Harvest time: Investment and support programmes have paid dividends for crops

Preliminary results from the Ministry of Food, Agriculture and Light Industry (MFALI) for the September-October 2011 harvest showed the Mongolian crop sector to be in fine form. With the numbers bigger than ever demonstrating, for many in the sector, the success of recent government moves to support agricultural development with a major investment of financial and political capital. Central to this is the Crop Rehabilitation Programme (CRP), which has seen a remarkable jump in yields. The challenge now is to maintain these figures in a sustainable fashion, both in terms of the environmental and fiscal impacts, with the crop sector able to stand on its own two feet in years to come.

RESULTS JUST IN: On October 11, 2011 MFALI announced harvest totals for wheat, potatoes and vegetables were 25.4%, 14% and 18.1% higher than for 2010, respectively. These earlier results had in turn been 11.1% and 5% higher for potatoes and vegetables than in 2009, although wheat had declined by 9.3% between those two earlier years, mainly due to the disastrously harsh winter, or dzud, of 2009-10. The 2011 results were lauded by the minister of agriculture, T. Badamjunai, as the best-ever for democratic Mongolia, with 433,400 tonnes of wheat, 191,500 tonnes of potatoes and 97,200 tonnes of vegetables produced. This represents a comeback for the crop sector, which had been badly hit by a number of issues, both natural and manmade.

Additionally, Russia announced in November 2011 it had lifted a quarantine on meat imports from Mongolia, with trade to resume in 2012. Mongolian meat exports rose by 32.9% year-on-year in 2010, media reported in November 2011, an increase of 23,800 tonnes compared to 17,900 tonnes a year earlier.

Around 19.5% of Mongolia’s total land area is arable, and the non-livestock segment of the agriculture sector is responsible for about 20% of the sector’s total output by value. A short growing season, due to long winters, along with occasional droughts and unseasonal frost, have a dramatic impact on the sector, with figures from the country’s Plant Science and Agricultural Research Centre suggesting 10-30% of crops are lost annually due to these factors. Nonetheless, Mongolia also has a wide variety of plant species, climates and micro-climates, making crop production historically lucrative. Indeed, in Soviet times, the country was self-sufficient in grains, potatoes and vegetables, and exported surpluses of each to other Soviet-bloc states.

In 1990 the country produced more wheat, potatoes and vegetables than seen even in the bumper harvest of 2011, but privatisation broke up the large state farms on which this output was based, and the system largely collapsed. Fragmentation resulted in the creation of many small farms, many of which went bankrupt. This left the sector in dramatic decline. From 1990 to 2007, the country cultivated only 30% of its arable land, supplying 24.9% of its annual grain, 86% of its potato and 47% of its vegetable needs.

GREEN REVOLUTION: Thus the need for decisive government action in the sector was clear. The Green Revolution campaign was launched in 1998, which targeted crop and vegetable production. Yet it was hampered by limited funding, receiving a budget allocation of just $1.7m during its 1998-2004 phase.

In 2008, in a sign of heightened commitment, the CRP – also known as Atar-3, or Crop-3, after earlier crop campaigns in 1957 and 1976 – was launched. Running from 2008 to 2010 this campaign aimed to restore 100% self-sufficiency in grains, potatoes and vegetables through a rolling programme of investment and support. It also aimed to rehabilitate 80% of the country’s agricultural machinery.

STRATEGIES: The CRP set out five strategies for achieving its goals: first, it would establish legally and economically favourable conditions for engaging in farming; second, improve human capacity by investing in existing and new vocational programmes for farmers; third, increase the area of arable land under cultivation by bringing abandoned arable land back into use; fourth, it would improve and increase the supply of seed for basic crops; and fifth, it would bring advanced techniques and technologies into the sector to intensify farming. This last strategy included new machinery and old wisdom, such as encouraging the planting of trees as wind breaks to prevent soil erosion and wind chill on farmland.

To meet its objectives, a number of initiatives were implemented over the lifetime of the programme. The government has given assistance to farmers by procuring new seed for them, offering new techniques and equipment at concessional prices, and allocating credit to farmers for summer ploughing. The government buys the crop and provides subsidised fuel. The legal framework has also been changed, with the maximum size of a field that can be allocated to one company engaged in crop production boosted from 3000 ha to 20,000 ha. Unlike pastureland, which is all publicly held, cultivated land can be leased for 50 or even 60 years.

In other financial support, the programme also provided some 230 tractors, 40 combine harvesters and 160 other units of agricultural trailer equipment, which were bought by the government and distributed to agricultural enterprises. Furthermore, individuals wishing to purchase farm vehicles were exempt from paying value-added tax on these items, while companies involved in crop production could also carry over tax cuts to other lines of business.

HUMAN CAPITAL: At the same time, a major programme of human resources development was launched to deliver training and education to farmers to bring agricultural techniques and technologies up to contemporary standards. This initiative dovetailed with a number of other plans, including the National Food Security Programme for 2009-16, which was introduced the following year, the Agricultural Sector Development Strategy for 2006-15 and the country’s UN Millennium Development Goals.

RESULTS: Harvest targets were set for the CRP to achieve by 2010 were 420,000 tonnes of wheat, 173,000 tonnes of potatoes and 171,000 tonnes of vegetables, amounts which would have made the country self-sufficient in all three crops. The actual numbers achieved were 345,458 tonnes of wheat, 167,956 tonnes of potatoes, 82,266 tonnes of vegetables, all shy of the targets, but still well up on previous performance. The 2011 figures, meanwhile, show self-sufficiency in wheat and potatoes.

FUNDING IT: The question many are now asking, however, is how sustainable a highly subsidised programme such as the CRP will prove to be. Critics suggest that such support, while welcome, will drain the government’s resources but will not establish farms on a truly commercial basis. Others point out that although the CRP significantly increased the state’s financial commitment, it also endeavoured to involve the private sector more effectively in crop production. Additionally, the campaign was also supported by a number of foreign aid organisations and national donors, including, for example, a $347,000 loan from Russia’s Rosselkhozbank.

MOVING FORWARD: The programme is clearly popular with many Mongolian agriculturalists and provincial governors. As the programme came to an end in December 2010, aimag governors called for its extension so that gains could be consolidated. In response, the ministry announced it would continue programmes to expand irrigation – aimed at bringing more arable land into use – while continuing tax exemptions on domestically produced wheat, potatoes, fruit and vegetables.

Given overall robust economic growth, it may be that Mongolia can continue to afford such programmes, with the rewards of investment in the basic infrastructure of the sector likely to begin paying for the costs of such initiatives in the years ahead. A more mechanised and technology-savvy sector will likely bring dividends for the country in a variety of ways – including making the countryside a more profitable place for young Mongolians to stay in, rather than heading for the cities. Provided the approach to crop farming is fiscally and environmentally sustainable, the benefits should continue to be felt across the sector and the economy for years.