Monday, August 30, 2010

Mongolian Borrowers in the Dairy Industry

By Amber Barger, KF12, Mongolia

Mongolians have been practicing the art of transforming milk into dozens of dairy products for hundreds of years. Nowadays, about 40 percent of the workforce is engaged in activities surrounding animal husbandry and products made from livestock. As Kiva’s August food month is coming to an end, here’s some insight into dairy product producers and distributors in Mongolia.

Like countless of other Mongolians living in the countryside Tsevelmaa, a Kiva borrower, owns a herd of animals from which her family makes a living. In the summertime, she produces milk and yogurt from a herd of fifty sheep and eleven cows. Tsevelmaa milks the herd with the help of her sister, mother, and other family members. Each morning, along with her own family’s products, Tsevelmaa gathers dairy products from other herding families to take to the market in her husband’s car. Every day from 7:00-8:00 AM, she sells about 40 liters of milk and 10 liters of yogurt directly to customers from her car parked near the market.

A Mongolian Herder Making Dairy Products*

Dolgor, another Kiva borrower, rents a table in the local dairy market to sell goods at retail prices to customers. Dolgor has two herding families that supply her stand with products throughout the year. Dolgor says that she prefers to sell dairy products that can be easily stored for long periods of time, like solidified dried curds (aaruul), caramelized curds (ezgi), cheese (byaslag), and clotted cream (urum). Other products, like fermented mare’s milk (airag) and boiled yogurt (aartz), usually spoil in about a week’s time and Dolgor doesn’t want the additional burden of storing those items. Dolgor says that her sales are highest during the summertime and around national holidays.

There are several other Kiva borrowers that have similar stories to Tsevelmaa and Dolgor who are producing, transporting, and selling dairy products. Since the fall of the Soviet Union, dairy production has been privatized and now the industry mainly consists of small-scale dairy producers. Until 1990, Mongolia could produce all of the milk it needed for its domestic demand. Nowadays production has lowered drastically and 70 percent of milk consumed in urban areas is imported. There are several obstacles facing Mongolia’s dairy industry:

1) Inadequate collection and treatment infrastructure causes 1/3 of milk to spoil on the way to a processing facility

2) Lack of technical expertise and access to capacity-building and trainings for dairy operators in urban and rural areas

3) Preference of new generation for imported, processed milk compared to domestically produced milk

4) Lack of trust by, usually urban, Mongolians in the quality of locally produced dairy goods

5) Insufficient in both quality and quantity of services for milk producers from breeders, veterinarians, and feed producers

6) A need for modern technology and equipment to make small-scale dairy producers more efficient and increase output

The Government of Mongolia and international development organizations are attempting to increase the demand and supply for Mongolian dairy products by tackling the problems stated above. Kiva lenders can help by lending to borrowers in the dairy industry. A loan could possibly provide a borrower ready access to freshly-produced milk products, like Dolgor, or offer a borrower funds to purchase modern technology or equipment. A loan could also help an entrepreneur in the transportation sector to move dairy products to a selling point before the products spoil.

Please lend to entrepreneurs at Credit Mongol, LLC or XacBank to support Mongolian borrowers.

* Photo Credit: IFAD photo by Thomas Rath. Mongolia – Arhangai Rural Poverty Alleviation Project.

Amber Barger is currently working as a Kiva Fellow.
Amber’s story was originally posted on "Kiva Stories from the Field" on August 30, 2010. To see the original post, please click here.