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Mongolia
After Mongolia's Harsh Winters, Herders Learn to Boost Dairy, Cashmere Sales
Herders harvest potatoes using machinery purchased through a bank loan with assistance from the Gobi Initiative.
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HARHORIN, Mongolia - In the grasslands around this ancient Mongolian capital, people have made a living from herding livestock since the days of Chinggis Khan, 600 years ago.
Recently, they have begun to produce vegetables, dairy products, and cashmere. Now, herders have learned how to market these items to raise cash incomes, through a U.S. funded project: the Gobi Initiative (GI).
"Dairy production is a traditional Mongolian livelihood - we've always made products for ourselves and the kids," said Tserendavga, 71, who has herded sheep and goats near Harhorin for 11 years. "But now we're learning the business mindset and we're thinking more about a profit."
Tserendavga's family is one of six that created a cooperative last year and learned how to plan a business through GI. They now sell goat milk, cream, and cashmere, and have a written business plan spelling out their cash flow, sales, market potential, and overall business viability.
This year the group took its business plan to a bank, requesting a $2,600 loan. The banks had grown used to seeing such requests.
Mongolia's competitive banking sector was established in the past decade after USAID helped create one bank, restructured another, and promoted policy reform. Because only about 1 percent of herder groups default on their loans, banks are eagerly lending to them.
"What we're doing is supporting what was already here. The success of the Gobi Initiative is in its timely technical assistance which has enabled these herder groups to succeed," said Sean Granville-Ross, country director for Mercy Corps which carries out the Gobi Initiative with USAID funding.
GI works with 5,000 herders in 171 groups in six provinces. It started seven years ago during two consecutive zuds -- harsh winters with snow and ice that killed livestock and cut incomes for the 40 percent of Mongolains who are nomadic herders.
GI replenished livestock and trained herders to improve the quality of their animals. In 2004, the project pledged $8.7 million over five years to work on business development among herders and other rural Mongolians.
To date, it has created 300 businesses and trained 2,500 entrepreneurs. Trade fairs and exhibitions are held to help herders sell cashmere, dairy, felt, and other products.
The project publishes a quarterly magazine, Rural Business News, and airs daily radio shows. A TV series offers market and animal care tips, and tells stories of herders who have developed and grown businesses.
Work with the banking sector has led to the consideration of herders as lending clients, and over the past year alone annual interest rates dropped from 36 to 22 percent because of competition among banks for GI clients.
Around the vast Gobi Desert, training sessions teach how to write a business plan, and to evaluate local markets for developing new products. Packaging and product presentation are taught and technical assistance offered.
For example, one year after a herder cooperative decided to plant vegetables and hay, they wrote a business plan, got a $2,500 loan, bought a truck, and produced 75 tons of hay - more than three times the previous year.
"The truck was the main factor in increasing production," said cooperative head Davaadavga. "But we've also learned how to better divide labor among ourselves, and people now can work a little less, because transport doesn't take so long."
Since it joined GI, the cooperative has sent three children to university.
URBAN GROWTH
A project aimed at urban residents -- the Growing Entrepreneurship Rapidly (GER) Initiative --offers business development and employment assistance. Ger is also the name of the traditional Mongolian tent.
Mongolians are an entrepreneurial people, said Margaret Herro, country director for CHF International, which carries out GER - they just need a hand with business planning and access to credit, or finding a job.
Many of GER's clients live in the outskirts of Ulaanbaatar, which has seen its population grow since the zud years, and is now home to nearly one-third of Mongolia's 2.8 million people.
The project charges small fees for business and vocational training in carpentry, tailoring, and agriculture. It has registered 12,000 businesses and placed over 4,000 clients in jobs.
On a cold May afternoon on the outskirts of Ulaanbaatar, a few young men look through lists of job openings at one of GER's 16 countrywide offices. A man discusses business ideas with a staffer; half the office is crowded with elderly people and pregnant women who have come to hear Labor and Social Welfare Department officials explain how to get social benefits.
Linking government services and people is a part of the project, Herro says. But linking unemployed people to jobs -- and entrepreneurs to banks and buyers -- is the bigger component.
Sansar, 26, is a typical GER client. He learned to sew not long after his family migrated to Ulaanbaatar, and was making women's suits for minimal income. In 2004 he joined GER, learned some new patterns, and wrote a business plan. Last year he got about $3,000 in loans from two commercial banks.
Now Sansar has moved out of his ger, and lives in a two-story house. Work is usually done upstairs, but on a snowy day Sansar, his wife, and two employees were working downstairs in the warm living room.
Fabric was strewn on the floor, along with measuring tape. An employee ironed women's three-piece suits in one corner, while another sewed buttons onto jackets. Until last year, Sansar and his wife made at best six suits a day. Now they are making 10, and his wife spends her days selling them at a market stall.
"Sales are very good now because secondary and university students are graduating and buying a lot of suits," Sansar says. "Now we're selling about 10 per day."
Business is equally busy at Uuganbayar's carpentry shop, another GER client.
As a school teacher, Uuganbayar made chairs and tables as a hobby. His brother, who made wooden instruments, has carved intricate designs since he was a child. Last year the two joined GER, received advice and training, and quit their jobs to start a business. As the quality of their work improved, GER linked Uuganbaar to seven large companies that now regularly order his products.
Now the brothers sell chairs, tables, cribs, and other furniture as fast as they can make them, said Uuganbayar, 29. With a loan last year, they bought new carpentry equipment and now hire part-time workers when they have many orders.
"Anything in this book," Uuganbayar says flipping through a Russian furniture catalogue, "we can make."
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