State Program on ''Fostering Hazelnut production development through promotion of agricultural cooperation''
Article 1. General Provisions
- state program on "Fostering hazelnut production development through promotion of agricultural cooperation" (hereinafter-Program) is one of the measu//res encouraging cooperation development in the area of agriculture, being currently implemented with a view to supporting hazelnut production in Georgia.
- goals of theprogram are as follows:
A) Ensure creation of preconditions for establishment of integrated systems (unified cycle) for hazelnut production, processing and marketing;
B) Ensure reduction ofhazelnut cost of goods sold;
C) Ensure increase of qualitative and quantitative indicators of the produced hazelnuts;
D) Ensure increase of hazelnut export potential;
E) Ensure enhancement of entrepreneurial culture of population, through their engagement into the agriculture cooperation;
F) Ensure improvement of socio-economic conditions of rural population.
- tasksof the program are as follows:
A) Raise awareness of hazelnutproducers / potential producers about the agriculturalcooperation;
B) Establish infrastructure for hazelnut production;
C) Stimulate establishment, development and enhancement of hazelnut producer agricultural cooperatives, through giving the opportunity to use the hazelnut production infrastructure;
D) Facilitate introduction of effective management systems across the hazelnut producer agricultural cooperatives;
E)Stimulate introduction of international standards across the hazelnut producer agricultural cooperatives.
Article2.Definition of Terms
A)Agricultural cooperative-a legal entity, engaged in implementation of agricultural activities, with a status of Agricultural Cooperative granted pursuant to the Law of Georgia on Agricultural Cooperatives;
B) Participant – an agricultural cooperative, whose participation in the programwas approved by the Agricultural Cooperatives Development Agency (hereinafter - Agency) and with whom the lease agreement was concluded;
C) The agreement - the Lease Agreement on exploitation of hazelnut production infrastructure, concluded between the Participant and the Agency;
D) Hazard AnalysisandCritical Control Points (HACCP) system - a system that provides opportunity for safe food production through hazard identification and its control;
E) Global good agriculture practice (Global GAP) − an international standard, that ensu//res integrated management of agricultural farms and safe food production through identification and management of critical control points;
F) VulnerableGroup-a group of people,who are deprived ofcertain privileges, or who don’t have accessto thesocialaspects, thatare easilyavailable for others.
For the purposes of the p//resent program, the following persons are deemed to be the rep//resentatives of vulnerable groups: Internallydisplaced persons; Disaster victims; socially disadvantaged individuals; People with disabilities; Persons living along the administrative border areas; conflictzone bordering //residents;
G) The young – an individual who is 18 to 35 years of age;
H) Productioninfrastructure − within the framework of the p//resent program, a building, equipped with relevant hazelnut dryingandstoring equipment and devices and a land plot attached to such building (s).
Article 3. The program activities and geographic coverage
- The program covers the activities in the following areas:
A) Transfer of the land plot program to the main implementers of the program;
B) Information campaign;
C) Develop theindustrial (production) infrastructure;
D) Conclude Lease Agreement with the programparticipant;
E) Facilitate introduction of the international standards;
F) Program monitoring;
G) Transfer of the property into the ownership of the program participant.
- program framework, production infrastructure shall be established in Zugdidi municipality.
- Legal and actual business add//ress of the program participant agricultural cooperative shall be registered in Zugdidi Municipality.
Article 4. Transfer of the land plot program to the main implementer of the program
- shall be transferred to ACDA without auction, with a right of use, termless and free of charge, in accordance with the rule set forth by the Law.
- hazelnutproducers/potentialproducers–future members of participant Agricultural cooperatives and raise their awareness about the key objectives and principles of agricultural cooperatives, as well as essence of the program and procedu//res for taking part in it.
Article 6. Establishment of production infrastructure
- Production infrastructure shall meet the following requirements:
A) Comprises of buildings suitable for installment (arrangement) of hazelnut drying equipment/stock and storing facility;
B) Possesses capacity of processing for storing (drying) purposes of at least 24 (twenty-four) tons ofhazelnuts a day;
C) Allows storing (storage) of 500 (five hundred) tons of hazelnut at a time;
D) Production infrastructure with quantitative, qualitative and localization characteristics of Its main constructions and other equipment, does not require a significant change (installation / dismantling / reconstruction) by participantagriculturalcooperative while implementing thepreparatory works to fulfill its commitment defined under theArticle 11, paragraph 2, subparagraph "B") of the program.
Article 7. Conclusion of a lease agreement with program participant.
Production infrastructure shall be transferred to the program participant with charge, without an auction, in accordance with the rule on transferring state property with a right of use, p//rescribed by the legislation.
2. To be eligible for obtaining the property with a right of use, the program participant agricultural cooperative should meet the conditions defined by the legislation and article 11.1 of this program;
3.A lease agreement shall be concluded with a program participant agricultural cooperative for 5-year term, on the basis of a relevant decision made by the Government of Georgia;
4. In case of an early termination of the lease agreement, the property shall be transferred with a right of use to another or the same agricultural cooperative, in the form stipulated by paragraph 1 of this article
5.paragraph 4 of this article, the Agriculturalcooperative, with whom the lease agreement was terminated, is not entitled to re-obtain the property with a right to use, if:
A) The contract was terminated on the initiative of the agricultural cooperative;
B) The agricultural cooperative breached or failed to fulfill the obligations p//rescribed by the law or agreement appropriately. 6.Each subsequentleasecontractterm should not exceed the contract term p//rescribed under the firstlease agreement;
6.During the whole period of lease, the program participant is obliged to fulfill obligations imposed by the legislation, programand a leaseagreement and to support program implementers in smooth administration of measu//res envisaged the by program;
7. In case if a participant fails to comply and/or properly fulfill the obligations set forthin paragraph 7of this article, a program implementer shall be entitled tocharge the participant with anappropriate penalty.
