUC T IO N The overall objective of this study was to assess the situation of farmer organizations (FOs) owned by small-scale farmers in Georgia. The results confirm and complement the information already available on FOs in Georgia. The analysis is based on the results obtained from a small survey of selected farmer organizations (FOs) owned by small scale farmers in Georgia. The objective of the survey was to assess the status of governance, activity levels, development trends, plans, characteristics, the extent of sustainability and member promotion, through discussions with members and management staff. Sixteen farmer organizations were selected and surveyed in six (6) regions of Georgia (Shida Kartli, Kvemo Kartli, Samtskhe-Javakheti, Guria, Imereti, Kakheti). The assignment was carried out under the “EC/FAO Programme on Information Systems to Improve Food Security Decision-making in the European Neighbourhood Policy (ENP) East Area” by Irakli Toloraia (FAO National Consultant) in February-March 2011. The study was coordinated by Dragan Angelovski (FAO International Consultant). The Programme is funded by the European Union and implemented by FAO. More information on the Programme activities in Georgia can be found at: http://www.foodsec.org/web/regional/europe/georgia/en/ Each of the 16 selected farmer organizations was visited. Group discussions were held with the management and randomly selected members of each of the FOs. Semi-constructed interviews were conducted with relevant stakeholders and background studies and documents were reviewed. Based on the interviews, short profiles were developed for each selected FO (Annex I and Annex II). The main findings were presented to the representatives of the Ministry of Agriculture, FAO and the EC Delegation on 30 March 2011 and to the participants of the “Conference on policies and programmes to support small farmers organizations in Georgia” in March 2012. .

1.1. B AC K G R OUND OF T HE AG R IC UL T UR AL S E C T OR IN G E OR G IA Georgian agriculture has been declining since independence. Half of Georgia’s labour force depends on agriculture for income, and the largest part of the poor relies on agriculture for livelihoods. Georgia’s current economic growth comes from non-agriculture sectors, which do not provide meaningful employment or benefits to rural households, and contribute to increased skewing of income distribution. The sector is dominated by small family farms, which produce more than 90 percent of total agriculture output mainly for subsistence. On average, the size of family holding is 1.22 ha and normally consists of scattered 2-3 land parcels, each of about 0.45 ha. Group building and organization of smallholders can contribute to addressing the underperformance of the agricultural sector as the collective action and social cohesion of the group can stimulate productivity, quality awareness, and improve smallholder position in input-output markets. The World Development Report 2008 states, “A key issue for development is enhancing participation of smallholders and ensuring the poverty reducing impacts of agriculture growth”. The Report recommends that donors and governments assist by facilitating the organization of farmer groups, training of group leaders, and inclusion of women and young farmers. In general, there is a limited exposure in Georgia to genuine cooperative principles and understanding of the difference between old collective economy-type cooperatives and member-driven farmer organizations. This, coupled with a Soviet legacy and examples of frequent elite capture of the assistance provided to the sector, has led to widespread scepticism and a biased attitude among smallholders towards any form of formal and informal grouping and towards collective action and cooperation.

http://www.foodsec.org/web/regional/europe/georgia/en/�

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There is an increasing recognition within the Ministry of Agriculture (MoA) of the fact that the development of FOs is essential for enhancing farm productivity and market participation of small farmers. The MoA considers farmer organizations as an instrument to reduce poverty and food insecurity in rural areas, and to stimulate agriculture development and wider economic growth. In the agriculture development strategy which is being developed by MoA, the following objectives have been identified as key priorities to promote farmer cooperation: (i) creation of favourable policy environment to promote cooperation among small-scale farmers, (ii) elaboration of tax policy stimulating cooperative activities in agriculture, and (iii) capacity enhancement of existing and future member-driven producer organizations. On average, operation per family holding is very small leading to inefficiencies, as different actors in the production chains have difficulties to reach many scattered operators. Group building and organization of smallholders can solve these problems as the collective action of the group can improve farmers’ position in the chains. Farmer groups are expected to operate on a commercial basis similar to a private company, especially for commercial types of FOs such as cooperatives, and companies owned by farmer associations. It must be clear that all types of groups mainly aim at improving production, generating savings and eliminating constraints, all ultimately focusing on improving livelihoods or increasing revenues for the members. Without these crucial motivations, farmers have little interest to participate in the activities. Experience shows that FOs that mainly rely on subsidies are not sustainable and a strong economic basis is vital to any growth and development of the FOs. Cooperatives can benefit: (i) members through increased farm incomes, better services, quality of supplies and products, secured sources of inputs, enhanced competition, access to expanded markets, improved farm management; (ii) local rural communities through increased community income, strengthened rural communities and provision of goods and services to non-farmers; and (iii) consumers through increased availability of quality products and services, new products, lower cost of farm produce, and improved general welfare.

1.2. OR G ANIZAT IONS S E L E C T E D F OR T HE S UR V E Y

Surveyed FOs included two types of farmer organizations: non-profit farmers associations and for-profit agricultural cooperatives. Most of the FOs conduct more than one type of activities within the organization. Table 1 provides an overview of the types of activities in which the surveyed organizations are engaged.

Type of activities carried out by selected organizations

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Table 1. Type of activities for each surveyed FO Type of organization Service FO’s Own Production1 Marketing

(Non-profit) Farmers Associations

XXX XXX XX XXX XX X

X XXX XX XXX XX X X XXX

XXX XX

(For-profit) Agricultural

Cooperatives

XXX XX XX XXX

XXX XX X XXX XX X XXX XX X XXX XXX XX

X XXX XX XXX – Main Activity, XX – Additional Activity, X – Sporadic Activity

During the survey, field visits were made to each of the selected FOs. Sixteen FOs were surveyed, out of which eight were non-profit farmer organizations and eight were for-profit agricultural cooperatives. FOs are involved in different types of agricultural activities, which are presented in Table 2. Table 2. Number of FOs per type engaged in different agricultural activities

Type Milk Fruits &Vegies Beekeeping Fish farming Livestock Framework Farmer Associations2 1 1 1

Farmer Associations3 1 3 1 Farmer Associations with LTDs4 2 1

Cooperatives 5 2 1 1 1 The FOs which were surveyed were selected from the lists with more than 100 FOs provided by donors and implementers supporting FOs, i.e. have at least some positive experience, have commercial operations, received support and actively apply for support, using as a main criteria their operationality. There are a significant number of FOs in Georgia but many of them are underdeveloped and very few 1 FOs are regularly engaged in their “own” agricultural production and processing while they are often not supporting (organizing, assisting, funding etc.) their member’s production and processing. FOs’ own production is often not linked in any way to the production of the members. It is sometimes relying on raw materials from members, however in general, FO’s own production aims at generating profit for the organization, rather than for the members. The profit generated by the organization is not distributed to members but used for operating costs, salaries and investments. 2 Framework Farmer Organizations are regional or national sector organizations in which local/individual Farmer Organizations are members. They represent the interests of the farmers at national and regional levels. 3 Farmer associations are standard Non Government Organizations (NGOs), in accordance to the Georgian legislations. They are considered as any of the other NGOs in Georgia, although only farmers are members. 4 Farmer associations which engage in commercial operations from time to time establish and own LTDs through which the financial activities are handled. This does not affect the non-profit character of the organization. 5 Farmer Cooperatives are established under the Company Law, which does not include any additional provisions for agriculture related cooperatives. In fact the cooperatives are considered and threated as standard LTDs, with a structure of ownership similar to a shareholder company.

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are operational. All operational FOs are or have been supported by donors were selected together with the Ministry of Agriculture. All selected FOs were established between 1999 and 2010. The approach allowed collecting and analysing information on types and severity of constraints met by FOs to achieve their objectives, implementation of specific activities and development in general.

1.3. AP P R O AC H

• Desk review of documents, including (i) reports on Farmer Organizations in Georgia; (ii) documents provided and produced by FOs and (iii) other documents relevant to the assignment;

• Design and testing of questionnaires;

• Selection of FOs;

• Survey of the selected FOs , which included: o group discussions with the management of the selected FOs and randomly selected

members; o filling of questionnaires during individual interviews.

• Analysis of the collected information.

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2. R E S UL TS OF THE S UR VE Y

2. 1. S T AT US

• Eight of the interviewed FOs were farmer associations (FA), registered in accordance with the Law on Non-Governmental and Non Profit Organizations

Types of FOs selected for the survey:

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o Two Farmers Associations that had established LTDs for commercial activities. , including:

o Two of the interviewed farmer associations are framework organizations operating at national and regional levels, of which other farmer organizations are members.

• Eight of the FOs were profit cooperatives, registered according to the Law of Georgia on Entrepreneurs.

