Agriculture, natural resources and rural development / Agricultural policy, institutional and capacity development - Agro-industry, marketing, and trade - Irrigation

Farming remains an underdeveloped sector in Mongolia, despite high potential for growth and livelihood opportunities, particularly in the country's central region, spanning Darkhan-Uul, Selenge, and Tuv aimags. In line with the government's focus to promote livelihood opportunities outside traditional livestock herding and mining, agriculture (including smallholder vegetable farming) has fast become a priority for growth. Mongolia has made strides over the past decade to become self-sufficient in and mechanized cereal and potato production, but vegetable farming has been neglected and is not yet very productive. This perpetuates low income for vegetable farmers and high reliance on imported products, which in turn threatens national food security.

The project aims to increase income and employment opportunities for rural households by implementing a community farming model, providing a sustainable irrigation system, securing access to value chain support services and infrastructure, and improving farm-to-market linkages. The project will: (i) rehabilitate irrigation systems and integrate farming groups into inclusive agriculture value chains in up to six aimags; (ii) set up cold storage, packaging, and wholesale trading capacity in Ulaanbaatar; and (iii) strengthen institutional capacity and coordination to enable sustainable and inclusive use of project supported irrigation systems and value chain facilities, including strengthening of farmer capacity on proper use of chemicals and fertilizers (e.g. integrated pest management and good agriculture practice).

The ensuing project is estimated to cost $42.4 million. ADB is requested to finance $40 million largely for investment and capacity building through a loan. A $2.0 million cofinanced grant4 will be processed in parallel with the loan. Central and local governments will provide in-kind contribution equivalent to $0.4 million.