The FINANCIAL -- In February 2017, the average cost of cooking one standard Imeretian khachapuri decreased to 3.66 GEL, which is 0.2% higher month-on-month (compared to January 2016), and 6.2% higher year-on-year (that is, compared to February 2016).
The main contributors to the y/y Khachapuri Index inflation were cheese (12.1%) and milk (3.6%). The prices of the four other ingredients decreased: flour (2.6%), butter (0.4%), eggs (2.0%), and yeast (1.0%).
Recently, the quality of cheese sold in open bazaars has been hotly discussed topic in the media. In Georgia, fresh milk is mostly produced by smallholder farmers, and it is very difficult to control quality. While industrial cheese-makers use pasteurized milk, a large share of cheese in Georgia is produced by hand at home, and it is made with soft, raw milk. Using unpasteurized fresh milk in cheese production can cause serious infectious diseases. Apart from the food safety considerations (and the lack of quality checks), the artisanal home production of cheese is creating unfair competition in the market.
All this suggests that Georgia’s dairy sector has yet to go through a fundamental structural change. Under the DCFTA agreement, by 2020, all business operators should establish Hazard Analysis and Critical Control Point (HACCP) systems, in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards. Of course, establishing these standards has a high cost, barely affordable for small cheese producers. While solutions such as establishing cooperatives might help some of them to survive, the ongoing regulatory harmonization with the EU will probably phase out a large number of small cheese producers. The expected structural change will cause a shift to better quality cheeses, and hopefully cheese “From the Village” will signal not a threat to health, but rather high quality for Georgian consumers.