• None of the surveyed FOs were organized in unions (registered or unregistered).

Most of the interviewed organizations are engaged in commercial activities. The main reason for establishing FOs was the expected benefits from joint services (use of joint mechanization and facilities), procurement of inputs and joint marketing of the produce on individual farmer level.

Type of activities and reasons for establishment:

Similar reasons explain the establishment of Framework Farmer Associations. However, responding to the demand for representation at regional/national levels, they evolved into framework groups providing services to FOs, rather than to individual producers. All except one of the interviewed FOs were established with donor support and for most of them the availability of donor funding was an important additional motivation. As noted by one of the FO managers:

“lack of start-up capital is one of the main obstacles for the formation and successful operation of the FO. With the contribution per member (GEL 50 per annum) and the small membership, producer organizations are not able to start activities without external financial support”.

Table 10 and 11 in Annex 3 provide a detailed comparison between, on the one hand, the original motivation and envisaged activities by the members at the time of establishment of the FO and, on the other hand, the activities which are currently implemented. The original motivation of the members at the time of establishment reflects the constraints faced by the farmers that the FOs had planned to address.

Almost all interviewed FOs own significant assets in mechanisation/equipment and real estate. Buildings, premises and land usually belong to a FO or to a member of the FO management. In general, FOs’ equipment and investments were originally granted by donors.

Farmer Organisations and assets:

The assets owned by FOs are usually directly related to their activities:

• Agricultural machinery and equipment (tractors, potato planters, rotating cultivators, plough, sprayers, choppers, potato pullers, hay pressers, etc.);

• Storage facilities and relevant equipment (refrigerators, calibration equipment, sorting and packing equipment, loading trucks, etc.);

• Dairy equipment (milk collection and small-scale cheese production equipment); • Production facilities (greenhouses); • Office equipment.

6The legal status of the FOs are regulated by the Civil Code of Georgia (for non-profit organizations) and the Law on Entrepreneurs (for profit cooperatives). Both laws regulate the responsibilities of organizations, members and define the rules for managing farmer organizations.

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Some of the surveyed organizations have benefited from substantial grants through co-funding arrangements. The contributions from donors in assets range from US$ 7 000 and US$ 170 000 per organization, i.e. US$ 53 000 on average per FO. The average value per donation, excluding framework organizations, amounted to some US$ 23 000.

Over the past decade, several donor organizations have supported the organization of Georgian farmers into agricultural producer groups. Their success has mainly depended on the type of constraints faced by FOs per location and commodity and the level of commitment of FOs’ management and members.

Current status of the FOs

Based on the interviews with management teams, most of the organizations have successfully initiated their activities with heavy guidance and dependence from donor-supported projects but, after completion of projects, few farmer organizations were able to continue to provide the same benefits to their members (reduced quantity and quality). The word “cooperative” continues to be negatively associated with the poorly managed Soviet-era collective farms, directly leading to mistrust in any type of formation and resulting in limited interest in creating or joining a FO. Following an explanation of the differences between the Soviet and the standard cooperative model, farmers tend to be more interested. In certain cases, the misuse or “privatisation” of the external assistance provided by projects, which is primarily seen as a grant transact mechanism, is responsible for the lack of progress in implementing the activities which are seen as priority by members, limited development of democracy in the established organisations and an exclusive focus on the accumulation of assets. Tables 3 and 4 provide an overall assessment of the FOs, based on the answers received from management teams, background information, observed facts and feedback from members and local residents. Table 3.Assessment of the development of surveyed FOs according to selected criteria (in number of FOs) Definition of scale: 1 = nonexistent, 2 = poor, 3=intermediate, 4 = advanced, 5 = fully developed Group management skills: 1 2 3 4 5

The FO has clear goals that are shared by all its members 4 0 7 2 3 The FO provide continuous learning support to its members 4 7 1 4 0 The FO makes decisions democratically with participation of members 4 0 8 2 2 The FO is managee transparently so everyone knows everything 1 2 0 9 4 Records are kept 1 1 10 0 4 The FO identifies market opportunities 4 0 4 7 1 The FO collectively market members’ products 4 0 7 5 0 The FO Improve members’ products to meet demand 5 0 0 11 0 The FO builds relationships with buyers and suppliers 1 4 7 4 0 Table 4. Characterization of the surveyed FOs on the basis of selected criteria Operations and activity level # FOs are member focused and member driven 7 FOs are almost a private business with little contribution from members 6 Virtual FOs de facto represent only individuals 3

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Main Findings: • Two types of entities are prevalent in Georgia, Farmer Associations and Agricultural Cooperatives,

representing the vast majority of FOs. The choice between one or the other usually depends on the type of support proposed by donors, i.e. support to non-profit or commercial activities.

• Several FOs evolved to become part or to be linked to multiple legal entities (profit and non-profit),

with no other motivation than to be in a better position to benefit from the support offered by several donor organisations.

• Management staff of nine of the FOs owns or is involved in other commercial entities (individual entrepreneur and privately owned LTDs). In two cases, the other entities in which the management is involved provide the same services (mechanisation services) than the FOs in the same area and de-facto compete. This finding raises questions on the interest of management in developing FOs activities, as FOs actually compete with their own private enterprises.

• The FOs’ objectives and activities are mainly determined by the availability of donor funding. Half of the FOs have developed their activities in different domains (economic, social, political, etc.) without prioritising specific farmer’s interests and ultimately attracting very few members.

• The primary goal for most of the FOs is not the welfare of the members, through increasing their productivity and income generation, but the development of business activities for the organisation, from which the members benefit in very limited ways. In such FOs the management sometimes invests personal funds, reducing the role of the members and increasing the “privatisation” of the FO.

• FOs often had a clear vision of their goals at the inception. However, there are obvious

discrepancies between the reasons for which the FO was originally established and what they are actually doing.

• Significant assistance was provided to a small number of FOs (including all but one FOs which

were surveyed), giving a solid base for development, ability to engage in commercial activities and opportunities for acquisition of commercial loans.

• More than half of the FOs are virtual FOs (FOs with no real membership or member driven/oriented activities) or centrally managed(managers “own” the FO and members have no real decision making power, or participation in the steering of the organisation) and show no tendency to move towards more member-driven governance.

• Shortage of start-up capital, and the inability to initiate any activities in an autonomous way without

external support, is the most significant problem for new FOs.

2.2. ME MB E R S AND ME MB E R S HIP Relevant legislations regulate the general activities of the FOs and members. The FOs’ charters define the activities and the rules for enrolling and leaving the organization, rights and duties of the members and the managing and control bodies, capital stock, rules on property and profit distribution, reorganization and liquidation, branches and offices, etc. All surveyed FOs are unique in terms of activities, membership and internal regulations. Number of members and fluctuations: The average number of members in the assessed organisations is 37.This average excludes the framework organizations where legal entities are members. Cooperatives have a higher number of members (30-250) compared to Farmer Associations (10-58), as they are organized around centralized

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commercial services (milk collection, fruit collection, artificial insemination etc.) and deliver more visible returns to the members. Most of the surveyed FOs experienced changes in the number of members since their establishment. In seven of them (including framework FOs), the number of members has been increasing by 15 percent annually. In four of them, the number of members has remained unchanged over the last 3 years. In eight of them, the number of members has decreased since their inception and has reached a minimum in the last couple of years. These eight FOs are mostly dealing with fruit and vegetable and dairy sectors, which have been declining sharply. Women’s representation in the surveyed FOs is about 20 percent, which is much below the participation of the women in the agricultural sector in Georgia. This is explained by the fact that men are considered to be the heads of the families and usually represent the households in organisations and institutions. Types of members: According to their charters, eleven FOs have only one status of membership, although almost all distinguish between active and passive members. “Passive members” describe members which are enrolled in the association but do not participate in the activities. Therefore, they exist as members only on paper and even appear to be virtual in many instances. In some instances, the number of passive or virtual members is half of the total FO members. It is generally considered that FOs with less than 100 contributing small farmers (or farmers which cultivate less than 50 ha under high value crops) have low probability to achieve sustainability. Membership and entrance fees: • In farmer associations (FAs), membership fees is an obligation prescribed by the charter.

Membership fees are mainly provided in cash. Two associations accept in-kind contributions, while in two FAs enrollment is free of charge. In-kind contributions are defined as “contribution other than cash to the activities and services provided by FOs to its members”, such as machinery services, labour, access to movable and immovable assets. No specific information is provided on the mechanism for assessing in-kind contributions.

• Membership fees range from Gel 24 to Gel 50 per annum. With all membership fees being paid, the annual revenue of a FO ranges from Gel 130 to Gel 2 200 per annum, or Gel 1 370 on average per annum per FO.

