Mongolia : Strengthening Food Security Post-COVID-19 and Global Food and Fertilizer Price Crises

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

Industry and trade / Small and medium enterprise development

Mongolian consumers are experiencing rising food prices and a limited availability of range of fresh foods and processed products. Food price inflation increased to 18% in March 2022 from and 8.1% in March 2021. High fuel price, on-going conflicts between Russian Federation and Ukraine, and limited crossing of trucks at the PRC border continue to threaten Mongolia's food security. Even before the pandemic, nearly 40% of population could not afford healthy diet. Reduced access to healthy and nutritious diet can exacerbate the double burden of malnutrition of increasing obesity and persistent undernutrition. The COVID-19 pandemic and the world food and fertilizer price crisis revealed the vulnerabilities of Mongolia's food supply chains. Building a resilient food supply chains is a priority for Mongolia to strengthen Mongolia's food security. Considering a high priority on food security and food safety, the Government of Mongolia announced the national movement on food security and food safety to scale up government actions to strengthen resilience to food insecurity risks, following the parliamentary resolution.

During the COVID-19 and global food and fertilizer price crisis, the rapid and coordinated response to evolving food security risks was hampered by the lack of integrated food security information system. Despite government investment in the database to track food price along food supply chains, and food import, distribution and storage, the insufficient coordination and information sharing between different ministries, and interoperability of IT systems constrained the government actions to ensure stable food supply across Mongolia.

Underdeveloped institution to develop modern and resilient food supply chains is another major constraint for Mongolia to ensure supply of quality and safe food to consumers. The dominance of informal marketing system in particular livestock chains is making difficult to quality-differentiated prices, proper animal traceability, health inspection and registration. The transition to an improved productivity and more quality-driven sector for export markets requires formal market institutions, where herders can obtain fair and transparent prices, and where food safety can be ensured. The lack of technical standards to produce safe food at production level and grading system is a major institutional constraint for the price discovery and commodity standardization in food supply chains. Another major bottleneck in Mongolia's food supply chains is a shortage of working capital for food processing and marketing actors. The credit facility for SMEs is much needed to provide enough cash for companies to build up inventories of raw materials and necessary inputs, including local retailers so they can afford to purchase food inventories that reflect rising product and transport costs. Having a warehouse receipts system could, to some extent, mitigate the shortage of working capital loans faced by processors, wholesalers, and retailers.

The disruption of food supply during the pandemic indicates the weak domestic logistics infrastructure remains a constraint for many local communities connecting to markets. The official State Reserves include wheat, flour, meat, milk and drinking water. However, limited local storage facilities made it difficult to stockpile products and has led to food losses and increased food prices. Increased storage capacity in partnership with private sector would mitigate logistical and transport issues when producers face a challenge to get their especially fresh products to market. The investment in modern collection capacity near producer nodes will be critically important. Moreover, disruption of food imports with the PRC and Russian Federation indicates that improvement of border procedures is necessary to facilitate movement and avoid long waiting periods of perishable food. A further development of digital processes could assist in overcoming delays at the borders and regulate who can enter with what into the country.

Mongolia's food security and food safety enhanced

Resilience strategy and management of food insecurity risks improved

Integrated food security information and response system established

Institutional capacity to develop modern and resilient food supply chains strengthened

Draft comprehensive investment strategy to strengthen food supply chain logistics prepared