Development of Agribusiness Enterprises - Asian Productivity ...

Agricultural extension differs from region to region. For example, 50 percent of the
grain harvest comes from the Central and the Northern districts, while 40 percent of the
fodder harvest comes from the Central and Northwest districts.
In the past decade, Mongolia has changed from being a centrally planned economy to
a free market economy. Moreover, state and collective farms have been privatized.
Consequently, central government aid has been discontinued. The new structure of
cooperation between private farmers is not yet well established.
After the dissolution of 19 state cooperatives in 1992, about 95 small companies were
formed. There are vegetable companies that were privatized from state farms, each with 50-
60 ha. In addition, the number of some small-scale private farms with 1-3 ha has recently
been increasing. However, it will be years before they are able to increase the harvest and
introduce new technology. Structural factors detracting from the efficient completion of tasks
during the preparatory phase have a significant impact on the area sown, yield and returns.
These factors include: a decreasing number of serviceable tractors; a decline in the quality
of cultivation equipment; a lack of timely access to fuel; and a decline in the efficiency of
management practices. Such factors are also symptomatic of the greater malaise of
unavailability of funding. Inherited indebtedness, high interest rates, comparatively low
farm-gate prices for wheat, poorly negotiated and utilized loans resulting in creditors seizing
equipment, and slow repayments are the root of many of the problems that have emerged
since liberalization. Mongolia’s sustainable agriculture and rural development strategy must
therefore be to:
C promote sustainable growth of agricultural production;
C reduce the risks of agriculture;
C enhance food security;
C target primary regional export markets for processed agricultural products;
C improve the agricultural management system;
C create an environment that is conducive to a more modern market-based agricultural
system involving value-added processing and product manufacturing, sales and
distribution;
C fully encourage the agriculture sector to increase the volume and quality of food
production in order to fully satisfy domestic food and raw material needs; and
C protect and improve methods of traditional animal husbandry, and create financial
guarantees to assist efforts within the sector to adopt a market system approach.
NATIONAL POLICY ISSUES AND OPTIONS
The government program of action includes basic policies on the livestock and crop
industries, and research development in the agriculture sector.
The action program of the Government of Mongolia towards agriculture is aimed at
stopping the decline in the farming industry by:
C creating a favorable legal and economic environment to ensure stable growth;
C improving arable land utilization and ownership through the increase of the fees for
neglected arable land, and exempt companies, organizations and individuals from the
land fee provided that they harvest a stable crop and efficiently utilize fallow and
arable land;
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