• Two out of the eight FA actually collect membership fees. Collected fees are mainly used for investments and to support operational costs. The other six FAs have difficulties to collect fees, or do not collect the fees at all.

• Associations mostly rely on part-time accountants for financial reporting and preparation of their annual accounts. In some cases, members with adequate skills provide accounting services.

• Cooperatives have membership fees and/or admission fees/shares. Admission fees usually range

between Gel 25 and Gel 50 and are a precondition for enrolling. Collected fees are mainly used for investments as the operational costs are covered by the commercial activities of the cooperatives. In small cooperatives, a skilled member usually provides accountancy services. Large cooperatives with more activities/turnover outsource this activity.

Three of the assessed FOs accept membership/admission fees in cash, while eleven FOs only accept deposits on the organization’s account. Payments in cash are preferred although at the risk of reduced transparency, due to the lack of traceability and eventual bookkeeping and tax implications.

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According to the charter of six assessed FOs, members should be excluded at the end of the fiscal year if they have not paid membership fees. In the other FOs, membership is permanent, independent of the payment of membership/admission fees. None of the interviewed FOs ever excluded a member since their inception. Decisions and expenditures: Membership in FOs is open to anyone. The decision of enrolling new members is based on simple majority voting, or on management’s decision. Potential members in few cases are required to fill out official applications, prescribing the FO’s and the member’s liabilities. In the majority of cases, verbal expression of interest is followed by a decision to enrol the member, is the standard admission procedure. FOs management and supervisory bodies keep the membership registry, the applications, and the minutes of general assembly meetings. In general, managers make decisions on disbursement of the funds from membership and admission fees to cover running costs. The supervisory boards, based on management recommendations, make decisions on investments. In most FOs, members are aware or able to get information on the use of funds. Main findings: • Cooperatives have larger numbers of members than Farmer Associations.

• Farmer Associations tend to implement diversified activities and offer fewer services with limited

commercial return than cooperatives. Cooperatives on the other hand are organized around centralized services with commercial benefits provided mostly to the members, and are therefore more attractive for farmers.

• The average number of members per FO is very low which, combined with the low average production size of the members, provides a limited basis for development, especially in the one third of FOs with the same 10-15 members since establishment. This is even more evident when taking into account the average production size of the Georgian farmer household and their output.

• The number of members in 7 out of 16 FOs is increasing but very slowly. At this rhythm it will take

decades for FOs to have a national impact.

• Decreasing or stagnating trends in the other FOs mostly result from unrealized expectations and negative developments in the agricultural sector. Stagnating numbers of members are mostly the results of the reduced interest of FOs to expand in terms of members, while they are interested in expanding their assets.

• Formally, membership is open in all farmer associations and cooperatives. However, reluctance to accept new members was observed in several organisations. The main reason is that the accumulated assets and profits would have to be shared between more beneficiaries.

• “Privatisation” of the FOs is also a reason for the limited interest in joining, as potential members feel that they will have no stake in the FOs and would be mainly excluded from the decision-making process.

• Almost all FOs have approximately 50 percent of passive members. The high percentage of passive

members reflects the lack of interest of a large proportion of the members, due to the limited attention given to members’ priorities.

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2.3. G OV E R NANC E

Governance of the FOs is regulated by the organisation’s status (charter/bylaw). In all FOs, activities are democratically structured and governed by members directly, or by members elected in constituted institutions and bodies. The legal provisions of the Charter is reviewed by an attorney, as part of the registration procedure. Fundamental principles of FOs’ governance are democracy, representation and participation. FOs’ members, the Board of Directors and the control bodies are called to participate in the FOs’ governance. The survey identified a variety of governance structures within the surveyed FOs, sharing management roles and responsibilities. Although the responsibilities of the FOs’ management are well defined in the legislation, only few of the interviewed managers seemed fully aware of their responsibilities towards the Government and the commercial partners.

• In the case of Farmer Associations, the organisation is juridically liable for its owned assets. In case of liquidation, the assets are transferred to a similar organization or to the Government. Members are not liable in any instance and for any action of the organisation. The President (signatory) is liable as representative of the organisation only for illegal activities.

• Liabilities of for-profit cooperatives are structured as regular LTDs. The organisation is juridically only liable for its owned assets. Members or bodies are not liable for any organizational obligations and actions. The Manager (signatory) is solely responsible for the activities of the organisation. In case of bankruptcy the cooperative property is distributed among its members.

None of the FOs has ever been involved in a judicial procedure initiated by or against the organization. Organisational structure In all FOs the highest management body is the assembly of members, which is held up to four times per annum. The general assembly takes all decisions related to changes in the organisation’s Charter. The general assembly is plenipotentiary and the quorum is ensured if more than half of the members attend. Most FOs practice “one-member, one-vote” system regardless of the position in the organisation or share of assets. FOs are managed by the Supervisory Boards elected by the general assembly for a maximum of four years and consist of minimum three members. Thirteen FOs have elected control bodies, four FOs carry out internal reviews as part of the operating procedures and one organization uses external review control. Cooperatives elect executive and supervisory bodies and auditing committee. A board member cannot be simultaneously a member of an auditing committee. The board manages the economic activities of the cooperative. The auditing committee oversees the implementation of the cooperative charter and the financial activities. The board and auditing committee are accountable to the general assembly. In Framework Farmer Associations, each organization delegates its own representative. The Supervisory Board, which consists of minimum five members, is handling the strategic management of the FO. A General Manager implements day-to-day activities.

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Management Three of the interviewed FOs have professional managers7

Half of the FOs don’t have any employee or paid management.

, which are also members. One FO prohibits the manager/director from being a member of the FO, through a resolution in the Charter.

In little more than half of the surveyed FOs, the management has changed at least once and in seven of the FOs, significant changes in management have occurred since inception. Education and competencies The management of most of the assessed FOs has participated in leadership, strategic planning, conflict resolution workshops and general management training (mostly cooperatives). None of the managers of the Farmer Associations have participated in specific FO management training. Donor organizations have organized most training and in few cases the FOs organized and covered the costs of the training. Most of the members of the FOs’ management teams have university degrees. All FOs have economists (nine FOs), agronomists (ten FOs), zoo-technicians and veterinarians (nine FOs) in their management teams. None of the assessed FOs have any member with a degree in marketing. Voting and rights In most of the surveyed FOs, all members have the same rights, no difference being made between the founders/managers and the other members. Few cooperatives have voting rights based on owned share in the organization. However, in most cases members are not able to increase their owned share beyond a certain level, as regulated by FOs’ bylaws. Managers in the framework organizations enjoy the right to cast two votes. Open declaration by raising of hand, and/or anonymous voting with ballots are the usual voting systems. The latter is used during the election of the board or managers. On average, voting turnout is 50 percent of the total members. For all assessed FOs, it takes 3 days on average to organize voting and agree on a decision. Framework organizations hold additional meetings in order to encourage member participation. Annual meetings are held to discuss different issues (profit allocation, funds use, etc.) or to appoint the organisation’s bodies. Thirteen of the assessed FOs have evaluated the effectiveness of their meetings as “sometimes very productive”. Preferred choice for informing the representatives and members of upcoming meetings, decisions, news etc. is the mobile phone. Documentation and rulebooks Reportedly, fifteen of the assessed FOs maintain records from the assembly meetings. However, none actually showed the records to the surveyors. Internal Management Systems have not been prepared or introduced in any of the assessed FOs. Four of the FOs have written rulebooks and conduct guidelines, which are provided to new members. Other FOs usually verbally present the charter and discuss it with the new members.

7 Professional management is remunerated and considered appropriately trained. Its primary function is to manage and improve the organization and handle day to day activities.

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None of the assessed FOs has a system in place for recording of complaints and conflict mitigation. There are also no records on any conflicts between members. Reportedly, one Framework Farmer Association has in place a moderating system. Main Findings: • In most cases, FOs appear to be managed by a very small group of members with very basic (day

or two) training on leadership, strategic planning and conflict resolution but no formal skills or training in development of farmer organizations and democratic principles in managing farmer organisations. The FO management is usually well educated. However, there is a general lack of experience and management capacity.

• General assembly meetings and voting rights are in general regulated by the legislations, however many optional details provide possibilities to reduce the members’ influence in decision-making.

• There are significant variations in the setups of the assessed FOs. Most charters have been

developed with donor support and in general serve their purposes, however some setups are undemocratic and lead to centralisation of the power.

• Internal regulations are poorly developed and almost not documented. Conflict mitigation and internal management systems are not in place and most organizations do not have concrete development strategies.

• There is lack of formal approach to the management of the FOs, leading to reduced understanding and ability to evaluate the operational capacity and activities.

