In consequence, Mongolia now faces a serious food deficit and only produces some 60 percent of its estimated cereal needs. As a result, although the country is not facing an emergency of a scale which may result in widespread famine, it does, like other transitional economies, have a growing population of vulnerable, low income people who have been experiencing a dramatic fall in nutritional standards due to a major deterioration in their economic circumstance.
To determine the extent of this year’s deficit an FAO Crop and Food Supply Assessment Mission, funded by UNDP, visited Mongolia from 22 September to 5 October to assess wheat production and evaluate the food supply situation for the 1997/98 marketing year. The evaluation is based on discussions with Government, UN, international development agencies, NGOs and crop assessment visits to main agricultural areas.
The Mission forecasts the production of wheat in 1997 at 282 000 tons, some 28 percent above output in 1996. Despite the increase this year, however, production remains only 40 percent of the level in 1990. Moreover, the increase this year compared to last is mainly attributed to improved rainfall in main producing areas rather than generalised improvements in the sector, such as better input supply. Indeed, the provision of credit and agricultural inputs remains a major problem which will have to be addressed if food production is to be restored in future. The agriculture sector urgently needs large scale investments in machinery, chemicals, input supply and marketing channels and training and research programmes. Without such interventions, for the majority of farm companies and the country as a whole, the future of grain production looks bleak.
The livestock sector contributes 88 percent to gross agricultural production. In common with other areas in the economy, the livestock sector has also been subject to radical reforms and the break-up of large state enterprises into smaller units. During its transition phase, there has been a sharp decline in budgetary and service support to the sector. As a result, infrastructure such as wells have broken down, veterinary and other services have been cut back, fodder production has decreased, marketing systems are underdeveloped and investment capital is unavailable or unaffordable to most herders. As the terms of trade turn against livestock, there is growing pressure to increase the number of animals per unit to make it viable. This has created many vulnerable households, whose capacity to absorb economic shocks has already been compromised.
Economic reforms have affected households in a number of negative ways including a significant increase in poverty, loss of employment, reduction in consumption, cuts in safety nets and social sector services. Amongst vulnerable groups of most concern are those that have least access to financial resources for the purchase of food, especially in a situation where purchasing power has been significantly eroded by high inflation. These groups include the unemployed, the elderly, female headed households, children, pensioners and small herders. Without additional assistance these groups, especially a growing population of abandoned "street" children, will face great hardship in the years ahead as their ability to counter food supply problems remains highly constrained. Moreover, as real incomes have fallen households have been forced to cut back on non-food items, leading to substantial welfare costs and increase in expenditure on cheaper and less nutritious food. Recent survey results suggest that the sharp rise in chronic under-nutrition in children to around 25 percent is a direct result of the adjustment made in consumption by households to adapt to a tightening food supply situation. Furthermore, with a substantial fall in the relative price of livestock to other food commodities, strongly negative terms of trade have developed against herders making the earning of their livelihood increasingly precarious.
Economic slow-down and a trade deficit in 1996 further constrained the country’s capacity to import both sufficient quantities of grain to meet needs and essential agricultural inputs to maintain productivity. The Mission estimates an overall cereal requirement for the 1997/98 marketing year of 178 000 tons comprising 175 000 tons of wheat and 3 000 tons of rice. Commercial imports are expected to cover the rice requirement, and, based on cereal imports last year, some 85 000 tons of wheat equivalent. This leaves a deficit of 90 000 tons, for which the country needs emergency and programme food assistance. The Mission recommends that for the most vulnerable sectors of society, the absolute poor who constitute some 6 percent of the population, 23 000 tons of emergency food aid be provided. The remaining 67 000 tons of the deficit should be covered by programme food aid. Both categories of food assistance can be handled by the National Poverty Alleviation Programme.
Mongolia, the fifth largest country in Asia, is landlocked with an area of approximately 1.56 million square kilometres. The country is divided into three main topographical zones: mountains, with the three largest ranges located in the north and west; the inter-mountain basins, in one of which Ulaanbaatar, the capital, is located; and the steppe, which covers three-fourths of the national territory.
