Mongolia's Yak Down and Camel Wool Supply

M O N G O L I A
S D C G r e e n G o l d P r o j e c t
M a r k e t i n g C o m p o n e n t
S t u d y o n t h e s u p p l y o f y a k d o w n a n d
c a m e l w o o l i n t h e p r o j e c t r e g i o n
P r e s e n t e d t o
Swiss Agency for Development and
Cooperation (SDC)
Ulaanbaatar, Mongolia
March 2014
I m p l e m e n t e d b y :

A d d r e s s
GFA Consulting Group GmbH
Eulenkrugstraße 82
22359 Hamburg
Germany
Phone +49 (40) 6 03 06 – 166
Fax +49 (40) 6 03 06 – 169
E-mail ronny.staffeld@gfa-group.de
SDC Green Gold Project
Marketing Component
Mongolia
S t u d y o n t h e s u p p l y o f y a k d o w n
a n d c a m e l w o o l i n t h e p r o j e c t r e g i o n
R e p o r t
Prepared by: Altanbat Tsedevsuren, Bolormaa Vanchigdorj, Carl Krug
Y o u r c o n t a c t p e r s o n
within GFA Consulting Group GmbH is
Ronny Staffeld

i
Contents
1 INTRODUCTION TO THE SUPPLY STUDY 1
1.1 The Green Gold project as framework of the supply study 1
1.2 Objective of the supply study 1
1.3 Methodology of the supply study 3
1.4 Scope of the supply study 3
2 SURVEY RESULTS ON SUPPLY OF YAK DOWN 5
2.1 Number of yak heads and yield of raw material in general 5
2.2 Survey results on yak down supply in the project region 7
2.2.1 Head number of yak and yak down resources in the
project region 7
29,200 8
2.2.2 Survey on coat-colour of yaks 9
2.2.3 Collection of yak down 11
2.2.4 Marketing of yak down 15
3 SURVEY RESULTS ON SUPPLY OF CAMEL WOOL 17
3.1 Head number of camel in Mongolia and camel wool yields 17
3.2 Survey results on camel wool supply in project target
aimags 20
3.2.1 Collection of camel wool 20
3.2.2 Marketing of camel wool 22
3.2.3 Increasing the volume of raw material and improving its
quality 25
4 THE ROLE OF COOPERATIVES IN RAW MATERIAL
SUPPLY 27
5 CONCLUSIONS AND RECOMMENDATIONS 33

ii
LIST OF TABLES, FIGURES & PHOTOS
Table 1 Number of study objects 3
Table 2 2013 Annual census of cattle (yaks) in the project
target aimags 8
Table 3 Number of yaks and volume of yak down resources in
the project target soums 8
Table 4 Yak coat-color distribution in percent in the project
target aimags 9
Table 5 Earnings from camel wool as percentage of total
earnings by number of herders 25
Figure 1 Head number of yaks in Mongolia 5
Figure 2 Number of yaks in the Aimags of Mongolia 6
Figure 3 Coat-color of yaks in percent and average for 6 project
aimags 10
Figure 4 Opinion of herders on possible weakness of yaks
colored light white 11
Figure 5 Share of yak herders collecting yak down in percent 11
Figure 6 Intensity of yak down collection by yak herders in
percent 12
Figure 7 Collection methods of yak down used by herders by
aimags 12
Figure 8 Cooperation of herders for yak down preparation 13
Figure 9 Assessment and proposals regarding upgrading the
collection of yak down 14
Figure 10 Directions of yak herders for yak combing in percent
and by aimags 15
Figure 11 Marketing channels of yak down in percent and by
aimags 16
Figure 12 Head number of camels in Mongolia (in thousands) 17
Figure 13 Head number of camels in surveyed soums and camel
wool resources 19
Figure 14 Preparation of camel wool in aimags in percent of the
potential resources 21
Figure 16 Marketing channels of camel wool in percent and by
aimag 23
Figure 18 Proposals of cooperatives on expansion of their
activities in percent 28
Photo 1 Interview with herder (Tsenkher soum, Arkhangai),
group discussion (Tsengel soum, Bayan-Ulgii) 4
Photo 2 Yaks grazing on pastureland in the Khangai region 6
Photo 3 Hair cover of yak 7
Photo 4 White yak, Tosontsengel soum, Zavkhan aimag 10

1
1 I N T R O D U C T I O N T O T H E S U P P L Y
S T U D Y
1 . 1 T h e G r e e n G o l d p r o j e c t a s
f r a m e w o r k o f t h e s u p p l y s t u d y
The SDC project “Green Gold” has the overall goal of improving
livelihoods for herders and reducing poverty in rural Mongolia. The “Green
Gold” project (in the following GG project) empowers herders to secure
user rights for their traditional rangelands in order to motivate them to
manage those pastures in a more sustainable manner. The project was
started in 2004 and is now in its fourth and final phase. It is the main
instrument to achieve outcomes in the “Agriculture and Food Security”
domain of the Swiss Cooperation Strategy for Mongolia (2013-2016), and it
specifically contributes to improved equitable access to markets through
cooperatives and other economic groupings. The project is in line with the
policy priorities of the Government of Mongolia and directly contributes to
the National Livestock Programme and the National Cooperative
Development Programme.
The major achievement of the GG project has been the active involvement
of 60,000 herder households in 679 PUGs established in 66 soums and
which are affiliated to 66 associations of PUGs (APUGs)... 470 PUGs have
made rangeland use agreements with local governments, and 10 APUGs
have received mandates to implement government projects. 35 economic
cooperatives among PUG members have been established, with a total
equity of 640 million MNT, playing active roles in organization and technical
support for livestock production, processing and marketing. It is recognized,
however, that PUGs, APUGs and herder cooperatives in the soums are at
different stages of maturity and levels of capacity. On the one hand, this
indicates a continued need for technical support. On the other hand, the
current diversity of experiences provides a rich basis for herder-to-herder
exchange and mutual support.
The marketing project is a new component of the GG project. Its main
outcome is to facilitate market access by linking yak herders to processing
companies and to increase the income of yak herders. Likewise the
component is also directed to the marketing of camel wool and to
increasing the income of camel herders. The geographic focus is on
selected soums with yak and camel herders in these seven Western
aimags: Arkhangai, Bayankhongor, Bayan-Olgii, Gobi-Altai, Khovd, Uvs,
Zavkhan.
1 . 2 O b j e c t i v e o f t h e s u p p l y s t u d y
The objective of this study is to analyze the actual and potential production
of yak down and camel wool in the project region. The results will be
incorporated into the study of the value chains for yak down and camel
wool and will be used to plan the approaches and activities of the marketing
component.

