Mongolia, a country with a strong heritage of nomadism and animal husbandry, maintains one of the highest per capita livestock ratios globally at 19 head of cattle per person (MICC, 2017). It is also one of the most sparsely populated, providing ample land for grazing. Mongolia is strategically located between Russia and China, countries with sizeable markets for meat and is within a 5 hour flight distance to Korea and Japan, markets with high-value-added meat markets and scarce grazing land.
Despite an excess of 65 million heads of cattle as of 2018 (NSO), only approximately 7,900 tons of meat were exported in 2016, marking a decrease of 21% since 2004 and representing only 14 Million USD in revenue (MICC, 2017). Local meat production far exceeds the domestic demand from the 3 million strong population.
According to the Ministry of Food, Agriculture and Light Industry, in 2017, there were 24 slaughtering houses and six processing factories in Mongolia that have been licensed by inspection institutions from Russia, China, Vietnam and Iran (Montasme, 2017) with an annual capacity of export of 130 thousand tons of meat. The ministry estimates that 1Billion USD in livestock meat exports could be achieved by 2020.
Regional demand for Mongolia’s excess meat supply seems to exist. China has repeatedly announces that they are willing to import 150,000 tones of meat (UB Post, 2017), invest in the processing infrastructure and have signed an MoU to that effect in 2016 (The Sheep Site, 2016). Vietnam has expressed interest in importing goat meat. Saudi Arabia and more recently Iran have signed MoU’s to explore Halal meat export. High levels government meetings regularly take place and promisses often made.
So what explains this discrepancy in matching demand and supply and the low levels of growth in this potentially promising sector? Let’s first explore internal constraints.
Complicated geography – Both domestically, and internationally with limited trade routes over vast distances, complicated and bureaucratic border controls, corruption and an often changing export policy and regulatory framework which many suppliers ignore. This is complicated by large annual temperature variances and increasingly unpredictable weather leading to decimating dzuuds, thus changing the herd makeup.
From many to the few – There are an estimated 150,000 herding families and 80 meat processing operations in Mongolia (the SheepSite, 2016), 26 of which are approved for export to China, Russia, Vietnam and Iran. 97% of all meat is slaughtered by the herders and not in professional monitored operations (MICA, 2017). Slaughterhouse mostly process herds brought in by micro-to-mid sized herders. Inspections are carried out by ill equipped and trained bureaucrats instead of skilled vets (lack of trained human resources). They are irregular and prone to abuse.
Technology & Infrastructure – The supply chain is scattered and highly inefficient with few clear system of control and tracking of the animals from cradle to grave. There are few rural laboratories, no centralised husbandry database and no pre-approval processes for faster meat processing and dispatching. Medicine and vaccines are hard to obtain on a predictable basis and can be prohibitively expensive.
Policies and Regulations – Meat destined to be exported must go through 5 separate agencies (a 14 step process) that takes 2 to 3 weeks and is prone to regular changes without warnings. There is little centralisation of data and policy efforts. Meat is considered a national strategic reserve and is stockpiled by the Government and released in spring as a price stabilisation measure, prices remain thus artificially low.
From an external perspective, the largest barrier to export growth is the regular outbreaks of Foot and Mouth Disease (FMD) in the country. Outbreaks have occurred in 5 of the 7 years and have led to a near total ban of meat exports and an inability for Mongolia to obtain an OIE accreditation from the World Organisation for Animal Health essential for most exports. The country must be FMD free for 3 years.
Who’s doing what – The growth potential for the Mongolian meat industry has not gone unnoticed. The Government has signed MoU’s with a number of countries but failed to further act on the potential due in part to lack of resources, a politically vulnerable agenda and regular staff turnover. IFI’s (World Bank, ADB Asia Foundation, AVSF and KOICA) are working on small disparate aspects of the supply chain but lack concerted co-ordinated efforts. Private sector efforts remain nascent.
The Mongolian Meat Association (MMA) focus is on modernising slaughtering facilities, a worthwhile endeavour but it is the supply chain traceability elements that must be prioritised in order to promote the export market and reduce (or better manage) outbreaks of FMD. There are an estimated 80 abattoirs nationally, 50 of which are under-utilised due low predictability in animal delivery. The local market is dominated by 3 conglomerate operators that control 75% of all slaughter operations.
Solutions – The Government’s hope for 1Billion USD in livestock trade by 2020 are optimistic but substantial growth is never the less achievable. 1) Tailored and affordable financing mechanisms must be established for meat processing operators to establish their own cattle farms to reduce dependence on untraceable herder cattle. 2) The MMA working with the Ministry must simplify and improve inspection and subsequent export procedures and establish pre-approval mechanisms with fast tracked priority border status. 3) Subsidies and technical assistances must be provided for veterinarian institutes (nationally) and the transport and availability of relevant medicines. 4) A capacity building programme should be established to train operators on best international practices, animal feed programmes, traceability, disease identification and quarantine procedures. 5) The GoM should support a livestock insurance programme in case of dzuud or FMD outbreak. 6) Centralised livestock database with quotas should be established to allow improved forecasting. 7) Enhance the effort, financing and dedicated actions to eradicating FMD nationally and providing faster regional quarantine systems. Current 4MUSD is too low.
- Global Times (2017) China-Mongolia meat trade full of potential [online] Available at: http://www.globaltimes.cn/content/1080146.shtml [Accessed 23 Sept. 2018].
- MICC (2017) Agricultural Industry Report – Animal Health, Mongolian Wealth: Unlocking Mongolia’s Other Treasure Chest – [online] Available at: https://frontcap.com/wp-content/uploads/2017/02/Mongolia-Meat-Market-Report-2017.pdf [Accessed 22nd Sept. 2018]
- Montsame (2017) China interested in buying meat from Mongolia [online] Available at: http://montsame.mn/en/read/11634 [Accessed 23 Sept. 2018].
- NSO (2017) National Livestock Statistics Annual Report (in Mongolian) [online] Available at: http://1212.mn/tables.aspx?TBL_ID=DT_NSO_1001_021V1 [Accessed 22 Sept. 2018].
- The Sheep Site (2016) Mongolia’s Fledging Meat Industry Seeks Export Expansion [online] Available at: http://www.thesheepsite.com/articles/76/mongolias-fledgling-meat-industry-seeks-export-expansion/ [Accessed 23 Sept. 2018].
- UB Post (2017) Organic Mongolia [online] Available at: https://www.pressreader.com/mongolia/the-ub-post/20170728/281522226158689 [Accessed 23 Sept. 2018]
- World Bank Group (2017) What China’s Appetite for Meat means for Mongolia [online] Available at: http://blogs.worldbank.org/trade/what-china-s-appetite-meat-means-mongolia [Accessed 22 Sept. 2018]