Food industry

May 14, 2007 at 1:37 am Leave a comment

Mongolia’s food processing industry began in the 1960s, processing agricultural raw materials and manufactured products for local consumption and export. Todays food processing industry is comprised of meat processing, milk and dairy processing, flour and flour product manufacture, production of alcoholic beverages and production of salt.

Processing of agricultural food products and raw materials is developing in Mongolia. The words “food industry” may not adequately reflect the real development, because many agricultural products are processed and marketed in small and medium-scale enterprises.

Presently, there are over 1800 small and medium sized business entities engaged in the food industry. These industries produce 10% of Mongolia’s GIO. Up to 14% of total industrial workers are engaged in this sector.

Processing industries for food:
In Mongolia, there are about 135 flour milling factories with a combined capacity to produce 288,000 tons of flour per annum. Ten of these comprise the larger plants with a joint capacity to produce 210,000 tons per annum. Currently, only 22% of plant capacity is utilised due to the lack of raw materials (wheat). In 2005, 30-40000 tons of flour was produced that satisfied only 15-16% of the domestic flour demand. A broader range of bread, pastries, macaroni and other related flour products are appearing on the market and the quality of these products has improved as is the packaging of locally produced goods.

New technologies for the production of beverages and soft drinks are being introduced and the range and quality of these products are improving through competition. MCS Group was appointed the official distributor of Coca Cola, and subsequently produced Coca Cola soft drinks under licence in 2002.

Meat Processing:Meat and meat product manufacturing has an important place in the food sector and is considered to be the most potential sector for future development. There are 28 medium and large slaughterhouses with a total capacity of about 85,000 tons of carcass meat per year. However, they only use 20% of their total capacity.

In total, there are over 70 SMEs that produce meat products. Total meat production was 199.3 thous. tons in 2004. As far as the food supply to the population is concerned, local meat production meets all the domestic demand and some meat products are exported. Meat consumption per person is about 94.2 kg per year. In 2004, 10 meat slaughtering factories with annual capacity of 30 thous. tons of carcass meat were newly established.

In 2004, 8.7 thous tons, 2005, 7,3 thous tons of carcass meat were exported. Russia is the basic meat export market for Mongolia. Since 2004, Canned meat and pet food has been started to export to Korea, Japan and Indonesia.

Looking at the 2005 statistics based on the livestock number, Mongolia was able to provide domestic meat consumption and to export meat. Due to the high import customs tax of Russia, high railway transportation cost and consumer monopoly, the price of the exported meat has decreased annually.

Among the larger meat slaughtering companies, Makh Impex JSC has a capacity of producing 120.0 tons of carcass meat per day, slaughtering 400 large animals (camel, horse, cattle) livestock and 4000 small animals (goat and sheep) livestock in one shift. Bagahangai meat processing company has a capacity of slaughtering 200 large animals and producing 25.0 tons of carcass meat. The “Darkhan makh expo” JSC has a capacity of slaughtering 400 large animals and 2000 small animals livestock or producing 80.0 tons of carcass meat per day. By the end 2003, “Meat market” placed into operation its new meat processing factory with production capacity of slaughtering 50 tons of meat and 10 tons of internal organs in a shift, which was equipped most advanced and sophisticated facilities of modern meat processing industry that meets international standards of meat and meat products.

Milk and milk production: . The average milk and dairy product consumption per capita increased by 18.8kg in 1990 compared to 1985. This consumption increased constantly during the last 10 years and reached 126.0kg in 2002 respectively. For instance, the dairy industry in 1990 was 315.7 thous. tons and 328.6 thous. tones in 2004.

Currently, many small and medium factories and business entities manufacturing milk products are established in the aimag, towns and soums, providing solid basis for the further development of the dairy industry. In 2005, the total output of processed milk was 7.1 mln liters, which is 5 times more than 2000.

The milk and dairy industry structure was unbundled during the early years of transition to a market based economy, which led to a sharp decrease in milk and diary product production. Due to the decrease in the domestic production, the amount of the imported milk products is increasing. In 1995, 1223.8 tons of milk and milk products were imported and in 2004, 6848.5 tons of milk products were imported. There are about 88 small and medium sized dairy plants, with a total daily capacity of about 50.0 tones of fresh milk, producing butter, cheese and other dairy products. Local dairy production has not been able to meet the population’s needs fully.

Mon-Fresh factory of Monsonic Group and a New Zealand-Mongolian joint venture, NZM-Food Company introduced tetra-pack technology and are now producing milk and fruit juice using UHT technology.
In recent years, alcohol producing factories such as APU and SAPU have introduced new technologies involving more sophisticated measuring equipment to produce low alcohol beverages and have improved the quality of their products.

Specific Government Programs

The Government launched a number (16, which are listed below) of nationwide, medium-term programs for the development of specific sectors and for implementation of Government policy. However, due to financial constraints, the implementation of all tasks set for the programs has not been possible.

The Green Revolution Program, started in 1997, and the White Revolution Program, from 1999, are well known in the farming sector. Under the Green Revolution, about 45 agro-parks were established, where pilot demonstrations are being implemented. These agro-parks are now merged with the Agriculture Extension Centers.

In order to improve the financial and economic conditions of the processing industries, the Government has now started to implement programs for “Wool”, “Cashmere”, and “Skins and Hides”.

Under a framework of promoting recovery of the cropping industry, actions mainly focused on increasing the amount and quality of cultivated land were introduced in 2001, when the Government approved a sub-program called “Fallow – 2001”. Under the sub programs “Seed” and “Fallow – 2001” some cropping companies were provided seeds under lending agreements, which helped to play an important role in the recovery of the cropping industry.

In addition a national program for “Assisting the Protection of Livestock from Drought and Dzud” was approved and implemented. As a result of that program, in 2001, 802.6 thousand tons of hay and 142.3 thousand tons of fodder were prepared, representing increases of 16.4 percent and 42.3 percent respectively, compared to 2000.


Entry filed under: Food industry.

Agriculture Sector Crop 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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