2
In order to achieve this objective, the research studies the following
aspects:
Actual supply capacity of raw materials
 Quantity of livestock resource (herd structure regarding sex,
age, colours), numbers of relevant herders, and supply capacity
of raw materials,
 Methods of preparation (combing, cutting, working capacity,
productivity),
 Sales channels of raw materials (domestic processors, changes,
agents of processors, Chinese buyers and sales through herder
organizations (APUGs, cooperatives),
 PUGs and cooperatives, soum and aimag-level Federations of
PUGs (status, activities, establishment, members and
management, role in the supply chain)
Quality system in the supply chain
 Awareness among herders and herder organizations about
quality of raw material,
 Knowledge about influence of collecting methods on quality,
 Knowledge about influence of quality on processing and
production of final products,
 Knowledge on sorting (by age and sex, colours, etc. ), first
processing and breeding
Potential and conditions for increase of supply capacity and quality
 Willingness of herders to intensify and improve collection from
existing animals
 Perspectives to increase the herds of yak and camel
 Expectations of herders regarding other actors in the value
chain
Partnership building between herders and processors
 Past practices regarding cooperation agreements between
herders and processors: volumes, terms, payments, sanctions
etc.
 Practices preferred by herders
 Best practices and experiences
Needs for qualification and consultation
 Training of herders on combing, sorting, first processing
(subjects, methods, schedules), quality issues,
 Training and consultation of cooperatives, PUGs and APUGs on
institutional strengthening, improved role in the value chain, and
quality issues.
 Other expectations from the project, soum and Aimag
administration

3
General information on the livestock sector and environment in the
relevant soums
 Social economic condition,
 Pasture degradation,
 Infrastructure development,
 Water supply and others,
 Income distribution by types of livestock,
 Development policies and instruments of soum and Aimag
administrations.
1 . 3 M e t h o d o l o g y o f t h e s u p p l y s t u d y
The study data were collected at the two administrative levels aimag and
soum and was obtained from primary as well as secondary resources.
In the pre survey stage all available information from different resources
like official statistics, branch information, resolutions, programs, and
regulations of the Government and local administrations was utilized.
For the collection of primary data the following participatory methods were
used:
Questionnaire: interviews conducted with a specific number of herders,
PUGs, APUGs and cooperatives in targeted soum and aimags,
Discussion: For collection of data on concrete subjects group discussions
were held, for example with members of cooperatives and PUGs,
Additional information: Internal information, which is not contained in
statistics collected from related organizations and persons by specific
tables.
1 . 4 S c o p e o f t h e s u p p l y s t u d y
The study was conducted in the preselected soums in all 7 aimags of the
project region: Bayan-Ulgii, Uvs, Khovd, Zavkhan, Gobi-Altai,
Bayankhongor and Arkhangai. The study involved 2092 herders from 45
soums and it covered 68.3% of the total yak population and 61% of the total
camel population in the targeted aimags.
Table 1 Number of study objects
Aimag
Number of
Soums Camel herders
Yak
herders
APUG
Primary and
secondary coops
Bayan-Ulgii 5 117 177 5 5
Khovd 8 184 188 8 1/8
Arkhangai 7 322 5 1/4
Zavkhan 3 77 3 1/2

4
Aimag
Number of
Soums Camel herders
Yak
herders
APUG
Primary and
secondary coops
Bayankhongor 10 250 206 4 6
Uvs 6 137 145 6 5
Gobi-Altai 6 289 6 1
Total 45 977 1115 37 34
The study involved all major stakeholders of the project component, i.e.:
yak and camel herders, PUG and cooperative leaders and members, soum
governors, experts of the soum administrations, changes (raw material
traders)and SMEs working in the fibre sector. The survey team has
endeavoured to keep gender balance among the interviewees and the total
gender ratio of respondents was about 40 percent female and 60 percent
male. The significance of the project soums in terms of livestock population
determined the number of interviews (from 5 up to 15 per soum).
Photo 1 Interview with herder (Tsenkher soum, Arkhangai), group discussion
(Tsengel soum, Bayan-Ulgii)
Questionnaires were taken on average from 28-50 herders in one soum.
Apart from that, meetings were organized with herder groups in 24 soums.

5
2 S U R V E Y R E S U L T S O N S U P P L Y
O F Y A K D O W N
2 . 1 N u m b e r o f y a k h e a d s a n d y i e l d o f
r a w m a t e r i a l i n g e n e r a l
The high mountain area and pastureland occupy over 30 % of rangelands
in the Khangai region of Mongolia. It is considered as the potential reserves
for production of animal origin products and raw materials.
There are about 14.2 million1 yaks in the world especially in the countries
China, Mongolia, Afghanistan, Nepal, Russia, India, Kirghiz and Tajik
located in Central Asia respectively. The Republic of China takes the first
place with its number of yaks (13.3 million) and Mongolia is on the second
place with around 0.6 million yaks.
99.5% of the total number of yaks lives in 9 aimags in the Khangai and Altai
mountain regions of Western Mongolia. The total head number of yaks and
of khainag (cross breed between yak and Mongol bull) was 833.9 thousand
in 1997 and decreased by 46,4% to only 447 thousands in 2003. As seen
from the annual livestock census, the number of yak was reduced further
by 5,12 % to the minimum of 424.1 in the year 2010. Since then until 2013
the number of yaks increased by 38 percent to 585.000. It is estimated that
1.29 2percent of the animals in these statistics are pure yaks. The head
number of yaks has increased by 7.4% from 2012 to 2013.
Figure 1 Head number of yaks in Mongolia
1 http://www.fao.org/docrep/006/ad347e/ad347e05.htm
2 http://www.nso.mn/content/1
1 2 3 4 5 6 7 8 9 10 11 12
Year 1997 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Head 833900 447000 464100 481200 536500 600000 627700 601500 424100 440300 545500 585161
0
100000
200000
300000
400000
500000
600000
700000
800000
900000

6
Figure 2 Number of yaks in the Aimags of Mongolia
In 2013, Arkhangai aimag had the largest number of yaks (21.274) or 36%
of the national herd. All 7 project aimags comprise about 65 percent of the
national yak herd.
The biological characteristics of yak focus on its ability for
acclimatization to harsh weather condition in the high mountain areas of
Central Asia. Yaks have the fur cover with thick and long hair along its
belly, forequarter and thigh respectively. It has the longer tail and thick skin
with relatively few numbers of sweat glands and grub hole, therefore yaks
have relatively low level of hypothermia and have adapted to the cool
climate conditions.
Yaks are grazing scanty bushes and shrubs in lands with hard surface and
rocks and with sharp and steep risings and ravines around high mountains.
Photo 2 Yaks grazing on pastureland in the Khangai region
Arkhangai
36%
Bayankhongor
9%
Khuvsgul
15%
Uvurkhangai
9%
Zavkhan
7%
Bayan-ulgii
6%
Khovd
5%
Uvs
1%
Gobi-Altai
1% Other
1%

7
Yak’s hair cover and hair from the mane and tail: The body hairy cover
of yaks protects the organism from any adverse impacts from the
environment and regulates the hypothermia. The hair cover and skin of
cattle are directly connected as the hairy cover is subject of the skin as its
feeding medium. The hair cover is dense and serves as “heat keeper” like
warm clothing for the body especially in the cold climate of the mountain
areas. The hair cover of yak is different in the body parts: in the main body
parts it is rich with cashmere while the lower part of the forequarter, thigh
and belly has comparatively thick and long hair. The long tail is shielding
the back of the thigh and grain. The forehead again has dense and long
hair.
In terms of morphology, the hair
cover of yak is divided into three
groups: namely fine soft
cashmere, coarse rough hair
and intermediate hair
respectively.
The cashmere and intermediate
hair is being shed in spring and
beginning of summer and newly
grows in the end of summer and
beginning of fall season. Hair
from the mane and tail is not
regularly shed and is gradually
replaced.
Photo 3 Hair cover of yak
Yak cashmere hair is fine, soft and highly wrinkled and composed of cortex
and scaly layers accordingly compared to rough hair. It is able to be easily
tangled because of its ring shaped scales and round cross section.
Guard hair or rough hair is relatively medium coarse, gentle, unwrinkled
and sometimes likely curved and comprises one third to one half of the
entire hair cover.
The cross section of rough hair is shaped oval and has the more narrow
and black diameter than cashmere and rough hair. The thicker hair than
cashmere without black diameter is called the intermediate hair.
2 . 2 S u r v e y r e s u l t s o n y a k d o w n s u p p l y
i n t h e p r o j e c t r e g i o n
2 . 2 . 1 H e a d n u m b e r o f y a k a n d y a k d o w n
r e s o u r c e s i n t h e p r o j e c t r e g i o n
The representation of the 25 soums in 6 aimags in the survey was based
on the nationwide statistics for yaks in 2013. On this basis the survey
covered 50.8 % of total number of yaks and 68.3% of surveyed aimags
where yaks are.

