China-Mongolia meat trade full of potential

By Li Chao Source:Global Times Published: 2017/12/13 21:48:40

Illustration: Peter C. Espina/GT



 

In a joint press release issued by the foreign ministers of China and Mongolia on December 4, the Chinese government expressed its willingness to give positive consideration to Mongolia's desire to expand its exports of mineral and energy products as well as increasing its beef and mutton exports.

While we are quite familiar with Mongolia's mineral and energy products, not so much attention has been paid to the country's meat exports. In fact, Mongolia in recent years has started to export meat products in order to build up foreign exchange earnings. According to Mongolian media reports, the country has already exported large amounts of meat products to countries including China, Russia, Kazakhstan, Japan, Iran, Vietnam and Qatar, with the annual export volume expanding five times compared to the level in 2013. From the perspective of Mongolia's foreign trade in 2017, the Mongolian government obviously intends to promote its economic growth by means of expanding exports of meat products. Such a development trend deserves our attention.

During the 16th session of the Vietnam-Mongolia Inter-Governmental Committee for Economic, Scientific and Technical Cooperation, held in August in Ulan Bator, capital of Mongolia, both countries reached an agreement on meat exports. Mongolia will export 200 tons of goat meat to Vietnam between 2017 and 2018. The two governments believe that the signing of export agreements on livestock products will be a great boost to the goal of achieving bilateral trade of $70 million by 2020.

Also in August, when a Saudi Arabian government delegation visited Mongolia, both parties conducted extensive discussions on the establishment of a joint-venture meat processing plant and a relevant working team.

In November, during a political consultation meeting between Mongolia and Paraguay, Mongolia showed great interest in Paraguay's experience in beef exports and expressed a desire to strengthen bilateral exchanges and cooperation in relevant fields.

In my opinion, there are several reasons behind Mongolia's growing focus on meat product exports and cooperation in its foreign trade. First, Mongolia's meat production is significant. At present, the country's livestock industry can not only fully meet the domestic demand for meat products, but also has the potential for exports. Statistics show that Mongolia's total livestock herd reached 55.97 million at the end of 2015, and the figure reached 61 million at the end of 2016. The country's current consumption of meat is roughly 11 million livestock per year, with 6 to 9 million livestock available for meat exports.

Second, the government has the need for diversified economic development. For a long time, Mongolia's mineral exports accounted for about 80 percent of its total export value. In comparison, its exports of animal and livestock products was so low that the value was nearly negligible. Mongolia's foreign trade has been heavily dependent on its mining industry, leading to imbalanced development of its industrial structure. Its economic development also appears unstable, and is vulnerable to fluctuations in global market demand for minerals and prices. Thus, in order to promote more diversified economic development, the Mongolian government has started to tap into the potential of meat exports.

Mongolia will continue to vigorously promote its meat exports in the future, but it should be noted that the country's actual meat export volume has always failed to meet the target, with its 2015 exports only reaching 3.8 percent of the planned export volume.

Due to some bottleneck factors, Mongolia still faces many uncertainties in exporting meat products. First, the quality and safety of its meat products is not guaranteed, which directly affects its export prospects given the relatively low level of prevention and control of livestock diseases in the country. Second, its raw meat processing capacity is limited. Official data shows that there are more than 40 meat processing factories in Mongolia, but only 10 have strong productivity and most of them do not operate year-round. Finally, the structure of its livestock also constrains exports. At present, horse meat is what the international market demands the most from Mongolia, and Russia and China also mainly import beef and horse meat from Mongolia. But sheep and goats account for nearly 90 percent of the country's livestock herd, with horses and cattle accounting for only 10 percent.

Mongolia's intention to enhance exports of its meat products and its lack of relevant capacity provides a large amount of potential for cooperation with China. The two countries can expand their trade in meat products by establishing joint-venture meat processing plants or increasing or expanding cold-chain logistics zones for meat trade and processing in their border areas. Also, both parties can strengthen cooperation on prevention and control of livestock diseases and the development of relevant vaccines. In addition, China should attach great importance to technical aid for Mongolia in the prevention and control of foot-and-mouth disease and other livestock diseases, which would provide a great boost to bilateral ties.

The author is a junior research fellow with the Russia and Mongolia Research Institute at the Inner Mongolia Academy of Social Sciences. bizopinion@globaltimes.com.cn



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