Arable land, calculated to be 1.3 million hectares, is relatively abundant at 0.56 hectare per caput (Korea DPR has only 0.06 and Vietnam 0.10), albeit of low productivity. It has sizeable reserves of copper and other minerals, allowing the country to export annually approximately U.S.$ 100 per caput in minerals alone and a potential for petroleum production in commercial quantities. However, Mongolia’s harsh and erratic semi-arid continental climate combined with sparse population over a huge territory constrains internal communication and transport.
In contrast to its huge landmass, Mongolia’s population is small (2.35 million in 1996), with a rate of growth of 1.5 percent per annum (2.8 percent in 1986). With a population density of 1.5 per km2, it is the most sparsely populated country in the world. Some 25 percent of the population are located in Ulaanbaatar, the capital. The rest of the country is largely pastoral, with animal husbandry the main economic activity. In the past 6 years there has been large-scale migration to cities and towns, in search of economic opportunities, as a result of which some 52 percent now live in urban areas
Although economic liberalisation since 1990 has been accompanied by a shift in trade away from the former centrally planned economies, Russia still remains the most important trading partner. The export sector is dominated by raw materials, whilst petroleum products account for a substantial proportion of imports. According to government figures, GDP growth in 1996 dropped to 2.6 percent from 6.0 percent in 1995. Falling international copper prices was the main cause of this slow-down, emphasising the important contribution of minerals to GDP. The inflation rate stayed high in 1997, rising to 56 percent in the first eight months from 53 percent at the end of last year. In 1996 there was a trade deficit of U.S.$ 15.4 million compared to the positive balance of U.S.$ 25.3 million in 1995.
The transition to a market economy resulted in a sharp increase in both
the number and the proportion of people in poverty. Despite the apparent
recovery of the economy since 1994, the number of people in poverty continues
to increase and for most Mongolians, transition meant loss of employment
and/or erosion of incomes. Large-scale redundancies followed the privatisation
of state assets and the collapse of outdated and unviable enterprises.
State farms faced similar transformation with large numbers of lay-offs
as agricultural production plunged. The livestock sector, however, expanded
rapidly as privatisation led to an increase in livestock and numbers of
The cereal production system is input intensive, large-scale and mechanised, presently employing less than an estimated 14 000 workers. The main producing regions are the Central Agricultural Region which accounts for some 80 percent of the planted area, the North West Steppe and the North East Steppe. In the three regions, 70 state farms have, since 1990, been broken down into 427 enterprises of varying size with ownership encompassing single household units, private and share-holding companies and joint ventures with substantial (49 percent) government involvement.
The farms are located as the central feature of administrative districts (Som) in 15 sub-regional areas (Aimags). The administration of the Som is responsible for monitoring performance of the emerging structures and providing advice/services through general agronomists and other technicians located on-site.
Since 1990 cereal production has declined by some 48 percent for a variety of technical, administrative and logistical reasons. A virtual monoculture of spring wheat has evolved in the form of a two-course annual rotation comprising treated fallow and wheat. Summer fallow treatment involving sub-soiling or deep ploughing and several passes of rigid line harrows, designed to eliminate weeds and capture the rainfall before the winter freeze begins, is crucial for the success of the next season’s crop. Spring cultivation with discs and sowing as rapidly as possible after the thaws is equally time-bound depending on the length of the growing season of the variety of wheat selected.
Structural factors detracting from the efficient completion of tasks
during the preparatory phases have a significant effect on both area sown
and yields returned. These include:
Such factors, valid in their own right are also symptomatic of the greater malaise of availability of money. Inherited indebtedness, high interest rates, comparatively low farm-gate prices for wheat, and poorly negotiated and exercised loans resulting in creditor seizure of equipment and slow payments, may be seen to be at the heart of many of the problems that have emerged since liberalisation.
Production has been further adversely affected by a dearth of imported agricultural inputs. In consequence, for several years there has been no use of fertiliser or insecticides in the cereal sector. Herbicide imports, vital for weed control in the spring under the system used, have also declined to virtually zero, although long-term stocks of 2.4D are still available for those farm companies which can obtain financial and/or logistical access. In consequence yields have dropped by some 50 percent on the better organised farms previously using fertilisers.