8
Table 2 2013 Annual census of cattle (yaks) in the project
target aimags
Aimags
Total number
of yaks
Yak numbers in
surveyed soums
Percentage of yaks
surveyed
Arkhangai 212740 142214 66.8
Bayankhongor 109953 85892 78.1
Zavkhan 42145 21139 50.2
Khovd 26605 21158 79.5
Uvs 7482 2490 33.3
Bayan-Ulgii 36854 24596 66.7
Total 435779 297489 68.3
Table 3 Number of yaks and volume of yak down resources in
the project target soums
No Aimags and soums
Total head number
of yaks
Yak down resources,
kg
Arkhangai 142,214 56,886
1 Chuluut 36,145 14,458
2 Tariat 31,708 12,683
3 Undur-Ulaan 26,052 10,421
4 Khangai 28,313 11,325
5 Ikh tamir 17,679 7,072
6 Tsenkher 20,325 8,130
7 Tsahir 18,137 7,255
Zavkhan 29,200 11,676
8 Ikh uul 14,448 5,779
9 Otgon 8,061 3.224
10 Tosontsengel 6,691 2,676
Bayankhongor 85,892 34,357
11 Erdenetsogt 31,921 12,768
12 Galuut 20,955 8,382
13 Jargalant 18,402 7,361
14 Ulziit 5,290 2,116
15 Gurvanbulag 9,324 3,730
Bayan-ulgii 24,596 9,838
16 Deluun 10,107 4,043
17 Altai 4,369 1,748
18 Tsengel 2,763 1,105
19 Buyant 5,817 2,327
20 Ulaan hus 1,540 616
Khovd 21,158 8,463
21 Munkhkhairkhan 5,228 2,091
22 Tsetseg 2,135 854

9
No Aimags and soums
Total head number
of yaks
Yak down resources,
kg
23 Duut 4,786 1,914
24 Must 9,009 3,604
Uvs 2,490 996
25 Bukhmurun 1,575 630
26 Turgen 915 366
27 Khovd 814 325
Total 305,550 122,545
According to the estimation done by surveyors, at average 0,4 kg of yak
down can be collected from each yak. Based on the number of about
300,000 yaks then a total of about 120 tons of yak down can be collected.
This represents the potential resource of raw material in the project region.
2 . 2 . 2 S u r v e y o n c o a t - c o l o u r o f y a k s
In total 59,282 yaks in 26 soums from 6 aimags were surveyed on coat-
colours and covered only 10.1 % of total numbers of yak in Mongolia.
Table 4 Yak coat-colour distribution in percent in the project
target aimags
Coat-
colour
Aimags
Average
Arkhangai
Bayank-
hongor
Zavkhan Khovd Uvs Bayanulgii
Black 65 50 82 59 64 58 63
Brown 15 19 15 11 11 12 14
Dark
blue
5 10 1 9 10 12 8
Light
white
5 9 1 10 7 10 7
Motley
(mixed)
10 11 1 11 7 9 8
Black and brown coat-collared yaks have the highest share while only
about 5 percent of yaks are of dark blue or light white colours.

10
Figure 3 Coat-colour of yaks in percent and average for 6
project aimags
As seen from the survey findings, 63% black coat-collared, 14% brown, 8%
dark blue, 7% light white and 8% are of mixed colours (motley)
respectively.
Yaks with coat-colours black and brown are dominating in Mongolia. Only
about 7 percent of the total number of yaks is light white, which represent
the colour with the highest actual demand among consumers in
international markets. The white collared yak is considered as a unique
feature of Mongolia which does not exist in China or Nepal.
Thus, the survey was asking
why herders in the past have
not increased the number of
yaks collared in light white.
The reasons stated
comprise: 7,6 percent of
herders state they have
lower milk output, 10,1
percent they are liable to fall
ill (e.g. with eye infection)
and 36,3 percent say they
are susceptible to cold
weather conditions.
Photo 4 White yak, Tosontsengel soum, Zavkhan aimag
However, from all respondents 20,3 percent stated that white yaks have no
weakness, and 25,8 percent mentioned that they do not know about this.
63%14%
8%
7% 8% Black
Brown
Dark blue
White
Motley

11
Figure 4 Opinion of herders on possible weakness of yaks
collared light white
The survey team found two herders in Chuuluut sum (Arkhangai Aimag)
owning each over 100 white yaks which are being bred in the family since
several generations. They mentioned that according to their long-term
experience yaks collared in light white have no specific weaknesses. It was
in general observed that herders do not pay attention to increase the
number of white collared yaks because processors offer the same price for
yak down irrespective of the colour.
2 . 2 . 3 C o l l e c t i o n o f y a k d o w n
Collection methods of yak down: the survey found that 66.3 percent of
herders collected yak down from their animals while 33.9 percent did not do
so. As a consequence about 30 percent of the yak down resources in the
project target aimags is being lost. The highest rates of yak down collection
in the aimags have Bayankhongor (94.2 percent), Arkhangai (87.9 percent)
and Zavkhan (78.6 percent). The high rate of yak down collection in these
aimags is results from the large number of yaks there and the close
distance to the buying processors in Ulaanbaatar.
Figure 5 Share of yak herders collecting yak down in percent
The analysis also surveyed the intensity of collection in more detail. Of the
responding yak herders 62 percent have combed up to 60 percent of their
total number of yaks while 11 percent combed between 60 and 90 percent.
Only 26 percent of the yak herders have combed more than 90 percent of
0% 20% 40% 60% 80% 100%
Arkhangai
Bayankhongor
Uvs
Average
low milking susceptible to cold no weakness
63,8
78,6
94,2
46,3 43,7 46,7
62,2
36,2
21,4
5,8
53,7 56,3 54,3
37,9
Arkhangai Zavkhan Bayankhongor Khovd Bayan-Ulgii Uvs Average
Prepared Do not prepared

