‘Importing wheat was a good call’

‘Importing wheat was a good call’

  • By Dulguun   -   Mar 10,2020
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CEO of the Mongolian National Crop Farmers’ Association U.Boldsaikhan gave an extensive interview regarding the government’s recent decision to import 160,000 tons of wheat from Russia. He has a PhD in agricultural science.

Last week, a group of farmers demonstrated against the Ministry of Food, Agriculture and Light Industry’s decision to import wheat from Russia. They protested even more after hearing that 128 billion MNT will be spent on wheat imports from taxpayer money. What is your opinion on this matter? How does your association function?

Mongolia consumes 230,000 tons of flour annually, which is made with around 300,000 tons of wheat. In 2019, flour factories procured 247,000 tons of wheat at national level. This indicates around 20 percent shortage in wheat supply. In truth, local farmers worked hard and harvested more than 400,000 tons of wheat last year, but a two-month continuous rainfall during harvest season – specifically from August to September – damaged crops and the degraded wheat had to be used for animal feed, spirit production, and poultry. It may have been used for non-food purposes but it was still wheat that our farmers grew and was put into the wheat registry. So, farmers didn’t fake the total amount of wheat harvest. Crop loss occurred last year in major crop producers in the world, such as Russia, Australia, Kazakhstan and Turkey, which demonstrates that countries can’t control the impact of natural phenomena.

The Mongolian National Crop Farmers’ Association was able to connect and cooperate with key crop farmers’ groups and associations over the past two years. During this period, we carried out numerous activities aimed to rectify incorrect information about farmers, eliminate negative public sentiments toward farmers, support farmers through price policy and technological solutions, and provide policy advocacy. We started many innovations and developments in the agricultural sector by incorporating farmers’ opinions into state policies and resolving problems through compromise. We make decisions altogether.

We thoroughly reviewed reasons and data related to the issue of importing wheat. Mongolians usually consume 21,000 tons of flour a month but since the government took preventive measures against coronavirus risks, thousands of children and students are staying at home, causing a spud in the consumption of flour, which is the main food staple.

Through numerous discussions and reviews with flour producers, we found that the supply of 247,000 tons of wheat would have met a nine months’ worth of flour demand, the said reason turned it into seven months’ worth. The virus epidemic that had affected 50 countries a few days ago is now affecting nearly 100 countries. This may cause food shortage and public quarantines worldwide.

Flour factories will likely run out of raw materials by April which makes it necessary to import wheat. The Food Security Council and Ministry of Food, Agriculture and Light Industry are planning to approve a quota to import 60,000 tons of wheat. Our association looked into this matter, discussed it with farmers and reached an understanding with all sides. An additional 100,000 tons of wheat will be imported, of which 10,000 tons will be used to make hand sanitizers and the rest to produce flour. Together with flour producers, the ministry estimates that the imported wheat will cover flour demand for five months depending on the heightened state of preparedness.

Farmers are accepting this import quota as they are concerned that the global epidemic will lead the public – children, young people and the elderly – to starvation. If Russia closes its borders, wheat import will cut off and cause serious problem for flour supply. Moreover, we don’t know how long the coronavirus situation will continue for. Considering all of these factors, all sides need to thoroughly assess the situation and make appropriate decisions to avoid food shortage among the public now that the whole world is fighting to survive.

However, there is a common caution and frustration among farmers, which are that the import quota will overflow flour factories with wheat supply and that there will be no market for them to sell wheat after harvest season. This will put their effort to waste. Our association has requested the ministry and Food Security Council to pay special attention to these matters and supervise the import.

If it were a normal year, we would be talking about much different issues and doing different calculations. Now that the country is on a heightened state of preparedness, children are required to stay inside, and as the public is fighting against health risks of the virus, neither flour producers, farmers nor the state should be prioritizing their profitability or trying to make a show out of it. Instead, we must be working together, compromising and making accurate, research-based decisions to reassure the public.