With changes associated with privatisation has come a reduction in technical support to the cereal sector in other ways. A cessation of support for seed selection and multiplication is causing seed development to stagnate. The simultaneous breakdown in plant protection services has left an industry depending on a non-progressing single commodity which is extremely vulnerable to plant disease and pest outbreaks.
The absence of organised insurance in such a risk prone situation deters investors and reduces expansion opportunities. Production figures for 1996 indicate that both area planted and yields obtained reached an all-time low last year, as the factors listed above were exacerbated by a 25-30 percent decline in rainfall in the main agricultural region. This perilous state of affairs was also noted in the parallel production of potatoes, which, though less industrialised, is subject to similar constraints.
In the Central Agricultural Region, decadal records of rainfall from 22 centres in all 6 aimags indicate that the season was characterised by a similar pattern. This included a late start, a decrease in late June - early July, dramatic increases in mid to late July and a variable precipitation in August - September. The quantity of rainfall recorded for the season at all 22 centres exhibits significant increases over last year’s deficits with totals ranging up to nearly 500 mm. However, some centres in Overhangai aimag (3 out of 5), Selenge (1 out of 4) and Tuv (3 out of 7), still recorded levels below 250 mm, which indicates that even in an acknowledged ‘good’ year some areas are likely to be moisture deficient. Regarding the early spring rain, the light-late characteristic in May was offset by very high snow-fall which, at thawing, provided enough soil moisture for germination and post- germination development of seedlings until the rains began properly. Early June rains ensured a reasonable seed-set and grain-fill was assured by the heavy rains of mid-late July. In consequence, rainfall was not a limiting factor in the main agricultural areas.
A similar situation is noted for the agricultural aimags of the North West Steppe. However, in the North East Steppe the situation was much more variable, exhibiting both heavy increases and decreases over last year’s localised rainfall bounty. Further, even in areas with seemingly adequate precipitation, the distribution in time was not favourable resulting in shortages at seed-set and grain-fill.
Other factors which positively affected area harvested in 1997 include:
i) increased access to funds for ‘reliable’ farmers arising from the government supported wheat fund, flour mills offering interest free loans in the form of cash and flour (for barter) and bank loans, albeit at 8 percent per month interest, being more readily available.
ii) improved timeliness of loans with tranches available for fallow treatment, sowing and harvesting.
iii) a de facto pegging of the price of diesel over the year in face of fairly rapid inflation
iv) extension of cropped area into areas not farmed in the past few years as companies either a) took over unviable units or b) reorganized into more efficient enterprises.
Support needs to be expanded if the decline in production is to be reversed,
as most farms fall outside the ‘reliable’ category. This includes companies
of all descriptions which have bad debts as well as others with poor access
to assistance. A list of factors still negatively affecting such farmers
and, therefore, area includes:
Time-series data indicating the trend for area planted and production for both cereals and potatoes from 1990 to 1996 is shown in Table 1. Both crops show a decline until 1993 when the area under potatoes seems to have bottomed-out. Area planted to cereals has continued to fall until 1996 when the drop decreased from 20 percent to 6 percent suggesting that cereal planting may also have bottomed-out
|1990||654 000||-||718 000||-||12 200||-||131 000||-|
|1991||615 000||-6||595 000||-20||10 100||-17||97 500||-26|
|1992||592 000||-4||493 000||-17||9 000||-11||79 500||-18|
|1993||546 000||-8||479 000||-3||6 800||-24||60 100||-24|
|1994||449 000||-17||330 000||-31||6 900||1||54 000||-10|
|1995||356 000||-20||261 000||-21||6 700||-3||41 800||-23|
|1996||331 000||-7||220 000||-16||6 933||3||45 700||9|
|1997 2/||313 000||-6||282 000||28||6 811||-2||51 703||13|
From 1990-1995 national average yields decreased from 1.1 to 0.73 tons per hectare. The data, which are heavily influenced by returns from more favourable areas in the Central Agricultural Region, mask yields less than 0.5 tons/hectare from the N.W. and N.E. Steppes.