12
the total number of yaks which they own. The highest levels of combing
were found in Bayankhongor, Arkhangai and Zavkhan aimags respectively.
This again demonstrates the potential for increased collection of yak down
especially in the three most western aimags Khovd, Bayan-Ulgii and Uvs.
Figure 6 Intensity of yak down collection by yak herders in
percent
The reasons stated by respondents for the low level of yak combing are as
follows: unable to sell the raw material (9,7 percent), missing knowledge of
combing methods (12.9 percent), lack of labour force (27,9 percent), low
sales price of yak down (49,6 percent) Much labour force is required to
comb yak down because of the large body and fierce behaviour of the yaks
and the relatively low yield. The survey also shows that many herders who
did not fully comb their yaks judge the sales price as not providing sufficient
incentives.
When asked about the method of yak down collection which they apply 55
percent of herders state that they comb the yak down, 35 percent shear the
yak hair including down and 10 percent use both of these methods.
Figure 7 Collection methods of yak down used by herders by
aimags
Arkhang
ai
Zavkhan
Bayankh
ongor
Khovd
Bayan-
Ulgii
Uvs Average
up to 30% 35 14 16 70,1 44 50 38
31-60% 34 7 25 23,0 33 25 24
61-90% 19 10 17 2,3 13 4,2 11
more than 90% 12 69 42 4,6 10 20,8 26
0
10
20
30
40
50
60
70
80
%
Arkhangai
Zavkhan
Bayankho…
Khovd
Bayan-Ulgii
Uvs
Average
89%
67%
81%
58%
26%
12%
55%
3%
18%
6%
33%
60%
88%
35%
8%
15%
14%
9%
14%
10%
combing shearing both

13
As can be seen from the figure, the majority of yak herders in the aimags of
the Khangai region are combing (Arkhangai 89 percent, Bayankhongor 81
percent, Zavkhan 67 percent), while the yak herders in the Altai region (Uvs
and Bayan-Ulgii aimags) are mostly shearing the yak down. The sheared
yak down contains a much higher content of less valuable coarse hair and
is less demanded by the processors.
The reasons stated by yak herders why the use the yak down shearing
method are: lack of labour force for large number of yaks 49 percent, 24
percent less knowledge of combing, 18 percent do not have the suitable
comb for combing which makes combing a time consuming activity and 9
percent state other reasons (low price of yak down and hard work of
combing etc.).
On the possible cooperation for yak down collection about 40 percent of
surveyed herders state that they have prepared the yak down alone without
assistance from others. 27 percent use the assistance of other herders, and
11 percent the support of cooperatives.
Figure 8 Cooperation of herders for yak down preparation
The combing of down from one yak takes 30-40 minutes if done alone and
20 minutes if done together with others. The survey found that herders
owning large number of yaks especially lack labour force for yak down
combing and do not utilize this potential source of income.
In order to overcome this appropriate actions could be taken, which were
discussed in detail with the yak herders during the survey:
 Herders can cooperate within the herders group (PUG) or in their khot
ails to help others who lack labour force,
 Unemployed or unskilled persons in the soum centers can be trained in
yak down combing to support local herders with large yaks herds and
receive incentives from the herders (e.g. share of the combed raw
material).
Regarding review and assessment of the current mechanism of yak down
collection, 63 percent of yak herders responded that it has to be upgraded
Arkhang
ai
Zavkhan
Bayankh
ongor
Khovd
Bayan-
Ulgii
Uvs Average
Prepare it alone 56 45 38 37 27 14 36
With other herders 19 17 34 29 20 45 27
With cooperative members 1 13 6 17 23 7 11
Others 24 26 23 17 30 34 26
0
10
20
30
40
50
60
%

14
no
problem
13%
improve
ment is
needed
63%
no idea
24%
53%
24%
19%
4%
government incentives for yak
down like for sheep wool
fix cost differently according to the
quality
primary grading and cleaning
should be done locally
Other
while only 13 percent do not see any constraints currently. In order to
upgrade the existing system for yak down collection, the herders propose
the following: 53 percent state that a government subsidy is required for
yak down collection similar to the one for sheep wool and camel wool, 24
percent propose a price difference taking account the various qualities of
raw materials and 19 percent propose the primary processing for quality
improvement of raw products in the rural areas.
Figure 9 Assessment and proposals regarding upgrading the
collection of yak down
Regarding further details 44 percent of surveyed yak herders said it is
necessary to base the government incentive system on different prices for
various qualities of raw materials, 33 percent propose contracts with
prepayments, 19 percent demand that processors communicate their
production requirements to herders. This is meant to maintain the feedback
between herders and processors in order to improve their cooperation.
The quality considerations of yak down collection: it is important to sort
the yak down by ages and colours of the animals in addition to keeping
combed and sheared yak down separate.
The sheared yak down has a high level of coarse hair and reduces the
production yield as well as increases the processing costs for processors.
Yak down shearing also has the effect to shorten the length of coarse hair
compared to camel wool and goat cashmere.
In fact, the better qualified yak down with narrow and soft diameter can be
collected from yaks in younger ages. Yak researchers maintain that the
fiber of yak down gets shorter with progressing age of the animal and this
raw material has a longer share of higher value fibres.
Therefore the focus should be directed at combing yak down with higher
quality and better yield from the younger yaks.
How to
improve?

15
Figure 10 Directions of yak herders for yak combing in percent
and by aimags
As seen from the survey results, on average 46 percent of herders do not
consider any particular criteria, 45 percent indeed focus on combing of only
younger yaks, 6 percent use a mix of indicators and 2 percent comb only
yaks with certain colours (e.g. white colour).
It is positive to note that 45 percent of yak herders comb yak down from
young animals in order to prepare yak down with higher quality. The yak
down yield is higher from the combing of younger yaks and requires less
labour. However, the herders remark that often this raw material is mixed
with other types (such as from old animals) prior to its arrival at the
processors.
The herders looking for yaks collared in light white usually focus on this
criteria in order to meet the demand of some processors and as a result of
the lack of labour force.
2 . 2 . 4 M a r k e t i n g o f y a k d o w n
According to survey results on average 58 percent of all yak herders sell
the combed yak down to travelling buyers (so called changes), 33 percent
to cooperatives, 6 percent to individuals and 3 percent to processing plants
through their agents.
66
74
37
34
58
45
2
4
4
4
2
6
4
4
16
8
6
26
22
55
58
25
92
46
Arkhangai
Zavkhan
Bayankhongor
Khovd
Bayan-Ulgii
Uvs
Average
Only young yaks Comb yaks with particular color
Observe another criteria Do not observe any criteria

16
Figure 11 Marketing channels of yak down in percent and by
aimags
The above figure shows that the majority of yak herders sell the combed
yak down to changes, which means that these changes have high benefits
from this trade compared to the herders’ earnings. It is positive to note that
33 percent of respondents sell the yak down to local cooperatives in the
soum. While many of these cooperatives are truly owned by the herders
themselves some are in fact owned by changes so benefits are enjoyed
only enjoyed by them.
In fact, few local cooperatives achieved benefits from selling at favourable
prices directly to processors through contracting. This also affects positively
the attention on the quality of raw material and helps to build a mutually
beneficial cooperation between herders and cooperatives on one side and
cooperatives and processors on the other side. The increased trust and
benefits of the long term partnership can be seen from the representatives
meetings organized by the cooperatives.
In soums where cooperatives operate poorly the changes purchase the yak
down at 5000-6000 MNT/kg while in soums with properly working local
cooperatives their buying price reaches 8000-9000 MNT/kg. The price
difference between collection price paid and sales price obtained from
processors amounts to 2500-3000 MNT/kg. It was distributed to herders as
additional sales income (so called bonus), which increases the income of
herders up to 11000-12000 MNT/kg from the yak down.
Several cooperatives started to sell directly to processors in 2012 and have
obtained skills and experience. This basis can be utilized to expand the
direct sales of yak down from herders through the cooperatives to the
processors and thereby to realize the various benefits attached to this
(higher income of herders, more consideration for quality).
3
2
3
2
5
3
34
17
45
58
38
8
33
60
76
50
29
46
89
58
3
5
2
11
11
3
6
Arkhangai
Zavkhan
Bayankhon…
Khovd
Bayan-Ulgii
Uvs
Average
processors cooperative change Other

