Located in the heart of Central Asia, between the People’s Republic of China and Russian Federation. Mongolia houses 3.3 million citizens living sparsely over a territory of 1,566,500 square kilometres, making it the least densely populated country in the world. Due to continuous rural-urban in-migration, Mongolia now has a mostly urban population (67.8% in 2018) with a national sex ratio of 96 males per 100 females.  In contrast to human population, Mongolia houses more than 70 million livestock comprising 32.3 million sheep, 29.3 million goats, 4.7 million cattle, 4.2 million horses and 0.5 million camel.

Rapid political changes of 1990–91 marked the beginning of Mongolia's efforts to develop a market economy. During the transition period in the 1990s, Mongolia suffered triple-digit inflation, rising unemployment, shortages of basic goods and food rationing. Since 2000, the economy has maintained healthy aggregate economic growth of 5 to 7 percent per year and in 2015 Mongolia was designated as an Upper Middle Income Country as the GNI per capita crossed the threshold between lower and upper middle income countries. Although a year later, in 2016, Mongolia was re-designated as the Lower Middle Income Country, this was primarily due to sharp exchange rate deterioration, and not necessarily due to contraction of per capita income. Despite healthy aggregate economic growth, there are growing concerns about rising inequality, impact of economic growth on decent employment creation and stagnation in poverty incidence level.  

Livestock population has registered a rapid growth in recent years. In 2018, the sector produced 475 thousand tons of meat and 940 million litres of milk. Both milk and meat production have registered steady growth since 2010. The crop sub-sector continues to lag behind with negative growth rates in production of cereals and potatoes and near stagnation of vegetable production. 

Growth in output of livestock products have primarily been driven by number of livestock rather than productivity. Overall, the sector generally remains characterized by low productivity due to underdeveloped animal health and breeding systems, high incidence of production and trade limiting animal diseases, lack of proper management of pastureland, and insufficient fodder and water supply. Pastures make up almost 95 percent of agricultural land; of which about 70 percent have degraded to some extent. All these factors have substantially increased risk to herders’ households, the quality of Mongolian livestock, and the health of the livestock industry.

Crop production focuses on cereals, including wheat, barley, oat, rye, buckwheat as well as oil plants, potatoes and vegetables. With a growing season of only a few months, high altitudes, extreme fluctuations in temperature, long winters, and low precipitation there are many obstacles that limit the potential for agricultural development. 

Challenges also exist in the areas of post-harvest processes and the manufacture of quality agricultural products. The current food and agriculture value-chain in Mongolia is weak. The capacity of the national food control system and food safety standard enforcement is inadequate and the country has difficulties to support the export of products. Much investment is needed in reliable systems that address value-addition through all stages of production from raw materials, processing, and distribution. This also involves competitive procurement, storage, processing, packaging, transportation, and sale to end-users.

Mongolia hosts one of the world’s most extensive and biodiversity-rich grassland ecosystems. Recent studies have shown, however, that this ecosystem is degrading rapidly and that biodiversity is being lost due to the degradation of grasslands, attributed primarily to overgrazing.  

Mongolia's vast forests (15 million hectares) are utilized for timber, hunting, and trapping (?) fur-bearing animals. Due to extreme conditions of continental climate, the forests have low productivity, slow growth, and are very vulnerable to both human and natural factors such as drought, forest fire, pests and diseases, and quickly lose their ecological balance. Some 90% of forests are officially designated as Protected Zone Forest where only forest regeneration and use of non-timber resources are permitted. Due to limited resources actual protection on the ground is very weak and unsustainable harvesting of firewood and timber and illegal logging have led to the loss and degradation of approximately 60,000 hectares per year over the last decade. To address this challenge the government is now working with nomadic herders to establish forest user groups (FUGs) from local families and community groups to implement forest protection, ecosystem management and sustainable harvesting within their grazing territories.

The common concern that cross cuts all sectors is the adverse impacts of climate change. Mongolia has recorded an increase in temperature of 2.14℃ between 1940 and 2008 and this has resulted in an increase in grassland aridity, lowering of the production of biomass, increased incidence of pasture insects and rodents, drying of many rivers, lakes and ponds and shifting precipitation patterns. The annual average snow depth during the past 30 years has also registered a decline in the northern mountain areas and an increase in the eastern and southern regions. The timing of snow melting has advanced by about one month and snow accumulation zones are predicted to decrease in the future.

The number of days of dust storms has increased significantly. Cold and snow damage called “Zud” (extremely cold situation where the temperature goes down to the range of 40-50℃ below zero) causes enormous economic damage when it occurs. The frequency of Zud followed a decreasing tendency until the early-1990s, but it has been increasing since then. About 70% of the grassland in the country is under the influence of desertification due to climate change as well as the anthropogenic factors including overgrazing of livestock, erosion of farmland soils, burning, and climate change.