We also looked into whether wheat will be imported with state money. The ministry has only set a quota for a strategically-important food – wheat – just like in previous years. The government will not be spending any money. Apparently, flour factories will procure wheat with their own money 100 percent and the government will exempt taxes on wheat imports to keep flour affordable for the public.

Some people complained that even though the authorities reported sufficient harvest of wheat last year, it is now planning to import more. They are speculating that the government is willing to spend a lump of money on wheat imports, or 200,000 MNT more per ton, compared to its spending on crop procurement from local farmers last fall. Can you comment on this?

As I mentioned before, 20 percent of the wheat harvested last year failed to meet flour production standards. The first frost of fall occurs between August 20 and 25 in agricultural fields and crops need to be planted during a specific period of time to ensure they sprout 85 days before the frost. This will enable farmers to harvest good quality crop. No matter how much effort farmers put, Mongolia faces a drought in spring and in August and September when crops mature, there usually is heavy rainfall, delaying the harvest process. In May, soil temperatures are too low for crops to sprout. Due to these factors, crops weren’t ready by harvest season last year and their quality didn’t meet standards.

The current wheat scarcity was caused by the said 20 percent low-quality crop and heightened consumption driven by precautionary measures (against the coronavirus). In addition, the government doesn’t give out money for importing wheat. Factories will have to buy it themselves in the quoted amount. Under these difficult conditions, people should refrain from spreading wrong information that could worry both the public and farmers.

The quota is for 160,000 tons of wheat, which is slightly over 40 percent of Mongolia's annual crop volume. Do you think farmers will be able to sell their crop later this year?

This is the issue we’re most concerned about. We’re discussing it with the ministry but right now, the country is on heightened state of preparedness. Even if flour producers opt to buy wheat from local farmers, no one is able to supply. Even poultries are running out of feed. Chicken feed needs to be made with good quality wheat just like flour. Until new crops are available, poultry farms need 20,000 to 30,000 tons of wheat and they are requesting to get it from the imported wheat.

In addition, the government is considering creating food reserve in case the virus epidemic aggravates. It’s true that prices of Russian wheat cost 150,000 to 200,000 MNT higher than locally-produced wheat. There is a high chance this year’s harvest will be sold for the same price in fall. In general, the state has maintained flour prices for years to supply affordable flour to the public. Due to this, farmers aren’t able to cover their costs, which causes the sector to go down the drain and farmers to face losses. If the government continues to uphold this policy, farmers’ investment will be worth nothing.

You’ve been working in the agricultural sector for more than 20 years. Has Mongolia studied its soil in depth? How can farmers increase the amount of harvest yield?

The involvement of scientific organizations is very important for increasing crop yield and diversifying soil studies. The Institute of Plant and Agricultural Sciences in Darkhan-Uul Province is globally recognized and has many researchers. Many of their ideas have been introduced to the agricultural sector but there is no support through policy. The main route to strengthening the agricultural sector is to work closely with scientific organizations. Incorporating innovations, research-based technology, and solutions will enable us to protect our crop from weather-related risks.

At present, an average of 13 metric centners (approximately 1.43 tons) of wheat is harvested per hectare in Mongolia. The area is regularly fertilized to ensure it can be used to grow crops for a long time. Our farmers pay special attention to this matter. It’s commendable how they managed to develop agriculture 1,000 meters above sea level and are able to locally supply wheat, potato, and other vegetables. Though it’s challenging, Mongolia has no choice but to engage in agriculture and farming.

Some people say that Mongolia could become an exporter of wheat and flour. Apparently, Chinese businesses and people are very interested in buying Mongolian flour as it is known to be organic. What is the wheat to flour production ratio?

Our association conducted studies at all flour factories in soums and provinces in 2018. There are 10 to 12 factories active in the country and three to four small plants are operated seasonally. These 12 factories can produce around 500,000 tons of flour per year if they operate at 80 percent of their full capacity. However, they currently work at 70 percent capacity, taking into account their sales and resources. If they have adequate raw material and work at 95 percent capacity, local factories are fully capable of exporting flour to China.

Dulguun Bayarsaikhan