Source: Pearly Jacob                                    Date: 1 September, 2010

Processed yak wool could be the next big Mongolian fiber export item after cashmere, if a planned pilot project to export some to France this year yields encouraging results. Combed from the shaggy beasts that dot the remote ranges of the Khangai mountains in Arkhangai province, 190 kilograms of washed and de-haired wool await the final freight clearance to Europe. Each processed kilo will fetch 38 Euro, and the entire money will go directly back to the cooperative of herders that collected the wool.

The man behind the project, Cedric Bussac, a Volunteer Service Overseas (VSO) sales and marketing advisor, is thrilled with the volume of the processed wool in hand. “Raw yak wool once processed usually has a yield of only 20-25% but we managed a record 34.1%,” he reveals. The high output was a clear indication that time and money invested in quality control training had paid off.

Yak and Calf: A young calf experiments with summer's new grass next to its mother in Jargalant sum. (Photo by: Pearly Jacob)

It was in mid-May that a group of 15 herders and their families huddled together in a ger in a remote part of Tariat soum, a small district on the western edge of Arkhangai. Outside, one could still feel the clammy breath of winter that had decimated 8.1 million animals across the country in what Mongolians call a dzud, a parched summer followed by a bitter winter. Remnants of a recent snow storm outlined the ridges of the surrounding mountains like chalk on bare rock while a feeble green crept across the valley floor still littered with carcasses, latest casualties of a summer come too late.

Back in the ger, members of the recently formed cooperative stoically shared stories of their loss. “We asked a Shaman to sacrifice a yak for warm weather to come quickly, but it hasn’t worked so far,” said one of the herders with a hint of wry humor. In this valley 95 families had lost more than 80% of their yak herds and significant proportions of goats.

But any sign of desperation was hidden as young and old launched enthusiastically into answering a questionnaire for the theoretical yak wool combing training they had gathered for - the yaks themselves still too weak to be combed. Despite the resilient cheerfulness, the prospect looked grim with the winter losses. However, by July, 1.7 tons of raw hand-combed yak wool had been collected from co-operative members scattered across the province.

The cooperative Ar Arvijin Delgerekh was formed in early 2010 as an offshoot project of Agronomes et Vétérinaires Sans Frontieres (AVSF), a French NGO working in the areas of animal care, local veterinary training and rural development. Looking for ways to diversify herders’ income sources and reduce their reliance on breeding goats for cashmere, the NGO was seeking markets for yak wool procured from local herders. Familiar with their work, Cedric had then initiated a project plan to establish a fair trade channel for direct export of processed wool to France.

With 8 years of experience in running a self-start-up garment line, Cedric knew the French textile market. He was quick to see the potential of yak wool as an exotic fiber. The move to export processed raw wool was a deliberate decision to cater to French manufacturers who have resisted offshore production and continue to supply the market for European-made goods. The targeted customers were companies with a strong brand image built around sensitivity to ecological concerns and ethical sources for their fibers.

Mongolia produces 17% of the world’s cashmere coming second after China. But as in China the explosion in goat populations to fuel the demand brought along an irreversible ecological impact. With their voracious appetites and destructive feeding habits, ripping out plants by their roots and their sharp little hoofs digging up the top soil, goats are the bane of sensitive eco-zones worldwide. The destruction wrought by them is evident in the once lush pastures that have been reduced to dust bowls in the Alashan Plateau of Inner Mongolia while 90% of Mongolia is threatened by desertification. Goats are certainly not the only factor, but uncontrolled breeding of livestock and overgrazing do play a major role.

With the collapse of the socialist structure followed by Russian sanctions on Mongolian meat imports, coupled with the growing demand of cashmere in the following years, herders were pushed to increase their goat population. “Even if herders are generally conscious of the damage caused by goats to the environment, the economic context of Mongolia does not enable them to choose other options,” points out Cedric, who believes encouraging herders in areas like Arkhangai to breed yaks is a significant step to address some of the environmental concerns. “The main idea is to think of ways for herders to generate more money without having to increase the size of their herds and subsequently reduce pressure on the environment,” he adds.

