“Our country has a new policy on agriculture,” deputy Minister for Food, Agriculture, and Light Industry Mr Kh.Zoljargal has announced. “The Ministry of Food, Agriculture and Light Industry represents among others sectors such as food, trade and public services and with the right policies and management, more jobs could be created,” Zoljargal went on. Certain sectors of the Mongolian economy such as the cashmere industry for example, could effectively participate in launching the country’s development. State officials who have studied the experiences of other countries came to the same conclusion: subsequent investments in the development of the economy’s non-mining related and traditional sectors are the best solution to avoid a dutch disease. Consequently, the new policy on agriculture will go in that direction.
Experts assert that Mongolians should not build their hopes on large sums of money from the mining sector rendered in the form of cash handouts or shares. These cannot lead to a stable economic development, they say, and the most important thing is for people to have reliable jobs. “It is necessary to improve the textile industry which has not developed or accumulated much know-how so far. For years, businessmen from Hong Kong and China have come to use the services of Mongolian taylors and seamstressed before to export their products to the US. Meanwhile, Mongolians have yet to export their own manufactured textile products to foreign markets, even though they are highly skilled in creating new designs using traditional fashions,” deputy Minister Mr Kh.Zoljargal declared.
Brits ready to wear clothes labeled “Made in Mongolia”
A small Mongolian factory is planning to load a cargo of outfit made from fabric and destined to the UK this May. The outfits will include short sleeved shirts and sleeping wear. The factory makes clothes according to orders placed by British customers. Two related designers who worked in UK put this initiative into operation and received the support from the Ministry of Food, Agriculture, and Light Industry (MFALI). Despite the fact that this factory has only two staffs, if the enterprise is successful, it will not only open the European markets to Mongolia’s textiles and garment products, but it will also provide the ground for an increase of these types of small factories in Mongolia. Therefore, the MFALI is decided to support the business franchise. If Mongolian textiles and garments can make up to only 3% of the European markets, it will generate profits of 150 million pounds. On the other hand, Mongolians are starting to tap into this potential market rather late. Other Asian countries such as Thailand, Nepal and Vietnam already assume 5 to 20% of the market. “If Mongolia humbly takes, say 3% of the market, it would already be a great opportunity. And if this work is successful, then in the near 4 to 5 years time it might possible to create 20,000 jobs in the textile industry,” Mr Kh.Zoljargal pointed out. Mongolians are skillful designers, now it is important they learn to produce products according to European standards.
Possibility to increase amounts of meat export by 10
One of the most important future tasks facing Mongolia will be to invest heavily in the traditional sectors of its economy, increase the productivity of its export-oriented production and improve their competitiveness. Mongolia’s traditional economic sectors include among others animal husbandry and crop growing. Zoljargal believes that Mongolia can become an important meat exporting country. However, this will only be achieved if the Government conducts the appropriate policy and cooperates with nomads and producers alike. If this is the case, the MFALI estimates the country could export 100,000 tons of meat annually. Experts highlight that despite the lack in Mongolia of record and experience in exporting such large amount of meat, nothing is impossible with the appropriate management. The largest amount of exported meat took place in the 1980’s when livestock representing 45,000 tons of meat was exported to the former Soviet Union. Today, with its large number of livestock, Mongolia needs to adopt a new policy if it is to export 100,000 tons of meat. Officials estimated that with the right conditions, Mongolian small cattle can increase by 5 to 6 million heads annually. A rough estimate shows that a sheep or a goat produces approximately 15kg of meat, according to which 5 million heads of small livestock would produce about 75 million tons of meat annually. In addition, the Ministry estimated that with the intensive development of the beef industry and the inclusion of horse meat, meat production would increase by 20,000 tons. Nevertheless, the country’s pastoral land capacity and environmental issues will have to be taken into account when it comes to increasing the livestock population.
Mongolian grasslands are as vital to the economy as minerals
The grasslands constitute Mongolia’s third largest natural wealth. Despite the intensification of the desertification process and droughts due to global warming and climate change, Mongolia has the opportunity to produce large quantities of food thanks to its vast territory and to provide both for the domestic and international market. The recent and rapid economic development of huge markets such as India and China and the consequent rising of their living standards and buying power could be very beneficial to Mongolia. In addition, the increase of natural disasters, droughts, hurricanes, earthquakes and the tragic current food shortages in the world could also help Mongolia becoming a major exporter of meat and wheat.
The next step will be to invest and develop the crop growing industry. During socialist times, Mongolia had a total of 1.2 million hectares of cultivable land. However, approximately 650 thousand hectares of land only are used today. As part of the Campaign to Bring Virgin Lands under Cultivation III, unused lands are to a certain extent cultivated again, and today Mongolia provides for 100% of its domestic consumption in potatoes and wheat and approximately 60% in vegetables. Could Mongolia further increase and diversify its crop production although much land is still uncultivated or only partially cultivated. In order to achieve this, a significant amount of labor intensive and capital demanding activities such as the introduction of irrigation systems needs to be conducted. However, a policy to develop both crop production and animal husbandry - named the New Agricultural Policy - might sound like an old tune as it has been discussed since the country’s transition to a market economy. On the other hand, as Mongolia has a vast territory and over 40 million heads of livestock, it remains a possible achievement.
A Glove Program and 2,000 jobs
It is necessary to demonstrate that the country’s light industry sector can be competitive as the risk of dutch disease threatens the economy. The MFALI has been working on a new policy to assist the growth of non-mineral sectors. The Deputy Minister stated that “The most important thing right now is to achieve and export processed meat products. In that respect, MFALI is cooperating with many professional associations to develop interesting ideas and initiatives.” For example, the Association of Mongolian Leather Producers put forward an initiative to implement a program to manufacture leather gloves and export them. Despite their low quality, exports and consumption of working gloves from China has increased. If good quality and stylish gloves are made thanks to our Mongolian livestock hide, it will be possible to export them to China. The Association of Mongolian Leather Producers informed the Ministry that with the implementation of the program, it intends to create 2,000 new jobs.