During a televised meeting with the president and other government officials, Minister of Agriculture Mikheil Svimonishvili announced that prices would continue to rise as long as Georgian farmers were not contributing to the market. According to him, the country imports even basic necessities, such as eggs and vegetables. Over the past several months, Georgians have seen the price of staples like sugar jump from a stable one lari to 1.34 lari and higher. Meat prices have been on the rise for the past year; last summer a kilo of beef cost between six and seven lari – now it is closer to nine or ten lari.

The minister explained the government has initiated several programs for Georgian farmers, including water irrigation projects, in an effort to support the development of local agriculture. In addition, wide scale land privatization is under way. While it is widely believed that over half the Georgian population supports itself by farming, the vast majority of such farms are subsistence-based and do not produce enough goods to sell for additional income. Traditionally, part of the problem has been the size of individual land plots. During the first wave of land privatization in the early 1990s, each family was awarded a patch of land equaling 3 acres. According to experts in land ownership, while that was enough land to save Georgians from starving during the economic crisis following independence, it is not enough to support farming as an industry.

Another factor – in addition to the rising fuel costs and higher electricity prices – is the ongoing effort to reduce contraband. With more businesses paying taxes and other government fees, consumers are increasingly footing the bill.

The higher costs have not gone unnoticed. While the government has made good on promises to pay pensions on time and raise salaries, Georgians are quickly realizing that their paycheck means less and less. During his presentation in June, the minister defended the government’s decision not to control prices. He noted that if Georgians want to preserve lower costs they need to produce more at home. According to agricultural experts, the country has the resources and climate to produce a wide variety of fruits, vegetables, wheat and other products. The problem is that there has been a lack of investment in these sectors. Several new grant programs from both the United States and the European Union are earmarked for rural development. The Millennium Challenge Account Georgia implies an impressive $295 million grant from the United States, and officially got started in April. It should start distributing grants to farmers as early as this summer.

However, the higher prices are taking on a political tone. After a year of minor scandals and the beginning of several tough reform programs, the National Movement and President Mikheil Saakashvili have both taken a beating in the polls. While there is still no sign of a competent opposition candidate to threaten the president or the ruling party, the government is already airing pro-administration advertisements on the major television stations to build up public support before the local elections in the fall. In addition, President Saakashvili has sanctioned several populist moves in an effort to head off voter dissatisfaction.

In April, he presented farmers in Kakheti with 500 new tractors and promised that more are on the way for other regions throughout the country. In addition, he has promised tax breaks and other aid for those involved in the wine industry to help cushion the fallout of the Russian embargo.

Representing over 17 percent of the nation’s GDP, agriculture is Georgia’s largest industry. However, a decade of severe neglect means Georgian farmers are not prepared to produce products for their own countrymen – let alone export for a profit. As prices – and voter dissatisfaction – rise, the government is under increased pressure to support the agricultural sector. Tbilisi’s decision not to support prices artificially is admirable and conforms to the goal of creating a free market economy. However, while an estimated 50 percent of the population lives in poverty, some protection for the most vulnerable part of the population while the projects and programs take root could make a difference for hundreds of thousands of Georgians.