Due to reforms to establish a market-oriented economy, Mongolia enjoys a degree
of economic openness that sets the country apart from its Central Asian neighbors
and from many other developing and transitional countries. More than 80% of the
economy is now in private hands, up from almost zero in 1990. Mongolia’s food processing
industry is comprised of meat processing, meat products, milk and dairy processing,
flour and flour product manufacture, production of alcoholic and non-alcoholic beverages.
Presently, there are over 1800 small and medium sized business entities working
in the food industry and up to 14% of total industrial workers are engaged in this
sector.
Variety of factors position the Mongolian agro-food sector as a good investment
opportunity. The agricultural and food processing industries have great market and
sales potential in Mongolia and abroad due to the promotion of bio and eco products
exports, and have successfully attracted foreign investors for the last decade.
Mongolia has a relatively pristine nature that sets it well conditioned to produce
and export bio and ecologically clean raw materials and foodstuffs. The Mongolian
National Chamber of Commerce and Industry (MNCCI) in order to support exports of
bio and eco products has initiated “One Aimag – One Organic Product” movement, and
it has selected “smoked fish” from Selenge aimag, “Watermelon” from Hovd aimag,
“Red skinned garlic” from Zavkhan aimag, “Plantain extract with honey” from Selenge
aimag, “Hippophae oil” from Uvs aimag, “Fluffy white aaruul [dried curd]” from Arkhangai
aimag, “Delicious airag [fermented mare’s milk]” from Bulgan aimag, “Sugar grass”
extract from Bayankhongor aimag, “Camel’s hoormog [camel milk clabber]” from Umnugobi
aimag, and “Green tea” from Huvsgul aimag to compete in the selection of the “99
Best National Products of Mongolia”. However, there is unquestionable need of further
investment, to better spread the employ of new technologies and make it a common
practice. Besides new technologies that improve the quality and quantity of the
output, there’s considerable need of new technology that guarantee safer standards
of production.
Meat and meat products manufacturing has an important place in the food sector
and is considered to be the most potential sector for future development. There
are over 70 SMEs that produce meat products for domestic consumption. Mongolian
meat and animal by-products such as sausage casings and blood and bone meal have
potentially large markets in Central Asia, the Middle-East, Europe, Japan, and China.
Exports could be increased with the introduction of better packaging, as well as
chilling and refrigeration facilities.
The average milk and dairy product consumption per capita increased
constantly during the last 10 years reaching 126kg in 2002. Currently, many small
and medium factories and business entities manufacturing milk products are established,
providing solid basis for the further development of the dairy industry. In 2006,
the total output of processed milk was 5 times more than 2000. There are about 88
small and medium sized dairy plants, with a total daily capacity of about 50 tonnes
of fresh milk, producing butter, cheese and other dairy products. Local dairy production
has not been able to meet the population’s needs fully. The amount of imported milk
products is increasing, pointing to high investment opportunities in this sector.
Recently, a local company and a joint venture group introduced tetra-pack technology
and are now producing milk and fruit juice using UHT technology. The introduction
of this new processing technology constitutes a remarkable improvement within the
food industry, confirming that Mongolia needs support and further investment in
this sector, in order to better meet the real needs of the population as well as
reach international standards of production.
Agro-processing industries have great potential in Mongolia due to the rich
availability of high quality raw materials. There are more than 80 semi-processing
and final processing firms in Mongolia. These companies are mostly medium size companies
with foreign ownership (77 out of 80 companies are joint ventures) engaged in primary
processing and the production of finished items.