Georgian agribusiness firm Lomtagora benefits from EBRD and EU funding.
Kakha Lashkhi studied agricultural science at university. When he finished his Ph.D. he wanted to put his expertise to good use, so he used his savings to found his own company, Lomtagora Ltd., in the Kvemo Kartli region in southern Georgia.
Lomtagora has a promising market model. “We grow, test and select local varieties of wheat and corn seeds,” Mr Lashkhi explained. “We cross-breed them, sometimes with foreign variants, to adapt them better to local conditions and achieve a richer harvest. The seeds are then sold to our clients.”
Over time the business grew and so did the need for further investment. Lomtagora benefitted from a GEL 100,000 loan (ca. €42,500) under the EBRD’s Georgian Agricultural Finance Facility (GAFF) in 2014. The loan was provided by JSC ProCredit Bank which is one among 5 local partner banks of GAFF which provides credit lines totalling €40 million.
The European Union provided a €4.8 million grant to train local banks’ staff, develop lending strategies for agriculture projects and improve their existing financial products.
The funding also served to share the lending risk and introduced innovative financing for agribusinesses in the same value chain – helping to link, for example, local milk farmers to larger dairy producers.
Mr Lashkhi’s company is one of 15,352 agribusinesses and farmers who have benefitted from EBRD credit lines and EU support. To avoid foreign exchange rate risks, they can also take out their loans in local currency (Georgian lari).
“The loan helped me to bring my company to the next level and become more competitive.” Mr Lashkhi said. “We plant crop to produce our seeds. The loan allowed us to purchase fertilizers to achieve a better harvest, which in turn resulted in a higher income for our business.”
Providing high-quality products and services is vital to building a good reputation, he stressed. This is particularly important in a field like seed breeding, in which very few companies are active in Georgia.
Mr Lashkhi has built on his enterprise’s success and recently expanded further. Lomtagora has constructed new grain silos, which are equipped with the latest technology to dry, store and sort grains automatically. At the same time, Mr. Lashkhi plans to invest in new seed varieties and to purchase a production line for animal feed.
The support of the EBRD, EU and ProCredit Bank helped his business develop from a small into a medium-sized one, which currently employs 25 people.
With his new expansion plans, Mr Lashkhi is confident that he will broaden his existing client base and sow the seeds for his company’s continued success.