|1997 2/||1996 3/||1995 3/|
|CAR||238 771||1.07||254 799||226 501||0.80||181 737||278 577||0.79||219 860|
|Orkhon||1 782||0.90||1 604||940||0.84||790||1 311||0.86||1 122|
|Tuv||68 957||0.94||64 820||63 789||0.85||54 131||77 815||0.73||56 528|
|Bulgan||32 268||1.09||35 172||34 383||0.82||28 079||41 894||0.83||34 748|
|Darkhan||12 951||0.94||12 174||12 961||0.61||7 962||16 753||0.93||15 611|
|Overhangai||7 527||0.51||3 839||8 822||0.64||5 602||13 484||0.35||4 730|
|Selenge||115 286||1.19||137 190||105 606||0.81||85 173||127 320||0.84||107 121|
|NW Steppe||27 094||0.55||14 816||25 313||0.51||12 851||50 780||0.50||25 431|
|Arkhangai||3 150||0.39||1 229||4 767||0.30||1 410||21 750||0.49||10 582|
|Uvs||12 619||0.61||7 698||8 426||0.43||3 604||17 468||0.48||8 411|
|Houd||1 489||0.74||1 102||1 001||1.45||1 452||1 105||0.77||855|
|Huvsgal||8 855||0.47||4 161||9 542||0.60||5 704||9 414||0.54||5 128|
|NE Steppe||27 345||0.44||11 982||29 827||0.86||25 552||27 064||0.60||16 105|
|Dornod||9 445||0.46||4 345||8 934||1.03||9 161||8 381||0.74||6 236|
|Henty||11 230||0.49||5 503||11 036||0.94||10 419||7 240||0.83||6 016|
|Sukhbatar||6 670||0.32||2 134||9 857||0.61||5 972||11 443||0.34||3 853|
|Grand Total||293 210||0.96||281 597||281 641||0.78||220 140||356 421||0.73||261 396|
Factors also positively contributing to yield increase in 1997 other
than improved rainfall are:
viii) pilot testing of 2 new wheat varieties namely ‘Selenge’ imported from Russia and reported to have yielded 2.5 tons per hectare on 200 hectare trial plots; and ‘Darkhan’ a new variety produced by the Mongolian Agricultural Institute - which has also shown promise. Caution needs to be exercised regarding a wider adoption of ‘Selenge" as the Mission discussion with Flour Mill Directors suggest it does not have the quality necessary to make bread and will not be accepted in large quantities.
The high and timely precipitation encouraged seed-set and grain-fill and produced wheat of higher quality than last year with fewer shrivelled grains and a significantly higher 1000 grain weight. Given plenty of sunshine prior to and at harvest time, the wheat is already quite dry in most areas, which will keep storage losses at around 2 percent and reduce handling/reception charges.
On the negative side, the rain that benefitted crops also enhanced the weed growth, both in the wheat crop and on treated fallow. Weeds were apparent in crops that had not been sprayed with herbicide and on fallow land that had been ploughed early in the season. The Mission particularly noted the regular occurrence of volunteer oats, wild oats and couch grass.
Co-ordinated adaptive research involving such emerging enterprises is urgently required into husbandry practices that will a) maintain expected levels of infiltration with minimal passes, b)encourage moisture retention, c) improve fertility and d) improve seed quality. Contour ploughing, tied ridging, green manuring with leguminous crops, and farm based crop breeding are all established techniques used elsewhere which could usefully be explored.
Overall, production in 1997 is estimated at 282 000 tons from 293 000 hectares harvested. Production is therefore, 28 percent higher than in 1996 from an increased (4 percent) harvested area mainly reflecting far better yields in the main cereal producing aimags in the CAR. Selenge aimag, in particular, has returned a far better harvest this year being some 60 percent above last year and 30 percent above the recorded production in 1995.