• Lack of support for organisational development and economic support preconditioned with internal development, provided little incentives to the management to improve the FO’s internal systems.

• FOs co-managed by long-term projects, focusing on internal aspects beside the economic capacity building, have more advanced structures compared to FOs established by local initiatives.

All surveyed FOs are involved in various types of activities and provision of services to their members and to non-member farmers. Framework farmer organizations tend to offer members and local farmer groups a wider range of agricultural services at very affordable price. Donor organizations at the inception stage have assisted the FOs to define the type of services provided and fees to be charged. Overtime, types of services and fees charged have changed, taking into account the actual demand and payment capacity. Joint procurement of inputs and services Several organizations engaged in joint supply of agricultural inputs at the beginning (fertilizer and plant protection (bought in particular for the needs of the members) through contacts with importers. However, due to unsustainable competition the imports eventually ceased. Currently, only two FOs import agricultural inputs (seeds and plant protection) and retail commercial activities for members and non-members. Half of the FOs (including those that import inputs) procure agricultural inputs for their organisation’s production needs through arrangements with local retail suppliers. Three of these FOs further extend the benefits of the arrangements to their members and one FO actually procures agricultural inputs on request and on behalf of the members. The annual procurement value per FO ranges between US$ 3 500 and US$ 40 000.

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The main objective for joint procurement of inputs is to ensure that the procured inputs are of sufficient quality rather than to generate revenue for the organisation or savings for the members. The other half of the FOs do not procure any agricultural services/inputs. Credits Three of the FOs have obtained commercial credits ranging from US$ 7 000 to US$ 18 000 for the organization. None of the FOs have provided credit in cash, inputs or services to their members. In two cases, credits have been used for co-funding grants and in one case for marketing their members’ produce. Technical Assistance Eight FOs have provided ad-hoc technical assistance in production practices to their members and six FOs provide regular technical support to members. In general, ad-hoc technical assistance is provided as part of projects activities and input supplier presentations, while regular support is provided through “in-house” experts. The cost of the technical assistance (salaries for experts, organisational costs etc.) is usually covered by support projects. Technical assistance (TA) is in principle provided free of charge. However, as stated by one of the FO’s managers: “Since farmers are not ready to pay for consultations, the TA cost is included in the price of inputs and services provided to the members“. Services provision Most of the FOs own substantial quantity equipment, facilities and machinery, used for service provision to members and non-members. Most commonly provided services include land cultivation, storage of products, post-harvest activities and artificial insemination for livestock. The Services are provided with 20-30 percent discount for members compared to non-members. Framework organizations are members in preparation of applications for credits and donor support. Five FOs ventured in retail of agricultural inputs (agricultural pharmacies) out of which three are still involved and provide small discounts to members. Accounting and cost-benefit analysis Fourteen FOs use simple accounting systems and have partial information on the costs and income from their members’ production, gathered as part of the donors’ monitoring of their projects. None of the FOs prepare or keep farm records or carry out profitability analysis. Accounting is generally not practiced at the farmer level and farmers are apparently not in a position to calculate/demonstrate the costs and the benefits of their activities. Funding of activities Four FOs have adequate funds and resources to support all planned activities and three of them keep some funds for contingencies. Most FOs have been able to mobilize funds and resources to support some of their planned activities. Two FOs are not able to mobilize the financial resources they need. Main Findings: • Most of the FOs are involved in a number of activities without making a clear distinction between

core activities and other activities. As a result, limited progress is achieved in many areas, including key areas.

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• Almost all non-commercial activities and most of the commercial activities are fully funded by donor organizations at the inception of the FOs. Activities developed with support from donor organizations as part of the start-up are usually not further developed and benefit from small or no reinvestment at all once the project ends.

• The FOs offer most of their services to farmers, not exclusively to their members, which is expected given the low number of members per FO. In such conditions, supporting commercial service providers rather than FOs seems more attractive to donor organizations as they are more sustainable.

• Limited investment is made to train the members in assessing the costs and benefits of their

production. In turn, members still produce a large number of crops/animals, with limited quantities and quality and they show little progress in professionalization of production development. Therefore, subsistence farmers will not be interested in FOs since they have little or no production surpluses.

• Crediting and self-crediting is underdeveloped. None of the FOs provide credit (either funds, inputs

or services) to their members. The lack of access to credit is however a significant constraints for FOs members and farmers in general.

• Joint input supply, apart from a few cases, is not provided on a regular basis. FOs are not able to

demonstrate any benefits from joint input supply to the members apart from better quality of imported inputs. Savings through bulk and early procurement, payment in instalments and voucher system discounts are not practiced.

2.4. MAR K E T ING

According to interviewed FOs, one of the main reasons for establishing FOs, was to improve upstream market linkages. Role of the management in marketing of produce In more than half of FOs, the management was reportedly involved in facilitating marketing of member’s produce through identification of new buyers. In addition, the management of most FOs have at least once participated (communication, exchange of contacts and dissemination of information) in organization of joint sales for their members. In few FOs, the management was at least once directly involved in negotiations on price, logistics and payment conditions with buyers, while the management if four FOs is regularly involved in such activities (milk and fruit/citrus). In eight of the surveyed FOs, management is not supporting the marketing of the members’ produce and every member has to find buyers by himself. FOs and marketing constraints More than half of the FOs have identified limited market information as a marketing constraint. The low quality of the produce to be commercialized and the low sale prices were also identified as primary constraints. No other constraints were identified by the FOs in marketing their members’ produce. As stated by one of the FOs managers, “members do not face problems in finding a buyer for marketing of produce since during the season retailers are coming to the region to buy their produce”.

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A cooperative has also identified specific constraints related to milk producers:

• Unfair competition through use of powder milk and inadequate enforcement of regulations on product labelling;

• Unreliable supply of fresh milk by the members; and

• Delayed payments by buyers for delivered products.

FOs and buyers Members of all FOs sell the bulk of their products to buyers available to all villagers during the whole year or on a seasonal basis. Members of six FOs also sell part of their produce on local markets. Members of nine FOs sell a part of their produce to buyers that exclusively buy from the members of the organisation (products of specific quality). Six of the FOs use written contracts with buyers, in addition to verbal agreements on deliveries for part of their members produce. Four out of this six FOs are selling most of the produce independently. Two FOs export produce to Ukraine, Belarus, Iraq and Azerbaijan by reselling products from purchased members. FOs members and method of payments The members of the 11 FOs sell most of their production in cash without any accompanying written documentation. Three FOs sell part of the produce of their members through the organization’s bank account and disburse payments in cash to farmers. Sales through the FOs organization are possible only if the product is firstly procured by the FO and then resold through the FOs account and if invoice are issued. Resale of the members produce apart from direct exports is subject to VAT taxation. Four FOs facilitate product delivery to the buyer but prefer not to directly handle the sales of member’s through the FO’s account. For instance, one of the surveyed cooperatives purchased, packed and sold to an exporter produce worth US$13,200. The cooperative also negotiated further sales and delivery of produce directly by the members to the exporter, in a total value of US$ 90,000 but did not participate in any of the transactions for the second arrangement. All farmer organizations provide their annual accounts to the revenue service. Main Findings: • The majority of Georgian individual farmers have small production. Individually, they are too small to

take part in markets out of their community or organization. Limited and sporadic volumes of production from a small number of members and large variations in the quality of the production, prevent the FOs to provide a stable supply (quality and quantity) and to better integrate in the markets. As consequence, all FOs support services for marketing are very basic.

• Agricultural produce is usually bought by village level traders, which in turn supply wholesale markets in urban areas, exporters and processing facilities.

• The trade of agricultural produce in Georgia is based on cash payments. The VAT liability of re-sold agricultural products influences the internal trade and traders/intermediaries prefer to operate as individuals, without transaction documentation and using cash.

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• Most of the FO's management tend to be sporadically involved in marketing issues and do not plan to systematically engage in marketing of their member’s produce. FO’s members sell most of their products to the same buyers and through the same channels, as non-member farmers. This provides little incentive for joining a FO.

• FOs are mostly unable to provide in-depth information on the quantity and quality of produce produced and sold by their members, which reflects their limited interest in marketing issues.

• Three FOs are dedicated to the collection and marketing of their members’ produce, including through exports. These few FOs have benefited from long term projects, professional management and marketing plans developed through donor support. There is also general and obvious reluctance, or even fear amongst the FOs management, to deal with the Revenue Service. If they have choice between having to claim for tax exemption to the Revenue Service or just pay tax, they usually opt for the second option.