Article 8. Ensure implementation of International Standards
The program implementer shall render consulting services to the agricultural cooperatives, to ensure fulfillment of the conditions p//rescribed by paragraph 2 of Article 11of this //resolution. The costs of the consultation services shall be covered by the program implementer.
Article 9. Implementation of the monitoring over the Program participant
1. The program implementer shall monitor whether the participant fulfills conditions p//rescribed under the Georgian legislation, program, and a lease agreement. The implementer shall carry out planned and unplanned, desk and field monitoring, as well as audit measu//res.
2. Financial reports shall be audited within the period of 3 (three) months upon completion of each financial year. The audit costs shall be covered by the program implementer. 3. A participant is obliged to provide a support to a person, //responsible for carrying out monitoring/audit measu//res, as well as ensure elimination of gaps, identified by a monitor/auditor and enforce recommendations within a reasonable time
Article 10. Transfer of a property into the ownership of a participant
1. In case a participant fulfills the obligations stipulated under the Georgian legislation, a program and a lease agreement, upon expiration of the lease, the participant is entitled to request transfer of the leased property through the direct sale, in accordance with the rule p//rescribed by the law.
2. An Agricultural cooperative is entitled to request privatization of the leased property prior to expiration of the lease term, in case if at the moment of the request, the cooperative has ensured implementation of international standards and principals defined in paragraph 2 of Article 11 of the program.
3. In the cases defined under the first and the secondparagraphsof this article, the production infrastructure shall be transferred to a program participant through a direct sale, via privatization, in accordance with the legislation
4.Government of Georgia shall define the privatization fee of the property being privatized as follows:book value of the equity at the moment of decision making on the direct sales, minus the amount paid by a participant throughout the lease period.
5.In case of p//resence of one of the conditions specified in this paragraph, the property shall be privatized in accordance with the rule defined by the legislation;
A) A lease agreement with a participant was terminated after March 1,2019 and conclusion of a new agreement for the remaining period is not deemed reasonable;
B) A participant has not registered an inte//rest to privatize the property after the expiration of the agreement;
C) After expiration of thelease agreement, it was definedthat participantfailed to meet the requirements specified under the first paragraph in thisarticle.
6. In the case specified in paragraph 5 of this article, an agricultural cooperative is entitled to request privatization of the property only if it meets the requirements set forth in 11.1 of the program and has implemented Global Gap.
Article11. Conditions set for participation in the program
1.Only those agricultural cooperatives had right of property usage and/or property privatization which at the moment of application submission meet the following criteria:
A) The applicant agricultural cooperative is in the hazelnut production business and is registered as business operator;
B) The applicant agricultural cooperative is operating in full compliance with the Georgian Law "About agricultural cooperatives" and with statutes of agricultural cooperative;
C) At the moment of application agricultural cooperative does not have recommendations from agency to improve defects in their activities. If such recommendation exists, applicant should provide evidence of improvement with application;
D) The number of applicant agricultural cooperative individual shareholders is not less than 500. For this program, the number of individual shareholders of the cooperative which itself is a shareholder of applicant agricultural cooperative, will be considered in total number of applicants individual shareholders;
E) The applicant agricultural cooperative doesn’t have -overdue tax debt;
F) The applicant agricultural cooperative doesn’t have overdue credit debt of financial institutions or other legal entities and/or individuals;
G) The applicant agricultural cooperative or/and its members should have own or/and leased land with hazelnut plantation with a total area of at least 500 hecta//res. Lease period should be at least 10 year after application submission date and it should be registered in LEPL- National Agency of Public Registry;
H) Applicant agricultural cooperative has Supervisory Board, with at least 10 board members;
I) there are at least 3 members in the board of applicant agricultural cooperative and at least 2 board members are authorized to rep//resent the company;
J) Authorized persons of the applicant agricultural cooperative are acting mutually;
K) At least 2 authorized persons of applicant agricultural cooperative are agreed with the agency;
L) At least 31% of applicant agricultural cooperative shareholders are women, young people or/and vulnerable group rep//resentatives;
2.During the lease contract validity, the applicant shall fulfill the following:
A) Implementation of Global GAP standards before September 1, 2018 in each member farming, which produces hazelnuts for processing and storage in the leased infrastructure;
B) HACCP standards should be implemented before June 1, 2019 in the leased manufacturing infrastructure;
3.The list of documents applicant should submit is defined by the agency.
Article12. Program Implementers
1.The implementation of the program is coordinated by Ministry of Agriculture.
2.Main implementer of program is LEPL – Agricultural Cooperative Development Agency which is in the system of the Ministry of Agriculture of Georgia.
3.Territorial bodies of the Ministry of Agriculture are participating in the program implementation by organizing meetings with local population (coordination with local self-government; selection of meeting place and arrangement of meetings; preliminary informing meeting participants and organizing meetings).