17
3 S U R V E Y R E S U L T S O N S U P P L Y
O F C A M E L W O O L
3 . 1 H e a d n u m b e r o f c a m e l i n M o n g o l i a
a n d c a m e l w o o l y i e l d s
Camel is one type of the domestic cattle in Mongolia with high productivity
and yields of wool, meat and milk products and with good adaptation to
grazing in the harsh climate conditions. Mongolians have used the camel
for riding, long distance transporting and domestic purposes since about
5000 years ago.
The two humped camel or Bactrian camel is widely spread in Mongolia and
represents about 30 percent of all Bactrian camels in the world. These
amount to about 2 million and exist also in countries such as China
(especially Inner Mongolia), Kazakhstan and some central Asian areas, the
home countries of the Bactrian camel.
Figure 12 Head number of camels in Mongolia (in thousands)
The highest number of camel reached 895.000 and was recorded in 1954.
From then it decreased by about one half until 1991. The number of camel
has gone down again by about one half until 2012. The reasons for the
reduction in the camel herd are: collapse of the collective system (negdels),
slaughtering of camels for meat preparation in order to obtain additional
income, and deterioration of camel breeding in these periods. These
reasons have negatively impacted on the camel herd size.
The dramatic decline of head number of camel herds had occurred during
the first 20 years of the market economy in the country. However, since
2009 the number of camel has been gradually rising again. According to
the national livestock census in 2013, Mongolia had in total 321,6 thousand
heads of camel. From the total herd 71.1 percent are in the aimags
Umnugobi, Bayankhongor, Dornogobi, Gobi-Altai and Dundgobi aimags.
By regions, 51.4 percent of all camels are in the central aimags and 24.2
percent are in the western aimags of the country. As regards the project
target aimags, only 36.1 percent of camel are living here (Bayankhongor
11.6 percent, Gobi-Altai 9.5 percent, Khovd 5.9 percent, Uvs 5.6 percent,
Zavkhan 2.0 percent, Bayan-Ulgii 1.4 percent, Arkhangai 0.3 percent).
870
755
611 562
367,5 322,9
254,2
322,9 321

18
The Mongolian camel has some specific features such as: domestication
for relatively long periods, adaptation to hard condition, sustainable yields
and little vulnerability for disease and sickness.
The camels in various areas of the country have little differences from each
other by body size, appearance, coat-colours and yield rates, which are
caused by traditional breeding selection and nature climate circumstances.
Mongolian camels are usually collared in dark brown, light brown, red while
a small share of camels is white collared.
Among breeding of camels, families of Galbiin Gobi red camel (in
Khanbogd soum, Umnugobi aimag), Khaniin hetsiin brown camel (in
Mandal-Ovoo soum, Umnugobi) and Tukhum Tungalagiin brown camel (in
Tugtug soum, Gobi-Altai) are famous camel breeds in the country. The
Tukhum Tungalagiin brown camel from within the project region has a large
body with much cashmere and double beards on the both sides of neck
plus throat. The wool yield from this family is higher than form others
amounting to 5.6-5.8 kg at average.
Camel wool: The main fibre product from camel is wool that is composed
of cashmere, partial and intermediate hairs and guard hair respectively.
Camel wool is categorized
into fine wool and coarse
wool. Fine wool is usually
taken from the body of the
camel while coarse wool
is taken from the knees,
beard, and top of the
hump and head of the
camel. The high density of
camel wool in the body
has protected from the
cold and keeping the
hypothermia.
The wool yield of Mongolian camel depends on sex and ages of the
animals: wool yields amount to 2,4-3,6 kg in the second year, 3,5-5 kg in
the third year, 4-5,9 kg in the fourth year, and 5,5-9,6 kg in the fifth year.
The fully grown camel cow yields 5-8,8 kg and the camel stallion 7,3-10,4
kg of wool respectively. Camel in their second year which is not used for
riding have the finest and softest wool. The most valuable part of camel
wool is cashmere and 69-71 percent of the coarse wool is cashmere while
74-76 percent of fine wool is cashmere.
The wool yield, as well as structure and feature of the fibres are different
depending on the breed, age, sex, and climate condition and husbandry
methods in the region of origin. The specifications of camel wool are
divided into 4 regions in the country taking account especially of location
and wool quality characteristics3. Consequently, the project target aimags
belong to the Western region, where 39,2 percent of camel wool is
collected. It is normally collared in light, red yellow and white and rich with
cashmere fine fiber.
3 Study on processing and production of wool, cashmere and camel wool, Mongolian
association of cashmere and wool, Ulaanbaatar 2003

19
Based on statistical data the annual camel wool collection amounted to
about 3,000 tons up to the 1980s followed by a decline starting from 1985
due to head loss of camels. In addition to use of camel for riding and
transportation from the ancient ages, Mongolia had constructed textile
factories in the 1970s using the processing technology for fine wool of the
camel.
As seen from the data collected by the Ministry of Industry and Agriculture,
domestic factories for wool processing collected almost 20-25 percent of
wool resources to produce the carpets and woolen products but were
closed for many months due to lack of camel wool supply. The Mongolian
Parliament in 2011 adopted decree No 30 “Some measures to support the
domestic production” and as result 34 domestic processing factories were
awarded with soft loans of 40 billion MNT to allow purchasing of sheep
wool and camel wools for domestic production. As a result over 90 percent
of the collected wool was delivered to domestic factories4.
Figure 13 Head number of camels in surveyed soums and
camel wool resources
Aiamgs and soums Number of camels
Camel wool resources in
kg
Bayankhongor 28,705 143,525
Bogd 4,088 20,440
Bayanlig 15,589 77,945
Bayangobi 2,389 11,945
Shinejinst 3,497 17,485
Bayan-Undur 3,142 15,710
Gobi- Altai 17,627 88,135
Delger 1,727 8,635
Khaliun 2,832 14,160
Tsogt 2,259 11,295
Sharga 3,820 19,100
Biger 1,531 7,655
Bugat 1,033 5,165
Tugrig 4,425 22,125
Khovd 10,447 52,235
Zereg 1,861 9,305
Mankhan 2,617 13,085
Durgun 3,272 16,360
Chandmani 2,697 13,485
Uvs 10,407 52,035
Naranbulag 2,144 10,720
Tes 2,290 11,450
Zavkhan 5,973 29,865
4 http://www.mofa.gov.mn/new/index.php?option=com_content&view=article&id=19&Itemid=141

20
Aiamgs and soums Number of camels
Camel wool resources in
kg
Bayan-Ulgii 1,590 7,950
Tsengel 638 3,190
Ulaanhus 684 3,420
Deluun 268 1,340
Total 68,776 343,880
In total 115,000 head of camels live in the soums which were surveyed
comprising 36,1 percent of the total camel herd in the country. Based on
the estimate of an average yield of 5 kg of wool which can be collected
from each camel, it is possible to collect around 344 tons of camel wool in
project target aimags. According to the survey the herder families have
30374 heads of camel (potential recourse is 151.8 tons ) and prepared
about 133 tons of camel wool in the surveyed aimags in the year 2013
which equals around 87.4 percent of the potential camel wool resources.
3 . 2 S u r v e y r e s u l t s o n c a m e l w o o l
s u p p l y i n p r o j e c t t a r g e t a i m a g s
3 . 2 . 1 C o l l e c t i o n o f c a m e l w o o l
Camel wool is not collected entirely at the same time but it is collected
several times from the different parts of the camel body. For instance,
coarse wool from the knees and beard is taken off by 15 April, fine wool
between 1 April and 15 May and coarse wool from the hump, and main
parts of the body between 15 May and 20 June of every year. The removal
of camel wool is a hard activity done by herders and requires the proper
preparation such as studying of climatic condition and choice of the optimal
timing in order not to expose camels to cold wind and storm.
In 2013, the surveyed families had prepared in total 132.8 tons of camel
wool and this number is based on the head number of camels owned for by
herders. For instance, the large herder Shinen of Bayanlig soum,
Bayankhongor aimag prepared 5 tons of camel wool.
Although there exist uniform incentives for camel wool, the collection status
is different in the various aimags.