• Marketing of fresh agricultural produce by the primary producers is VAT exempted, while resale of

the products is subject to VAT. Since FOs are not able to sell “on behalf” of their members, they have to formally buy the produce from the members and re-sell it,adding18 percent VAT. Only when FOs are directly exporting are the products excluded from VAT. Showing the members’ production as the FOs (legal entity) own production and further marketing is possible if the farmers are formally employed and Personal Income Tax of 20 percent is calculated to the funds disbursed as salaries.

• The management of most FOs do not perceive significant marketing constraints. The constraints are mainly connected to organisational and production aspects rather than to marketing issues.

• Many project interventions support the development of marketing-related infrastructure although the FOs management failed to identify the lack of such infrastructure as a marketing constraint.

2.5. DONOR S UP P OR T Support in assets as donations and grants • All except one of the interviewed FOs were established with incentives from donor organizations.

• Most of the support was provided without an initial assessment of the FOs as organisations. In few

cases only a simple business plan was developed showing that the investment if properly managed, providing that appropriate demand exists, would be commercially viable.

• For most of the assessed FOs, the availability of grants from one of the multiple donor organizations

was a significant motivation for establishing a FO. Four FOs were initiated and continued to be supported and managed by projects.

• All except one of the FOs which were surveyed, have benefited at least once from a substantial

grant in materials from a donor. Seven of the assessed FOs have received donations from two donor organizations, and eight from more than two.

• Six FOs have received a grant with co-funding requirements. The FOs’ co-funding contribution was

provided by the manager as physical person or by the organisation in cases of well-established FOs.

• The total value of the received grants per FO ranges from US$7 000 to US$ 170 000. On average, a

grant amounts to US$ 23 000.

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• Framework FOs have received the largest grants, ranging between US$ 30 000 and US$ 170 000. Technical Assistance Technical Assistance (TA) has been provided to all interviewed FOs. In cases where FOs are co-managed by a project, TA was provided in organizational, managerial and development issues. Four of the supported FO have developed strategic development planning and operate on sound commercial and organisational basis. TA on improved production and technology transfers has been commonly provided to all interviewed FOs. Vocational training, presentations, practical trainings etc. in various forms and duration, focused on capacity building in:

• Improvement of agricultural production and associated technologies; • Finding markets and improvement of marketing; • Organizational aspects for use of the provided donations.

TA has often included educational and commercial field trips for the FOs in Georgia and abroad. Control and follow-up During the project implementation, all of the assessed FOs were visited by the donor organisations from 1 to 6 times annually. After the end of the projects, only three organizations implemented follow-up activities. In one case, a 2-year monitoring plan was implemented. In another case, the donor made one subsequent visit and in the last case, the donor organization sub-contracted a third party to assess the project outcomes. Main findings • Significant support has been provided to the FOs in Georgia by a variety of donor organizations,

with an ever-increasing availability of funds. Many donor organizations have supported the establishment of FOs and/or have provided significant grants, without proper pre-assessment of the viability of the organisation. Donor organizations have rarely considered viability and performance of existing FOs as criteria for provision of support. Follow-up on the performance and the development of the assisted FOs after support ends is far from being systematic.

• All surveyed FOs were created from top-down (management to members, and donor to management/members). The targeting of FOs was often “project cycle driven”, resulting in duplication of assistance and strengthening of few potentially viable FOs. The management of most of the FOs (not considering project staff), has limited experience and training in FOs development. They learn from their mistakes, in addition to the very short training courses provided. The FOs assisted by projects which employ professional managers are much more developed, however keeping the professional managers after the project ends is a difficult challenge.

• Significant number of virtual FOs have accumulated significant assets, creating an overall negative

image at national level. Numerous virtual FOs create the illusion of an active FOs sector, when in reality external funds are fuelling the establishment of structures which have no foundations. The number of members in virtual FOs further leads to an overestimation of the impact of the FOs on the targeted communities . In addition, virtual FOs contribute to discourage initiatives to promote real FOs as donors tend to prefer adding values to existing structures, rather than developing new FOs.

• The survey confirms the lack of involvement of Government in the development of the FOs and the

limited dialogue with FOs. FOs have however shown significant interest in being actively involved in policy formulation.

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• The local authorities have been regularly involved in the preparation of the Municipality

Development Plans, training and contractual arrangements related to FO support. With the Local Authorities being able to tap into different GoG development funds or to contribute through their own budgets they remain a significant potential for the development of FOs.

2.6. P E R C E P T ION OF F AR ME R OR G ANIS AT IONS B Y T HE G E NE R AL P UB L IC In order to better understand the development constraints of the FOs the survey included a chapter on the perception of the FOs by the general public. The survey addressed approximately 200 respondents through focus groups (5-20 participants) discussions in 36 randomly selected communities. The focus groups had to assess the percentage of population which would agree/disagree with the answers proposed to answer a set of questions. None of the respondents had ever been a FO member or associated with an FO in any way in the past. Their answers about FOs and their activities in their districts are provided in Table 5. Table 5. Do the residents of your community know what FOs are? Answers Population (%) Has no information on existence or activities of farmers’ organizations 81 Has some information on the activities of farmers’ organizations 19

The majority of farmers have no information on FOs and their activities. Table 6. Do you know any FOs in your district Answers Population (%) NO, there are no farmers’ organizations in the district 84 Knows an FO or a member of a FO 16

The vast majority of the respondents have not been in contact with FOs or their members knowingly, although FOs are established in the villages or in the vicinity. Table 7. Are you willing to learn more about FOs and become a member? Answers Population (%) Not interested to know, or to be a member of FOs 26 Wants to know about FOs 56 Tried to contact FOs but without result 18

A quarter of the farmers are sceptical about the opportunities that would result from membership of FOs and are unwilling to join any of them. The majority of farmers is willing to know more about FOs. Table 8. Are you willing to join a FO and pay membership fee for the obtained services? Answers Population % Will join an organization and pay membership fees for an adequate services addressing their production constraints

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Will join an organization, but will not pay membership fees 31 Will not join an organization in any case 33

One third of the population would be ready to join an organization and pay membership fees providing appropriate benefits are guaranteed. One third would be willing to join but not to pay membership while the last third would not join an organization in any circumstance.

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Table 9. What would you expect from the FOs of which you would be a member? Answers Population % Procurement of quality inputs (seed, plant protection, fertilizer) 51 Assistance in employment 21 Knowledge, training, new skills and introduction of modern technologies 11 Assistance in marketing of production 12 Improvement of social conditions 5

The interviewees identified agricultural constraints that are expected to be addressed through the FOs. Their main expectation refers to the procurement of quality inputs. Main Findings

There is significant knowledge gap amongst the rural population concerning FOs and their role, the development possibilities, the available donor support, the rights of the members and the location and activities of already existing FOs.

• The high percentage of respondents who are unaware of FOs in their districts (84 percent) reflects

the low level of awareness about FOs. In most cases, farmers are not aware of the fact that FOs exist in their neighborhood or close to their villages.

• Farmers showed significant interest in FOs and the majority of farmers would join an FO although only one third would be ready to join and pay the fees, providing they benefit from their membership.

• Many farmers are willing to address the constraints they face through the FOs.

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3. C ONC L US IONS The FOs sector in Georgia consists of at least one hundred specialized organizations, across all regions of the country. They tend to be grouped in districts which have been targeted by donor organizations in the last two decades. Very few are however operational. The findings which are summarized in this report come from the survey of 16 FOs. These organizations have been selected from the lists provided by the donor organizations which are supporting FOs, using operationality as a main criteria. Therefore, the 16 selected FOs are expected to be representative of the situation of the operational FOs in Georgia since, from the discussions with stakeholders, all FOs which are currently operational are or have been supported by donors in the past, with the notable exception of one FO.

There are three main forms of legal entities (NGO, cooperative and Union (also called Amkhanagoba)) that are used for the establishment of FOs in Georgia. These legal forms correspond to different concepts and purposes have different implications in terms of management and member’s responsibilities. Farmer associations were predominant among the organizations supported by donor organizations in the earlier years of the transition period. External support is now increasingly provided to cooperatives, which are commercially viable organizations. This shift is explained by the fact that the results from farmer associations were limited.

All surveyed FOs but one have been established with the objective of obtaining grants from donor organizations. The creation and development of FOs are donor driven and dependent on external support for survival.

There is currently no institutionalized coordination mechanism to support the coordination of donor organizations, resulting in limited exchange of information on the methods used, results obtained, problems met and lessons learned. This is an obstacle to the harmonization of the approaches adopted by different organizations to support the development of FOs. The lack of systematic sharing of experiences between donor organizations prevents the identification and replication of successful interventions and the elimination of unsuccessful approaches. The dependency of the FOs on donors underlies a number of closely interconnected and important constraints mentioned in the report:

• The objectives and activities of FOs are determined (or at least strongly) influenced by donor organizations’ agenda rather than by the members’ interest, which has negative consequences in terms of ownership, commitment, motivation, participation, internal organization; all decisions are biased by the need to attract donors’ funding;

• The tendency of the FOs’ leaders to dominate and consider the FOs as their private business (possibly creating virtual FOs to get the funds); they have limited interest in the real development of the FOs, in the setting of a democratic environment, etc.

