Regions and Countries

	Table of Contents
p. 9 of 20 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies A. Agriculture B. Infrastructure C. Social Infrastructure and Environment D. Governance Dimensions of ADB Operations E. Gender Dimensions of ADB Operations F. Private Sector Operations IV. Subregional Economic Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Mongolia : III. Sector Strategies

---

A. Agriculture

42. The major constraints undermining the performance in the agriculture sector include the weak private sector activity; undeveloped agricultural marketing systems; the relative low activity level of cooperatives; the crisis in the financial sector; the limited institutional capacity of agricultural agencies; the inadequate provision of agricultural support services by the public and the private sector; the social transformation in rural areas; overgrazing problems; and insufficient risk management which contributed to the livestock disaster in the winter of 1999/2000. Export markets need to be developed not just for meat, but also for live animals and other livestock products.

43. The major agricultural reforms introduced by the Government in the first half of the 1990s included the privatization of state farms and negdels, the deregulation of prices of major agricultural products, and the liberalization of agricultural trade. These policy and institutional reforms were supported by the ADB-funded Agriculture Sector Program. Future policy actions are expected to focus on:

1. developing updated agriculture sector strategies and policies to strengthen competitive markets and private sector activity;
2. strengthening governance in the institutions supporting agriculture to make more efficient use of financial resources;
3. reduce price and other distortions to improve resource allocation and sector efficiency;
4. promoting competitive markets for agricultural inputs, outputs, and processed goods;
5. rationalizing tax incentives to promote investment and sustainable production and to enhance agriculture’s contribution to national and local budgets;
6. ensuring the delivery of financial services and providing improved access to credit in rural areas;
7. improving the delivery of veterinary services to improve competitiveness in the livestock subsector;
8. mitigating risks in agriculture and ensuring food security, income, and employment for vulnerable groups;
9. strengthening agricultural research and extension to support private sector agriculture; and
10. ensuring sustainability in extensive livestock production.

44. The agriculture and livestock sector is the main provider of employment in Mongolia. ADB’s new strategy will build on this source of strength by emphasizing measures aimed at generating viable employment and income through:

1. supporting private-sector-led expansion of economic activity, particularly in the livestock-based agroprocessing industry;
2. strengthening the enabling legal and regulatory environment to stimulate private sector activity;
3. improving support services to overcome constraints to agricultural development,
4. promoting the improved provision of financial services in rural areas; and
5. supporting improvements in land tenure.

45. The development of small-scale agroprocessing industries would require background support particularly from new rural credit facilities, support for product quality improvement, and the development of new export markets for meat and other livestock products (including markets outside the two immediate neighboring economies of Mongolia). ADB support will address the agroprocessing industry’s main problems including lack of working capital and insufficient market study.

46. ADB is working with the Government in the context of the proposed Agriculture Sector Development Program, to identify policy reforms, capacity-building measures, and investments to increase agricultural and livestock production in a sustainable manner. An ongoing project, approved in 2000, is supporting the establishment of a cadastral survey and land registration system. This project will provide important support for future agriculture development, management of natural resources, urban and rural development, and broadening the local government's revenue base.

Back III. Sector Strategies	Next B. Infrastructure