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Study on the supply of yak and camel wool

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Study on the supply of yak and camel wool in the Green Gold project region, 2014

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Study on the supply of yak and camel wool

  1. 1. M O N G O L I A S D C G r e e n G o l d P r o j e c t M a r k e t i n g C o m p o n e n t S t u d y o n t h e s u p p l y o f y a k d o w n a n d c a m e l w o o l i n t h e p r o j e c t r e g i o n P r e s e n t e d t o Swiss Agency for Development and Cooperation (SDC) Ulaanbaatar, Mongolia March 2014 I m p l e m e n t e d b y :
  2. 2. A d d r e s s GFA Consulting Group GmbH Eulenkrugstraße 82 22359 Hamburg Germany Phone +49 (40) 6 03 06 – 166 Fax +49 (40) 6 03 06 – 169 E-mail ronny.staffeld@gfa-group.de SDC Green Gold Project Marketing Component Mongolia S t u d y o n t h e s u p p l y o f y a k d o w n a n d c a m e l w o o l i n t h e p r o j e c t r e g i o n R e p o r t Prepared by: Altanbat Tsedevsuren, Bolormaa Vanchigdorj, Carl Krug Y o u r c o n t a c t p e r s o n within GFA Consulting Group GmbH is Ronny Staffeld
  3. 3. i Contents 1 INTRODUCTION TO THE SUPPLY STUDY 1 1.1 The Green Gold project as framework of the supply study 1 1.2 Objective of the supply study 1 1.3 Methodology of the supply study 3 1.4 Scope of the supply study 3 2 SURVEY RESULTS ON SUPPLY OF YAK DOWN 5 2.1 Number of yak heads and yield of raw material in general 5 2.2 Survey results on yak down supply in the project region 7 2.2.1 Head number of yak and yak down resources in the project region 7 29,200 8 2.2.2 Survey on coat-colour of yaks 9 2.2.3 Collection of yak down 11 2.2.4 Marketing of yak down 15 3 SURVEY RESULTS ON SUPPLY OF CAMEL WOOL 17 3.1 Head number of camel in Mongolia and camel wool yields 17 3.2 Survey results on camel wool supply in project target aimags 20 3.2.1 Collection of camel wool 20 3.2.2 Marketing of camel wool 22 3.2.3 Increasing the volume of raw material and improving its quality 25 4 THE ROLE OF COOPERATIVES IN RAW MATERIAL SUPPLY 27 5 CONCLUSIONS AND RECOMMENDATIONS 33
  4. 4. ii LIST OF TABLES, FIGURES & PHOTOS Table 1 Number of study objects 3 Table 2 2013 Annual census of cattle (yaks) in the project target aimags 8 Table 3 Number of yaks and volume of yak down resources in the project target soums 8 Table 4 Yak coat-color distribution in percent in the project target aimags 9 Table 5 Earnings from camel wool as percentage of total earnings by number of herders 25 Figure 1 Head number of yaks in Mongolia 5 Figure 2 Number of yaks in the Aimags of Mongolia 6 Figure 3 Coat-color of yaks in percent and average for 6 project aimags 10 Figure 4 Opinion of herders on possible weakness of yaks colored light white 11 Figure 5 Share of yak herders collecting yak down in percent 11 Figure 6 Intensity of yak down collection by yak herders in percent 12 Figure 7 Collection methods of yak down used by herders by aimags 12 Figure 8 Cooperation of herders for yak down preparation 13 Figure 9 Assessment and proposals regarding upgrading the collection of yak down 14 Figure 10 Directions of yak herders for yak combing in percent and by aimags 15 Figure 11 Marketing channels of yak down in percent and by aimags 16 Figure 12 Head number of camels in Mongolia (in thousands) 17 Figure 13 Head number of camels in surveyed soums and camel wool resources 19 Figure 14 Preparation of camel wool in aimags in percent of the potential resources 21 Figure 16 Marketing channels of camel wool in percent and by aimag 23 Figure 18 Proposals of cooperatives on expansion of their activities in percent 28 Photo 1 Interview with herder (Tsenkher soum, Arkhangai), group discussion (Tsengel soum, Bayan-Ulgii) 4 Photo 2 Yaks grazing on pastureland in the Khangai region 6 Photo 3 Hair cover of yak 7 Photo 4 White yak, Tosontsengel soum, Zavkhan aimag 10
  5. 5. 1 1 I N T R O D U C T I O N T O T H E S U P P L Y S T U D Y 1 . 1 T h e G r e e n G o l d p r o j e c t a s f r a m e w o r k o f t h e s u p p l y s t u d y The SDC project “Green Gold” has the overall goal of improving livelihoods for herders and reducing poverty in rural Mongolia. The “Green Gold” project (in the following GG project) empowers herders to secure user rights for their traditional rangelands in order to motivate them to manage those pastures in a more sustainable manner. The project was started in 2004 and is now in its fourth and final phase. It is the main instrument to achieve outcomes in the “Agriculture and Food Security” domain of the Swiss Cooperation Strategy for Mongolia (2013-2016), and it specifically contributes to improved equitable access to markets through cooperatives and other economic groupings. The project is in line with the policy priorities of the Government of Mongolia and directly contributes to the National Livestock Programme and the National Cooperative Development Programme. The major achievement of the GG project has been the active involvement of 60,000 herder households in 679 PUGs established in 66 soums and which are affiliated to 66 associations of PUGs (APUGs)... 470 PUGs have made rangeland use agreements with local governments, and 10 APUGs have received mandates to implement government projects. 35 economic cooperatives among PUG members have been established, with a total equity of 640 million MNT, playing active roles in organization and technical support for livestock production, processing and marketing. It is recognized, however, that PUGs, APUGs and herder cooperatives in the soums are at different stages of maturity and levels of capacity. On the one hand, this indicates a continued need for technical support. On the other hand, the current diversity of experiences provides a rich basis for herder-to-herder exchange and mutual support. The marketing project is a new component of the GG project. Its main outcome is to facilitate market access by linking yak herders to processing companies and to increase the income of yak herders. Likewise the component is also directed to the marketing of camel wool and to increasing the income of camel herders. The geographic focus is on selected soums with yak and camel herders in these seven Western aimags: Arkhangai, Bayankhongor, Bayan-Olgii, Gobi-Altai, Khovd, Uvs, Zavkhan. 1 . 2 O b j e c t i v e o f t h e s u p p l y s t u d y The objective of this study is to analyze the actual and potential production of yak down and camel wool in the project region. The results will be incorporated into the study of the value chains for yak down and camel wool and will be used to plan the approaches and activities of the marketing component.
