Mongolia's Dairy Industry Overview

Mongolia's dairy industry is a critical component of its economy, deeply rooted in the country's rich cultural heritage of livestock management. In 2023, the industry was supported by approximately 1.19 million dairy cattle and 1.03 million dairy goats, enabling the production of 576 million liters of milk annually. This highlights the sector's significant contribution to the national economy.

Dairy Processing and Production

Mongolia's dairy processing capabilities are robust, with facilities capable of managing approximately 200 million liters of milk each year. These facilities produce various value-added products, including around 18,000 tonnes of cheese and 25,000 tonnes of milk powder and whey annually. This reflects the industry's strong processing infrastructure.

Key Enterprises

Several enterprises are pivotal in advancing Mongolia's dairy industry. Notable companies include Suu JSC, Monfresh Dairy LLC, Undurkhaan Dairy, Asem Agro, and Tes Agro LLC. Important dairy farms such as Bayankhoshuu Dairy Farm, Erdene Farm, Khustai Dairy Farm, and Selenge Cooperative significantly contribute to the industry's production capacity.

Exports and Imports

In 2023, Mongolia exported approximately 9 million liters of milk and dairy products, with primary markets being China and Russia. Simultaneously, the country imported about 12 million liters of dairy products, mainly from New Zealand and the European Union. Mongolia is also a major importer of Russian ice cream, which diversifies its import portfolio.

Significant Events

A notable development in the industry is the near completion of a camel milk processing plant in Umnugobi aimag, expected to begin operations in October 2024. Additionally, APU Dairy, the second-largest dairy producer in the country, secured a $40 million loan for expansion, including $20 million from the European Bank for Reconstruction and Development (EBRD), indicating confidence in the sector's growth potential.

Market Trends and Future Outlook

Despite an anticipated 10.9% reduction in livestock numbers in 2024, bringing the total to 57.6 million animals, Mongolia's dairy market is poised for continued evolution. The industry's foundation in Tsagaan Idee, the traditional "white food" of Mongolia, is being transformed with innovative products, suggesting a promising future for the sector.

Health Concerns

A recent outbreak of foot-and-mouth disease was reported in the Ulziin Khayalga area in eastern Mongolia. Approximately 19,000 animals in the affected zone are scheduled for vaccination, demonstrating proactive measures to contain the disease. Mongolia remains a significant importer of Russian veterinary vaccines, essential for maintaining animal health and productivity.

Imports from Kazakhstan and Export Expansion

Mongolia also imports a variety of Kazakhstani dairy products such as yogurt, kefir, ryazhenka, butter and spreads, and cheese and cottage cheese, further diversifying its dairy consumption. Mongolia contributed to cheese and curd imports to Kyrgyzstan, though in smaller volumes. Namyang Dairy Products has secured a significant export agreement with Mongolia's leading food distributor. The agreement, valued at 10 billion won, aims to expand Namyang's presence in the Mongolian market by exporting Korean food products, particularly focusing on dairy products.

Trade Agreements

The Eurasian Economic Union (EAEU) and Mongolia discussed a temporary trade agreement, which includes tariff reductions and the supply of Mongolian meat to the EAEU. Mongolia and Russia have entered into a memorandum to expand trade and economic cooperation. Mongolia aims to expand trade in value-added products, investment interaction, and e-commerce with Russia. It supports the aimags of Mongolia in developing interregional and cross-border cooperation.