REPORT ON ANALYSIS ON CURD (AARUUL) VALUE … VC report_eng.pdf · curd(aaruul) sub-sector ......

REPORT ON ANALYSIS ON CURD (AARUUL) VALUE CHAIN IN ARKHANGAI

AIMAG

ANALYSIS ON CURD VALUE CHAIN

Content Section 1. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.2 Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 1.3 Analysis methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.4 Coverage of the analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.5 Brief introduction to curd(aaruul) sub-sector in Arkhangai aimag . . . . . . . . . . . . . . 3 Section 2. Analysis overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.1 Potential curd(aaruul) production in soums of Arkhangai aimag . . . . . . . 4 2.2 Seven soums with largest production of curd(aaruul) in the aimag. . . . . . . . . . . . . . . 5 2.3 Amount of curd(aaruul) supplied by major wholesale traders of aimag food market to Ulaanbaatar markets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ………………6 2.4. Summary of questionnaires on curd(aaruul) production taken from herders of Khangai, Chuluut, Undur Ulaan, Tariat, Ikh Tamir and Bulgan soums. . . . . . . .……………… . . 7 2.5. Incomes of an average herder household in those soums from dairy products and curd(aaruul)s……. . .7 Section 3. Chart of curd(aaruul) value chain in Arkhangai aimag……….. . . . . . . .9 Section 4. Problems faced by participants in the curd(aaruul) sub-sector in Arkhangai aimag…………………………………………………………………………….. . . . 10 4.1. Participants in the curd(aaruul) value chain . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 4.2. Problems encountered to them . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 5. Solutions to eliminate the problems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 6. Selection of solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 7. Identification of Program involvement… . . . . . . . . . . . . . . . . . . . . . . . . .18 Sources of information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ….. . 25

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SECTION 1. SUMMARY 1.1. Purpose:

The purpose of this Analysis is to determine the ways and opportunities for developing the curd(aaruul) sub-sector according to market solutions by determining participants, channels and their inter-relations in the value added chain of the curd(aaruul) production sub-sector.

1.2. Objective:

The following objectives are set to reach the above-mentioned purpose:

• Determine the participants in the curd(aaruul) value-added chain; • Determine the percentage represented by curd(aaruul) from Arkhangai at the Ulaanbaatar

market; • Determine major curd(aaruul) producing soums in Arkhangai aimag; • Identify problems of participants in the curd(aaruul) sub-sector; • Identify ways to solve those problems; • Determine the Program involvement in the sub-sector.

1.3. Analysis methodology:

We tried to collect information from all available official and unofficial sources and the following methods were used in the analysis:

• Sample analysis method; • Analysis questionnaires • Meetings and interviews; • Collection of information from secondary sources; • Others

1.4. Analysis coverage:

• Questionnaires were taken from 98 herders of 7 soums, namely Khangai, Chuluut, Undur-Ulaan, Tariat, Ikh Tamir, Bulgan and Erdenebulgan;

• Questionnaires were taken from 14 traders at the Arkhangai Central Market. • Interviews were taken from 7 major curd(aaruul) suppliers from Arkhangai to

Ulaanbaatar. • Questionnaires were conducted with 10 producers. • Interviews were taken from 4 producers. • Interviews were taken from 32 herders/producers and suppliers of curd(aaruul).

1.5. Brief introduction to curd(aaruul) sub-sector in Arkhangai aimag.

Arkhangai aimag is located in Khangai mountain range in central Mongolia. It has a population of 93,000, 24,300 households living in 19 administrative soums consisting of 99 baghs. Total number of livestock reached 2,530,500 by livestock census at the end of 2006, including 281,300 cattle, 205,200 horses, 841 camels, 1,162,400 sheep and 880,700 goats. Major source of supply of milk for production of curd(aaruul) is cattle herds. Though sheep and goat milk is used to produce curd(aaruul), such curd(aaruul) takes a minor part at the total market and the milking season usually is relatively short.

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Yak herds represent 56 percent of the entire cattle herds in this aimag. The nucleus of curd(aaruul) production of Arkhangai aimag is situated in soums with most of yak herds and is located in Khangai high mountain range. Yak milk is a kind of milk with largest content of fat. Some 61.7 percent of total households in the aimag or 15,000 households are engaged in agriculture sector production and 6,121 households residing in the abovementioned soums run dairy production. Currently there are more than a dozen small and large enterprises running curd(aaruul) production in the aimag and most of them supply their products to centralized markets located at large settlements as Ulaanbaatar. There is one dairy market and one dairy shop at the aimag center.

SECTION 2. OVERVIEW OF THE ANALYSIS

Information and figures were taken from two sources, since there are a few research materials undertaken previously on the curd(aaruul) market, in fact the National Statistic Office does not collect data and information on curd(aaruul) and dairy production and the RASP has conducted a analysis on value added chain in the curd(aaruul) market in Arkhangai aimag for the first time.

1. Identify potential production and sales depending on number of cattle herds and cows; 2. Identify an average production and sales per household

2.1. Analysis on potential curd(aaruul) production of soums in Arkhangai aimag:1

№

Nam

es o

f sou

ms

Num

ber o

f cat

tle

Num

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f cow

s

Num

ber o

f cow

s im

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d ga

ve b

irths

, pe

rcen

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r of c

ows

pote

ntia

lly b

e in

volv

ed in

m

ilkin

g, 7

5%

Pote

ntia

l pr

oduc

tion

of m

ilk

in l

(ann

ual m

ilk

outp

ut o

f a c

ow

300-

500

l) A

mou

nt o

f milk

us

ed fo

r pr

oduc

tion

of

curd

(aar

uul),

60

%

of to

tal m

ilk

Yog

hurt

mad

e fr

om m

ilk to

pr

oduc

e w

et c

urd

in li

ter

Cre

am o

utpu

t (25

%

of y

oghu

rt a

nd

70%

hum

id)

Pote

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l cu

rd(a

aruu

l) pr

oduc

tion

in k

g,

hum

idity

15

%

1 Battsengel 11,255 3,746 2,997 2,248 674,280 404,568 343,883 85,971 38,687 2 Bulgan 10,175 3,772 3,018 2,263 1,131,600 678,960 577,116 144,279 64,926 3 Jargalant 13,958 4,858 3,886 2,915 1,457,400 874,440 743,274 185,819 83,618 4 Ikh Tamir 24,116 9,228 7,382 5,537 2,768,400 1,661,040 1,411,884 352,971 158,837 5 Ugiinuur 7,092 2,500 2,000 1,500 450,000 270,000 229,500 57,375 25,819 6 Ulziit 4,455 1,663 1,330 998 299,340 179,604 152,663 38,166 17,175 7 Undur Ulaan 29,816 11,212 8,970 6,727 3,363,600 2,018,160 1,715,436 428,859 192,987 8 Tariat 24,539 9,507 7,606 5,704 2,852,100 1,711,260 1,454,571 363,643 163,639 9 Tuvshruulek 4,118 1,451 1,161 871 261,180 156,708 133,202 33,300 14,985 10 Khangai 17,562 7,072 5,658 4,243 2,121,600 1,272,960 1,082,016 270,504 121,727 11 Khairkhan 8,550 2,681 2,145 1,609 482,580 289,548 246,116 61,529 27,688 12 Khashaat 5,000 1,959 1,567 1,175 352,620 211,572 179,836 44,959 20,232 13 Khotont 9,468 3,033 2,426 1,820 545,940 327,564 278,429 69,607 31,323 14 Chuluut 24,114 9,337 7,470 5,602 2,801,100 1,680,660 1,428,561 357,140 160,713 15 Tsahir 11,684 4,594 3,675 2,756 1,378,200 826,920 702,882 175,721 79,074 16 Tsenkher 14,040 4,097 3,278 2,458 983,280 589,968 501,473 125,368 56,416 17 Tsetserleg 7,268 2,471 1,977 1,483 444,780 266,868 226,838 56,709 25,519 18 Erdenebulgan 10,768 4,032 3,226 2,419 1,209,600 725,760 616,896 154,224 69,401 19 Erdenemandal 15,183 5,186 4,149 3,112 933,480 560,088 476,075 119,019 53,558 Total 253,161 92,399 73,919 55,439 24,511,080 14,706,648 12,500,651 3,125,163 1,406,323

1 By 2005. (Statistic Office in Arkhangai )

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Diagram 012

Улаанбаатар хотын Ааруулын нийлүүлэлт

Хөвсгөл1%

Хэнтий10%

Ховд9%

Баянхонгор18%

Архангай34%

Говь-Алтай1% УБ-ын ойролцоох

үйлдвэр6%

Завхан7%

Өвөрхангай7%

Увс7%

The diagram shows that Arkhangai aimag takes the first place among the suppliers of curd(aaruul) at the Ulaanbaatar market by volume of supplied curd(aaruul).

2.2. Seven soums with largest production of curd(aaruul) in the aimag3:

Soums Cow/yak Potential

curd(aaruul) production, kg

Potential curd(aaruul) for sales, kg (80%)

Production of the leading seven soums

/kg/

1 Undur Ulaan Yak 192,987 154,389 2 Tariat Yak 163,639 130,911 3 Chuluut Yak 160,713 128,570 4 Ikh Tamir Yak 158,837 127,070 5 Khangai Yak 121,727 97,381 6 Jargalant Mongolian/yak 83,618 66,895 7 Tsahir Yak 79,074 63,259

881,521

/63 %/

2 From materials on Ulaanbaatar market in 2006. Mercy Corps. 3 These soums are located in the Khangai high mountain range and some 90 percent of cattle herds in those soums are represented by yaks.

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Diagram 024

Улаанбаатар хотод ааруул нийлүүлж байгаа Архангай аймгийн сумд

Цахир 5%Хангай 8%Их тамир 8%

Өндөр Улаан 14%

Тариат 24%Чулуут 41%

This diagram shows the supply of curd(aaruul) by soums of Arkhangai aimag to Ulaanbaatar markets. 2.3. Amount of curd(aaruul) supplied by major wholesale traders of aimag food market to Ulaanbaatar markets.

Monthly supply

Wholesale traders Supplied amount /pieces/

Amount of one-time supply /ton/

Total amount /ton/

Annual /ton/

Chantsaldulam 4 25 100 1200Urchger 3 1 3 36Nachinbadam 3 1 3 36Bayraa 3 1 3 36Bujinlkham 1 0.5 0.5 6Saijirmaa 1 0.5 0.5 6Dolgor 1 0.5 0.5 6

Total 1326 There are 12 counters at the aimag food market and 6 out of them sell curd(aaruul) to Ulaanbaatar to some extent.

4 From materials on Ulaanbaatar market in 2006. Mercy Corps.

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2.4. Summary of questionnaires on curd(aaruul) production taken from herders of Khangai, Chuluut, Undur Ulaan, Tariat, Ikh Tamir and Bulgan soums5:

Soums Baghs Number of herders involved in the analysis Zuun Mod 3 1 Chuluut Haluun us 6 9 Terh 10 2 Tariat Tsagaan nuur 12 22 Belhi 9 3 Undur Ulaan Bayangol 10

19 Noyon Khangai 21 4 Khangai Chandmani 7 28

5 Ikh Tamir Taikhar 10 10 Tusgalt 4 Tamir 3 Bayanbulag 2 6 Bulgan Zuunmod 1

10

Total 98 There are 13 non-herder curd(aaruul) producers in Arkhangai aimag. № Name Soum Annual production size /in

tons/ 1 Ar tusgalt Chuluut 26 2 Ar banch Undur Ulaan 2 3 Begze ar Tsenher 4 4 Noyny khishig Khangai 1,5 5 Ar Chandgani Ikh Tamir 6 6 Tansag suu Erdenebulgan 1,0 7 Myangany ar Undur Ulaan 1,5 8 Bayan Uul Undur Ulaan 1,5 9 J. Ganzorig Undur Ulaan 2 10 Ikh Nuuts Bulgan 3 11 Az bat LLC Tsahir 2 12 Odgerel Tsahir 2 13 Gendenbulag Erdenebulgan 2,5

2.5. Incomes of an average herder household in those soums from dairy products and curd(aaruul)s: /a household with 15 cows was taken as average one./ Household expenditures:

Items Measuring unit

Amount in kg Comment

Curd(aaruul) Kg 30 About 1 sack Cream and clotted cream kg 70-80 5 kg each time in winter and spring and similar

amount of clotted cream in summer and the fall. Wet curd kg 50 Milk liquor l 100 Eezgui kg 25

5 See the summary of comments and analysiss from Appandix 3!

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Total 285 Household incomes6:

Items Measuring unit

Amount in kg

Average price

Total in MNT

Frozen cream Pcs 100 1,000 100,000Wet curd kg 1500 400 600,000Clotted cream kg 250 800 200,000Liquor kg 200 500 100,000Frozen milk kg 200 350 70,000

Total 2250 1,070,000

6 This analysis was made as a result of interviews with herders from Zuunmod bagh, Chuluut soum.

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SECTION 3. CHART OF CURD(AARUUL) VALUE CHAIN IN ARKHANGAI AIMAG

Export / up to1-4 % /

Customers Traders Producers Suppliers of raw materials (Wet curd)

Herders/11500 households,

70 %-984 426 kg/

Other shops

Food markets /14/

Chain shops 7

Aimag wholesale traders /7/

Traders at the aimag food market (14)

Soum traders/40/

UB producers /8/

Aimag producers /2, 48 tons/

Soum producers /11,

68 tons/

Herders /3500 households, 30 %-421'897 kg/

Retail traders

Customers (96-99%)

Business Development Service providers Note: Wet curd marked by blue arrow and curd(aaruul) was marked by black arrow.

Projects and

programs /5/

TSO /ECS, Training trade and

intermediary service

Administrative

organizations /ECS and

Training trade

Vet services

/36/

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SECTION 4. PROBLEMS FACED BY PARTICIPANTS IN THE CURD(AARUUL) SUB-

SECTOR: 4.1. Participants in the curd(aaruul) sub-sector value chain: There are the following four major participants in the curd(aaruul) sub-sector value chain, as it is described in the chart:

1. Suppliers of raw materials 2. Producers 3. Traders 4. Consumers.

As the linkage and level of participants are clearly shown in the chart, we can discuss about the four major participants in brief way. 4.1.1 Main raw material suppliers are herders generally. They supply wet curd and milk. Though producers use milk from their private cows for production, the milk output is relatively small. 4.1.2 Since producers are engaged in a wide range of activities and most of herders run household production, they are covered in this Section as well. Currently, there are 13 producers of curd(aaruul) in the aimag and there are a few cooperatives, which can be a model for the rest such as Ar Tusgalt. 4.1.3 Curd(aaruul) traders can be divided into two groups, which are retail traders and changers. Obstacles faced by them are considered separately. Retailers deliver products to the end customers, but changers work as intermediaries. Changers can be subsequently divided into levels such as aimag, soum and national. 4.1.4 Customers are the most important players in any market and the customers of the curd(aaruul) sub-sector are all domestic. Obstacles encountered to them are similar despite their location in soum, aimag and national level markets.

4.2. Obstacles faced to them:

Obstacles described below were identified by questionnaires, meetings and interviews conducted during the analysis team work. 1. Herders and raw material suppliers:

№ Obstacles Reason

1

Curd(aaruul) producers, who buy wet curd, want to buy good quality cream for cheaper price

− Poor sanitation conditions for making cream in some households and their products can not meet producers’ standards.

− They can not store cream during the milking season and have no choice but to sell.

− They do not care about buyers needs. − Cream has a relatively low importance in the herder

household budget rather than other products such as meat, cashmere, airag and milk.

− Price of cream does not depend on its quality.

2 − Sold wet curd at cheaper

price. − High sales cost.

− Located in different distances from the market. − Poor transportation conditions and high cost. − Lack of knowledge and information on the market. − No united organization. − Lack of technological knowledge on increasing the

cream output

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3 − Lack of funding to increase the production

− Lack of low cost funding sources. − High bank loan interest and short-term loan. − No other financial organizations rather then bank. − Lack of knowledge on bank loan conditions. − Shortage in source of assets to use as collateral.

Note: Herders play a role of cream supplier and curd(aaruul) producer at the same time. 2. Curd(aaruul) producer:

№ Obstacles Reason

1

− Hard to find good quality cream

− Quality of raw material highly varying

− Most of herders add up airag to cream to produce strong liquor.

− Suppliers of raw material do not pay attention on producers’ needs and requirements.

− Lack of knowledge on storing the raw material. − Do not agree with suppliers on cream quality

beforehand. − They do not keep the price policy to encourage quality

while buying raw materials.

2 Curd(aaruul) production cost is regularly increasing

− Inflation and basic price increase. Especially of the gas. Price of sugar and cream are increasing due to it.

− Poor condition of raw material procurement. High procurement cost.

− Volume of raw material is small and it is seasonal.

3 Low productivity.

− Lack of knowledge on business management. − No information on production technology, equipment

and their use.

4 Poor opportunity to carry out production without suspension.

− Hard to find raw material in the winter. − Difficult to dry up cream.

5 Lack of funding sources to expand production and lack of working capital.

− Lack of low cost funding source. − No other organizations or individuals to provide

financial services but banks. − High interest rate and short term loan. − Shortage in source of assets to use as collateral.

6 Irregular cash flow and difficulty in funding some current costs.

Seasonal activity. − Lack of raw material in winter.

Difficult to dry up cream.

7 Pressure on enterprises from expert control services

− High production standards − Some producers lack of knowledge and information on

production and sanitation standards.

3. Changers:

№ Obstacles Reasons

11


1 Poor transportation conditions − Lack of information and opportunity to rent specially designed vehicles.

2 They do not meet storing and sanitation requirements.

- Lack of special storage and store houses. -Poor knowledge on product storage. -No special packs or boxes for products.

4. Retail traders:


Poor renters’ management and organizational capacity, low attention on sanitation conditions Lack of knowledge on sanitation and environmental requirements Poor control on selling conditions by expert control services

1 Poor selling environment

Weak control by market lab

2 Shortage in specific curd(aaruul) store rooms

− Renter do not pay enough attention on this issue − Lack of knowledge on sufficient storing conditions. − Lack of sufficient storing equipment

5. Customers:


Weak lab control by market

Changers lack sufficient knowledge Poor activities of control organizations 1

Products not meeting quality and sanitation requirements are sold at the market

Storing technology is not kept with.

SECTION5. SOLUTIONS TO ELIMINATE PROBLEMS:

Solutions to eliminate obstacles described in the previous section have been identified based on reasons creating them. Solutions that can be potentially implemented are as follow:

1. Suppliers:

№ Obstacles Reasons Solutions

1 Curd(aaruul) producers, who Poor sanitation conditions for

making cream in some 1.Provide sanitation and technological training and consultancy

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households and their products can not meet producers’ standards.

They can not store cream during the milking season and have no choice but to sell.

2. Supply with storage technology and technical training and information

They do not much care about buyers needs

3. Organize meeting for suppliers and producers 4.Identify buyers’ needs and provide suppliers with hand-outs and trainings

buy wet curd, want to buy good quality cream for cheaper price

Price of cream does not depend on its quality

5. Sell good quality create at higher price 6. Make agreements with cream buyers on price depending on quality

Importance of cream is relatively lower in the household budget rather than that of other products including meat and cashmere.

7. Provide training on household budget and provide with training materials

Located in different distances from the market

8.Provide training for herder households on group activities

Poor transportation conditions and high cost Lack of knowledge and information on the market

9. Conclude agreements with producers and organize exchange of information

2

-Sold at cheaper price -High sales cost

No united organization 10. Organize herders into group activities and open sales points

− Lack of low cost funding sources.

- No other financial organizations rather than bank - High bank loan interest and short-term loan

- Shortage in source of assets to use as collateral.

3 Lack of financial sources to expand production.

− Lack of knowledge on bank loan conditions.

11. Encourage them in joining membership of financial organizations and establish financial organizations 12. Share assets and enable themselves to receive loans 13. Introduce on non-banking financial organizations and establish links with other financial service providers 14.Take credits from producers and conclude with them agreements on supply

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15. Establish links with organizations and enterprises providing additional collateral and guarantee 16. Producers can provide collateral

2. Curd(aaruul) producers:


− Hard to find good quality cream

Most of herders add up airag to cream to produce strong liquor.

17. Distribute information on technological quality 18. Conclude contract with suppliers

Suppliers of raw material do not pay attention on producers’ needs and requirements

19. Buy milk from herders and provide support for herders in producing their needed cream 20. Provide producers with training and consultancy on curd(aaruul) storing technology 21. Try to link the cream quality with price

1 - Quality of raw material highly varying Lack of knowledge on quality

and storing the raw material 22. Organize training for all suppliers on how to prepare raw materials and store it before the purchase of cream

Inflation and basic price increase. Especially of the gas. Price of sugar and cream are increasing due to it.

2

Curd(aaruul) production cost is regularly increasing Poor condition of raw material

procurement. High procurement cost.

23.Automatization of production 24. Reduce per product cost by increasing the productivity Provide consultancy on production management

Poor knowledge on business management

25. Provide training on marketing and financing and distribute information

3 Low productivity - No information and knowledge on production technology, equipment and their use

26. Obtain and distribute information on new technology introduced to production 27.Organize business introductory trips for producers

- Poor availability of raw materials in winter months

28. Introduce technology on storing cream until the spring

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Poor opportunity to carry out production without suspension

- Difficulty in storing curd(aaruul).

29. Look for opportunities of milking the cows all around the year 30. Study the opportunities to construct store houses to dry up cream in winter 31. Study equipment for printing and drying up curd(aaruul) in winter

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- Lack of low cost financial source

32. Provide with information on financial service providers other than banks

- No other financial service provider but bank.

33. Establish links with other non-banking financial organizations

- Short-term loan with High interest rate

34. Provide support in linking with international projects and programs

5

Lack of funding sources to expand production and lack of working capital.

- Lack of source of assets to use as collateral

35. Cover with loan guarantee programs

6

Irregular cash flow and difficulty in funding some current costs

- Seasonal activities 36. Provide training on management and improvement of financial activities

- High production standards 37.Create a new standard more suitable for production

7

Pressure on enterprises from expert control services

- Some producers lack knowledge and information on sanitation and production standards

38. Conduct training and awareness activities on curd(aaruul) production

3. Changers:


1 Poor transportation conditions

Lack of information and opportunity to rent specially designed vehicles

39. Provide information on opportunities to rent special vehicles 40. Let them understand the of impacts of transporting curd(aaruul) with non-purpose –built vehicles 41. Provide knowledge for changers on proper product transportation

2

They do not meet storing and sanitation requirements

Lack of special storage and store houses

42. Attract attention of markets and other sales organizations onto improvement of availability of purpose-built storages and storing conditions 43. Advertise importance of storing products in purpose-built storages

4. Retail traders:


1 Poor sales environment

Weak management and organization of renters and they do not pay due attention on sanitation conditions

44. Improve the activities of local sanitation control organizations 45. Address the expert control and customers’ rights organizations and exchange information with them

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Lack of information on sanitation and environmental standards.

46. Provide information on sanitation and other requirements

Weal control by expert control organization on rented accommodations.

47.Cooperate with expert control organization to improve its capacity

Weak control by market labs - Renter do not pay due attention on this issue

48. Support organizations working in the field of improving responsibilities of markets and trade centers

2 Lack of purpose-built curd(aaruul) store houses

- Reserved in large amounts due to wrong calculations on customers’ demands and to keep the transportation cost low

49. Provide information and training on marketing and market analysiss 50. Provide information on product quality, storage and packing.

5. Customers:


Weak laboratory control by trading organizations

Market changers lack knowledge and determination

Poor activities of control and inspection organizations

1

Products not meeting sanitation standards are often sold at the market

Storing technology is not well kept.

51. Improve the knowledge of customers on organizations providing control and inspection on product quality and sanitation standards; Improve the responsibility during buying process; provide with information. 52. Improve the accountability of expert control service, Training, Trade and Intermediary Service and labs

Solutions are considered in a summarized way, since the solutions to some obstacles are similar.

SECTION 6. SELECTION OF SOLUTIONS: Solutions have been selected by criteria, as follow:

Solutions mentioned in Section 5 are all numbered and solutions are selected according to the following criteria:

- Opportunities for implementation of selected solutions; - Coverage of people to get benefits from results of implementation; - To be aimed at improvement of competitiveness of participants in the sub-sector; - To be sustainably operating for longer term and able to have benefits; - To be open for the Program’s involvement

16

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SECTION 7. IDENTIFICATION OF THE PROGRAM’S INVOLVEMENT

Selected solutions are combined and grouped, as follow: • Lack of knowledge and information -training • Lack of information on machinery and technology – introduction of updated equipment

and technology • Lack of information on legislation and poor operational management –conclusion of

contracts • Lack of funding – Opening the funding opportunities • Improvement of production management • Improvement of business environment • Improvement of the marketing- linking to the market and increase the awareness of the

aaruul beenfits within the consumer market Implementing bodies, obstacles encountered to implementing bodies, program involvement and assessment of program sustainability are described in the following Table. Activities and plan of involvement of the Program aimed at sustainable development of the sub-sector, improvement of its competitiveness and efficient operations of the system based upon the Analysis on Value chain in the Curd(aaruul) Sub-sector have been developed. In the table below the program intervention has been identified and numbered. Since the program has limited resourses in terms of staff time and finance, we have prioritized the program intervention. High or low priorities are given to each program intervention in the bracelet like (high/low) in the table. We plan to implement high priority program interventions in 2007 and low priority interventions in 2008-2009. Implementation period Priority Number of the program interventions Timing of the

implementation High 1, 2, 3, 4, 6, 11, 13, 15, 18, 22, 25, 29,32 2007 Low 5,7, 8, 9, 10, 12, 14, 16, 17, 19, 23, 24, 26, 27, 28,

30, 31 2008-2009

Sections Solutions Implementer of solutions

Obstacles facing the implementers Program involvement Sustainability

1, 2, 7, 8- Provide training for herders on sanitation standards, production technology on curd(aaruul) and cream storing, household budget and estimation and group cooperation 20, 22, 25, 36, 38-Provide training for producers on cream production and storage technology, market and financial management, transportation, storage and packing.

Lack of information

and knowledge-

training

41,48,49- Provide training for changers and other traders on curd(aaruul) storage and transportation and packing as well as packing and management

- Local trainers - Business

support service providers (hereinafter BDS)

-Producers

- High cost - Lack of knowledge and information on technology and standards

1. Program can provide the abovementioned trainings directly or through BDSs. (high) 2. Program can collect information on needed technological trainings and publish brochures and training materials.(high) 3. Provide training for producers and producers thereafter can distribute their acquired knowledge to herders. (high) 4. Have local BDSs provide trainings and improve their capacity. (high) 5. Assist the producers to prepare brochures on wet curd production technology, standards and quality information and help them to distribute the information further on to herders. (low)

- Producers will share the cost of trainings and technical assistance for them. - Producers are not obliged to receive payment for training and consultancy of herders. This cost will be covered by profits from activities.

2,4 – Distribute information to herders on storing and production

Lack of information

on machinery and

technology – Introduction

of new equipment

and

17, 23, 24, 26, 28, 30 –Conduct intermediation service for producers to introduce technology on curd(aaruul) production and storage, production

- Local consultants - BDSs -Producers -Equipment suppliers

- High cost -Weak human resources’ capacity -Poor purchasing capacity of herders

6. Collect information on the abovementioned equipment, technology. New technology must be cost-effective, easy to implement, and capable to increase productivity. (high) 7. Operate in cooperation with scientific training and research organizations and consultants; (low)

-Program may be getting involved in linking with those organizations and publishing brochures.. - BDSs can provide intermediary service for producers and


technology

automatization, improvement of productivity, new production equipment and their use, as well as technology on cream drying in winter;

8. Publish brochures and hand-outs on technology; (low) 9. Distribute collected information to producers and herders. (low) 10. Distribute technological information to BDSs, train them how to find information and assist them in cooperating with technology and equipment suppliers. BDSs then can provide intermediary service for equipment suppliers and producers/herders. (low) 11. Collect information from equipment suppliers and publish information and catalogue of related equipment. (high) 12. Producers and suppliers of equipment and technology may provide training and consultancy for herders and supply equipment. Producers will conduct training on producing and storing cream and distribute recommendations before concluding contracts with herders. (low)

herders to provide information on TAs and technology from suppliers and get paid for intermediary service. - Suppliers of equipment and technology will provide information on own products free of charge. -Customers will share the cost of training and consultancy.

Lack of information

on legislation and

6, 9, 18- Regulate the activities between producers, suppliers and herders on the basis of

-Producers - BDSs to provide

- No sample of contract - No knowledge how

13. Program will provide assistance in developing a sample contract to be concluded between producers and suppliers. Contract will include issues on

Program may provide a sample contract.

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management skills –

conclude agreements

contracts consultancy on contracts -Local consultants -Herders and suppliers

to do it - Suppliers do not know how to cooperate because of lack of organization.

credit, product quality, term and price.(high) 14. Provide assistance for suppliers in cooperating with each others and sharing their labor. (low)

Encourage them join the Cooperative Development Program and work on a cost-share basis

Financial problem –

Open financial

opportunities

11, 12, 13, 14, 15, 16- Introduce herders to other financial opportunities and availabilities 32,33, 34, 35- Introduce producers to other financial opportunities and availabilities

- Banks and other financial organizations - MCM -Producers -Suppliers of equipment and technology (sell their products on leasing) - BDS

-MCM will not carry out regular long-term activities. - Lack of knowledge on legislation - Lack of information on financial market and existing possibilities - Suppliers of equipment can not reach out to suppliers of raw materials

15. MCM can expand the coverage of Loan Guarantee Program and cover larger number of producers and herders. (high) 16. Empower national loan guarantee-providing organizations and support them. (low) 17. Study on other organizations providing loans or loan collateral, let them know opportunities for cooperation and link them with certain organizations (low) 18. Support intermediaries (BDS) and introduce market opportunities to them. Provide BDSs with information on financial services, opportunities and conditions. (high) 19. Organize training for financial organizations on product development, financial market and marketing. (low)

- Loan Guarantee Program to get funded with interest of loan allocated in banks. - Program can provide training and information on its own and have BDSs act for it and improve its capacity. - BDSs may receive payment for intermediary service and incentives from sales for introducing such opportunities.

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20. Study on opportunities for producers to provide collateral for suppliers to receive loan from financial organizations (low) 21. Study opportunities for introducers of equipment and new technology to sell their products on financial leasing and link them. (low) 22. Study opportunities for Program to provide assistance for producers to get large low interest-rate loan, so that producers can finance contracted suppliers in terms of advance payment for supply of raw materials on a contract basis. (high)

Improve production

management

24-Improve production management

- BDS -Producers -Exporters

- Producers are not aware of their needs. - Lack of qualified BDSs

23. Improve the capacity of BDSs and consultants and qualify them on production management. (low) 24. Publish books and brochures on this issue. (low) 25. Conduct analysis/assessment on situation of producers and develop recommendations. This is a training and TA need assessment. (high)

- Involve in program to support BDSs -Sell brochures and hand-outs -Operate on a cost-sharing basis

Improve business

environment

44, 45, 46, 47, 48, 51, 52- Cooperate with government organizations in creating a

sound business environment

ECS Consumers’ Rights’ Association

- Lack of information and advertisement - Lack of citizen’s awareness on

26. Provide training and consultancy on improving capacity of employees of those organizations. (low)

- Training and consultancy will be conducted on a cost-share basis.

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22


Laboratories BDSs

legislations - Poor skills of qualified organizations to provide consultancy - Poor capacity to distribute information

27. Provide training on introducing one-point service at markets and methodology on doing such an activity. (low) 28. Provide consultancy on improving the activities of food markets and labs at the markets and cooperate with them . (low)

Improve the marketing

• Link producers with new market

• Increase the awareness of the benefits of using aaruul, support the consumtion of the aaruul within the consumers

(Though there was no problem with this issue during the analysis, it can be an opportunity that producers have not described about them yet.)

- Large buyers (both domestic and foreign)

- They do not know how to establish links.

29. Program may pay attention on linking producers with new larger markets and open new sales channels. (high) 30. Introduce those market opportunities to producers. (low) 31. Large buyers can provide consultancy for producers on technology, standards, credits, and packs. (low) 32. Training and campaign to increase the awareness of aaruul benefits for health and to increase consumption of aaruul within the consumers. (high)

- Large buyers may provide paid consultancy and training or get paid in terms of purchase.

32 Program involvements mentioned here will be implemented by officers of UB and aimag offices of the RASP in 2007-2008.

Business Support Organizations in the aimag Business Support Organizations that could be potentially participating in the implementation of chosen solutions in Arkhangai aimag are as follow:

1. Cooperative training center 2. Agriculture extension service 3. Banks 4. Employment and social welfare division 5. Branch office of Mongolian National Chamber of Trade and Industry 6. Other projects and programs 7. Local administration organizations 8. Franchising cooperative.

Current situation and obstacles encountered to those organizations can be considered as follow, by each problem:

1. Cooperative training center • Irregular activities • No stable funding • Lack of skilled trainers

2. Agriculture extension service • Poor management • No regular training program • No own trainers

Banks • Tough requirements for bank loan • No branches in most of soums • Herders lack knowledge and information on banks

Employment and social welfare division • Aimed at vulnerable groups of the society • Shortage in human resource

Branch office of Mongolian National Chamber of Trade and Industry • High training fee • Unable to reach out to all soums • Shortage in human resource • High salary paid to skilled trainers

3. Other programs and projects • Poor cooperation and linkage between projects and programs • Some project is designed to provide a narrow profile specific service

4. Projects implemented by public organizations are operated along with personal interests and profiles of certain groups • Lack of authority (vertical management), small funding • Poor initiatives and skills

5. Franchising cooperative • Motives and skills are reliable but honesty is under question because the

personnel are consisted of residents of a given soum. • Poor skills and capacity


Relatively good outcomes can be expected from business support organizations except projects and programs, if they run sustainable activities and can reach their customers with their services. Therefore, RASP can participate by assisting organizations implementing selected solutions in improving their organizational structure and tools of implementations. Also, Program can assist in development of organizations implementing selected solutions such as NGOs, which provide training and consultancy service, and research and training organizations as Highland Regional Branch of Animal Husbandry Research Institute by empowering them.

Information sources: Used materials: 1. Brochure of Aimag Statistic Office 2005

2. "Value Chain Program Design" training material

3. Interviews and questionnaires 2007

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REPORT ON ANALYSIS ON CURD (AARUUL) VALUE … VC report_eng.pdf · curd(aaruul) sub-sector ......

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