  6. 6. 2 In order to achieve this objective, the research studies the following aspects: Actual supply capacity of raw materials  Quantity of livestock resource (herd structure regarding sex, age, colours), numbers of relevant herders, and supply capacity of raw materials,  Methods of preparation (combing, cutting, working capacity, productivity),  Sales channels of raw materials (domestic processors, changes, agents of processors, Chinese buyers and sales through herder organizations (APUGs, cooperatives),  PUGs and cooperatives, soum and aimag-level Federations of PUGs (status, activities, establishment, members and management, role in the supply chain) Quality system in the supply chain  Awareness among herders and herder organizations about quality of raw material,  Knowledge about influence of collecting methods on quality,  Knowledge about influence of quality on processing and production of final products,  Knowledge on sorting (by age and sex, colours, etc. ), first processing and breeding Potential and conditions for increase of supply capacity and quality  Willingness of herders to intensify and improve collection from existing animals  Perspectives to increase the herds of yak and camel  Expectations of herders regarding other actors in the value chain Partnership building between herders and processors  Past practices regarding cooperation agreements between herders and processors: volumes, terms, payments, sanctions etc.  Practices preferred by herders  Best practices and experiences Needs for qualification and consultation  Training of herders on combing, sorting, first processing (subjects, methods, schedules), quality issues,  Training and consultation of cooperatives, PUGs and APUGs on institutional strengthening, improved role in the value chain, and quality issues.  Other expectations from the project, soum and Aimag administration
  7. 7. 3 General information on the livestock sector and environment in the relevant soums  Social economic condition,  Pasture degradation,  Infrastructure development,  Water supply and others,  Income distribution by types of livestock,  Development policies and instruments of soum and Aimag administrations. 1 . 3 M e t h o d o l o g y o f t h e s u p p l y s t u d y The study data were collected at the two administrative levels aimag and soum and was obtained from primary as well as secondary resources. In the pre survey stage all available information from different resources like official statistics, branch information, resolutions, programs, and regulations of the Government and local administrations was utilized. For the collection of primary data the following participatory methods were used: Questionnaire: interviews conducted with a specific number of herders, PUGs, APUGs and cooperatives in targeted soum and aimags, Discussion: For collection of data on concrete subjects group discussions were held, for example with members of cooperatives and PUGs, Additional information: Internal information, which is not contained in statistics collected from related organizations and persons by specific tables. 1 . 4 S c o p e o f t h e s u p p l y s t u d y The study was conducted in the preselected soums in all 7 aimags of the project region: Bayan-Ulgii, Uvs, Khovd, Zavkhan, Gobi-Altai, Bayankhongor and Arkhangai. The study involved 2092 herders from 45 soums and it covered 68.3% of the total yak population and 61% of the total camel population in the targeted aimags. Table 1 Number of study objects Aimag Number of Soums Camel herders Yak herders APUG Primary and secondary coops Bayan-Ulgii 5 117 177 5 5 Khovd 8 184 188 8 1/8 Arkhangai 7 322 5 1/4 Zavkhan 3 77 3 1/2
  8. 8. 4 Aimag Number of Soums Camel herders Yak herders APUG Primary and secondary coops Bayankhongor 10 250 206 4 6 Uvs 6 137 145 6 5 Gobi-Altai 6 289 6 1 Total 45 977 1115 37 34 The study involved all major stakeholders of the project component, i.e.: yak and camel herders, PUG and cooperative leaders and members, soum governors, experts of the soum administrations, changes (raw material traders)and SMEs working in the fibre sector. The survey team has endeavoured to keep gender balance among the interviewees and the total gender ratio of respondents was about 40 percent female and 60 percent male. The significance of the project soums in terms of livestock population determined the number of interviews (from 5 up to 15 per soum). Photo 1 Interview with herder (Tsenkher soum, Arkhangai), group discussion (Tsengel soum, Bayan-Ulgii) Questionnaires were taken on average from 28-50 herders in one soum. Apart from that, meetings were organized with herder groups in 24 soums.
  9. 9. 5 2 S U R V E Y R E S U L T S O N S U P P L Y O F Y A K D O W N 2 . 1 N u m b e r o f y a k h e a d s a n d y i e l d o f r a w m a t e r i a l i n g e n e r a l The high mountain area and pastureland occupy over 30 % of rangelands in the Khangai region of Mongolia. It is considered as the potential reserves for production of animal origin products and raw materials. There are about 14.2 million1 yaks in the world especially in the countries China, Mongolia, Afghanistan, Nepal, Russia, India, Kirghiz and Tajik located in Central Asia respectively. The Republic of China takes the first place with its number of yaks (13.3 million) and Mongolia is on the second place with around 0.6 million yaks. 99.5% of the total number of yaks lives in 9 aimags in the Khangai and Altai mountain regions of Western Mongolia. The total head number of yaks and of khainag (cross breed between yak and Mongol bull) was 833.9 thousand in 1997 and decreased by 46,4% to only 447 thousands in 2003. As seen from the annual livestock census, the number of yak was reduced further by 5,12 % to the minimum of 424.1 in the year 2010. Since then until 2013 the number of yaks increased by 38 percent to 585.000. It is estimated that 1.29 2percent of the animals in these statistics are pure yaks. The head number of yaks has increased by 7.4% from 2012 to 2013. Figure 1 Head number of yaks in Mongolia 1 http://www.fao.org/docrep/006/ad347e/ad347e05.htm 2 http://www.nso.mn/content/1 1 2 3 4 5 6 7 8 9 10 11 12 Year 1997 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Head 833900 447000 464100 481200 536500 600000 627700 601500 424100 440300 545500 585161 0 100000 200000 300000 400000 500000 600000 700000 800000 900000
  10. 10. 6 Figure 2 Number of yaks in the Aimags of Mongolia In 2013, Arkhangai aimag had the largest number of yaks (21.274) or 36% of the national herd. All 7 project aimags comprise about 65 percent of the national yak herd. The biological characteristics of yak focus on its ability for acclimatization to harsh weather condition in the high mountain areas of Central Asia. Yaks have the fur cover with thick and long hair along its belly, forequarter and thigh respectively. It has the longer tail and thick skin with relatively few numbers of sweat glands and grub hole, therefore yaks have relatively low level of hypothermia and have adapted to the cool climate conditions. Yaks are grazing scanty bushes and shrubs in lands with hard surface and rocks and with sharp and steep risings and ravines around high mountains. Photo 2 Yaks grazing on pastureland in the Khangai region Arkhangai 36% Bayankhongor 9% Khuvsgul 15% Uvurkhangai 9% Zavkhan 7% Bayan-ulgii 6% Khovd 5% Uvs 1% Gobi-Altai 1% Other 1%
  11. 11. 7 Yak’s hair cover and hair from the mane and tail: The body hairy cover of yaks protects the organism from any adverse impacts from the environment and regulates the hypothermia. The hair cover and skin of cattle are directly connected as the hairy cover is subject of the skin as its feeding medium. The hair cover is dense and serves as “heat keeper” like warm clothing for the body especially in the cold climate of the mountain areas. The hair cover of yak is different in the body parts: in the main body parts it is rich with cashmere while the lower part of the forequarter, thigh and belly has comparatively thick and long hair. The long tail is shielding the back of the thigh and grain. The forehead again has dense and long hair. In terms of morphology, the hair cover of yak is divided into three groups: namely fine soft cashmere, coarse rough hair and intermediate hair respectively. The cashmere and intermediate hair is being shed in spring and beginning of summer and newly grows in the end of summer and beginning of fall season. Hair from the mane and tail is not regularly shed and is gradually replaced. Photo 3 Hair cover of yak Yak cashmere hair is fine, soft and highly wrinkled and composed of cortex and scaly layers accordingly compared to rough hair. It is able to be easily tangled because of its ring shaped scales and round cross section. Guard hair or rough hair is relatively medium coarse, gentle, unwrinkled and sometimes likely curved and comprises one third to one half of the entire hair cover. The cross section of rough hair is shaped oval and has the more narrow and black diameter than cashmere and rough hair. The thicker hair than cashmere without black diameter is called the intermediate hair. 2 . 2 S u r v e y r e s u l t s o n y a k d o w n s u p p l y i n t h e p r o j e c t r e g i o n 2 . 2 . 1 H e a d n u m b e r o f y a k a n d y a k d o w n r e s o u r c e s i n t h e p r o j e c t r e g i o n The representation of the 25 soums in 6 aimags in the survey was based on the nationwide statistics for yaks in 2013. On this basis the survey covered 50.8 % of total number of yaks and 68.3% of surveyed aimags where yaks are.
