Agriculture and Rural Development Project in Mongolia

Introduction

Agriculture is one of the main contributors to the national economic development. This has provided income and source of living for the rural population. Mongolian agribusiness enterprises have little quality-based comparative advantage in terms of the international market standards; however, it has comparative advantage derived from the distinctive qualities of Mongolian agricultural products. This provides the bases for developing a brand that could command premium niche markets, which will require comprehensive coordinated value-chain development, .

Purpose of the Programme

The central purpose of the Agriculture and Rural Development Project in Mongolia is to build and establish a consistent supply of premium value Mongolian agriculture products to the key targeted niche markets to support agricultural and rural growth to develop sustainable premium value differentiation for Mongolian products.

The project comprises the 3 following components:

Component 1: Value-Chain Development – This will provide loans to around 15 private enterprises to carry out value-chain development investments to develop their public goods content and to deliver premium value products to the niche market.

Component 2: Rural Infrastructure and Services Development – This will provide investments for the development of livestock testing and veterinary extension centres, business advisory and technical support to agricultural cooperatives, and development of fodder supply and storage facilities to foster fodder market development.

Component 3: Project Management – This will support the capacity strengthening of the Ministry of Finance and the Ministry of Food and Agriculture to in implementing and overseeing the project activities to ensure efficient and effective project performance.

The project was approved by the Board on 29 September 2008.

The total project cost is estimated at US$47.5 million. The Asian Development Bank will provide an ADF grant of US$14.72 million of the total project cost. The Ministry of Finance and the Ministry of Food and Agriculture shall undertake the overall project implementation.

Competitive Scope

Procurement

According to , with the assistance of the value-chain development PMU, where applicable, project enterprises will be encouraged to follow ADB’s Procurement Guidelines (2007, as amended from time to time), Section 3.12, and adopt appropriate procurement procedures. Project enterprises will be encouraged to procure goods through competitive bidding and shopping when such procedures are applicable in the interest of economy and efficiency. For all other procurement, contracts for goods estimated to cost more than $0.5 million and contracts for works estimated to cost more than $1.0 million will be procured using international competitive bidding (ICB) procedures. Contracts for goods and works estimated to cost less than the ICB values but equal to or more than $100,000 will be procured through national competitive bidding procedures in accordance with standard government procedures subject to modifications agreed with ADB. Contracts for goods and works estimated to cost less than $100,000 will be procured using shopping procedures. Relevant sections of ADB’s Anticorruption Policy (1998, as amended to date) will be included in all procurement documents and contracts.

......

to cost less than $100,000 will be procured using shopping procedures. Relevant sections of ADB’s Anticorruption Policy (1998, as amended to date) will be included in all procurement documents and contracts.

Consulting Services

The Project will require 436 person-months of consulting services: 42 person-months international and 394 person-months national. All consultants will be selected and engaged in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). Technical experts will be recruited individually by the value-chain development PMU as requested by project enterprises to support enterprises in the implementation of their investment plans. Recruitment will be through a cost-sharing arrangement whereby enterprises requesting experts will bear 60% of the costs of engagement. The project manager, both project directors, and staff of both PMUs will be engaged individually. The remaining consultants will be recruited through firms under two packages (one package each for the value-chain development component and the rural infrastructure and services development component) following quality- and cost-based selection procedures using an 80:20 quality–cost ratio.

Key Issues of Social equity

Gender Equality

Gender equality has become one of the most significant issues relating to Social equity within Mongolian farms. As society gets more developed and civilised, the rural areas of Mongolia, struggle to comply with Gender Equality issues, as the male worker is far too valuable compared to the female worker. As long as there is physical labour or work to be done, men will always be predominant compared to women due to the general assumption that the average male is significantly stronger than the average female.

The challenge now is to find strategies that broaden consumer perspectives, so that environmental quality, resource use, and social equity issues are also considered in shopping decisions

The key issues and problems within the agriculture and rural industry of Mongolia are:

Lack of health services for the people within the rural areas of Mongolia

Lack of educational services for the people within the rural areas of Mongolia

Lack of participation of rural communities in planning and implementing investment to social infrastructure

Poor quality of social welfare for the people within the rural areas of Mongolia

Lack of employment support systems for the people within the rural areas of Mongolia

Gender equality within the agriculture industry of Mongolia.

Are farmers able to pay back loans?

Many farmers are not able to pay back the loans because they have lost harvests due to the 4-years of drought. Directed loans were provided to the crop sector by the state through large flourmills because commercial banks were lacking the credit resources to provide agriculture loans. This measure however has created a burden of debt for many crop farms and is one of the main reasons for the increased bad debts of commercial banks and state budget.

This has not only affected the farmers, but has also affected the whole Mongolian economy, as farmers are unable to product the quality of…

...