Development organizations including Swiss Development Cooperation and Mercy Corps, and NGOs like AVSF have been working over the years to develop new marketing chains for different products from herders and to address the environmental aspects of overgrazing. In 2008 Mercy Corps carried out the first value chain assessment for yak wool where it identified lack of a potential market as the biggest obstacle to its large-scale commercial use. Since then, the organization has been assisting rural producers to gain skills and capacities to win new and diversified markets.

Yak wool itself has been recognized as the next best alternative to cashmere. Combed yak wool has properties very similar to those of cashmere. Each fiber has an average diameter of 18 mm and a length of 35 mm compared to cashmere’s 15 mm diameter and 38 mm length. However, the market demand still remains a niche segment and promoters of yak wool are realistic enough to accept that it can never replace cashmere.

“While cashmere is well known and is an established product that submits to the global demand and supply trends, yak wool is still a niche product for which demand is volatile,” says Jeton Starova, the Economic Development Programs Manager of Mercy Corps Mongolia. Cashmere also has an assured brand image as a luxury product. However, Cedric’s opinion is that the potential for yak wool is huge in the niche segment of exotic wools.

Private companies have been quick to catch up. “Because of the high price of cashmere and quick changing fashion trends, many mid level brands are looking for a cheaper but comparable replacement for cashmere. Yak wool can be used for their seasonal designs,” says B. Bilegt, Vice-Director of Altai Cashmere, one of the largest textile companies in the country. While he feels customers used to cashmere will never buy yak wool products, Bilegt sees a market in places like Scandinavia and Germany where customers care more for quality and comfort than just for fashion.

Some 60% of Altai Cashmere’s revenue comes from cashmere exports but this could change this season as sky-rocketing cashmere prices have prevented many local companies from buying their usual annual quantities. From an average price of MNT25,000 a kilo in 2009 the prices soared to MNT55,000-MNT60,000 this year. A major reason for this was the government decision to remove export taxes on raw cashmere to help herders secure a better price from traders. The loss of 3 million goats in the dzud was also a factor. The Chinese government’s recent policy to reduce the number of goats has also led to an increase in demand for Mongolian cashmere. Bilegt admits that the Mongolian decision helped herders but feels private companies have been affected. The government cannot support one sector and ignore another, he said.

Combing trial: Herders in Tariat sum try their first hand at combing their yaks at a training session. (Photo by: Pearly Jacob)

The cashmere season is short, covering just about three months, and many companies were unable to raise money to compete with Chinese traders to buy from herders. “With high interest rates of 18% to 20%, we cannot afford to take loans whereas the Chinese government provides easy credit and other help to private companies,” says R. Enkbold, executive director of Mongol Nekhmel on the crisis faced by Mongolian cashmere manufacturers this year. Bilegt feels the main problem for Mongolian producers is finding markets. “If they can do this, financing and access to bank loans will not be a big problem,” he states.

In the event, the shortage of cashmere has opened the doors for yak wool to an extent. While local producers have been experimenting with yak wool for several years, this year they have been able to process more of it. Altai Cashmere purchased 5 tons of raw yak wool this year of which 1.1 ton was directly bought from Ar Arvijin Delgerekh. The factory also undertook the processing of the cooperative’s wool for export to France.

Mongol Nekhmel, too, has been interested in yak wool since resuming production in 2008 after a change in management. Most of their products are imported by a German company, Yak & Co., but recently companies from Italy and Belgium have also expressed interest. “Everyone knows cashmere now and it can be found everywhere, so buyers are looking for a new fiber,” says Enkhbold.

Elsewhere, an adventure clothing line based in Beijing has been drawing attention with their 100% luxury yak wool collection. Khunu was started by American Aaron Patillo and former British Army officer Julian Wilson with the social aim of providing help to impoverished Tibetan nomads who make little money with their yak milk and meat. Laboratory tests conducted by the company also found yak wool to be warmer and more sweat absorbent than merino wool used in most winter outdoor garments.