  12. 12. 8 Table 2 2013 Annual census of cattle (yaks) in the project target aimags Aimags Total number of yaks Yak numbers in surveyed soums Percentage of yaks surveyed Arkhangai 212740 142214 66.8 Bayankhongor 109953 85892 78.1 Zavkhan 42145 21139 50.2 Khovd 26605 21158 79.5 Uvs 7482 2490 33.3 Bayan-Ulgii 36854 24596 66.7 Total 435779 297489 68.3 Table 3 Number of yaks and volume of yak down resources in the project target soums No Aimags and soums Total head number of yaks Yak down resources, kg Arkhangai 142,214 56,886 1 Chuluut 36,145 14,458 2 Tariat 31,708 12,683 3 Undur-Ulaan 26,052 10,421 4 Khangai 28,313 11,325 5 Ikh tamir 17,679 7,072 6 Tsenkher 20,325 8,130 7 Tsahir 18,137 7,255 Zavkhan 29,200 11,676 8 Ikh uul 14,448 5,779 9 Otgon 8,061 3.224 10 Tosontsengel 6,691 2,676 Bayankhongor 85,892 34,357 11 Erdenetsogt 31,921 12,768 12 Galuut 20,955 8,382 13 Jargalant 18,402 7,361 14 Ulziit 5,290 2,116 15 Gurvanbulag 9,324 3,730 Bayan-ulgii 24,596 9,838 16 Deluun 10,107 4,043 17 Altai 4,369 1,748 18 Tsengel 2,763 1,105 19 Buyant 5,817 2,327 20 Ulaan hus 1,540 616 Khovd 21,158 8,463 21 Munkhkhairkhan 5,228 2,091 22 Tsetseg 2,135 854
  13. 13. 9 No Aimags and soums Total head number of yaks Yak down resources, kg 23 Duut 4,786 1,914 24 Must 9,009 3,604 Uvs 2,490 996 25 Bukhmurun 1,575 630 26 Turgen 915 366 27 Khovd 814 325 Total 305,550 122,545 According to the estimation done by surveyors, at average 0,4 kg of yak down can be collected from each yak. Based on the number of about 300,000 yaks then a total of about 120 tons of yak down can be collected. This represents the potential resource of raw material in the project region. 2 . 2 . 2 S u r v e y o n c o a t - c o l o u r o f y a k s In total 59,282 yaks in 26 soums from 6 aimags were surveyed on coat- colours and covered only 10.1 % of total numbers of yak in Mongolia. Table 4 Yak coat-colour distribution in percent in the project target aimags Coat- colour Aimags Average Arkhangai Bayank- hongor Zavkhan Khovd Uvs Bayanulgii Black 65 50 82 59 64 58 63 Brown 15 19 15 11 11 12 14 Dark blue 5 10 1 9 10 12 8 Light white 5 9 1 10 7 10 7 Motley (mixed) 10 11 1 11 7 9 8 Black and brown coat-collared yaks have the highest share while only about 5 percent of yaks are of dark blue or light white colours.
  14. 14. 10 Figure 3 Coat-colour of yaks in percent and average for 6 project aimags As seen from the survey findings, 63% black coat-collared, 14% brown, 8% dark blue, 7% light white and 8% are of mixed colours (motley) respectively. Yaks with coat-colours black and brown are dominating in Mongolia. Only about 7 percent of the total number of yaks is light white, which represent the colour with the highest actual demand among consumers in international markets. The white collared yak is considered as a unique feature of Mongolia which does not exist in China or Nepal. Thus, the survey was asking why herders in the past have not increased the number of yaks collared in light white. The reasons stated comprise: 7,6 percent of herders state they have lower milk output, 10,1 percent they are liable to fall ill (e.g. with eye infection) and 36,3 percent say they are susceptible to cold weather conditions. Photo 4 White yak, Tosontsengel soum, Zavkhan aimag However, from all respondents 20,3 percent stated that white yaks have no weakness, and 25,8 percent mentioned that they do not know about this. 63%14% 8% 7% 8% Black Brown Dark blue White Motley
  15. 15. 11 Figure 4 Opinion of herders on possible weakness of yaks collared light white The survey team found two herders in Chuuluut sum (Arkhangai Aimag) owning each over 100 white yaks which are being bred in the family since several generations. They mentioned that according to their long-term experience yaks collared in light white have no specific weaknesses. It was in general observed that herders do not pay attention to increase the number of white collared yaks because processors offer the same price for yak down irrespective of the colour. 2 . 2 . 3 C o l l e c t i o n o f y a k d o w n Collection methods of yak down: the survey found that 66.3 percent of herders collected yak down from their animals while 33.9 percent did not do so. As a consequence about 30 percent of the yak down resources in the project target aimags is being lost. The highest rates of yak down collection in the aimags have Bayankhongor (94.2 percent), Arkhangai (87.9 percent) and Zavkhan (78.6 percent). The high rate of yak down collection in these aimags is results from the large number of yaks there and the close distance to the buying processors in Ulaanbaatar. Figure 5 Share of yak herders collecting yak down in percent The analysis also surveyed the intensity of collection in more detail. Of the responding yak herders 62 percent have combed up to 60 percent of their total number of yaks while 11 percent combed between 60 and 90 percent. Only 26 percent of the yak herders have combed more than 90 percent of 0% 20% 40% 60% 80% 100% Arkhangai Bayankhongor Uvs Average low milking susceptible to cold no weakness 63,8 78,6 94,2 46,3 43,7 46,7 62,2 36,2 21,4 5,8 53,7 56,3 54,3 37,9 Arkhangai Zavkhan Bayankhongor Khovd Bayan-Ulgii Uvs Average Prepared Do not prepared
  16. 16. 12 the total number of yaks which they own. The highest levels of combing were found in Bayankhongor, Arkhangai and Zavkhan aimags respectively. This again demonstrates the potential for increased collection of yak down especially in the three most western aimags Khovd, Bayan-Ulgii and Uvs. Figure 6 Intensity of yak down collection by yak herders in percent The reasons stated by respondents for the low level of yak combing are as follows: unable to sell the raw material (9,7 percent), missing knowledge of combing methods (12.9 percent), lack of labour force (27,9 percent), low sales price of yak down (49,6 percent) Much labour force is required to comb yak down because of the large body and fierce behaviour of the yaks and the relatively low yield. The survey also shows that many herders who did not fully comb their yaks judge the sales price as not providing sufficient incentives. When asked about the method of yak down collection which they apply 55 percent of herders state that they comb the yak down, 35 percent shear the yak hair including down and 10 percent use both of these methods. Figure 7 Collection methods of yak down used by herders by aimags Arkhang ai Zavkhan Bayankh ongor Khovd Bayan- Ulgii Uvs Average up to 30% 35 14 16 70,1 44 50 38 31-60% 34 7 25 23,0 33 25 24 61-90% 19 10 17 2,3 13 4,2 11 more than 90% 12 69 42 4,6 10 20,8 26 0 10 20 30 40 50 60 70 80 % Arkhangai Zavkhan Bayankho… Khovd Bayan-Ulgii Uvs Average 89% 67% 81% 58% 26% 12% 55% 3% 18% 6% 33% 60% 88% 35% 8% 15% 14% 9% 14% 10% combing shearing both
  17. 17. 13 As can be seen from the figure, the majority of yak herders in the aimags of the Khangai region are combing (Arkhangai 89 percent, Bayankhongor 81 percent, Zavkhan 67 percent), while the yak herders in the Altai region (Uvs and Bayan-Ulgii aimags) are mostly shearing the yak down. The sheared yak down contains a much higher content of less valuable coarse hair and is less demanded by the processors. The reasons stated by yak herders why the use the yak down shearing method are: lack of labour force for large number of yaks 49 percent, 24 percent less knowledge of combing, 18 percent do not have the suitable comb for combing which makes combing a time consuming activity and 9 percent state other reasons (low price of yak down and hard work of combing etc.). On the possible cooperation for yak down collection about 40 percent of surveyed herders state that they have prepared the yak down alone without assistance from others. 27 percent use the assistance of other herders, and 11 percent the support of cooperatives. Figure 8 Cooperation of herders for yak down preparation The combing of down from one yak takes 30-40 minutes if done alone and 20 minutes if done together with others. The survey found that herders owning large number of yaks especially lack labour force for yak down combing and do not utilize this potential source of income. In order to overcome this appropriate actions could be taken, which were discussed in detail with the yak herders during the survey:  Herders can cooperate within the herders group (PUG) or in their khot ails to help others who lack labour force,  Unemployed or unskilled persons in the soum centers can be trained in yak down combing to support local herders with large yaks herds and receive incentives from the herders (e.g. share of the combed raw material). Regarding review and assessment of the current mechanism of yak down collection, 63 percent of yak herders responded that it has to be upgraded Arkhang ai Zavkhan Bayankh ongor Khovd Bayan- Ulgii Uvs Average Prepare it alone 56 45 38 37 27 14 36 With other herders 19 17 34 29 20 45 27 With cooperative members 1 13 6 17 23 7 11 Others 24 26 23 17 30 34 26 0 10 20 30 40 50 60 %
  18. 18. 14 no problem 13% improve ment is needed 63% no idea 24% 53% 24% 19% 4% government incentives for yak down like for sheep wool fix cost differently according to the quality primary grading and cleaning should be done locally Other while only 13 percent do not see any constraints currently. In order to upgrade the existing system for yak down collection, the herders propose the following: 53 percent state that a government subsidy is required for yak down collection similar to the one for sheep wool and camel wool, 24 percent propose a price difference taking account the various qualities of raw materials and 19 percent propose the primary processing for quality improvement of raw products in the rural areas. Figure 9 Assessment and proposals regarding upgrading the collection of yak down Regarding further details 44 percent of surveyed yak herders said it is necessary to base the government incentive system on different prices for various qualities of raw materials, 33 percent propose contracts with prepayments, 19 percent demand that processors communicate their production requirements to herders. This is meant to maintain the feedback between herders and processors in order to improve their cooperation. The quality considerations of yak down collection: it is important to sort the yak down by ages and colours of the animals in addition to keeping combed and sheared yak down separate. The sheared yak down has a high level of coarse hair and reduces the production yield as well as increases the processing costs for processors. Yak down shearing also has the effect to shorten the length of coarse hair compared to camel wool and goat cashmere. In fact, the better qualified yak down with narrow and soft diameter can be collected from yaks in younger ages. Yak researchers maintain that the fiber of yak down gets shorter with progressing age of the animal and this raw material has a longer share of higher value fibres. Therefore the focus should be directed at combing yak down with higher quality and better yield from the younger yaks. How to improve?
