Project Title : Supply Chain for Dairy products and New Import substitute product

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1 GEORGIA Project Title : Supply Chain for Dairy products and New Import substitute product Contact person/ focal point : Nino Tavadze, Broker Main objective of the project The main objective of the project is to build a supply chain for buffalo milk in Kakheti Region. Part of Kakheti Region is known for Buffalo population, however, the production has been limited to house-made yogurt; Buffalo mozzarella is not found in any of the shops in Georgia, however, Georgian population is consuming different types of cheese (including cow-milk mozzarella, which is imported) and it can be assumed that there could be a niche for Buffalo Mozzarella. Research has shown that there is a demand on dairy products made out of pure milk as opposed to powder made milk (AgVantage). Consumers also prefer products made in Georgia, given that quality assurance is provided. Despite the fact that Georgia is rich with dairy resources, still most of the dairy products produced by Georgian companies are made from milk-powder, as the companies are concerned about quality and consistency of the milk provided by individual farmers. However, due to intervention from OPTO international, a supply chain has been built in Kakheti region for cow milk farmers and one company is sourcing raw milk locally; There is no milk collection center in the region with Buffalo population, therefore, milk cannot be sourced by local companies; OPTO international will be approached to see, whether they would be interested to assist the local farmers in building the supply chain in any form (technology know-how transfer, equipment, etc.); Local companies will also be approached for identifying their interest; The mechanism of the supply chain will be defined at a later stage, considering the interests of each stakeholder (e.g. company might install collection center, or farmers might get a micro credit to install it, etc.); Development results and impact If the supply chain is built, local farmers will have more income; While processing the milk and turning it into yogurt or home-made cheese, the waste of the production is higher compared to selling the raw milk only; Business proposition and Sustainability Local company sources milk locally (impacting farmers) and will produce a new product (import substitute);

2 Multi-stakeholder partnerships OPTO international contribute to building supply chain Local Company conducting feasibility study on demand as well as about cost of production and demand price; source milk locally; CHF provide technical assistance to local farmers (forms to be explored) Support from local municipality building for collection center, co-funding, etc to be explored; Our project support and services Risks To Co-fund a feasibility study with an interested dairy company on price and demand of buffalo mozzarella on Georgian market; Technical assistance to farmers on how to milk, store and submit raw milk at collection center (this role can be played by some other donor to be explored) It is a long-term project, therefore needs a lot of time and energy for identifying interests of the parties; The Risk could be the lack of number of buffalos in the region needed for making the project viable (especially when milk farming tends to decrease during winter time)

3 Project Title : Sourcing Local products Import substitution Contact person/focal point : Nino Tavadze, Broker Main objective of the project Georgia is currently importing most of the products with largely increasing negative trade balance; Most of the large companies that need agricultural products, import the goods while there is potential to source products locally; Usually, the problem is lack of know-how on how to grow crops, how to pack product and how to market it; There are several organizations working with relatively large number of farmers; Due to certain interventions from donor organizations, farmers are united in association to ensure product consistency in terms of quantity and quality; however, importing channels are well developed and farmers still lack marketing know-how and access to market for selling their products in Georgia or abroad. The objective of the project is to get large companies engaged in sourcing local products as an import substitute. Entry-point for such model is 2 Marriott hotels in Georgia; Development results and impact Marriott hotel is interested to source organic honey and walnuts locally labeling them as Georgian products. Amount and volume of the products still needs to be determined as it depends on type of packing available (as the FB manager has explained, Marriott Tbilisi needs more high class packing than Elkana can provide now, however, current packing would be sufficient for Courtyard Marriott.) In addition to these products, Marriott is interested to source vegetables with the guarantee of product consistency and quality; therefore, more farmers will get income from this model. Marriott could serve as an entry point for such models and it can be replicated to other hotels (Sheraton and the hotels to be opened in 2008 and beyond) as well as some of the big restaurants; Business proposition and Sustainability Large company sources products locally as opposed to import, contributing to local economic development and income generation for farmers; Multi-stakeholder partnerships Marriott is interested to source products locally as opposed to import them given that quality is satisfactory and product consistency is guaranteed; Elkana is working with farmers teaching them grow organic products and market them. Currently Elkana is looking for proper packing opportunities for organic honey (small jars)

4 and walnuts. Our project support and services Role of GC is to link parties such as Elkana and Marriott to generate more income for farmers in rural areas; GC also helps Elkana identify different places for jar producers. Risks The risk is that Elkana cannot find small jars for packing honey as required by Marriott;