21
Figure 14 Preparation of camel wool in aimags in percent of the
potential resources
For instance, 84,8 percent of the herders in Bayankhongor aimag fully
collected camel wool, 64,7 percent in Gobi-Altai, 51 percent in Uvs, 30
percent in Khovd and 3,8 percent in Bayan-Ulgii Aimag. The reasons for
not collecting camel wool in full stated by the herders are: lack of labour
force (51.2 percent), low price of wool (27.2 percent), insufficient quantity
for sale (5.3 percent) and other reasons (16.4 percent) respectively.
As seen from the survey results, 26.7 percent of all camel herders prepared
the camel wool including sorting: 19,1 percent by age, 43,3 percent by body
parts and 16,6 percent by colours respectively. Sorting is normally
uncomplicated because wool removal is performed at different periods of
time for the various body parts as stated above.
In the recent years, some factories requested to buy the wool from the
highest yielding camel in the second year of age at comparatively high
prices. Because of that herders collected and sorted the camel according to
the age of camels. However, most herders do not like to sort the camel
wool due to the following reasons: unsorted and sorted wool achieve the
same price (71.1 percent), do not know how to sort the wool (9.5 percent),
not enough supply of bags or containers (9.5 percent) and other reasons
(9.5 percent) respectively.
For wool removal from one camel, two men are required to hold the camel
and to tie up its feet. The family members surveyed stated that about 30
minutes are required for wool removal from one camel on average.
For the purpose to support the production of value added animal origin
products, the Mongolian Government started to pay an incentive premium
of 2000 MNT per kg of camel wool from the year 2011. 96.9% of surveyed
herders said this incentive in principle is a supportive action to increase the
family income and it supports to fully collect camel wool without waste.
In the first years of provision of the incentive premium, herders were unable
to receive it caused by lack of proper information and the necessary
papers. But the number of herders who desire to receive this incentive is
gradually growing in recent years.
However, the procedure for incentive premium states that it shall be issued
for qualified wool meeting the requirements for the first sort and normal
classified. However, this procedure is not practical in rural areas and it
impacts on the quality of raw materials. Some herders mentioned that there
Bayankhongor
Gobi-Altai
Uvs
Khovd
Bayan-Ulgii
Average
6
14,0
16,8
37,0
32,4
21,2
9,2
21,2
32,2
33,2
63,8
31,9
84,8
64,7
51,0
29,9
3,8
46,9
up to 70% 71-90% more than 91-%

22
is no difference for the various quality categories of camel wool and the
mechanism to obtain the incentive is not clear and has many obstacles.
Responses from herders regarding the upgrading of the existing premium
system of camel wool were as follows: 66.6 percent request to improve the
system, 22.6 percent have no problems with while 10.8 percent did not
know about it. The respondents from Khovd, Bayan-Ulgii and Uvs aimags
said that collection system and premium mechanisms have to be upgraded
urgently as a result of their remote distance from the markets and limited
access to marketing channels.
Figure 15 Assessment of the premium mechanisms for camel
wool by herders
42 % of all camel herders responded that the state incentive mechanisms
needs to be upgraded, 29 % request that the price is variable to the quality
categories, 25 % suggest that primary processing of camel wool processing
is done in the rural areas and 4 % mentioned other actions respectively.
3 . 2 . 2 M a r k e t i n g o f c a m e l w o o l
Herders are selling the fine wool of camel in full. The coarse wool is used
for domestic purposes to spin thread, prepare the girth rope of ger or
loading straps. 28.3 % of herders in the survey used the camel wool for
domestic purposes.
Most herders have sold camel wool to soum cooperatives and changes
while few herders with large numbers of camels in Bayankhongor and
Gobi-Altai aimags hold sales contracts with factories for camel wool. There
are cooperatives organized by changes in some aimags while other
changes are authorized as official representative of factories (actually are
agents).
50,4
7,1 10,8
27,9
16,5
22,6
32,5
86,8
80,4
60,0
73,4
66,6
17,1 6,0 8,8 12,1 10,1 10,8
Bayankhongor Khovd Bayan-Ulgii Gobi-Altai Uvs Average
no problem improvement is needed no idea

23
Figure 16 Marketing channels of camel wool in percent and by
aimag
As seen from the survey findings, on average for 5 aimags 1.5 percent of
herders sell the collected camel wool to processing factories, 58 percent
sell to cooperatives and 40,5 percent sell to changes. There are great
differences between the aimags. All herders become members of
cooperatives because of the governmental incentive premiums for wool can
only be received through cooperatives. Otherwise, most herders are less
interested in cooperative activities and development.
However many herders are still unable to receive the incentives for camel
wool through cooperatives. Therefore camel herders in soums outside the
project area gave their wool to cooperatives where they became member
but in some cases they sold to others who pay a higher price.
Herders in soums which are part of the “Green Gold” project on the other
side have trust into the cooperatives to which they deliver their wool and
receive the incentive premiums.
In 2013 herders sold unsorted camel wool at 4500-5500 MNT/kg. The
sorted wool from the high yielding two year old camels in Bayankhongor
and Gobi-Altai aimags achieved a price of 8000-10000 MNT/kg.
The contract for sales of raw materials is important to maintain the herders’
revenues and to ensure the quality of raw materials. But only 34 percent of
6,0
0,7
1,5
77,7
50,2
20,5
48,9
51,1
58,0
16,3
49,7
79,4
50,4
48,9
40,5
Baynakhongor
Khovd
Bayan-Ulgii
Gobi-Alta
Uvs
Average
Processor Cooperative Change
Case on incentive premium
A young man being the relative of our family has started a cooperative for
collection of raw materials in soum center. He asked us to become
members and took our citizen ID card. But we still do not know even the
name of the cooperative. Animal raw materials are normally given to that
man for sales, but we do not receive any incentive premium at the
moment. Instead sometimes we borrow money and repay with collected
cashmere in the spring time …. Stated by local herder in Jargalant soum,
Bayankhongor aimag