  19. 19. 15 Figure 10 Directions of yak herders for yak combing in percent and by aimags As seen from the survey results, on average 46 percent of herders do not consider any particular criteria, 45 percent indeed focus on combing of only younger yaks, 6 percent use a mix of indicators and 2 percent comb only yaks with certain colours (e.g. white colour). It is positive to note that 45 percent of yak herders comb yak down from young animals in order to prepare yak down with higher quality. The yak down yield is higher from the combing of younger yaks and requires less labour. However, the herders remark that often this raw material is mixed with other types (such as from old animals) prior to its arrival at the processors. The herders looking for yaks collared in light white usually focus on this criteria in order to meet the demand of some processors and as a result of the lack of labour force. 2 . 2 . 4 M a r k e t i n g o f y a k d o w n According to survey results on average 58 percent of all yak herders sell the combed yak down to travelling buyers (so called changes), 33 percent to cooperatives, 6 percent to individuals and 3 percent to processing plants through their agents. 66 74 37 34 58 45 2 4 4 4 2 6 4 4 16 8 6 26 22 55 58 25 92 46 Arkhangai Zavkhan Bayankhongor Khovd Bayan-Ulgii Uvs Average Only young yaks Comb yaks with particular color Observe another criteria Do not observe any criteria
  20. 20. 16 Figure 11 Marketing channels of yak down in percent and by aimags The above figure shows that the majority of yak herders sell the combed yak down to changes, which means that these changes have high benefits from this trade compared to the herders’ earnings. It is positive to note that 33 percent of respondents sell the yak down to local cooperatives in the soum. While many of these cooperatives are truly owned by the herders themselves some are in fact owned by changes so benefits are enjoyed only enjoyed by them. In fact, few local cooperatives achieved benefits from selling at favourable prices directly to processors through contracting. This also affects positively the attention on the quality of raw material and helps to build a mutually beneficial cooperation between herders and cooperatives on one side and cooperatives and processors on the other side. The increased trust and benefits of the long term partnership can be seen from the representatives meetings organized by the cooperatives. In soums where cooperatives operate poorly the changes purchase the yak down at 5000-6000 MNT/kg while in soums with properly working local cooperatives their buying price reaches 8000-9000 MNT/kg. The price difference between collection price paid and sales price obtained from processors amounts to 2500-3000 MNT/kg. It was distributed to herders as additional sales income (so called bonus), which increases the income of herders up to 11000-12000 MNT/kg from the yak down. Several cooperatives started to sell directly to processors in 2012 and have obtained skills and experience. This basis can be utilized to expand the direct sales of yak down from herders through the cooperatives to the processors and thereby to realize the various benefits attached to this (higher income of herders, more consideration for quality). 3 2 3 2 5 3 34 17 45 58 38 8 33 60 76 50 29 46 89 58 3 5 2 11 11 3 6 Arkhangai Zavkhan Bayankhon… Khovd Bayan-Ulgii Uvs Average processors cooperative change Other
  21. 21. 17 3 S U R V E Y R E S U L T S O N S U P P L Y O F C A M E L W O O L 3 . 1 H e a d n u m b e r o f c a m e l i n M o n g o l i a a n d c a m e l w o o l y i e l d s Camel is one type of the domestic cattle in Mongolia with high productivity and yields of wool, meat and milk products and with good adaptation to grazing in the harsh climate conditions. Mongolians have used the camel for riding, long distance transporting and domestic purposes since about 5000 years ago. The two humped camel or Bactrian camel is widely spread in Mongolia and represents about 30 percent of all Bactrian camels in the world. These amount to about 2 million and exist also in countries such as China (especially Inner Mongolia), Kazakhstan and some central Asian areas, the home countries of the Bactrian camel. Figure 12 Head number of camels in Mongolia (in thousands) The highest number of camel reached 895.000 and was recorded in 1954. From then it decreased by about one half until 1991. The number of camel has gone down again by about one half until 2012. The reasons for the reduction in the camel herd are: collapse of the collective system (negdels), slaughtering of camels for meat preparation in order to obtain additional income, and deterioration of camel breeding in these periods. These reasons have negatively impacted on the camel herd size. The dramatic decline of head number of camel herds had occurred during the first 20 years of the market economy in the country. However, since 2009 the number of camel has been gradually rising again. According to the national livestock census in 2013, Mongolia had in total 321,6 thousand heads of camel. From the total herd 71.1 percent are in the aimags Umnugobi, Bayankhongor, Dornogobi, Gobi-Altai and Dundgobi aimags. By regions, 51.4 percent of all camels are in the central aimags and 24.2 percent are in the western aimags of the country. As regards the project target aimags, only 36.1 percent of camel are living here (Bayankhongor 11.6 percent, Gobi-Altai 9.5 percent, Khovd 5.9 percent, Uvs 5.6 percent, Zavkhan 2.0 percent, Bayan-Ulgii 1.4 percent, Arkhangai 0.3 percent). 870 755 611 562 367,5 322,9 254,2 322,9 321
  22. 22. 18 The Mongolian camel has some specific features such as: domestication for relatively long periods, adaptation to hard condition, sustainable yields and little vulnerability for disease and sickness. The camels in various areas of the country have little differences from each other by body size, appearance, coat-colours and yield rates, which are caused by traditional breeding selection and nature climate circumstances. Mongolian camels are usually collared in dark brown, light brown, red while a small share of camels is white collared. Among breeding of camels, families of Galbiin Gobi red camel (in Khanbogd soum, Umnugobi aimag), Khaniin hetsiin brown camel (in Mandal-Ovoo soum, Umnugobi) and Tukhum Tungalagiin brown camel (in Tugtug soum, Gobi-Altai) are famous camel breeds in the country. The Tukhum Tungalagiin brown camel from within the project region has a large body with much cashmere and double beards on the both sides of neck plus throat. The wool yield from this family is higher than form others amounting to 5.6-5.8 kg at average. Camel wool: The main fibre product from camel is wool that is composed of cashmere, partial and intermediate hairs and guard hair respectively. Camel wool is categorized into fine wool and coarse wool. Fine wool is usually taken from the body of the camel while coarse wool is taken from the knees, beard, and top of the hump and head of the camel. The high density of camel wool in the body has protected from the cold and keeping the hypothermia. The wool yield of Mongolian camel depends on sex and ages of the animals: wool yields amount to 2,4-3,6 kg in the second year, 3,5-5 kg in the third year, 4-5,9 kg in the fourth year, and 5,5-9,6 kg in the fifth year. The fully grown camel cow yields 5-8,8 kg and the camel stallion 7,3-10,4 kg of wool respectively. Camel in their second year which is not used for riding have the finest and softest wool. The most valuable part of camel wool is cashmere and 69-71 percent of the coarse wool is cashmere while 74-76 percent of fine wool is cashmere. The wool yield, as well as structure and feature of the fibres are different depending on the breed, age, sex, and climate condition and husbandry methods in the region of origin. The specifications of camel wool are divided into 4 regions in the country taking account especially of location and wool quality characteristics3. Consequently, the project target aimags belong to the Western region, where 39,2 percent of camel wool is collected. It is normally collared in light, red yellow and white and rich with cashmere fine fiber. 3 Study on processing and production of wool, cashmere and camel wool, Mongolian association of cashmere and wool, Ulaanbaatar 2003
