On the Path to Agricultural Development – Why Has the Cooperative Model Struggled in Georgia?

Agriculture remains one of Georgia’s most labor-intensive yet underproductive sectors. While approximately 16% of the population is employed in agriculture, the sector contributes just 6% to the national GDP (source: Geostat). This imbalance highlights structural weaknesses — especially land fragmentation. Over 93% of landowners hold plots smaller than two hectares, creating an inefficient and disjointed production system. In this context, agricultural cooperation — pooling resources and jointly managing production — was promoted as a rational solution. But in practice, the cooperative model has faced serious obstacles in Georgia.

In 2013, the Georgian government passed the Law on Agricultural Cooperatives, offering tax incentives and laying the foundation for the registration of hundreds of cooperatives. By 2017, approximately 1,500 cooperatives had been registered, involving around 13,000 farmers. However, only a small portion of these remained active and sustainable. The main challenges stemmed from a lack of resources, limited technical knowledge, and weak infrastructure.

Despite years of external support — particularly from the European Union’s ENPARD program — progress has been slow. As of 2023, only a handful of cooperatives had successfully registered new agro-food trademarks, indicating persistent systemic challenges and a lack of real deepening of the model. Issues like mistrust among farmers, lack of managerial capacity, and limited long-term vision continue to hinder development.

Against this backdrop, international comparisons offer valuable lessons. In countries like the Netherlands, Denmark, and Israel, agricultural cooperatives form the backbone of the sector.

The Netherlands stands as a prime example of a successful cooperative agricultural model. Dutch cooperatives manage not just production but also processing, marketing, and logistics. One such example is Agrifirm, which serves thousands of farmers with animal feed, fertilizers, and crop protection inputs.

Denmark is home to Arla Foods, one of the largest dairy cooperatives in the world, owned by farmers and operating across several countries. Such systems thrive on strong institutional backing, advanced technology, and a deep-rooted culture of collaboration.

Israel features unique cooperative forms — kibbutzim and moshavim — that remain vital to its agricultural output. In 2016, kibbutzim alone accounted for about 40% of the country’s total agricultural production. These models combine collective farming with shared infrastructure and services, creating efficiency through scale.

Compared to these countries, Georgia’s cooperatives often exist in form rather than in function — legal entities that do not operate as economic actors. Cultural factors also play a role: traditions of private ownership, independent labor, and skepticism toward shared responsibility all contribute to weak uptake.

Today, only a small share of Georgian cooperatives engage meaningfully in market activity. Most either remain inactive or exist only formally. While in the Netherlands, Denmark, and Israel, cooperatives are central to the agri-sector, in Georgia they are still seen as temporary projects or imitations of foreign models.

But this shouldn’t be dismissed as failure. Instead, it signals that for cooperation to thrive in Georgia, it requires more than policy and funding. It calls for deep institutional support, farmer education, trust-building, and targeted infrastructure investment. Only then can cooperation evolve into what it already represents in many other countries — a stable and competitive pillar of rural economic development.