New Zealand, which is five times smaller and has fewer sheep and cattle than our country, has exported meat worth 9.2 billion dollars (400,000 tonnes of mutton and 471.718 tonnes of beef) in 2020. Meat exports rose by 7 percent from last year’s figure to a record high as demand for natural, high-quality meat increased during the COVID-19 pandemic.
On the other hand, Mongolia’s total exports reached 7.7 billion dollars in 2020, of which 80 percent comprised mining raw materials such as coal, copper, gold, and iron ore. Only 92.6 million dollars of our exports were earned by selling around 38.8 thousand tonnes of meat.
New Zealand sold 1kg of meat for 10.5 dollars on average, while Mongolia sold it for 2.4 dollars.
The reason for Mongolian meat being so cheap and the productivity of the livestock sector being so low is the yield of each process, including herding, maintaining, feeding, slaughtering, producing, selling, and transporting livestock. After 30 years, we realized that the turnover of a herder-centered livestock production scattered over such a large area is incapable of growing.
So far, we have not been able to realize the principle that the scale and potential of agricultural development can be formed only through cooperation, not individuality. The government has repeatedly tried to get herders to work together, but to no avail. What is the reason, and how should it be solved?
Cooperatives That Failed to Cooperate
The first cooperative in Mongolia was established 100 years ago, on November 2, 1921, by the decree of the Bogd Khan under the name “People’s Mutual Aid Cooperative.” This movement, united by wealth, labor, and will, made a significant contribution to the employment of many people and increased social labor productivity at that time.
In March 1958, the 13th Congress of the MPRP convened and launched a collectivization movement. In 1959, people’s livestock was confiscated and registered as public property. As a result, 389 cooperatives were formed and the livestock was distributed evenly. Authorities at the time emphasized that the movement “created a common social property and stopped herders from exploiting each other.”
After the 1990 democratic revolution, all cooperative-owned livestock were privatized to herders. Thirty years later, the number of livestock has increased 2.5 times to 66 million. The number of sheep increased twofold and the number of goats by 5.3 times.
As of 2020, there are 4468 cooperatives registered in Mongolia, with a total of 234,633 members and share capital of 49.6 billion tugriks, of which 3670 are located in rural areas and 798 in Ulaanbaatar (NSO data). One-third of them work in wholesale and retail sectors, and 30 percent work in agriculture, including animal husbandry and farming. Unfortunately, most cooperatives do not operate and are only registered on paper.
Mongolians, especially herders, did not manage to cooperate successfully. Labor productivity in the agricultural sector is low, and its participation in the economy is weak. Herders’ labor productivity is low, and there’s a growing trend of young people moving to urban areas while older people remain in rural areas. As for meat, which is the staple food for Mongolians, 90 percent of it is delivered to the people through questionable non-industrial methods, unsanitary ways, and many intermediaries.
New Cooperative, New Countryside
For the first time in history, herders have had the real opportunity to cooperate and increase their productivity since May 6, 2021. According to the “Law on Cooperatives” approved by the parliament on this day, cooperative relations such as attracting investment, owning and using up the property, obtaining loans, and distributing profits are regulated. A cooperative may engage in all activities not prohibited by law.
The cooperative did not have any assets in the past because it had been divided among its members under their names. With the new law, a cooperative’s assets will be clearly defined, and it will be able to borrow money using the asset as collateral. Establishing a contingency fund will also be the norm.
Parliamentary Resolution on measures to be taken per the Law (Article 40) tasked the government with transforming the Soum Development Fund to a Cooperative Development and Promotion Fund, financing cooperatives annually through the Labor Promotion Fund, and conducting the renewed registration of cooperatives. Moreover, 2022 will be a “cooperative development and promotion year” for the government with the framework of intensifying and expanding the movement, establishing model cooperatives, and introducing best practices.
Cooperatives are also exempt from VAT on the sales of their members’ products to domestic manufacturers. This will allow cooperatives to trade their raw materials and products without intermediaries to supply them to foreign and domestic consumers.
The new cooperative movement will enable the concentration of livestock raw materials, primary sorting, transportation, sales, slaughtering, storage, milk collection and processing, exchanging, and a more efficient supply of products needed by its members. Herders and farmers will receive incentives for raw materials such as hides, skins, wool, cashmere, and milk through their cooperatives.
Establishing a cooperative mutual fund enables access to low-interest loans to its members, preparation and purchasing fodder, and organizing veterinary and breeding activities in collaboration with specialized organizations.
For farmers, productivity will soar in many activities such as purchasing fertilizers, providing technical services, and organizing the cooperative members’ storage, transportation, and sales of potatoes and vegetables.
Cooperatives will make a solid contribution to meeting their members’ economic and social needs, providing services such as cafeterias, hotels, and household services. The list also includes running small workshops such as sewing, felt work, bakery, minor farming of bees and pigs, and vegetable processing.
As a part of a cooperative, herders and farmers can participate in the activities mentioned above and provide those services. In addition, the social image of existing cooperatives will improve, the coordination of cooperative support organizations will be enhanced. The next generation of cooperatives will be prepared, unemployment will decrease, and herders and farmers will live and work with stability in their local areas or soums.
One Team – One Cooperative
Cooperatives have been involved in these activities to a certain extent but have not been able to find a firm foothold. The primary foundation is the land and pasture. High-yield animal husbandry is feasible only through the common use of pastures. The smallest unit of administration suitable for cooperation is the bagh. Each soum has five or six baghs, each with its territory. Baghs (smallest administrative units) need to cooperate, and each cooperative should have a male and a female leader. The “New Village Movement” (Saemaul Undong) in South Korea has shown that having a female leader representing all women in teamwork is a great contributor to social development.
A team that combines the will, the effort, and the resources can work most effectively. Only the cooperative will decide as a group how to use the pasture properly, which area to leave for recovery, where to get hay, and how to pay the livestock footprint tax. It will also plan where to build a well and whose winter camp to renovate, financing it from the mutual fund.
Cooperatives as a team will increase their income and develop their local communities. Soum authorities can oversee the competition within their cooperatives and reward the winners with material prizes from the cooperative development promotion fund if necessary.
The UN celebrates the International Day of Cooperatives every year, and the motto of 2021 is “Rebuild better together.” The time has come for Mongolian herders to work together to build better.
2021.11.15
Trans. by Riya.T and Munkh-Erdene.D