The importance of a strong domestic agricultural sector, and within it, a strong flour market sector, has been recognized by the Mongolian people and government for decades. There is an increasing demand amongst Mongolian consumers for flour and flour-based products. At first glance, the country seems well-prepared to meet consumers’ needs. Mongolia has a significant installed milling capacity and a government committed to supporting the flour market. Yet, the country continues to rely on wheat and flour imports from its neighbors to meet domestic demand. An unpredictable wheat harvest precludes the development of a stable domestic flour production pipeline. If Mongolia is to reduce its dependence on wheat and flour imports, steps must be taken to improve the reliability of domestic wheat production through focusing on increasing yields and wheat quality.

With abundant copper, gold, coal and uranium resources, Mongolia’s mineral wealth is estimated to be staggering US$ 1 trillion. In mid-2005, Mongolia made this treasure trove available to foreign and domestic investors alike. Mongolia’s mineral product exports increased more than six times to US$ 4 billion from 2004 to 2016. But Mongolia possesses another resource in abundance that remains relatively unknown. Mongolia has one of the highest per capita livestock ratios in the world, with 19 heads per person. And with 0.5 square km per person, it is also one of the most sparsely populated countries as well. Mongolia’s livestock sector specifically the meat industry, holds tremendous potential. Yet Mongolia has not been able to leverage this endowment into the creation of a global industry. From 2004 to 2016, agricultural product exports decreased 21% to US$ 330 million.

Every few months, the Mongolian government announces and signs a power purchasing agreement or license for a new power plant. Despite having approved over 60 power plant projects over the last few years, Mongolia today faces serious energy challenges, namely growing domestic demand — up to 7,100GWh in 2015 — and ageing or, more accurately, obsolete infrastructure. Mongolian foreign energy imports grew to 20% of overall electricity consumption in 2015. Yet there have been no major generators constructed in Mongolia since 1983. So what is preventing the successful development of additional power capacity? Why does Mongolia have so many projects in the pipeline, but so few successes? MICC finds one explanation for Mongolia’s lack of new capacity to be, almost paradoxically, the large number of projects currently under development.

Mongolian cashmere producers have reason to be optimistic. In the past decade, recovered global demand offset weak domestic economic conditions and garment companies like Gobi established international beachheads. Cashmere production levels are breaking records. And government programs, international financial institutions, and domestic companies are promoting in-country value-add cashmere processing. However, the industry’s rapid growth has degraded the average fiber quality and made the industry more susceptible to a catastrophic supply-chain shock.