  23. 23. 19 Based on statistical data the annual camel wool collection amounted to about 3,000 tons up to the 1980s followed by a decline starting from 1985 due to head loss of camels. In addition to use of camel for riding and transportation from the ancient ages, Mongolia had constructed textile factories in the 1970s using the processing technology for fine wool of the camel. As seen from the data collected by the Ministry of Industry and Agriculture, domestic factories for wool processing collected almost 20-25 percent of wool resources to produce the carpets and woolen products but were closed for many months due to lack of camel wool supply. The Mongolian Parliament in 2011 adopted decree No 30 “Some measures to support the domestic production” and as result 34 domestic processing factories were awarded with soft loans of 40 billion MNT to allow purchasing of sheep wool and camel wools for domestic production. As a result over 90 percent of the collected wool was delivered to domestic factories4. Figure 13 Head number of camels in surveyed soums and camel wool resources Aiamgs and soums Number of camels Camel wool resources in kg Bayankhongor 28,705 143,525 Bogd 4,088 20,440 Bayanlig 15,589 77,945 Bayangobi 2,389 11,945 Shinejinst 3,497 17,485 Bayan-Undur 3,142 15,710 Gobi- Altai 17,627 88,135 Delger 1,727 8,635 Khaliun 2,832 14,160 Tsogt 2,259 11,295 Sharga 3,820 19,100 Biger 1,531 7,655 Bugat 1,033 5,165 Tugrig 4,425 22,125 Khovd 10,447 52,235 Zereg 1,861 9,305 Mankhan 2,617 13,085 Durgun 3,272 16,360 Chandmani 2,697 13,485 Uvs 10,407 52,035 Naranbulag 2,144 10,720 Tes 2,290 11,450 Zavkhan 5,973 29,865 4 http://www.mofa.gov.mn/new/index.php?option=com_content&view=article&id=19&Itemid=141
  24. 24. 20 Aiamgs and soums Number of camels Camel wool resources in kg Bayan-Ulgii 1,590 7,950 Tsengel 638 3,190 Ulaanhus 684 3,420 Deluun 268 1,340 Total 68,776 343,880 In total 115,000 head of camels live in the soums which were surveyed comprising 36,1 percent of the total camel herd in the country. Based on the estimate of an average yield of 5 kg of wool which can be collected from each camel, it is possible to collect around 344 tons of camel wool in project target aimags. According to the survey the herder families have 30374 heads of camel (potential recourse is 151.8 tons ) and prepared about 133 tons of camel wool in the surveyed aimags in the year 2013 which equals around 87.4 percent of the potential camel wool resources. 3 . 2 S u r v e y r e s u l t s o n c a m e l w o o l s u p p l y i n p r o j e c t t a r g e t a i m a g s 3 . 2 . 1 C o l l e c t i o n o f c a m e l w o o l Camel wool is not collected entirely at the same time but it is collected several times from the different parts of the camel body. For instance, coarse wool from the knees and beard is taken off by 15 April, fine wool between 1 April and 15 May and coarse wool from the hump, and main parts of the body between 15 May and 20 June of every year. The removal of camel wool is a hard activity done by herders and requires the proper preparation such as studying of climatic condition and choice of the optimal timing in order not to expose camels to cold wind and storm. In 2013, the surveyed families had prepared in total 132.8 tons of camel wool and this number is based on the head number of camels owned for by herders. For instance, the large herder Shinen of Bayanlig soum, Bayankhongor aimag prepared 5 tons of camel wool. Although there exist uniform incentives for camel wool, the collection status is different in the various aimags.
  25. 25. 21 Figure 14 Preparation of camel wool in aimags in percent of the potential resources For instance, 84,8 percent of the herders in Bayankhongor aimag fully collected camel wool, 64,7 percent in Gobi-Altai, 51 percent in Uvs, 30 percent in Khovd and 3,8 percent in Bayan-Ulgii Aimag. The reasons for not collecting camel wool in full stated by the herders are: lack of labour force (51.2 percent), low price of wool (27.2 percent), insufficient quantity for sale (5.3 percent) and other reasons (16.4 percent) respectively. As seen from the survey results, 26.7 percent of all camel herders prepared the camel wool including sorting: 19,1 percent by age, 43,3 percent by body parts and 16,6 percent by colours respectively. Sorting is normally uncomplicated because wool removal is performed at different periods of time for the various body parts as stated above. In the recent years, some factories requested to buy the wool from the highest yielding camel in the second year of age at comparatively high prices. Because of that herders collected and sorted the camel according to the age of camels. However, most herders do not like to sort the camel wool due to the following reasons: unsorted and sorted wool achieve the same price (71.1 percent), do not know how to sort the wool (9.5 percent), not enough supply of bags or containers (9.5 percent) and other reasons (9.5 percent) respectively. For wool removal from one camel, two men are required to hold the camel and to tie up its feet. The family members surveyed stated that about 30 minutes are required for wool removal from one camel on average. For the purpose to support the production of value added animal origin products, the Mongolian Government started to pay an incentive premium of 2000 MNT per kg of camel wool from the year 2011. 96.9% of surveyed herders said this incentive in principle is a supportive action to increase the family income and it supports to fully collect camel wool without waste. In the first years of provision of the incentive premium, herders were unable to receive it caused by lack of proper information and the necessary papers. But the number of herders who desire to receive this incentive is gradually growing in recent years. However, the procedure for incentive premium states that it shall be issued for qualified wool meeting the requirements for the first sort and normal classified. However, this procedure is not practical in rural areas and it impacts on the quality of raw materials. Some herders mentioned that there Bayankhongor Gobi-Altai Uvs Khovd Bayan-Ulgii Average 6 14,0 16,8 37,0 32,4 21,2 9,2 21,2 32,2 33,2 63,8 31,9 84,8 64,7 51,0 29,9 3,8 46,9 up to 70% 71-90% more than 91-%
  26. 26. 22 is no difference for the various quality categories of camel wool and the mechanism to obtain the incentive is not clear and has many obstacles. Responses from herders regarding the upgrading of the existing premium system of camel wool were as follows: 66.6 percent request to improve the system, 22.6 percent have no problems with while 10.8 percent did not know about it. The respondents from Khovd, Bayan-Ulgii and Uvs aimags said that collection system and premium mechanisms have to be upgraded urgently as a result of their remote distance from the markets and limited access to marketing channels. Figure 15 Assessment of the premium mechanisms for camel wool by herders 42 % of all camel herders responded that the state incentive mechanisms needs to be upgraded, 29 % request that the price is variable to the quality categories, 25 % suggest that primary processing of camel wool processing is done in the rural areas and 4 % mentioned other actions respectively. 3 . 2 . 2 M a r k e t i n g o f c a m e l w o o l Herders are selling the fine wool of camel in full. The coarse wool is used for domestic purposes to spin thread, prepare the girth rope of ger or loading straps. 28.3 % of herders in the survey used the camel wool for domestic purposes. Most herders have sold camel wool to soum cooperatives and changes while few herders with large numbers of camels in Bayankhongor and Gobi-Altai aimags hold sales contracts with factories for camel wool. There are cooperatives organized by changes in some aimags while other changes are authorized as official representative of factories (actually are agents). 50,4 7,1 10,8 27,9 16,5 22,6 32,5 86,8 80,4 60,0 73,4 66,6 17,1 6,0 8,8 12,1 10,1 10,8 Bayankhongor Khovd Bayan-Ulgii Gobi-Altai Uvs Average no problem improvement is needed no idea
