Mongolian Agro-industries and Agro Processing

Due to the lack of processing equipments and lagged technology development, the rates of value-addition are low in agro-industries. Mongolia produces about a quarter of the world output of cashmere. Small-scale cashmere processing factories are scattered in Mongolia. In 2003, there were five domestic and 80 foreign invested cashmere processing factories, of which there were 42 primary-level, 37 knitting, and 6 complex-level processing factories. Substantial amounts of raw or primary-level processed cashmeres are exported to China, hindering additional value creation within the borders of Mongolia.

Besides livestock production, food self-sufficiency is low. Crop farming is relatively new activity and was developed primarily through large state farms, although now those state farms are completely privatized. Wheat production in 2003 was 164,400 ton, which is not sufficient for feeding the people; Mongolia imports heavy amount of wheat flour from abroad including Kazakhstan. Vegetables and fruits had been produced sufficiently until the early 1990s, but they are now imported from China.