Flour Mills consulted by the Mission, anticipated a far greater intake of local grains this year than last year but stressed that they are still only working at 50 percent of their storage/processing capacity. Competition between mills for the limited wheat available had encouraged the administrations in each mill to provide interest free loans to farmers or farm companies considered to be reliable. Loans extended this year by the administrations of Selenge, Darkhan and Bulgan flour mills to farm companies have covered the wheat production costs (115 000 tugriks per ton (U.S.$ 143)) for some 24 000 hectares out of an estimated 160 000 hectares in the aimags that the flour mills serve.
For the majority of farms the future looks bleak. Change to a less-demanding, minimal cultivation system will require an enormous foreign exchange investment in machinery and chemicals. A return to peasant-scale holdings does not seem a serious option for a non-agrarian society experienced in mechanised farming. For some farms however the situation is much better where adequate negotiating and management skills combined with opportune rain contributed to earning reasonable profits. Indeed, in the future it is quite possible that such farming groups will absorb the less viable units.
Furthermore, studies in 1997 suggest that there is a tendency for the newly-created herds to occupy peri-urban, ‘comfortable’ areas for trading or social purposes, thereby increasing stocking density during the grazing season near towns; disrupting established transhumant patterns and lowering the efficiency of the overall pasture utilisation. Calls for detailed studies into pasture and livestock production should be heeded in order to establish guidelines for the ‘Som’ executives with regard to access, stocking densities and annual stocking rates of the winter and summer pastures within their domains. These guidelines would need to be determined for each locality, taking into account:
|Total||9 477||82||95||9 443||80||97|
|Ewe||5 232||88||96||5 037||86||97|
|Goat||3 037||84||92||3 212||83||93|
All stock noted during field trips in 5 aimags in the CAR were in very good condition. Further, no significant outbreaks of animal diseases were reported from any aimags although ectoparasites were noted as a local problem. With regard to animal health services, this year has also witnessed the beginnings of the privatisation of veterinary centres - 70 out of the 390 units have been privatised. The remainder will be privatised before the year 2000 according to existing plans. The effect this will have on the livestock health is not yet clear.
The area of forest and pasture destroyed by fire during the year was some 10 percent less than in 1996, when a general state of emergency was declared. This year, aimags in the N.E. Steppe bore the brunt of the fires. Overall 219 events were recorded by the Information and Computer Centre in the National Meteorological Institute, causing an estimated U.S.$ 50 million worth of damage to trees and fodder. Shortfalls in forage were met by purchased hay and other feeds by those who had access to suppliers and the cash to buy.
Generally, supplementary feeds for livestock arise from three sources, the compounds prepared in the main lour mills, on-farm (Som) preparation of livestock feed from home produced grains, and hand-made hay-based pellets for young stock made by the traditional herders. The two former supplements are themost important for the FAO cereal balance presented in Table 4. Supplementary feed produced by the main flour mills is derived during the process of flour extraction and is, therefore, accounted for as part of the 70 percent conversion factor from wheat to grain. The Som level animal feed use is estimated within thecategory of on-farm losses and other uses.
Recent developments reveal that the terms of trade are moving against the herding population (20 percent of the population) at an alarming rate. For example, prices of livestock products since 1995 have either fallen or increased at a lower rate than flour prices. The price of flour has more than doubled (160 percent) since 1995, while the prices of mutton and cashmere rose by 49 and 6 percent respectively and that of wool fell by about 30 percent.
The average annual household consumption of livestock products (meat and milk) has been valued in recent independent surveys at 350 000 tugriks (U.S.$ 437) or 7 percent of total expenditure. This suggests a per caput intake of some 100 kg of meat equivalent per annum, confirming an approximately equal calorific balance between livestock and grain products identified during last year’s Mission as 92 kg meat and 130 kg milk.
Estimated utilisation is based on the following assumptions:
The estimate for the opening stock is based on historical figures of wheat and flour set aside to act as buffer estimated at 10 000 tons of wheat equivalent plus 9 000 tons of unsold grain in Darkhan flour mill with an additional 3 000 tons of grain stored as strategic seed reserve. Similarly, the closing stock is estimated at 13 000 tons, comprising 10 000 tons of buffer plus the 3 000 ton seed reserve.
