The objective of the research was to provide an overview of the meat and dairy sector in Racha with an aim to assessing the viability of both sectors and the various ways that the project could work with the sectors to improve them.
The research was based on desk analysis of economic data, open interviews with experts, vets and large farmers in Racha and outside as well as open and closed interviews with 42 recipients of CARE grants in Racha. We also included some preliminary results from a visitor survey conducted in the summer of 2011.
The number of head of cattle and consequently the level of milk and meat production has been in decline in Georgia for the last decade. That said, according to government data, while Georgia has become increasingly self-sufficient in milk, it has become less self-sufficient in beef. There is no government data on the region of Racha specifically, but there are multiple anecdotal sources which suggest that the cattle stocks have dropped precipitously.
The households in our sample of CARE grant recipients, had an average of 5 cows (including calves) including an average of 2.6 milking cows. This particular group seemed to be seeing its numbers increase, as 50% of the farms we spoke to had grown and only 14% had shrunk in the last 12 months. Across the whole population, the average increase was slightly less than one cow per household.
The direct costs of keeping these cattle were fairly low. Cattle cost around 60 GEL per winter in hay and less than 10 GEL on average in veterinary costs.
Cows in Racha are fairly low-yield milk producers. Our survey suggested a current yield of 5-6 liters per day with as much as 9 liters per day in high season. The main reason for this low yield, according to the farmers and experts we spoke to is poor grazing. Only one farmer suggested they needed different breeds and no-one suggested veterinary care or inputs.
The main cost for most farmers is winter feed. Most farmers feed only hay which is provided from communal village hay-pastures. Transportation of hay for one cow for one winter is about 60 GEL. A couple of farmers fed the cattle other food they grew themselves (like small potatoes) but most did not supplement the hay with anything else.
We asked separately about sickness and veterinary care. 8 households had at least one sick cow in the last 12 months and most of these had mites. In 10 out of 11 cows involved, a vet was called and the vet cost an average of 20 GEL. We also asked about inoculations and found that 25 of the farmers we spoke to inoculate in some way and this costs 3 GEL per cow.
The main way in which milk is consumed in Georgia is through the production and consumption of cheese. All of the households we spoke to both produced and sold cheese. Production of milk and cheese is extremely seasonal with a peak in May, June and July. Prices for cheese are fairly constant throughout the year. In the rest of Georgia cheese is a lot more expensive in the winter. In Racha, the increase in production in the summer does not result in a reduction of price because the influx of tourists results in a dramatic increase in demand at the same time.
Total annual sales of cheese for one household seem to be around 850 GEL with slightly over twice as much cheese produced as sold. Whether this excess production is consumed, traded or given to the extended family, is unclear. The variation in overall cash income per household is extreme with 26% making less than 300 GEL in the year and around 50% making less than 500. Three households make more than 2000 GEL per year in cheese sales alone.
There is a fairly wide range of different paths for selling cheese, including sales by the farmer directly on the market, sales in the village and sales to visitors. However, around 90% is sold directly from the farmers to the consumers, which probably partly explains the fairly high prices that farmers receive. There is little evidence of obvious barriers to market inside Racha.
Around 80% of households also sell liquid milk at some point in the year, though most of that is between June and August. While the value this sale puts on milk is far higher than the implied value on milk suggested by cheese sales, relatively little milk is sold and total average monthly revenue rarely goes over 20 GEL. Most of that is sold to visitors.
Only 12% of farmers said that if they had a male calf they would fatten it for a couple of years before selling it for beef and none of the farmers we spoke to seem to be raising a significant number of beef cattle. Our interviewee households produced three calves, on average, per year, or one per cow. Cattle are usually sold after 2 months for slightly less than 200 GEL. Females are far more likely to be kept than males, though males may be kept as potential bulls.
If calves are kept to fatten for beef then there seems to be a consensus that they need to be kept for 1.5 or 2.5 years. Keeping a calf for the 6 months after it is weaned, and then killing it, is generally considered a poor option as the young cattle gain little weight in that period. However, even this extension in the holding of cattle does bring substantial returns. A calf kept over the summer will probably gain 25% in value in 6 months. If placed in good grazing the return on investment (even taking into account grazing costs) may be as high as 40%.
Keeping cattle over the winter and the following summer (so until they are 1 year and 8 months) certainly increases the value of the cow and will offer significant return on investment in any scenario. As a result, it looks clear that the main reason this does not happen more is a combination of cash-flow and risk aversion.
That said, it does not necessarily follow that a very high investment strategy is the right one. This initial assessment (which is, of course, highly provisional) seems to suggest that good grazing offers a far higher return on investment than paying for expensive feed (which is currently not available in Racha anyway). Paying for mountainous grazing may bring with it other issues, like greater risk of accidental death, and a more complete model of these scenarios would have to take these risks into effect. But there provisional investigations do seem to suggest that failure to take advantage of high-mountain grazing is a missed opportunity in Racha.
The last data source we looked at for this project was a visitor survey recently finished by CARE International. 2/3 of the 449 visitors questioned in the visitors survey stay in their own house in Racha. Most of the rest are staying with relatives. Only 1% are staying in a hotel or guest-house. 26% of those interviewed were staying 3 weeks, 44% were staying a month and 22% for one month.
During that time, in relation to the dairy and milk sector, 68% said they bought Imeruli cheese. Out of those who bought cheese, about ½ bought less than 5kg and about half bought more. About ¼ of those interviewed by butter (averaging 3.75 kg), about ¼ buy milk (averaging 14 liters) and about 10% buy matsoni (averaging 11 kg).
We also found that 68% buy beef and about half of them buy more than 5kg and about half of them buy less than 5kg.
Finally, based on all of our analysis, the prospects for future demand in milk products and beef in Racha seem to be good. The structure of cheese pricing clearly indicates that demand is largely dependent on tourism. Therefore, as long as tourism continues to grow in Racha one would expect demand for cheese to grow also. And there are a range of obvious reasons why one would expect tourism to continue growing, particularly as the result of improving roads and tourism infrastructure generally.