Georgia

An image of the country's flag.

Over the last 20 years, the Republic Georgia has privatized ownership of both rural and urban land, drawing upon significant amounts of technical assistance from donors, including USAID, to do so. Initial transfers of farmland from 1300 collective and state farms in 1992 enabled households to acquire up to 1.25 hectares of land to produce food for their own consumption. Nearly half of Georgia‘s 4.3 million people now live in rural areas and have ownership of some land, although not all rural households are full-time farming households. In 2007, the average family farm size was only 0.7 hectares.

Not all agricultural land has been privatized, however. In the late 1990‘s, the state chose to retain ownership of more than half of all agricultural land (some 2 million hectares) and to use leasing arrangements to allocate operating rights to larger, commercially oriented enterprises. This strategy did not prove successful. Agriculture declined as a share of GDP, many rural households lived well below the poverty line, and the larger farms operating on lands leased from the state were not as efficient or productive as envisioned. Short lease-terms for state-owned land, for example, provided little incentive for investment or sustainable management. In 2005, the Government of Georgia (GOG) began privatizing the agricultural land remaining in state ownership. The existing lease arrangements had not provided farmers and other investors the tenure security needed to encourage serious investments in agriculture. As a result, theGOG stopped the practice of farmland leasing, mades lands already held under leasehold available for privatization, and granted leaseholders preemption rights. The aims of this large-scale privatization strategy were to complete the land privatization process, create incentives for the establishment of large-scale farms and increase productivity. Some observers note that poor environmental management, in general, is the result of inadequate property rights and tenure security. A new realignment of rural property rights may be needed to realize greater agricultural productivity and income growth.

Privatization of non-agricultural land has been less problematic. It is more readily registered, marketed, and transferred. Urban property reforms were undertaken in 1997, five years after rural land privatization was initiated. Georgia‘s procedures for registering property – largely for urban-based industries – are now significantly simpler and less expensive than those of other countries in Eastern Europe and Central Asia. Disputes over property rights mark the Government of Georgia‘s relationships with the territories of South Ossetia and Abkhazia. These are rooted in longstanding differences and will be resolved only through political negotiation at a higher level. However, as a number of people have been internally displaced by conflicts, property-rights issues are likely to remain on the agenda for some years to come.

KEY ISSUES AND INTERVENTION CONSTRAINTS

  • Support Additional Rural Land Reform to Improve the Prospects for Greater Agricultural Productivity and More Effective and Sustainable Natural Resource Management. While agriculture contributes relatively little to Georgia‘s GDP, more than half the population continues to live in rural areas, often under conditions of extreme poverty. The small size of landholdings may constrain some households‘ abilities to increase productivity. Procedures for leasing state land do not result in expected levels of marketed production. Donors could work with the Government of Georgia to develop another wave of rural land reform, including, for example: testing new approaches to leasing; privatizing land still held by the state; and complementing these reforms with additional investments to make the new owners more competitive agricultural producers. Donors should also continue to provide technical support to government institutions responsible for survey and title registration to ensure that reforms are administered fairly and rapidly.
  • Help to Consolidate and Codify Laws and Decrees Governing Land and Disseminate Information to the Public at Large. A large number of laws, orders, and decrees now apply to Georgia‘s land sector, so it is difficult to research law applicable to a particular issue. This reduces transparency and may inhibit the design and implementation of needed changes. In addition to supporting government efforts in this regard, donors should continue to promote the work of nongovernmental organizations that help to ensure the public’s awareness of its rights and responsibilities as well – for example, the work of the Association for the Protection of Landowners’ Rights. Specifically, donors should support analyses of Georgian law governing women’s land rights, including family law, and assess the degree to which Georgian women have participated in and benefited from land privatization, with particular attention to women-headed households. Based on the analysis and findings of that assessment, a follow-on action agenda might be considered for support.

SUMMARY

The Republic of Georgia, a former Soviet republic, is a largely mountainous, low-income, food deficient country in which 24% of the population lives in poverty while a further 9% lives in extreme poverty. Poverty is concentrated in rural areas where 47% of the population resides. Rural areas have not benefited from nationwide economic growth. Historically, agriculture has been one of Georgia‘s most important sectors, due to the country‘s diverse climate and relatively good soils. Following the dissolution of the Soviet Union, however, Georgia‘s agricultural output declined dramatically due to the severance of trade ties with other former Soviet republics, as well as war and ethnic conflict. As a result, Georgia became a net importer of agricultural products.

In 1992, the government began to privatize rural land. In the lowlands, the government allocated 1.25 hectares to each rural family from the holdings of the collective and state farms that had dominated production in Soviet days. In the highlands, the government allocated five hectares to eligible families. The new government of Georgia retained more than half of all agricultural land in state ownership with the intention of leasing it out for commercial agricultural purposes. By 2002, these programs had created a class of private rural land owners on 0.7 million hectares of agricultural land. However, leaseholders controlled 0.3 million hectares of state-owned lands, and another million hectares of state-owned land was not cultivated due to problems of poor soil, location of the land, and damaged irrigation and drainage systems.

While 54% percent of employed Georgians work in the agricultural sector, in 2008 that sector generated only 10% of the country‘s GDP of US $12.7 billion. Despite laws protecting women‘s access and rights to land, women in Georgia often lack information about their rights and, as a result, tradition, customary law and religious law shape attitudes and behavior. Women have little involvement in economic decision-making within the family and do not have the same rights and responsibilities as men. Rural women have limited access to credit. Although the law guarantees an equal right to inherit, women and girls are often secondary heirs with few rights.A decade-long unresolved conflict in South Ossetia and Abkhazia continues to jeopardize the population‘s ability to maintain livelihoods, and disputes over land are common in these areas. An August 2008 conflict with Russia displaced another 128,000 people and this displacement along with the global financial crisis undermined the government‘s poverty-reduction efforts.Although Georgia has abundant water resources, the water sector suffers from severe contamination, a deficit of drinking water, and low sanitary standards of the water supply system. Sixty percent of existing water pipeline has deteriorated, and sanitary and technical conditions are unsatisfactory. In addition, water distribution is uneven throughout the country. Droughts are common in the eastern region, and irrigation is necessary for agricultural production.

Georgia‘s forests are of vital importance to the country‘s economy and citizenry. The primary causes of forest degradation are rural poverty and lack of affordable alternatives to wood as heating fuel, as well as the high demand for forest products. Sustainable commercial exploitation, resource conservation, and curbing illegal logging are environmental challenges for the country.During the Soviet period, Georgia was a source for many minerals. Following the dissolution of the Soviet Union, Georgia‘s mineral production fell sharply. Although mineral production began to rise in 2005, Georgia does not produce mineral products in globally significant quantities. The country‘s primary role in the mineral sector is as a transport route for oil and gas out of the Caspian region to world markets.

Published / Updated: August 2010