• The success of a FO is not directly related to performance. The most important factor for survival of a FO is probably the capacity of its management to find new sources of external funding, rather than good results. FOs are learning how to adapt to each specific donor’s requirements to survive, independently of members’ aspirations.

• The time-limited and ad hoc technical assistance of donor interventions has resulted in the limited development of management capacity. In recent years, donors increasingly tend to provide management support from outside the FO rather than to train the FO’s management team. De facto, FOs with external management show better results than FOs with “trained” management.

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The fact that the large majority of the FOs that have survived are or have been dependent on the support from donor organizations reflects the difficulty for FOs to operate in the current environment in a sustainable way without external support. Newly established FOs face significant problems of funding in the current environment. Even well-established FOs tend to remain dependent on donor support and prefer to implement donors‘ priorities than to serve their members.

In the absence of Government’s support, the development of FOs mainly depends on external support, which is by nature limited in time, sporadic and unpredictable. FOs would benefit from stable, predictable and longer term interventions which would require an appropriate legislative and taxation environment.

Government could play a positive role in creating a favourable environment for farmer cooperation through appropriate measures including legislation and taxation. Recommendations on legislation and taxation issues are addressed in separate reports.

FOs are governed by unclear legislations and non-existent secondary legislations. This situation contributes to a number of deficiencies of the FOs which have been highlighted in the report:

The survey has also highlighted the lack of awareness of the farmers of the existence and potential role of FOs. A significant proportion of the farmers which have been interviewed said that they would be ready to join a FO and pay the fee if there was any reasonable guarantee of corresponding benefits. There is definitely a role to play by government to inform farmers of the potential of farmer organizations.

There is limited understanding of the tax regulations within the FOs. In addition, based on the discussions with the farmers, there seems to be room for interpretation of the provisions of the tax code. Most FOs are reluctant to increase their operations. They prefer to stay below the VAT registration threshold and not to increase the FO’s turnover. The tax regime provides farmers and FOs disincentives to increase turnover and engage in marketing activities. As a conclusion, today the FOs fail to play the role that they could have in the development of agriculture of Georgia, when they are the most appropriate institution to increase the productivity and income of the small farmers who currently contribute 90 percent to the agricultural production of Georgia. The weak representation of the FOs at regional and national levels is a serious obstacle to their contribution to policy dialogue with the Government and the Parliament.

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ANNE X I. P R OF IL E S OF F AR ME R AS S OC IAT IONS (F A) FA # 1 FA # 2 FA # 3 FA # 4 FA # 5 FA # 6 FA # 7 FA # 8

STATUS Date of Establishment 2008 2006 2008 2006 2004 1999 2008 2008

Type of organization Non-profit NGO Non-profit NGO;

framework organization

Non-profit NGO Non-profit NGO Non-profit NGO Non-profit NGO Non-profit NGO Non-profit NGO

Main activities

Joint services/ Mechanization service to members at 30% discount

Joint services, procurement of inputs, sales of produce/ Machinery service to FCs and input supply through LLC

Joint services, procurement of inputs, sales of produce/ Milk storage and marketing, veterinary medicine, AI

Joint services, procurement of inputs, sales of produce, benefits and subsidies/ Animal husbandry related advisory service, etc.

Joint services, procurement of inputs, transport, storage

Joint services, procurement of inputs, benefits and subsidies, other/advisory services, etc. on beekeeping

Procurement of inputs, benefits and subsidies/ Mechanization service to members at 30% discount

Main reasons to form FA

Joint services, benefits and subsidies

Joint services, procurement of inputs, sales of produce, benefits and subsidies



Joint services, procurement of inputs, benefits and subsidies

Benefits and subsidies, other

Joint services, benefits and subsidies

Responsibilities to Government, buyers, creditors, input suppliers

Elected/delegated responsible persons/management

Elected/delegated responsible persons/management

Elected/delegated

responsible

persons/management

Elected/delegated

responsible

persons/management

Elected/delegated

responsible

persons/management

Elected/delegated

responsible

persons/managemen

t

Elected/delegated

responsible

persons/management

FA management

All members vote on all issues

All members vote on all issues, members elect/delegate organization members as management, members elect bodies within organization

All members vote on all issues, members elect/delegate organization members as management, members elect bodies within organization

All members vote on all issues, members elect bodies within organization




Duration of delegated member/body mandate

3 years and reelection is required

1 year and reelection is required






Professional management

Yes Yes

FA control beyond tax issues

Bodies elected by members

Bodies elected by members, control/review part of operating procedures

Control/review part of operating procedures





MEMBERS AND MEMBERSHIP Membership size 25 280 58 14 8 200 10 Change in membership size during the last 5 years

Increase No change Decline Increase Increase Increase No change

Difference in member No No No Yes No No No

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FA # 1 FA # 2 FA # 3 FA # 4 FA # 5 FA # 6 FA # 7 FA # 8 rights and obligations

Membership/admission fees and mode of payment

GEL 10 None On a monthly basis in cash GEL 2

On annual basis in cash GEL 10

On entrance through a bank GEL 50

On annual basis either by cash, through a bank, or in-kind GEL 10

On annual basis either by cash or through a bank GEL 50

Use of membership fees and decision making on use

On salaries and running costs by elected board

On running costs and activities by elected board

On investment by members

On activities by a president

On salaries, running costs, activities by a president

Member awareness about the use of membership fees

Yes Yes Yes Yes Yes

Openness to all interested to join

Yes Yes Yes Yes Yes No Yes

Pre-requisites to join

Membership fee payment and/or production profile of applicant

Membership fee

payment and/or

production profile of

applicant

Membership fee

payment and/or


applicant

Membership fee

payment and/or


applicant

Membership fee

payment and/or


applicant

Membership fee payment and/or production profile of applicant

Application and acceptance procedures

Yes Yes No Yes No Only application procedure

Yes

Type of admission endorsement required for a new member admission

Majority of members Majority of members and management

Management Majority of members Majority of members Majority of members Majority of members

and management

Exclusion procedures and type of endorsement required

No Elected board and automatic when responsibilities are not met

Majority of members and management

Majority of members, and automatic when responsibilities are not met

All members Management Majority of members and automatic when responsibilities are not met

Permanence of membership

Yes No Yes but membership is suspended/on hold until contribution is not paid

No No No No; also, membership is suspended/on hold until contribution is not paid

Membership registry Yes Yes Yes Yes Yes Yes Yes Renewal on annual/monthly basis

Yes Yes Yes Yes Yes Yes No

Registry availability to all members

Yes Yes Yes Yes Yes No

Responsibility for registry maintenance

Manager Elected body Manager Manager Manager President President

Proportion of women members

20% 30% 37.5% 20%

DEMOCRACY

Received training topics Management of

farmer organizations; Democracy in farmer

Other Management of farmer organizations; Democracy in farmer

Management of farmer organizations; Democracy in farmer



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FA # 1 FA # 2 FA # 3 FA # 4 FA # 5 FA # 6 FA # 7 FA # 8 organizations; Other

organizations; Other

organizations; Other

organizations organizations

Management degrees Economics Economics Economics Economics Management degrees or at least training subjects

Agronomy, IPM Agronomy, plant protection, livestock, veterinary, other

Agronomy, plant protection, livestock, veterinary

Agronomy, livestock, veterinary, IPM, other

Livestock, veterinary, IPM, other

Agronomy, plant protection

Voting rights One member, one vote

One member, one vote

One member, one vote One member, one vote One member, one vote



Voting through representatives

No Yes No No No No No

Quorum for voting 90% 80% 95% 75% 75% 70% 51% Days required to organize voting and agree decision

1 2 1 7 2 14 1

Type of voting

Open declaration by raising hand, anonymous with ballots

Open declaration by raising hand, anonymous with ballots, other

Open declaration by raising hand


Open declaration by raising hand, anonymous with ballots


Open declaration by raising hand

Meeting regularity with members and delegated representatives

Yes Yes Yes Yes Yes Yes Yes

Number of annual meetings with members and delegated representatives

With, members - 6 times and del. reps. - 6 times







Meeting record keeping Yes Yes Yes Yes Yes Yes Yes Mode of communication with members about upcoming meetings