24
herders in the surveyed aimags hold such contracts. 46.4 percent of
herders intend to have contracts while the remaining 20 percent state that
they do not need a contract.
In terms of aimags, about one third of camel herders have sales contracts
in Khovd, Bayankhongor and Gobi-Altai aimags while only 23-26 percent of
herders in Bayan-ulgii and Uvs aimags have such contracts. Most herders
in the most western aimags desire to have sales contracts with factories but
cannot obtain those (Bayan-ulgii 71 percent, Uvs 56 percent and Khovd 48
percent).
Figure 17 Availability of sales contracts of herders for camel
wool in percent by aimag
As regards the contract partners of herders, i.e. factories, cooperatives and
changes the situation is as follows: Of the surveyed herder households,
33.7 percent (335) had the sales contract with manufacturers, 77 percent
(258) with cooperatives, 15.8 percent (53) with changes and 7.2 percent
(24) with processors respectively. In general, the contracts with processors
and manufacturers are officially made in written form while contracts with
cooperatives and changes are verbal and considered as non-formal
contracts. Changes negotiate with herders to repay the funds which they
borrowed in winter in the form of raw materials in spring. This is based on
the need of many herders to borrow money from changes when they lack
liquidity. Due to this dependence changes buy the raw materials from the
herders at prices below the going market prices.
The survey enquired about the importance of sales contracts for raw
material collection: 39 percent of herders said they have no obstacles for
raw material sales, 18.8 percent are able to receive advance payments
from the processor, 13.9 are familiar with sales price and earnings in
advance, 10.5 percent state that they have good partnership with
processors, 5.1 percent said there are other benefits while for 12.6 percent
it is not an important issue.
As regards the relationship between quality of raw materials and quality of
finished products the herders answered as follows: 55.5 percent state that
they very well know the relationship between quality of raw materials and of
final products, 26.1 percent have no such information, 6.5 do not see the
Bayankhongor
Bayan-Ulgii
Gobi-Altai
Khovd
Uvs
39
23
38
41
26
41
6
24
11
18
19
71
38
48
56
I have contract I don’t need to make a contract I need contract but cannot obtain it.

25
relationship between quality of raw materials and quality of final products
while 11.9 percent have no answer here.
Concerning measures to maintain the relationship between quality of raw
materials and quality of final goods the herders proposed as follows: 33.3
percent say that advance payments are required along with contracts, 27.2
want that the incentive premium system depends on quality and categories
of raw materials, 23 percent feel that they have sufficient information on
contract requirements from the processing factories and plants, 12.7
percent suggest to visit to factories so that herders can see the ready
products, while 3.7 percent made other comments.
As concluded from above, the incentive premium system has to be build up
based on quality of the raw materials. In addition, the processors should
communicate the requirements and demands for raw materials for market
oriented collection as well as basis for contracting.
3 . 2 . 3 I n c r e a s i n g t h e v o l u m e o f r a w m a t e r i a l
a n d i m p r o v i n g i t s q u a l i t y
Income from camel wool selling is one of the income sources for herders
but does take that much high percentage in total income that comes from
livestock.
Table 5 Earnings from camel wool as percentage of total
earnings by number of herders
Aimag
Percentage in revenues from animal husbandry
Up to 25% 25 – 50% 51 - 75 % 75 % above
Bayankhongor 187 40 13 7
Khovd 155 21 5
Gobi-Altai 174 43 32 19
Bayan-Ulgii 93 2 2
Uvs 106 28 10
Total 715 134 62 26
Earnings from camel wool sales of 715 (76.3 percent) surveyed camel
herders represent up to 25 percent of the total revenues generated from
animal husbandry. There are relatively few numbers of herders (88
households) who earn over 50 percent of their total income from camel
wool sales.
The elder herders with few numbers of family members but with large herds
of camels are able to earn income from camel wool sales that represents
75 percent of total revenues from animal husbandry.
During the survey, herders expressed their opinions on how to increase
their income from camel wool: 33 percent say by increasing the number of
camels, 31.9 percent by shearing at the right time prior to the natural loss of
the wool, 30.8 percent by breeding more camels with high yield through
proper registration or recording system and 4.3 percent made other
proposals to increase wool yield from the camel.

26
21,2 percent or 211 herders in surveyed aimags have attended trainings
focusing on camel wool. Many of them participated in the trainings
organized by the raw material exchange center and by the agriculture and
SME Division of the Aimag administration. Mercy Corps has mostly
organized trainings how to sort and how to prepare fibre raw materials in
rural areas.
Coat colour of Camel: According to research findings there is a tendency
of coat colours of camels to become lighter from the north western regions
towards the south east regions of Mongolia with body size getting larger.
On the other hand there is the tendency for darker coat colours from the
southern region to the north western region combined with increasing wool
yields 5. In this way the Tuhum Tyngalag brown camel in the north western
region yields 0,3 kg of wool more than average amount of wool from the
Khaniin hestiin camel in the south eastern part of the country. And this type
of camel again has 0,4 kg more wool than Galbiin brown camel. Generally
Tuhum Tungalag brown camel has the highest yield of wool compared to
other types of camel.
Among the surveyed families with their 389,8 thousands head of camels,
70,4 percent have camels with brown golden coat colour, 22,7 percent with
brown yellow colour and 6,9 percent with white yellow colour respectively.
Asked about the specific features of camels with white yellow colour, 34,4
percent of respondents say they are susceptible to cold, 26,1 percent say
there no specific characteristics, 19,6 percent do not know about this, 8,3
percent say there is lower milk yield and 5,3 percent state that such camels
are more easily sick or ill.
Therefore herders prefer the camel stallion collared in dark such as red
brown and black because dark camels are rich with wool and enduring in
the winter cold. Camels collared in light white have shorter hair and more
easily loos their weight in winter.
5- T.Baldan, Ph.D, Research institute animal husbandry, MSUA, Study result, 2010

27
4 T H E R O L E O F C O O P E R A T I V E S I N
R A W M A T E R I A L S U P P L Y
In the surveyed soums, the number of cooperatives reaches from one up to
18 if based on the registration. However, this includes cooperatives which
were registered but currently are not active. Those cooperatives have
between 9 and 650 members and aim at running the business of collecting
raw materials in the soums.
Among the total of 45 cooperatives, 32 are collecting yak down and 13 are
collecting camel wool. 55 percent of the cooperatives have 1 to 3 years of
working experience in preparing and collecting raw materials, 31 percent
have 4 to 6 years of experience and 14 percent have over 7 years working
experience in the soums. 46.1 percent of cooperatives have collected raw
materials from member herders, 20.6 percent act as representatives or
dealers of processors, 18.6 percent conducted trainings for members and
3.9 also process the raw materials.
In the year 2013 the surveyed cooperatives sold 42 tons of yak down at
8000-13000 MNT per kg and 122 tons of camel wool at 4000-5000 MNT
per kg which they had collected from the herders. This represents a total
sales value of approximately 969 million MNT. The reliable and well
operating cooperatives (53.2 percent) have contracts with processing
plants while small sized cooperatives (44.2%) sold the products to the
larger cooperatives. In 2013, 31 cooperatives had contracts, out of which
23 had contracts with factories while 8 had cooperatives with larger soum
cooperatives. The cooperatives named some processing companies with
whom they had contracts, namely "Sor cashmere" (10 cooperatives),
“Erdenet carpet” (2), “Bayalag Ulzii” (2), and “Noos Ireedui (2).
In 2013, totally 20 cooperatives distributed 49.5 million tugriks for premium
from yak down and camel wool sales. In addition they promote the
monetary prize and right to travel or visit Ulaanbaatar city and abroad to
leaders of herders’ groups.
During the survey, the cooperatives expressed their opinion on how to
expand the activities for supply of raw materials as follows: 27 percent want
raw materials to be primarily processed at soums, 25 percent want sorting
to be done at soums, 20 percent request information on quality and
benefits from the collection to herders, 20 percent are interested in direct
contracting with processors or factories and 8 percent run the family
business having the equipment and working places to produce demanded
goods for rural herders.
As regards their needs the cooperatives answered as follows: 20 percent
need general training, 19,9 percent need training on raw material quality,
19,4 percent training on sorting of raw materials, 13,4 percent on combing
methods, 12,5 percent on manual spinning, 11.1 percent on cooperative
management, 10,2 percent on marketing, 9,2 percent on breeding, 4,2
percent request other types of trainings and seminars accordingly.
Concerning ways to increase the activities of cooperatives the responding
cooperatives made proposals such as: 53 percent demand the introduction
of incentive premiums for yak down similar to the ones for camel wool; 24
percent request different sales prices for the various raw material qualities;