  27. 27. 23 Figure 16 Marketing channels of camel wool in percent and by aimag As seen from the survey findings, on average for 5 aimags 1.5 percent of herders sell the collected camel wool to processing factories, 58 percent sell to cooperatives and 40,5 percent sell to changes. There are great differences between the aimags. All herders become members of cooperatives because of the governmental incentive premiums for wool can only be received through cooperatives. Otherwise, most herders are less interested in cooperative activities and development. However many herders are still unable to receive the incentives for camel wool through cooperatives. Therefore camel herders in soums outside the project area gave their wool to cooperatives where they became member but in some cases they sold to others who pay a higher price. Herders in soums which are part of the “Green Gold” project on the other side have trust into the cooperatives to which they deliver their wool and receive the incentive premiums. In 2013 herders sold unsorted camel wool at 4500-5500 MNT/kg. The sorted wool from the high yielding two year old camels in Bayankhongor and Gobi-Altai aimags achieved a price of 8000-10000 MNT/kg. The contract for sales of raw materials is important to maintain the herders’ revenues and to ensure the quality of raw materials. But only 34 percent of 6,0 0,7 1,5 77,7 50,2 20,5 48,9 51,1 58,0 16,3 49,7 79,4 50,4 48,9 40,5 Baynakhongor Khovd Bayan-Ulgii Gobi-Alta Uvs Average Processor Cooperative Change Case on incentive premium A young man being the relative of our family has started a cooperative for collection of raw materials in soum center. He asked us to become members and took our citizen ID card. But we still do not know even the name of the cooperative. Animal raw materials are normally given to that man for sales, but we do not receive any incentive premium at the moment. Instead sometimes we borrow money and repay with collected cashmere in the spring time …. Stated by local herder in Jargalant soum, Bayankhongor aimag
  28. 28. 24 herders in the surveyed aimags hold such contracts. 46.4 percent of herders intend to have contracts while the remaining 20 percent state that they do not need a contract. In terms of aimags, about one third of camel herders have sales contracts in Khovd, Bayankhongor and Gobi-Altai aimags while only 23-26 percent of herders in Bayan-ulgii and Uvs aimags have such contracts. Most herders in the most western aimags desire to have sales contracts with factories but cannot obtain those (Bayan-ulgii 71 percent, Uvs 56 percent and Khovd 48 percent). Figure 17 Availability of sales contracts of herders for camel wool in percent by aimag As regards the contract partners of herders, i.e. factories, cooperatives and changes the situation is as follows: Of the surveyed herder households, 33.7 percent (335) had the sales contract with manufacturers, 77 percent (258) with cooperatives, 15.8 percent (53) with changes and 7.2 percent (24) with processors respectively. In general, the contracts with processors and manufacturers are officially made in written form while contracts with cooperatives and changes are verbal and considered as non-formal contracts. Changes negotiate with herders to repay the funds which they borrowed in winter in the form of raw materials in spring. This is based on the need of many herders to borrow money from changes when they lack liquidity. Due to this dependence changes buy the raw materials from the herders at prices below the going market prices. The survey enquired about the importance of sales contracts for raw material collection: 39 percent of herders said they have no obstacles for raw material sales, 18.8 percent are able to receive advance payments from the processor, 13.9 are familiar with sales price and earnings in advance, 10.5 percent state that they have good partnership with processors, 5.1 percent said there are other benefits while for 12.6 percent it is not an important issue. As regards the relationship between quality of raw materials and quality of finished products the herders answered as follows: 55.5 percent state that they very well know the relationship between quality of raw materials and of final products, 26.1 percent have no such information, 6.5 do not see the Bayankhongor Bayan-Ulgii Gobi-Altai Khovd Uvs 39 23 38 41 26 41 6 24 11 18 19 71 38 48 56 I have contract I don’t need to make a contract I need contract but cannot obtain it.
  29. 29. 25 relationship between quality of raw materials and quality of final products while 11.9 percent have no answer here. Concerning measures to maintain the relationship between quality of raw materials and quality of final goods the herders proposed as follows: 33.3 percent say that advance payments are required along with contracts, 27.2 want that the incentive premium system depends on quality and categories of raw materials, 23 percent feel that they have sufficient information on contract requirements from the processing factories and plants, 12.7 percent suggest to visit to factories so that herders can see the ready products, while 3.7 percent made other comments. As concluded from above, the incentive premium system has to be build up based on quality of the raw materials. In addition, the processors should communicate the requirements and demands for raw materials for market oriented collection as well as basis for contracting. 3 . 2 . 3 I n c r e a s i n g t h e v o l u m e o f r a w m a t e r i a l a n d i m p r o v i n g i t s q u a l i t y Income from camel wool selling is one of the income sources for herders but does take that much high percentage in total income that comes from livestock. Table 5 Earnings from camel wool as percentage of total earnings by number of herders Aimag Percentage in revenues from animal husbandry Up to 25% 25 – 50% 51 - 75 % 75 % above Bayankhongor 187 40 13 7 Khovd 155 21 5 Gobi-Altai 174 43 32 19 Bayan-Ulgii 93 2 2 Uvs 106 28 10 Total 715 134 62 26 Earnings from camel wool sales of 715 (76.3 percent) surveyed camel herders represent up to 25 percent of the total revenues generated from animal husbandry. There are relatively few numbers of herders (88 households) who earn over 50 percent of their total income from camel wool sales. The elder herders with few numbers of family members but with large herds of camels are able to earn income from camel wool sales that represents 75 percent of total revenues from animal husbandry. During the survey, herders expressed their opinions on how to increase their income from camel wool: 33 percent say by increasing the number of camels, 31.9 percent by shearing at the right time prior to the natural loss of the wool, 30.8 percent by breeding more camels with high yield through proper registration or recording system and 4.3 percent made other proposals to increase wool yield from the camel.
