When a country makes the dramatic shift from a state-run economy to one driven by market forces, the transformation is often jarring. Jobs can disappear, populations become displaced and entire industries collapse.

During the 1990s, Mongolia underwent such a shift. Many of the changes were painful, and one industry that was nearly destroyed was the dairy industry. That spelled disaster for two reasons. First, Mongolia is a nation of herders and farmers; 42 percent of its people earn their living in this manner, and many of the country’s 2.6 million population depend upon milk and dairy production for their livelihoods. “Milk is sacred in Mongolia,’’ says Dendev Terbishdagva, Minister of Food and Agriculture. Second, lack of dairy products, and milk in particular, contributed to under-nutrition among 25 percent of the country’s children, and a drop in nutrition among a growing population of vulnerable, low-income people.

Fortunately, FAO was ready to help. In partnership with the governments of Mongolia and Japan, FAO launched a project entitled Increasing the supply of dairy products to urban centres in Mongolia by reducing post-harvest losses and restocking. That’s a complex name for a simple idea – rebuild the Mongolian dairy industry. With 800 000 USDin funding from partners for modern dairy equipment, and 350 000 USD from FAO, rebuilding is underway. The total project budget of some 2 million USD permits crucial capacity building and training as well as the purchase of equipment.

The focus of this multi-faceted project is the Milk Marketing Enhancement Programme. With public and private partners, the programme has built 16 model units demonstrating all aspects of this vertically-integrated industry – from dairy cow breeding to dairy sales centres. Five dairies in the capital, Ulaanbaatar, collect milk from 1 500 rural and nomadic families, then safely transport and sell it in cities. In 2006, a model “One-Stop Dairy Sales Centre” was opened in Ulaanbaatar.

These five dairies also supply meals to those who need it most: children. Over 80 percent of the meals in a school nutrition programme in Ulaanbaatar for children in grades 1 and 2 (aged five to seven) come from these dairies. The school meals programme is reaching 110 000 children across the country; the government is adding grades 3 and 4 in 2007 reaching 1 870 000 students in all. Learning is also essential for those working in the dairy industry, and so with help from FAO, in 2005 the government established the National Dairy Training Centre on the Food Technology Campus in Ulaanbaatar.

Consumers are also important, and so a modern marketing campaign was launched to promote domestic milk. Its slogan is Mongolian milk for health and wealth. The message is clear: drinking Mongolian milk makes children healthy, and Mongolian farmers and herders wealthier. More than 20 new Mongolian milk and dairy products were launched on to urban markets in 2006. As the industry rebuilds and continues to grow, dairy producers expect to begin exporting. Market economies require competition, and dairy production is one area in which Mongolians can succeed. Consumers around the world are increasingly demanding natural, safe products. With hardly any pesticides or animal drugs, and no milk-stimulating hormones, Mongolian dairy farmers have milk, and one day maybe honey too.

Project: Increasing the supply of dairy products to urban centres in Mongolia by reducing post-harvest losses and restocking.

Publicated: June, 2016.