5 Project Title : Vocational Education in Kvemo Kartli Region Contact person/focal point : Nino Tavadze and Irakli Chkonia, Brokers Main objective of the project To introduce Vocational Education in Kvemo Kartli. Kvemo Kartli is ethnically diverse region with 63% of Azeri ethnic population, 4.5 % Armenian ethnic population and 1.8% other. Total population is over , the labor force is Actual unemployment reaches to 60%. Out of the employed, 67% is engaged in agriculture and only 12% are employed by industrial companies. The only companies employing people in this region are Madneuli and Quartzite mining companies. The problem of unqualified labor is persistent in almost every industry in Georgia. Lack of knowledge and skills restrains the locals from actively engaging in agriculture or getting jobs in companies; The goal of the project is to introduce vocational education in the region, which will enable students obtain basic supervisory and management skills as well as on job specific skills (operating machines, etc.). The knowledge obtained at this school would be useful for agriculture, mining and construction. Development results and impact Students will get vocational education with a prospect of getting jobs and internship at Madneuli Group companies as well as use their skills in other industries, such as construction (e.g. road constructions are booming now in Georgia), and agriculture (e.g. operating agricultural machines). Business proposition and Sustainability Madneuli group has increased number of employees by 50% since 2004 and plans to employ more people; therefore qualified labor force for them is a priority; In addition to the employees, the company has a CSR policy to assist local communities, therefore the company will play a role in development of local communities; Multi-stakeholder partnerships Ministry of Education department of vocational education Ministry will take a responsibility of developing curriculum, recruiting students and paying salaries for teachers; Curriculum for supervisory and basic management skills development is already created for another school, which can be used in Kazreti school; the rest will be developed by the

6 MInistry; Madneuli and quartzite (the only large industrial companies in the region) are now in the process of decision making whether or not to fund rehabilitation of the training center (top management) in Kazreti. This center used to be professional technicum old vocational center; it has been originally designed for teaching students how to operate, maintain and repair operating machines of different types; the center has been cancelled due to lack of funds in the state budget; If the center is renovated, Ministry of Education is willing to take up on introducing Vocational Education, which in addition to teaching skills for operating machines, it will also teach supervisory and management skills; it should also be noted that the center will be focused on new technologies and equipment available on world market as opposed to only Russian produced equipment, which does not seem to have progressed since Soviet Times. After the project is launched, companies, in addition to offering jobs to a limited number of people, will also offer internships for the students; but more importantly, will give opportunity to local residents have access to vocational education that they can use right after graduating from the school. Our project support and services Role of GC is to regularly meet with representatives of the companies (usually different levels of the management) and discuss the project. Serve as a liaison between the companies and the Ministry of Education. GC will also outreach to local community to identify their perception of the company; Risks The risk is that the company decides not to get engaged in this project. The idea came from GC team but the initiative and enthusiasm was demonstrated by company at the beginning; slowed progress of the project may result into cancelling of the project.

7 Project Title : Access to Affordable Healthcare for mid and low income families in Georgia Contact person/focal point Nino Tavadze, Broker Main objective of the project Access to affordable and good quality healthcare is associated with many constraints in Georgia. In many cases, the patients only see doctors at the extreme cases or apply selftreatment that leads to unfavorable consequences; healthcare system is very informal and patients do not know what are the prices for different services; Moreover, healthcare was always provided by the government and the shift in the behavior has also affected the healthcare system; Government recently launched health insurance for the socially vulnerable in Georgia; 7 insurance companies are participating in the government program where the government buys the health policies for the socially vulnerable and the insurance companies provide the service when necessary. This gives the people opportunity to get good quality healthcare and avoid informal payments, which resulted into more expenses. There are two organizations that have done community based insurance in rural areas with success stories. As the organizations explained, it needs a lot of effort for social marketing to show the benefits of insurance and explain to what they are entitled to and to what they are not eligible. A study was done in Georgia in on determining the real demand on micro health, life and property insurance; the study showed that there is a real demand for micro-health insurance, meaning that regular citizens are eager to pay relatively low premiums and insurance companies get in profitable business. Development results and impact As a result of the project, families with mid and low income will have access to affordable healthcare through micro-insurance. Business proposition and Sustainability Insurance company(ies): will offer micro-insurance to families with mid and low income (note: income level and targeted region(s) to be identified); Multi-stakeholder partnerships Insurance Companies: GPIH already expressed a clear interest; IC Group interested but has questions; BCI interested (to be reconfirmed), Imedi L and IRAO to be approached;

8 Oxfam GB conducts researches and assists communities have access to healthcare (through different means: community based health financing, social marketing, etc.) Irakli Katsitadze to meet in the week of Sept 17 once he comes back in the country; Welfare foundation partner organization with Oxfam role to be identified; (can be social marketing and monitoring of the project); Micro-Financial Institutions (in case where insurance companies do not have partner banksin most cases they do); Banking institutions for administering the transactions; Micro-Insurance expert from UNDP work with companies on specific issues and address the questions posed. Our project support and services Provide expertise Micro-insurance expert needed; ToR will be drafted a bit later, once needs of the stakeholders and gaps are clearer;