“Although yak is a new fiber to Western consumers, and one that few would associate with luxury, it's actually amazing to see people's reactions when they first feel a swatch of high quality yak wool - most are extremely surprised at how soft and luxurious it feels,” says Julian. He, however, has no illusion that “debunking the myth that yak hair is itchy and coarse will take time”.  The brand recently created a buzz in the international press as official sponsors and outfitters for Kwame Nkrumah-Acheampong, Ghana’s first skier to compete at the 2010 Winter Olympics.

“It's successful marketing that can bring prosperity locally. One should be working on that in fact and not just wait for it to happen”, says Jeton of Mercy Corps on the lack of similar initiatives in Mongolia. The Khunu founders are interested in working with the Mongolian textile industry but feel the country is still behind in competing with China which offers higher quality products at a cheaper price. “‘Made in China’ is something that luxury brands are rarely keen to carry on their label so ‘Made in Mongolia’ could become a viable alternative if Mongolia gets things right”, says Julian of the country’s potential to become a world class leader for high end woolen products.

Meanwhile the 1.7 tons of raw yak wool collected by the cooperative is a small step towards providing direct market access to herders and improving local livelihoods. Each member of the cooperative will receive around MNT9,000 per kilo for the raw greasy wool they collected, compared to the average market price of MNT4,500. While it is too early to label the venture a success, it does stand out as a unique example of collaboration between NGOs, private companies, volunteers, herders and community heads.

Mercy Corps helped the co-operative secure the initial loan and provided training tools while AVSF undertook the role of organizing the cooperative and paying for the transportation costs involved in setting it up. This meant long excruciating jeep trips over rough mountain tracks to seek out member herders who in turn had volunteered their time to serve as collectors. Despite receiving no remuneration for his work, Cedric derives personal satisfaction in seeing the project take off. Both he and the AVSF country director Jean-Christophe Natorp were present at the Altai factory to receive the raw wool that arrived for processing. They were covered with tick bites and dust from the wool, but their excited whoops and happy smiles radiated through the factory when the average output figures were announced.

Altai Cashmere has been impressed with the quality of the wool bought from the cooperative and has expressed interest in continuing to do business with them. The concept of fair trade and working directly with herders is an idea that appeals to company vice-director Bilegt. “The history of agricultural development in countries like Australia, New Zealand or USA shows that herders and farmers formed unions and cooperatives to maintain standards of quality themselves and to be able to directly approach factories. This is what Mongolia also needs to develop,” he says. This would mean a reliable supply chain, consistent quality and finish and lower production costs.

The company is also collaborating with Swiss Development Cooperation' ‘Green Gold” initiative and has bought wool sourced through the project. Better quality wool and a higher yield are the principal reasons for continuing the collaboration. Bilegt recalls with a chuckle an occasion when a bag from one of the independent suppliers was found to contain a 5-kilo piece of iron, put, no doubt, to increase the weight. This is where a cooperative or a responsible supplier will be of value.

Shaggy Yak: A shaggy yak bull looks on curiously. Thousands of these beautiful beasts dot the mountains slopes and valleys of Arkhangai Province, yak capital of Mongolia. (Photo by: Pearly Jacob)

Once knitted into a garment, yak wool is surprisingly soft and dense considering the bulky beast it comes from. It is also more resistant to wear and tear and less delicate than cashmere. This is an advantage that could very well lead to increased demand but there is still a long way to go. Moreover, with the limited yak population, “developing the product quality in quantities feasible enough to cater to the needs of potential big buyers remains a big challenge”, is Jeton’s pragmatic reminder.

For now, the members of Ar Arvijin Delgerekh cooperative are happy with their modest additional income. While their herds graze on the yellowing grass under a late August sun, talks now shift to securing a fair trade label some time next year and dreams of investing future profits to build a wool processing factory in the countryside sometime in the bright blue future.