  30. 30. 26 21,2 percent or 211 herders in surveyed aimags have attended trainings focusing on camel wool. Many of them participated in the trainings organized by the raw material exchange center and by the agriculture and SME Division of the Aimag administration. Mercy Corps has mostly organized trainings how to sort and how to prepare fibre raw materials in rural areas. Coat colour of Camel: According to research findings there is a tendency of coat colours of camels to become lighter from the north western regions towards the south east regions of Mongolia with body size getting larger. On the other hand there is the tendency for darker coat colours from the southern region to the north western region combined with increasing wool yields 5. In this way the Tuhum Tyngalag brown camel in the north western region yields 0,3 kg of wool more than average amount of wool from the Khaniin hestiin camel in the south eastern part of the country. And this type of camel again has 0,4 kg more wool than Galbiin brown camel. Generally Tuhum Tungalag brown camel has the highest yield of wool compared to other types of camel. Among the surveyed families with their 389,8 thousands head of camels, 70,4 percent have camels with brown golden coat colour, 22,7 percent with brown yellow colour and 6,9 percent with white yellow colour respectively. Asked about the specific features of camels with white yellow colour, 34,4 percent of respondents say they are susceptible to cold, 26,1 percent say there no specific characteristics, 19,6 percent do not know about this, 8,3 percent say there is lower milk yield and 5,3 percent state that such camels are more easily sick or ill. Therefore herders prefer the camel stallion collared in dark such as red brown and black because dark camels are rich with wool and enduring in the winter cold. Camels collared in light white have shorter hair and more easily loos their weight in winter. 5- T.Baldan, Ph.D, Research institute animal husbandry, MSUA, Study result, 2010
  31. 31. 27 4 T H E R O L E O F C O O P E R A T I V E S I N R A W M A T E R I A L S U P P L Y In the surveyed soums, the number of cooperatives reaches from one up to 18 if based on the registration. However, this includes cooperatives which were registered but currently are not active. Those cooperatives have between 9 and 650 members and aim at running the business of collecting raw materials in the soums. Among the total of 45 cooperatives, 32 are collecting yak down and 13 are collecting camel wool. 55 percent of the cooperatives have 1 to 3 years of working experience in preparing and collecting raw materials, 31 percent have 4 to 6 years of experience and 14 percent have over 7 years working experience in the soums. 46.1 percent of cooperatives have collected raw materials from member herders, 20.6 percent act as representatives or dealers of processors, 18.6 percent conducted trainings for members and 3.9 also process the raw materials. In the year 2013 the surveyed cooperatives sold 42 tons of yak down at 8000-13000 MNT per kg and 122 tons of camel wool at 4000-5000 MNT per kg which they had collected from the herders. This represents a total sales value of approximately 969 million MNT. The reliable and well operating cooperatives (53.2 percent) have contracts with processing plants while small sized cooperatives (44.2%) sold the products to the larger cooperatives. In 2013, 31 cooperatives had contracts, out of which 23 had contracts with factories while 8 had cooperatives with larger soum cooperatives. The cooperatives named some processing companies with whom they had contracts, namely "Sor cashmere" (10 cooperatives), “Erdenet carpet” (2), “Bayalag Ulzii” (2), and “Noos Ireedui (2). In 2013, totally 20 cooperatives distributed 49.5 million tugriks for premium from yak down and camel wool sales. In addition they promote the monetary prize and right to travel or visit Ulaanbaatar city and abroad to leaders of herders’ groups. During the survey, the cooperatives expressed their opinion on how to expand the activities for supply of raw materials as follows: 27 percent want raw materials to be primarily processed at soums, 25 percent want sorting to be done at soums, 20 percent request information on quality and benefits from the collection to herders, 20 percent are interested in direct contracting with processors or factories and 8 percent run the family business having the equipment and working places to produce demanded goods for rural herders. As regards their needs the cooperatives answered as follows: 20 percent need general training, 19,9 percent need training on raw material quality, 19,4 percent training on sorting of raw materials, 13,4 percent on combing methods, 12,5 percent on manual spinning, 11.1 percent on cooperative management, 10,2 percent on marketing, 9,2 percent on breeding, 4,2 percent request other types of trainings and seminars accordingly. Concerning ways to increase the activities of cooperatives the responding cooperatives made proposals such as: 53 percent demand the introduction of incentive premiums for yak down similar to the ones for camel wool; 24 percent request different sales prices for the various raw material qualities;
  32. 32. 28 19 percent propose primary grading and washing of raw materials to be done in the soums; and 4 percent made other suggestions. Figure 18 Proposals of cooperatives on expansion of their activities in percent Among the surveyed cooperatives 18 have training experiences and practice on topics such of combing of yak, preparation of yak down, quality of camel wool and standards. Some projects such as World Bank’s Sustainable livelihood, Mercy Corps have activities in the soums and in total 19 cooperatives were cooperating with these international projects and organizations. The surveyed cooperatives together with survey team of the GG marketing component have identified the possible fields of cooperation as follows: conducting primary processing in rural soums in small workshop and with procurement of required equipment and machineries (35 percent), public awareness programs (17.5 percent), direct sales to processors (15.7 percent), obtaining financial support and low interest loans (12,3 percent), increasing prices of yak down products and export to foreign markets (7 percent), maintaining nucleus herds and increasing yield of wool and yak down (5,3 percent) study visits or experience sharing on breeding of yaks (7,2 percent) respectively. For the purpose of clarifying the role of cooperatives the herders were asked about their perception of cooperatives. 98 percent of herders in Bayan-ulgii aimag responded that they are familiar with cooperative activities and business as well duties of members, while 26-29 percent herders in Zavkhan, Arkhangai and Uvs aimags do not know well cooperatives and the duties of membership although all are interested to join the cooperatives as members. Figure 19 Knowledge among herders of cooperative structure and duties of members 53% 24% 19% 4% government incentives for yak down like for sheep wool fix cost differently according to the quality primary grading and cleaning should be done locally other 15 10 21 24 7 12 17 60 59 77 43 44 37 37 12 15 2 14 29 26 29 13 16 0 19 20 25 17 Bayankhongor Bayan-Ulgii Uvs Zavkhan very well little don't know interesting to improve
  33. 33. 29 Based on information obtained from the herders the operations of cooperatives can be categorized as follows:  Poorly operating cooperative: founded with shared capital from only a few members and not operating properly,  Changes cooperative: head of some cooperatives are changes, who buy the raw materials from herders at low price and regardless of sorting by quality and sell to the processors. In this case, only the head of the cooperative has a benefit.  Well-functioning cooperatives: Few cooperatives were set up under the GG project with funding from share capital of the herders along with granted funds from the project in form of intermediate monetary fund. This fund helps the herders with loans when they are in need of financial support. The fund protects the herders from the risks to sell their raw materials at low prices by replacing the loan from the changes. Herders obtain loans from the intermediate fund with low rate of interest. The cooperatives with such funds help the herders to earn profit from sales of raw materials directly to processing factories without involvement of changes. Most herders have joined the cooperatives organized within the GG project because they well understood the benefits of cooperation. In contrast many herders do not trust the cooperatives organized by changes which operate poorly in the soums. This type of cooperatives does not sort the wools but mix them together and reduce the wool quality. However, as the results mentioned above show, knowledge of cooperative structures as well as on the rights and obligations of members is still very low among the herders and needs to be improved. Relationship and cooperation between PUG structures and cooperative structures The survey team also analyzed the relationships between the structures of the Pasture user Groups (PUGs) and the cooperatives. Here several cases can be classified considering whether the respective soum is cooperating in the GG project or not. The following three cases for possible structures in the soums can be defined. Each diagram presents the actors in the value chain from herders, khot ails and PUGs to Cooperatives and up to processors. They also show the organizational support between the PUG structures (red arrows), the flow of raw materials in the proposed value chain (blue arrows) and the intended technical support provided by the project (green arrows).
  34. 34. 30 Case 1: Soum cooperating in the GG project and with functioning soum cooperative In this case the members of the PUGs have jointly established a cooperative. Mostly the cooperative and the APUG have the same leadership. In the proposed value chain the cooperative will sell the raw materials which have been collected within the PUGs from all the herders. The cooperative sells to the processors either directly or through a secondary cooperative. These exist so far in Khovd and Zavkhan aimags while in Arkhangai it will be established soon. The advantage here is that the cooperative can use the organizational structure of the PUGs in the Bags to collect the raw materials in a cost efficient manner. The cooperative should achieve an appropriate margin between price paid to herders and the price obtained from processors. From this margin the cooperative can compensate the costs of raw material collection and can also finance necessary investments such as storage facilities. In the diagram it is also indicated that the combing and sorting shall take place no longer at the herder household level but at the level of khot ails. Here several families can support each other or large herds can be combed by unemployed persons from the soum center after receiving the necessary training. This case can be seen as optimal and a providing a solid basis for the value chain development. There is no need for the GG component 4 to directly support the PUGs because this support is already provided by the GG components 1 and 3.
