Agriculture Sector

May 14, 2007 at 1:36 am Leave a comment

Agricultural sector in Mongolia has been and is still holding a weighty share in the country’s economy. The agricultural sector produces over 25 per cent of GDP and 13 per cent of the national hard currency income is generated from exports of products of food and agricultural origin.

We have over 170 thousand herding households working in livestock sector, which produces over 80 per cent of total agricultural produce. Number of livestock has increased during the last two years and reached 30 million at the end of 2005, which is a 10 per cent increase or 2 million heads of livestock more compared to the previous year.

Crop sector produced 77 thousand tonnes of cereals and 145.9 thousand tonnes of potato and vegetables in 2005, which provided 20 per cent of domestic flour demand and 50-70 per cent of that of potato and vegetables. Legal conditions were set up for using land in the economic rotation and intensive work is being done for privatizing land for household use and giving possession rights for cropland.

Nationwide there are approximately 1800 enterprises working in food production sector. This sector produces 12 per cent of total industrial product and 13 per cent of total industrial workers are employed here. Food production has increased by 2,5 per cent in 2004 compared to the previous year.

It is assumed that Mongolia’s population will be increase in near future so that demand for food and other products will be increased significantly. Currently basic food staff such as wheat flour, potato, vegetable, milk and dairy products cannot be supplied by domestic production. In rural areas, meat, flour and milk products are consumed mostly that other product’s consumption such as fish, egg, fruit products which are rich of valuable micronutrients and vitamins are not sufficient and present very small percentage in total population’s food consumption. In relation to the fast economic development and changing livelihood level in neighbouring countries like Russia and China, as well as other regional countries, there is going to be high demand of ecologically clean food products.

The Government Policy on Food and Agriculture sector was approved in 2003 by the State Ih Khural that formulated the basic principle and strategy to develop the sector and measures to implement within the sector until 2015. In order to use land efficiently in the market economy system as a property and to improve it’s value, renovation of land issues has being implemented that requires higher priority for larger investment. Legislative environment has been established for such land renovation process due to revision of “Land law” and approval of “Law on land ownership for Mongolian citizens”.

Currently, Mongolia has 30.4 million heads of livestock which is being produced annually about 200 thousand metric tons of meat, 328.000 metric tons of milk, 8.4 millions of skin and hide, 17,000 metric tons of sheep wool, 3.0 thousands metric tons of cashmere. In this regard, the Government’s policy intends to improve capacity in order to protect livestock from natural disaster’s risks, consequently to increase aid and loan assistance through attracting foreign investors and donor’s attention, to promote national investment as possible, to promote efficiency and productivity through introduction of some elements of intensification. Last years, the policy on active implementation has been taken place to support initiatives on rural people’s cooperation and co-working, starting of settled intensified farming based on new technologies for improving livestock production and herding methods.

In crop sector, there is wide range of opportunities to intensify crop sector by increasing national and foreign investment. Before 1990, even though 1.2 millions ha of arable land had been utilized under crop production nationwide, privatisation of the state owned large crop producing entities during transition period from state planned economy to market economy system had contributed to the negligible effect that caused about 690 ha of land unutilised and substantial decrease of arable land. With increased demand of agricultural products and enough available and suitable land such as Khalkhiin gol river basin area that also could be used for cropping create more opportunities for future investment in the crop sector.

There is wide range of possibilities to invest in the national processing enterprises that are based on inexpensive and high quality raw materials. Many small and medium sized food processing enterprises, which meet sanitary and hygiene requirements and equipped with modern techniques and technologies have been established and their products’ variety and packaging have been improved a lot. Due to newly established meat processing and slaughtering plants, currently there are total 28 large, medium and small sized meat plants with capacity of processing 70 metric tons of meat annually. Processed milk production has been increased due to the increased number of small and medium sized dairy processing plants that was doubled compared to 1999 and reached 88 plants nationwide.

At present, there are operating about 130 large and small flourmill plants with capacity of producing total domestic consumption. Also there are more market competition among producers with increased production and increased variety of different products such as bread, cake, spagetti, beverages and soda. In last four years, annual food production has been increased by 2.1 to 5.5 percent. However, major objective of our national food enterprise is to introduce new technologies into production, provide domestic market with high quality products through improved productivity, eventually to support import substituting and export production. In this regard, this sector requires high need for the substantial investment.

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Entry filed under: Agriculture Sector.

Livestock sector Food industry

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Information contained in this web site are partly derived from a CD-ROM "Guide to Investment and Trade-Mongolia", produced by Foreign Investment and Foreign Trade Agency (FIFTA). All trademarks are properties of their own respective owners.

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