Competitiveness of pastoral livestock production and sea buckthorn farming in Mongolia: Application of Policy Analysis Matrix
by Ganzorig Gonchigsumlaa
Date of Examination:2016-07-07
Date of issue:2016-07-28
Advisor:Prof. Dr. Stephan von Cramon-Taubadel
Referee:Prof. Dr. Stephan von Cramon-Taubadel
Referee:Prof. Dr. Bernhard Brümmer
Referee:Prof. Dr. Eva Schlecht
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Abstract
English
This dissertation deals with two issues related to the competitiveness of the Mongolian agricultural sector: pastoral livestock production and sea buckthorn farming. The pastoral livestock sector plays a vital role for rural development in Mongolia. Pastureland is a public good and herders are free to let their livestock graze. The number of livestock heavily influences sectoral development. Increasing numbers of goats causes pastureland degradation due to goats’ grazing habits. Nonetheless, nomadic herders hold more goats than other types of livestock because cashmere is the basis for their cash income. However, it is unconfirmed whether goats are the most competitive/profitable animal compared with sheep, cattle, horse and camel. The aim of this study is to analyse the competitiveness of livestock production in Mongolia using the Policy Analysis Matrix approach. The approach takes into account private and social revenues and costs to analyse the competitiveness of production. The literature to date has not yet worked with primary, disaggregated, individual farm data for nomadic pastoral livestock husbandry in Mongolia. We use two years of panel data from 176 herder households in Bulgan County, Khovd province of Mongolia, and analyse five types of meat, milk and hides, and four types of hair/wool. We conclude that the estimated cost of pastureland has little effect on the competitiveness of livestock production. Our results show that pastoral livestock production in Mongolia is privately and socially competitive. Cattle is the most competitive livestock type from both the private and social perspectives, not the goat as the current management implies, in particular because cattle require less labour than goats. The most competitive households have larger numbers of livestock, lower mortality rates in Dzud disaster, cattle based production, and less mobility costs than the least competitive households. Sea buckthorn (Hippophae Rhamnoides) provides multiple products that are very nutritious and healthy. Plus, sea buckthorn mitigates against desertification. The most valuable output is oil, extracted from the pulp and seeds of the sea buckthorn berry. Scientists in the fields of ecology, botany, environmental sciences, food and medicine have studied sea buckthorn. However, there is no solid economic and market analysis for sea buckthorn, which traces back to a lack of data. We analyse the private and social competitiveness of sea buckthorn farming of 21 households in Bulgan county of Khovd province in Mongolia. We confirm that half of the interviewed sea buckthorn berry farmers are competitive, yet their level of competitiveness is not very high. This could be caused by lack of experience in sea buckthorn farming. Interestingly, the private competitiveness level is lower than the social one. Output prices are high due to government support policies; however input prices are also and even more distorted. Consequently, producers display low levels of private profitability. Hence, to improve the private competitiveness, the policies should focus towards decreasing the costs of inputs of the production system. The level of competitiveness of sea buckthorn farming has increased from 2012 to 2013, which might be due to the government’s “Sea Buckthorn National Programme”. According to interviewed producers, the most serious challenge facing sea buckthorn production is lack of finance, which is also evidenced that more than one third of the total cost of the farming is composed of investment costs.
Keywords: pastoral livestock production; herder households; private and social competitiveness; income; cost; price; Sea buckthorn; berry farming