  35. 35. 31 Case 2: Soum not cooperating in the GG project and with functioning soum cooperative In this case no PUGs or APUGs are existing. However the herders have jointly established a cooperative at the soum level which functions sufficiently well. In the proposed value chain the cooperative will sell the raw materials which have been collected within the groups of herders at the Bag level. These groups are informal and are organized by the Bag governor and/or influential herders. The cooperative sells to the processors either directly or through a secondary cooperative. The problem here is that the cooperative cannot use the organizational structure of the PUGs in the Bags to collect the raw materials but it must establish its own collection structure. The cooperative needs to achieve an appropriate margin between price paid to herders and the price obtained from processors. From this margin the cooperative can compensate the costs of raw material collection and can finance necessary investments such as storage facilities. Also here it is proposed that combing and sorting shall take place no longer at the herder household level but at the level of khot ails. This case can be seen as the envisioned standard for soums which are outside of the GG project. It demands some efforts from the GG component 4 to strengthen the cooperative and to help establish a collection structure at the Bag level.
  36. 36. 32 Case 3: Soum not cooperating in the GG project and without functioning soum cooperative Also in this case no PUGs or APUGs are existing. While there may be some cooperatives none of them is functioning well. In some soums such cooperatives have been established by changes in others by the soum administrations. The herders themselves have not yet jointly established a cooperative at the soum level but they may be interested to do so. Since there is no cooperative in the respective soums there may exist a well-functioning in a neighbouring soum. In the proposed value chain this neighbouring cooperative will sell the raw materials which have been collected within the groups of herders at the Bag level. These groups are informal and are organized by the Bag governor and/or influential herders. The cooperative sells to the processors either directly or through a secondary cooperative. Also in this case the problem is that the cooperative from the neighbouring soum cannot use the organizational structure of the PUGs in the Bags to collect the raw materials but it must establish its own collection structure. This is even more difficult since the members of the cooperative are not active herders in the soum. This case can be seen as a temporary solution for such soums in which no functioning cooperative exists. The component 4 will consult herders to establish such cooperatives so that every soum can utilize the services of functioning cooperatives. It demands considerable efforts from the GG component 4 to establish the cooperative but this is seen as an approach to establish sustainable structures for the collection of raw materials.
  37. 37. 33 5 C O N C L U S I O N S A N D R E C O M M E N D A T I O N S Based on the results of supply study the following conclusions are drawn. Consequently the following recommendations are made for consideration in the value chain development strategy of the GG component 4: 1. Collection and selling of yak down: main conclusions  From the entire Mongolian yak herd about 67 percent exist in the project region in seven western aimags. Two important areas with yaks are not part of the project region (Huvsgul and Ovorkhangai aimags). The number of yaks has decreased against previous levels but started to increase again since some years.  25 soums from 6 aimags were surveyed with regard to yak down which cover 68 percent of the total number of yaks in the project aimags. The survey has found strong interest among herders to better utilize the yak for collection of valuable fibres. Based on the estimated yield of 0,4 kg yak down per animal the potential resource of yak down in the project region amounts to about 120 tons.  A large share of the potential resource of yak down is not utilized because only 66 percent of yak herders collect the yak down at all. Among those who do so only 26 percent comb nearly all of their yaks. Especially herders with large herds cannot comb their yaks due to the shortage of manpower. In the far western aimags many herders still shear the yak hair since combing methods are not yet known.  The survey showed that only about 7 percent of yaks are light and white colours, which is the most demanded colour from the market side. Many herders believe that light collared yaks are inferior in harsh winter conditions.  According to the survey the majority of herders sell the yak don to changes. One third to cooperatives and only a small minority directly to processors.  In order to increase the collection of yak down herders propose to introduce an incentive premium similar to the one for camel wool and demand higher sales prices for yak down. These appear necessary in order to compensate for the hard work connected to combing of yaks. 2. Collection and selling of yak down: main recommendations  In order to increase the collection of yak down an increase in income from yak down for herders is necessary. This can be achieved by improving the effectiveness of combing (through combing training and involvement of unemployed persons as combers of large herds). As a second approach the project shall support the direct selling of yak down from cooperatives to the processors at higher prices than those offered by the changes.  Herders also require information on the relationship between the quality of raw materials and the quality of the final products. This also includes training on sorting according to the criteria established by the processors.
  38. 38. 34  The usefulness of introducing the governmental incentive premium needs to be studied further since it may have negative effects on the quality of the raw materials and it does not encourage sorting.  There is a need to further research whether light collared yaks indeed are inferior with regard to harsh winter conditions. In case they are found not to be inferior there is then need to research further the feasibility to support the breeding of light collared yaks in response to the high market demand for this fibre. 3. Collection and selling of camel wool: main findings  The camel herd of Mongolia has experienced a dramatic decline and the herd is only slowly growing again. Only 36 percent of all camels are living in the project region. Therefore the influence of the project on the camel wool value chain is rather limited.  The survey included 115,000 and based on the average yield of 5 kg of camel per animal the potential resource amounts to about 345 tons. However, so far herders only collect about 132 or 38 percent of the potential resource.  The main constraints for a higher volume of camel wool collection are the low prices of the raw material and the shortage of manpower for this time consuming activity. The incentive premium offered by the government has not helped much since it does not provide price incentives for collection of higher qualities such as wool from baby camels. Consequently most herders do not engage in sorting of camel wool which results in higher costs for processing.  In order to increase the collection of camel wool many herders demand an improvement of the governmental incentive system so that it provides incentives for collection of more valuable fibres. Also the primary processing at the local level is seen as an approach to increase the interest of herders.  As regards the sales channels the majority of herders sell their camel wool to cooperatives, 40 percent to changes and a small minority directly to processors. The role of cooperatives is more dominant that in the case of selling of yak down.  For most herders the sales of camel only contributes a minor share to their total income. 4. Collection and selling of camel wool: main recommendations  It is necessary to restructure the governmental system of incentive premiums for camel wool in such a way that it allows for price differences according to the quality and rareness of the fibres. For example camel wool from baby camel should then achieve higher prices and encourage the herders to better utilize this valuable source of fibre.  There is a need for herders to better react on the market signals from the demand side and to collect those camel wool fibres which are in higher demand, for example baby camel wool. This also demands better sorting of the fibres in order to support price variations based on qualities.
  39. 39. 35  More research is required to investigate the appropriateness of various camel wool fibres for new and high quality products, which can be introduced to the international markets. 5. Role of cooperatives in the supply of yak down and camel wool: main findings  Among the 45 cooperatives which were surveyed 32 are collecting yak down and 13 are collecting camel wool. In 2013 they sold 42 ton of yak down at 8000-13000 MNT/kg and 122 tons of camel wool at 4000-5000 MNT/kg, representing a total value of about 969 million MNT.  Several longer existing cooperatives which are operating well have sales contracts with processors while younger or smaller cooperatives sell to the larger ones.  Especially the cooperatives which were established in connection to APUGs within the GG project function relatively well. Other cooperatives are still weak as regards management, education and participation of members. In several soums there is no cooperative at all which could work effectively for the benefit of the herders. 6. Role of cooperatives in the supply of yak down and camel wool: main recommendations  There is a need to strengthen the existing cooperatives with regard to their institutional capacity and the participation of members.  In several soums the project should facilitate the establishment of new and well- functioning cooperatives among the herders.  In general the cooperation between PUGs and APUGs on one side and cooperatives on the other side needs to be improved. This will result in mutual benefits, since PUGs can help in collecting the raw materials from herders while the surplus generated in cooperatives can help to make the PUG/APUG system more sustainable.  There is also the need to bring cooperatives and processors into direct contact and to enable them the conclusion of sales agreements on the supply of yak down and camel wool. This will be most beneficial for both sides: herders will receive higher prices for the raw materials compared to those offered by changes and processors can secure a steady supply of raw materials in the qualities which they require.  Together with the well-functioning cooperative it can be explored further whether some primary processing stages can be performed effectively at the soum level, especially the washing of camel wool. Likewise the feasibility of manual spinning of yarn from yak down in the soums can be further explored. However, this demands that the volume of yak down collected has been increased considerably.

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