New study finds potential in Zavkhan’s aaruul and garment production
- By Dulguun Bayarsaikhan -
- Sep 01,2019
Zavkhan Province should focus on the production of aaruul and knitted wear instead of its local brand -- garlic, as revealed by a new project carried out by World Vision.
World Vision and the Mayor’s Office of Zavkhan Province are carrying out a four-year project, entitled “Enhance civil society organization (CSO) contribution to sustainable local economic development and growth of Zavkhan Province”, through a grant provided by the European Union. The project has been designed to increase collaboration of CSO and local authorities and address the need for households to diversify income. Its overall objective is to build a sustainable economy and develop Zavkhan Province through a better organization and capacity building of CSO.
Running for the second year, the project has successfully completed a value chain (VC) analysis in 12 soums of the western province in Mongolia. The analysis was conducted in an effort to increase income generation opportunities among vulnerable groups through the value chain, and improve local economy and diversify household income through strategic partnerships of the local authority and CSOs.
The analysis was conducted in conformity with World Vision’s Local Value Chain Development project model step-by-step guide. It is composed of two main stages. The first one is to scope potential markets and products, and select number of products. The second is to analyze the selected products using participatory value chain analysis. Before starting the analysis, a preparation work -- including capacity building of the project staff and local partners, detailed action planning and budgeting, formation of a research team, and local authority meeting -- was properly provided by market facilitator and project staff who were supported by technical specialist from World Vision. The preparation work was done during January and February. As a result, the research team was successfully established with 30 members including representatives of the local government, CSOs, local universities, and community producer groups.
Surveying 741 local producers, 94 other community members and 94 consumers living in 12 soums of Zavkhan Province, the team identified 30 products with the highest production and market potential. However, when the team did a situational analysis, six of these products were found to have the greatest potential and they are aaruul (dried curd), leather products, red garlic and vegetable, readymade garment/ sewing product, felt making products, and wooden furniture.
The main eight criteria to select the most competitive and marketable products were:
- 1. Quick win potential
- 2. Strong and Growing
- 3. Reasonable price
- 4. Impact potential
- 5. Product preservation
- 6. Eco-friendly
- 7. Possibility of forming groups
- 8. Governmental supporting policy/ Business enabling the environment
As a result of further VC analysis, dry curds and ready-made garment products were found to have the highest potential in providing quick results with large production volume, not to mention that these products are reasonably priced and marketable for many poor producers compared to other products. Taking this into account, the project has decided to fully support the production, marketing and the provision of after-sales service of these two products until they become the most competitive pro-poor value chains.
The team found that 228 CSOs and individuals produce curds and other dairy products across the 12 soums, which is relatively high compared to other producers. They also expect the number of producers and profitability in the curd production to be increased through the upcoming value chain development process, especially through product improvements and market participation.
Looking at the improvements suggested by a business canvas model and its consumer surveys, the majority of curd buyers would be in Ulaanbaatar. At the same time, curd producers were advised to improve their products, producing them in various forms such as chips, pellets, and with supplements (such as vitamins, fruits, and so on), as consumers are keen to use unconventional types of curd products. In addition, experts suggested using different forms of packaging, ranging from 100 grams to a kilogram.
As for the ready-made garment production, there are currently 216 producers in the surveyed soums and the profitability analysis estimates that the profit per producer can surge by more than 30 percent.
The other products -- vegetables, leather products, wooden products and felt products -- were found to be less competitive than curd and tailored products because they had an insufficient number of producers, limited number of beneficiaries, or low profits. The project team emphasizes the need for locals who produce vegetables and leather, wooden and felt products to boost the eco-friendly production process.
According to the project team, the provincial and soum governments are very supportive of this value chain analysis. This will enable the soum and province to diversify its food production and improve the product quality through the Joint Economic Development Policy and subprograms, and perhaps through the actions taken as part of the provincial mayor’s action plan.
Head of the Finance and Treasury Department of Zavkhan Province Mayor’s Office, J.Khurelbaatar remarked, “Our office first participated in the baseline survey for the project in 2017. I joined the project team as a representative of the mayor’s office. This year, our work is progressing as planned. In general, I’m sure that the number of beneficiaries of the project will increase and the project will considerably benefit Zavkhan Province as a whole.”
“The key objective of this project is to support individuals and entities engaged in dairy and other food productions as well as tailoring industry. By doing so, we can increase production and jobs,” said National Coordinator for Technical Support Unit T.Enkhtsetseg.
World Vision reported that the local administration is supportive of the project as they are also carrying out number of projects with similar purpose. For instance, the local administration is implementing “Healthy Food – Healthy Mongolians” subprogram and local level programs such as “Production in Zavkhan and Local Consumption and Export”, “Zavkhan with Standard” and “Job for each Household”.
The analysis suggested that the support for curd and tailoring businesses will benefit not only local households but also the entire economy of Zavkhan Province. The project team estimates producers will get approximately 500,000 MNT higher revenue in the first year as a result of the World Vision's Local Value Chain Development project.