Mongolia

Agriculture and Rural Development Project

Mongolia's agriculture industry is potentially attractive to international niche markets. The sector offers production processes such as chemical free methods, environment-friendly practices, and free range livestock. In addition, Mongolia's unique culture of nomadic lifestyle, family-based production, traditional relationship with animals and nature, and boutique practices contrast the mass production methods of its neighbors.

Supply chain development

To capitalize on its niche advantage, it is necessary to make sure that Mongolia can offer international quality products. This will require investments along the entire supply chain starting from the herders/ raw material producers to intermediate processors and ending with the final producers. The technical assistance will assist 8 to 10 private agricultural enterprises, with a team of international and national experts working with them to:

• Identify supply-chain partners for the enterprises
• Help develop investment plans, and
• Arrange financing for investment plans on attractive terms.

The technical assistance [ PDF: 112kb | 20 pages ] will target companies with a long-term commitment to Mongolia and its unique production environment. It is expected that investments will be identified in processing facilities, management, and raw material supply. The companies are also expected to pay attention to community development and environmental aspects of their investments. ADB is itself preparing a loan project that could be a source of financing for the investment plans. The objective is to make sure that agricultural enterprises can meet the quality and reliability standards expected by international markets. Selection criteria are being developed by an Advisory Board [ PDF: 57kb | 1 page ]. Please see the initial screening criteria [ PDF: 74kb | 1 page ].

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Branding

Product quality alone will not guarantee success. Mongolia will lose if it tries to compete on the basis of price and quality alone with producers in the new manufacturing powerhouses such as the People's Republic of China. Mongolia's unique geography and nomadic lifestyle make it almost impossible to cost-effectively harness the economies of scale that Chinese companies have become masters of. On top of it all, Mongolia's agricultural environment is fragile. If herd sizes grow too much, the Mongolian pastures could slip into a non-recoverable desert. The only way for Mongolian herders to improve income sustainability is to produce premium quality, and not by increasing quantity. The way to do this is to fit their product into specialty niche markets that place a premium value on quality products that are uniquely "Mongolian."

The technical assistance will, therefore, in parallel to identifying investments in the supply chain, prepare a branding campaign to provide a distinct identity or "brand" that differentiates Mongolia's agricultural products from those of other countries. The branding campaign will be considered for funding through the ADB loan project and through grants from other development agencies. The branding campaign could help Mongolian enterprises command an international price premium for their products in niche markets.

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Public Sector Investment

The technical assistance team will also work with private sector enterprises, government agencies and civil society organizations to identify investments in public services and infrastructure that will improve the performance of private enterprises and support local communities' economic development. These public investments, to be considered for funding through the ADB loan project, could range from veterinary facilities to breed improvement research, to environmental management, to roads, energy, wells, and other rural infrastructure and capacity building of relevant stakeholders.