The cereal balance sheet for the 1997/98 marketing year suggests a deficit of 178 000 tons of grain (Table 4). With anticipated commercial imports of 88 000 tons, there would remain a food aid requirement of 90 000 tons. Of this, 23 000 tons should be provided as emergency assistance to the most vulnerable people. The remaining 67 000 tons should be provided as programme food aid or concessional imports.
|A. Domestic Availability||
|Opening Stocks 1 October 1997||
|On farm feed use, losses and impurities||
|Government closing stocks||
|C. Import Requirement||
|Anticipated Commercial Imports||
|Uncovered imports deficit||
|- Emergency assistance||
|- Programme food aid||
The minimum subsistence level has been revised nine times since 1991. The last revision was made in February 1997 and included stipulations for different regions of Mongolia. The poverty line now stands at tugriks 10 400 (U.S.$ 13) for Ulaanbaatar, 10 380 for Orkhon and Darkhan, 9 720 for the Western region, 9 420 for the Middle region, 9 340 for the Gobi region, and 9 250 for the Eastern region.
In 1996 official estimates put the number of poor in the country at 453 000 people, or some 105 000 households. This level constitutes some 19.6 percent of the population of which 6 percent (those consuming less than 40 percent of the poverty line consumption level) are classified as being absolutely poor. The statistics are based on calculations of average monthly income per member of the household and vary from the 1995 survey conducted by the World Bank (Living Standard Measurement Studies) during which the calculations were made on the basis of average monthly consumption per member of household. The LSMS estimates for 1995 place the poverty rate at a far higher 36 percent of which 17 percent were considered to be absolute poor. The most vulnerable people in society are estimated at 143 000.
Rural poverty and unemployment are most serious in the aimag centres where, without adequate capital to establish and operate new businesses, the private sector has not yet been able to generate new employment opportunities.
In 1996 a total of 6236 tons of wheat flour was received as food aid from Japan (83 percent), China (16 percent) and Germany (1 percent). Yet last year’s balance suggested a deficit of 151 000. In consequence the Mission feels that the poorer section of the population may have adjusted downwards their already low consumption rates, which may explain recent survey results showing high prevalence of chronic under-nutrition (1 in 4) in children.
During the first half of 1997 only 2640 tons, mainly from China, were received. The Targeted Assistance Fund (TAF) of the National Poverty Alleviation Programme (NPAP) provides cash and in-kind assistance to the most vulnerable sections of the poor to help them meet their most basic needs. The Targeted Assistance Fund was opened by the government in January 1997 as one of the four Poverty Alleviation Fund (PAF) sub-funds to complement the existing Social Assistance Fund of the Government. The target population includes: elderly and disabled without caregivers; very poor single parent households with children under the age of 16. The assistance provided includes: food, clothing, fuel and meal costs for pre-school children.
In addition to the structural problems noted above there are three identifiable causes for concern which are likely to reduce incomes and increase hardships in certain aimags. These are: fires, unusually high winter losses of livestock and low crop yields. Table 5 ranks affected aimags according to severity.
|Fire*||Livestock Mortality**||Low Yields (t/hectare)***|
Gobi Altai (3.1%)
The table suggests that the aimag centres of Sukhbaatar and Huvsgaal are the areas of greatest concern for the coming year as the deep seated poverty is likely to be exacerbated by adverse natural events.
|This report is prepared on the responsibility of the FAO Secretariat
with information from official and unofficial sources. Since conditions
may change rapidly, please contact Mr. Abdur Rashid, Chief, ESCG, FAO,
(Telex 610181 FAO I; Fax: 0039-6-5705-4495, E-Mail (INTERNET): [email protected])
for further information if required
The Special Alerts/Reports can also be received automatically by E-mail as soon as these are published, subscribing to the GIEWS/Alerts report ListServ. To do so, please send an E-mail to the FAO-Mail-Server at the following address: [email protected], leaving the subject blank, with the following message: