As the agriculture sector prepares for winter, a major export deal with China and improvements in trade relations with Russia are heating up prospects for Mongolia’s meat industry.

A meat trade agreement to send 8m sheep to China in the next three years was signed between Ulaanbaatar and Beijing in late November, with Kh Zoljargal, the deputy minister of food, agriculture and light industry, inking a cooperation agreement for processed meat with Pu Chan Chen, the vice-president of the Ministry for the General Administration of Quality Supervision, Inspection and Quarantine of China.

Local media has reported that advances in Mongolia’s hygiene standards made the deal possible. Indeed, Russia announced November 22 it had lifted a quarantine on meat imports from Mongolia, with trade to resume in the new year, and Just Agro, which supplies 40% of the country’s industrially processed meat and 23% of meat exports, recently introduced global food safety standards.

Mongolian meat exports rose by 32.9% year-on-year in 2010, local media reported in November, an increase of 23,800 tonnes compared to 17,900 tonnes a year earlier. With an average sheep weighing 20 kg, the 8m sheep to be sent to China represents some 160m kg of meat. Mongolia will also export goat meat and wheat under the agreement.

With a human population of 3.3m compared to a livestock population of some 60m, Mongolia’s 112.8m ha of pastureland leaves it well placed to capitalise on meat exports and related sectors. Global meat supplies will likely tighten further in 2012, keeping prices high. Neighbouring Russia and China are among the world’s largest meat importing nations.

Unlike countries suffering meat shortages due to rising food prices, Mongolia, with 72% of its land devoted to pasture, has had issues with overproduction. The population’s per capita meat consumption is approximately 75-85 kg per year, among the world’s highest.

Agriculture constitutes about 20% of Mongolia’s GDP and employs more than 42% of the workforce. A majority of the jobs outside of the nation’s cities are connected to livestock farming and animal husbandry, such as in meat, wool, cashmere and leather production.

Between 85% and 95% of Mongolia’s annual meat production is consumed domestically, and the price of what is available for export is about $1 per kg, some three to four times lower than Australian exporters. The Mongolian Meat Association estimated its supply for export in 2010 was 111,400 tonnes, made up of 89,000 tonnes of goat meat, 10,000 tonnes of horsemeat, 10,000 tonnes of beef and 2400 tonnes of sheep meat.

A February 2011 report by the UN Industrial Development Organisation (UNIDO) found that while the global market would “easily” absorb this amount, the domestic industry was limited due to “production difficulties and food safety issues”.

The UNIDO recommends Ulaanbaatar focus on adding value to its meat products by sectioning and packaging animal carcasses into individual cuts suited to retailers’ needs. It also said the country should explore emerging markets for lamb meat, such as the Middle East. That region imported 36,522 tonnes of lamb and 39,272 tonnes of mutton in 2010-11 from Australia, making it by far Australia’s biggest sheep-meat importer.

Enhancing Mongolia’s meat industry potential is the scarcity of steroid and additive use in animal husbandry, with no hormones or chemicals in feed. However, to capitalise on this the government must obtain organic certification after it has implemented more advanced and hygienic meat production systems.

Another challenge to the sector is the country’s notoriously harsh winters, which run from November to April. Some farmers lost up to 70% of livestock in 2009 and 2010 due to dzuds (the Mongolian term for the combination of summer drought and severe winter), according to the World Bank. In 2010, disaster status was declared in 11 provinces during winter.

The World Bank recommends building emergency facilities equipped with provisions to prevent herders’ livelihoods and pivotal national resources being endangered. It also suggests the government work with within the bank-financed Sustainable Livelihoods Programme to provide support, under its pasture risk management and community initiatives funds.

With fears of a dzud remaining high in 2011, the Ministry of Food, Agriculture and Light Industry announced November 23 that winter and spring preparations were 90% complete. The ministry said there was a 10% increase in the livestock feed across main cities and remoter areas, with protective measures also being taken against insects and infectious diseases.

Mongolia’s export deal with China, plus the reopening of trade with Russia, will surely boost meat exports. But if the country aims to compete with Australia and take advantage of rapid growth in the region, improved standards and expanded production facilities will be in order to maximise the animal husbandry subsector.