Phone Phone Phone Phone Phone Phone Face-to-face communication

Views about meeting productivity

Very productive Sometimes very productive


Very productive and sometimes very productive

Sometimes very productive

Not very productive

Complaints system against member activities

No Yes Yes Yes No No No

Possibility of exclusion after complaints review

No Yes Yes No No No No

Non-member right to submit complaint

No No No Yes No No No

Rule books in addition to statute

No Yes No Yes No No No

Change in the leadership of FA

No Yes Yes Yes Yes No No

29

FA # 1 FA # 2 FA # 3 FA # 4 FA # 5 FA # 6 FA # 7 FA # 8 Change in FA No Yes Yes No Yes No No

ACTIVITIES OF FARMER ASSOCIATIONS Joint input supply No Yes Yes Yes Yes No Yes Agreements with input suppliers

Yes Yes Yes Yes No

Origin of input supplies Retailers, wholesalers,

own imports Retailers, wholesalers, own imports

Retailers, wholesalers Wholesalers Retailers, wholesalers

# of joint procurements 5 5 2 3 Availability of credits and advances

No No To all members No No No No

Technical advise on production

Yes Yes Yes Yes Yes Yes No

Technical advise on organization matters and accounting

No Yes Yes No Yes No Yes

Availability and the origin of technical support

Regular from FA Seasonal and ad-hoc from FA, donor project, and input supplier

Regular and seasonal from donor project

Ad-hoc from FA and donor project

Regular and ad-hoc from donor project

Regular and seasonal from FA and donor project

Ad-hoc from donor project

Type of services offered by FA

Machinery and application for credits, subsidies, donor support

Machinery, post-harvest and transport, and marketing

Post-harvest and transport, and marketing

Machinery, post-harvest and transport, labor, administrative services, marketing

Machinery, post-harvest and transport, and marketing

Machinery, post-harvest and transport, and administrative services

FA affiliated agriculture pharmacy and service target

No Yes, serving both members and non-members

Yes, serving both members and non-members

No No Yes, serving both members and non-members

No

FA/Member benefits from pharmacies

Discounts to members and generates revenue to FA

Credited input supply to members

Discounts to members; provides technical advice on selection of inputs through field visits and controls

Book-keeping and reporting to revenue service

On organization level On organization level On organization level On organization level On organization level On organization level

Financial report to revenue service and adoption by members/FAs

Reported to revenue service


Reported to revenue service, and adopted by members/FA




Capacity to mobilize funds

Has adequate funds and resources to carry desired activities

Has reserve contingencies and has capacity to mobilize funds for most of its activities

Has capacity to mobilize funds for most of its activities





MARKETING

30

FA # 1 FA # 2 FA # 3 FA # 4 FA # 5 FA # 6 FA # 7 FA # 8

Marketing method

Every member finds a buyer, FA management finds buyers

Every member finds a buyer, FA members support to find a buyer and organization of sales, FA management support sales organization, FA management finds a buyer, market is available with FA effort

FA members support to find a buyer and organization of sales, FA management support sales organization, FA management finds a buyer

Every member finds a buyer, FA members support to find a buyer and organization of sales, FA management support sales organization, FA management finds a buyer

Every member finds a buyer, FA members support to find a buyer and organization of sales, FA management support sales organization

Every member finds a buyer, FA members support to find a buyer and organization of sales

Every member finds a buyer, FA members support to find a buyer and organization of sales

Major obstacles in marketing

None, but quality is the issue

None Yes, but no specifics Low price Low price None None

Buyers and contracts Written contracts with

buyers Written contracts with buyers

Written contracts with buyers

Ad-hoc traders set the rules

Buyers

Retail sales handled by each member at green market

Local and remote buyer available to all villagers, local buyers available to all members, remote buyers available to members

Retail sales handled by each member at green market, Local and remote buyer available to all villagers, local buyers available to all members

Local buyer available to all villagers and members, remote buyer available to members

Retail sales handled by each member at green market

Local and remote buyers available to all members

Local and remote buyers available to all members

Sales transaction mode

Cash payment to individual members

Joint FA account, cash payment to organization and distribution to members, invoicing, etc,.

Joint organization account, cash payment to FA and distribution among members, cash payment to individual members, invoicing, etc.

Cash payments to FA and distribution among members, cash payment to individual members

Cash payments to individual members

Invoicing, etc.

DONOR SUPPORT

Type of donation Equipment, mechanization, facilities

Mechanization / Machinery and implements

Equipment, facility Equipment, mechanization

Equipment, mechanization, facilities, seeds

Equipment, mechanization, greenhouse

Value of donations (GEL)

221,000 288,000 204,000 21,000 11,900 51,000 245,000

REVENUE AND TAXES Number of paid staff 1 1 1 1 1

Sales format FA is able to handle

sales on behalf of members

FA is able to handle sales on behalf of members

FA is able to handle sales on behalf of members

Requirements on the sales transactions by FA

Without any limitations or requirements

Only payments through account, only if fiscal bill is issued, and daily sales are transferred to the account



31

FA # 1 FA # 2 FA # 3 FA # 4 FA # 5 FA # 6 FA # 7 FA # 8 Requirements on the sales transactions by members








32

ANNE X II. P R OF IL E S OF F AR ME R C OOP E R AT IVE S (F C ) FC # 1 FC # 2 FC # 3 FC # 4 FC # 5 FC # 6 FC # 7 FC # 8

STATUS Date of Establishment 2009 2003 2007 2006 2007 2007 2007 2000

Type of organization For profit cooperative

For profit cooperative


For profit cooperative For profit cooperative For profit cooperative For profit cooperative


Main activities

Joint services, procurement inputs, sales of produce/ Post harvest handling of fruits and sales

Joint services, procurement inputs, sales of produce/ Milk collection and processing, veterinary medicine supplies, and AI

Joint services, procurement inputs, sales of produce/ Milk collection and processing, veterinary medicine supplies, and AI

Joint services, procurement inputs, sales of produce/ Input procurement and transportation

Joint services, procurement inputs, sales of produce/ Trout farming

Joint services, sales of produce/ Sheep husbandry

Joint services, procurement inputs, sales of produce, benefits and subsidies/ Cattle fattening

Joint services, sales of produce/ Input procurement

Main reasons to form FC

Joint services, sales of produce

Joint services, procurement of inputs, sales of produce







Responsibilities to Government, buyers, creditors, input suppliers

Elected/delegated responsible persons/management guaranteeing with FC assets





Elected/delegated

responsible

persons/management

guaranteeing with FC

assets

Elected/delegated

responsible

persons/managemen

t guaranteeing with

FC assets

Elected/delegate

d responsible

persons/manage

ment

guaranteeing

with FC assets

FC management

Members elect/delegate FC members as management, members elect bodies within organization

All members vote on all issues, members elect/delegate FC members as management, members elect bodies within organization

All members vote on

all issues, members

elect/delegate FC

members as

management,

members elect

bodies within

organization

All members vote on

all issues, members

elect bodies within

organization

All members vote on

all issues All members vote on

all issues All members vote on

all issues, members

elect/delegate FC

members as

management,

members elect

bodies within

organization

All members

vote on all

issues, members

elect/delegate

FC members as

management,

members elect

bodies within

organization

Duration of delegated member/body mandate









Professional management

Yes No No No No No No Yes

FC control beyond tax issues

Control bodies elected by members, control/review part of operating procedures

Control bodies elected by members, external control

Control bodies elected by members



Control bodies elected by members, control/review part of operating procedures

33

FC # 1 FC # 2 FC # 3 FC # 4 FC # 5 FC # 6 FC # 7 FC # 8 MEMBERS AND MEMBERSHIP

Membership size 250 53 22 9 12 20 8 30 Change in membership size during the last 5 years

Increase Increase Increase No change No change No change Decline Decline

Difference in member rights and obligations

No On the basis of participation and voting and decision making rights

No No No No No

Membership/admission fees and mode of payment

Pai, on entrance through a bank GEL 25

Pai, on entrance through a bank

GEL 50

on entrance through a bank

GEL 50


GEL 50


GEL 50


GEL 50

on entrance through a bank

GEL 50

Pai, on entrance through a bank and/or in-kind

GEL 50 Use of membership fees and decision making on use

On investment by manager

On activities and investments by manager


On investment by members


Member awareness about the use of membership fees

Yes Yes Yes Yes Yes Yes Yes Yes

Openness to all interested to join

Yes Yes Yes Yes Yes No Yes Yes

Pre-requisites to join

Pai payment and/or production profile of applicant

Pai payment and/or production profile of applicant

Pai payment and/or


applicant

Pai payment and/or


applicant

Pai payment and/or


applicant

Pai payment and/or


applicant

Pai payment and/or


applicant

Pai payment

and/or

production

profile of

applicant Application and acceptance procedures

Yes Yes No No No No Yes, only acceptance procedure

Yes

Type of admission endorsement required for a new member admission

Unanimous by all members



No Unanimous by all

members

Unanimous by all

members

No Unanimous by all members, and by the management

Exclusion procedures and type of endorsement required

Automatic when responsibilities are not met

By the majority of members, automatic when responsibilities are not met

No No By all members, by the majority of members

By the majority of members, automatic when responsibilities are not met

By all members By the majority of members, automatic when responsibilities are not met

Permanence of membership

Yes/ membership is on hold if contribution is not paid

No No No No No No Yes

Membership registry Yes Yes Yes Yes Yes Yes Yes Yes Renewal on annual/monthly basis


34

FC # 1 FC # 2 FC # 3 FC # 4 FC # 5 FC # 6 FC # 7 FC # 8 Registry availability to all members


Responsibility for registry maintenance

Manager Manager Manager Manager Manager Manager Manager Manager

Proportion of women members

40% 30% 41.7% 30% 62.5% 25%

DEMOCRACY

Topics of received trainings

Management of farmer organizations, democracy in farmer organizations, other

Management of

farmer organizations,

democracy in farmer

organizations, other

Management of


democracy in farmer


Management of


democracy in farmer

organizations

Management of


democracy in farmer


Management of


democracy in farmer


Management of


democracy in farmer


Management of

farmer

organizations

Management/members degrees

Economics, management, marketing

Economics, management

Economics Economics Economics, management

Subjects of management degrees or at least training

Agronomy, plant protection, IPM, other

Plant protection, veterinary, livestock, other

Agronomy, veterinary, livestock, other

Veterinary, livestock, other

Agronomy, plant protection, other

Agronomy, other Veterinary, livestock Agronomy, plant protection, veterinary, livestock, IPM

Voting rights One member, one vote

One member, one

vote

One member, one

vote One member, one

vote

One member, one

vote One member, one

vote

One member, one

vote One member,

one vote Voting through representatives

No No No No No No No No

Quorum for voting 60% 80% 51% 51% 90% 70% 60% 65% Days required to organize voting and agree decision

7 10 4 2 5 2 1 3

Type of voting

Open declaration by raising a hand, anonymous with ballots

Open declaration by

raising a hand Open declaration by





raising a hand Open declaration

by raising a

hand,

anonymous with

ballots, other Meeting regularity with members and delegated representatives

Yes, only with members

Yes Yes Yes Yes Yes, only with

members Yes Yes

Number of annual meetings with members and delegated representatives

With, members – 1 time, del. reps. – 2 times

With, members – 2

time, del. reps. – 4

times

With, members – 3


times

With, members – 4


times

With, members – 12


times

With, members – 4


times

With, members – 4


times

With, members –

1 time, del. reps.

– 4 times

Meeting record keeping Yes Yes Yes Yes Yes Yes Yes Yes Mode of communication with

Phone Phone Phone Phone Phone Phone Phone Phone

35

FC # 1 FC # 2 FC # 3 FC # 4 FC # 5 FC # 6 FC # 7 FC # 8 members about upcoming meetings

Views about meeting productivity


Very productive, sometimes very productive





Very productive

Complaints system against member activities

No Yes No Yes Yes No No No

Possibility of exclusion after complaints review

Yes Yes Yes

Non-member right to submit complaint

No Yes No Yes No No No No

Rule books in addition to statute

Yes No No Yes No No No No

Change in the leadership of FA

Yes Yes No Yes No No Yes Yes

Change in FA Yes Yes No Yes No No No Yes ACTIVITIES OF FARMER ASSOCIATIONS

Joint input supply No Yes No Yes Yes Yes Yes No Agreements with input suppliers

No Yes Yes Yes No No Yes No

Origin of input supplies Retailer, wholesaler Retailers Retailer Wholesaler Retailer Retailer # of joint procurements 5 times 4 times 3 times 4 times 3 times Availability of credits and advances

Yes

Technical advise on production


Technical advise on organization matters and accounting

Yes Yes Yes Yes Yes No Yes Yes

Availability and the origin of technical support

Regular, ad-hoc/ FC, donor project

Seasonal, ad-hoc/ donor project

Ad-hoc/ donor project

Seasonal, ad-hoc/ donor project

Ad-hoc/ donor project Ad-hoc/ FC Seasonal/ donor project

Regular, ad-hoc/ FC, donor project

Type of services offered by FC

Mechanization/machinery, post harvest and transport, marketing

Post-harvest and transport, marketing

Mechanization/ machinery, post-harvest and transport, marketing

Labor, marketing Labor, marketing Marketing Post-harvest and transport, marketing

FC affiliated agriculture pharmacy and service target

No No Yes Yes No No No No

FC member benefits from pharmacies

Yes

Book-keeping Yes Yes Yes Yes Yes Yes Yes Yes Financial report to Yes Reporting only to Reporting only to Reporting only to Reporting only to Reporting only to Reporting only to Yes

36

FC # 1 FC # 2 FC # 3 FC # 4 FC # 5 FC # 6 FC # 7 FC # 8 revenue service and adoption by members/FCs

revenue service revenue service revenue service revenue service revenue service revenue service

Capacity to mobilize funds

Has adequate funds and resources for desired activities, can mobilize resources for most of its activities


Has reserves for contingencies, can mobilize resources for most of its activities


Can mobilize resources for most of its activities


Can mobilize resources for most of its activities


MARKETING

Marketing method

FC management supports sales organization, FC management finds a buyer

Members support identification of a buyer and organization of sales, FC management supports sales organization, FC management finds a buyer

FC management supports sales organization, FC management supports sales organization, FC management finds a buyer

Members support identification of a buyer and organization of sales, FC management supports sales organization

Members support identification of a buyer and organization of sales, FC management supports sales organization, FC management finds a buyer

Every member finds a buyer, members support identification of a buyer and organization of sales, FC management supports sales organization, FC management finds a buyer

FC management supports sales organization, FC management finds a buyer

Every member finds a buyer, members support identification of a buyer and organization of sales, FC management supports sales organization, FC management finds a buyer

Major obstacles in marketing

Low price, low quality

Yes, but no specifics Low price No Low price Yes, but no specifics Low price Yes, but no specifics

Buyers and contracts Written contract, ad-hoc traders set the rules

Written contract, ad-hoc traders set the rules

Ad-hoc traders set the rules

Written contract

Buyers

Retail sales handled by each member, local buyer available to all villagers and to all members

Local buyer available to all villagers and to all members, remote buyer available to all villagers, local or remote buyer available only to individual members

Retail sales handled by each member, local buyer available to all members, local or remote buyer available only to individual members

Retail sales handled by each member, local buyer available to all villagers, remote buyer available to all villagers

Local buyer available to all villagers, local or remote buyer available only to individual members

Local buyer available to all villagers, remote buyer available to all villagers, local or remote buyer available only to individual members

Local buyer available to all villagers, remote buyer available to all villagers

Local buyer available to all villagers, local buyer available to all members, local or remote buyer available only to individual members

Sales transaction mode

Joint organization account, cash payment to individual members, invoicing, etc.

Joint organization account, cash payment to individual members, invoicing, etc., cash payment to FC and distribution to members

Cash payment to FC and distribution to members, cash payment to individual members

Cash payment to individual members

Cash payment to FC and distribution to individual members

Cash payment to FC and distribution to individual members

Cash payment to FC and distribution to members, cash payment to individual members

Joint organization account, cash payment to individual members, invoicing, etc., cash payment to FC and

37

FC # 1 FC # 2 FC # 3 FC # 4 FC # 5 FC # 6 FC # 7 FC # 8 distribution to members, cash payment to individual members, individual members accounts

DONOR SUPPORT

Type of donation Fruit handling equipment, storage facilities

Milk collection and processing equipment, facilities

Milk collection and processing equipment, facilities

Mechanization, facilities, seeds

Facilities Live sheep Live cattle Facilities, tractor, demo plot, nursery

Value of donations (GEL)

128,000 138,000 23,200 30,000 16,000 20,000 22,000

REVENUE AND TAXES Number of paid staff 1 1 1

Sales format Can handle sales on behalf of members

Can handle sales on behalf of members







Requirements on the sales transactions by FC

Only payment through account, only if fiscal bill is issued, and daily sales are transferred to the account





Only payment through account, only if fiscal bill is issued, and daily sales are transferred to the account, without any limitation provided appropriate documentation is kept



Requirements on the sales transactions by members

Without any limitation provided appropriate documentation is kept




Only payments through account




SURVEY OF SELECTED FARMER ORGANIZATIONS IN GEORGIA...In 2011, a small survey was carried out by FAO with support from the Ministry of Agriculture to study Farmer Organizations (FOs)

Documents