28
19 percent propose primary grading and washing of raw materials to be
done in the soums; and 4 percent made other suggestions.
Figure 18 Proposals of cooperatives on expansion of their
activities in percent
Among the surveyed cooperatives 18 have training experiences and
practice on topics such of combing of yak, preparation of yak down, quality
of camel wool and standards. Some projects such as World Bank’s
Sustainable livelihood, Mercy Corps have activities in the soums and in
total 19 cooperatives were cooperating with these international projects and
organizations.
The surveyed cooperatives together with survey team of the GG marketing
component have identified the possible fields of cooperation as follows:
conducting primary processing in rural soums in small workshop and with
procurement of required equipment and machineries (35 percent), public
awareness programs (17.5 percent), direct sales to processors (15.7
percent), obtaining financial support and low interest loans (12,3 percent),
increasing prices of yak down products and export to foreign markets (7
percent), maintaining nucleus herds and increasing yield of wool and yak
down (5,3 percent) study visits or experience sharing on breeding of yaks
(7,2 percent) respectively.
For the purpose of clarifying the role of cooperatives the herders were
asked about their perception of cooperatives. 98 percent of herders in
Bayan-ulgii aimag responded that they are familiar with cooperative
activities and business as well duties of members, while 26-29 percent
herders in Zavkhan, Arkhangai and Uvs aimags do not know well
cooperatives and the duties of membership although all are interested to
join the cooperatives as members.
Figure 19 Knowledge among herders of cooperative structure
and duties of members
53%
24%
19%
4% government incentives for
yak down like for sheep
wool
fix cost differently
according to the quality
primary grading and
cleaning should be done
locally
other
15
10
21
24
7
12
17
60
59
77
43
44
37
37
12
15
2
14
29
26
29
13
16
0
19
20
25
17
Bayankhongor
Bayan-Ulgii
Uvs
Zavkhan
very well little don't know interesting to improve

29
Based on information obtained from the herders the operations of
cooperatives can be categorized as follows:
 Poorly operating cooperative: founded with shared capital from
only a few members and not operating properly,
 Changes cooperative: head of some cooperatives are changes,
who buy the raw materials from herders at low price and regardless
of sorting by quality and sell to the processors. In this case, only the
head of the cooperative has a benefit.
 Well-functioning cooperatives: Few cooperatives were set up
under the GG project with funding from share capital of the herders
along with granted funds from the project in form of intermediate
monetary fund. This fund helps the herders with loans when they
are in need of financial support. The fund protects the herders from
the risks to sell their raw materials at low prices by replacing the
loan from the changes. Herders obtain loans from the intermediate
fund with low rate of interest. The cooperatives with such funds help
the herders to earn profit from sales of raw materials directly to
processing factories without involvement of changes.
Most herders have joined the cooperatives organized within the GG project
because they well understood the benefits of cooperation. In contrast many
herders do not trust the cooperatives organized by changes which operate
poorly in the soums. This type of cooperatives does not sort the wools but
mix them together and reduce the wool quality.
However, as the results mentioned above show, knowledge of cooperative
structures as well as on the rights and obligations of members is still very
low among the herders and needs to be improved.
Relationship and cooperation between PUG structures and
cooperative structures
The survey team also analyzed the relationships between the structures of
the Pasture user Groups (PUGs) and the cooperatives. Here several cases
can be classified considering whether the respective soum is cooperating in
the GG project or not.
The following three cases for possible structures in the soums can be
defined. Each diagram presents the actors in the value chain from herders,
khot ails and PUGs to Cooperatives and up to processors. They also show
the organizational support between the PUG structures (red arrows), the
flow of raw materials in the proposed value chain (blue arrows) and the
intended technical support provided by the project (green arrows).

30
Case 1: Soum cooperating in the GG project and with functioning
soum cooperative
In this case the members of the
PUGs have jointly established a
cooperative. Mostly the cooperative
and the APUG have the same
leadership.
In the proposed value chain the
cooperative will sell the raw materials
which have been collected within the
PUGs from all the herders. The
cooperative sells to the processors
either directly or through a secondary
cooperative. These exist so far in
Khovd and Zavkhan aimags while in
Arkhangai it will be established soon.
The advantage here is that the
cooperative can use the
organizational structure of the PUGs
in the Bags to collect the raw
materials in a cost efficient manner.
The cooperative should achieve an
appropriate margin between price
paid to herders and the price
obtained from processors. From this
margin the cooperative can
compensate the costs of raw material
collection and can also finance
necessary investments such as
storage facilities.
In the diagram it is also indicated that
the combing and sorting shall take
place no longer at the herder
household level but at the level of
khot ails. Here several families can
support each other or large herds
can be combed by unemployed
persons from the soum center after
receiving the necessary training.
This case can be seen as optimal
and a providing a solid basis for the
value chain development. There is no
need for the GG component 4 to
directly support the PUGs because
this support is already provided by
the GG components 1 and 3.

31
Case 2: Soum not cooperating in the GG project and with
functioning soum cooperative
In this case no PUGs or APUGs are
existing. However the herders have
jointly established a cooperative at
the soum level which functions
sufficiently well.
In the proposed value chain the
cooperative will sell the raw materials
which have been collected within the
groups of herders at the Bag level.
These groups are informal and are
organized by the Bag governor
and/or influential herders. The
either directly or through a secondary
cooperative.
The problem here is that the
cooperative cannot use the
materials but it must establish its
own collection structure. The
cooperative needs to achieve an
appropriate margin between price
paid to herders and the price
obtained from processors. From this
margin the cooperative can
compensate the costs of raw
material collection and can finance
necessary investments such as
storage facilities.
Also here it is proposed that combing
and sorting shall take place no
longer at the herder household level
but at the level of khot ails.
This case can be seen as the
envisioned standard for soums which
are outside of the GG project. It
demands some efforts from the GG
component 4 to strengthen the
cooperative and to help establish a
collection structure at the Bag level.

32
Case 3: Soum not cooperating in the GG project and without
functioning soum cooperative
Also in this case no PUGs or
APUGs are existing. While there
may be some cooperatives none of
them is functioning well. In some
soums such cooperatives have been
established by changes in others by
the soum administrations. The
herders themselves have not yet
jointly established a cooperative at
the soum level but they may be
interested to do so.
Since there is no cooperative in the
respective soums there may exist a
well-functioning in a neighbouring
soum. In the proposed value chain
this neighbouring cooperative will
sell the raw materials which have
been collected within the groups of
herders at the Bag level. These
groups are informal and are
organized by the Bag governor
and/or influential herders. The
either directly or through a
secondary cooperative.
Also in this case the problem is that
the cooperative from the
neighbouring soum cannot use the
materials but it must establish its
own collection structure. This is
even more difficult since the
members of the cooperative are not
active herders in the soum.
This case can be seen as a
temporary solution for such soums
in which no functioning cooperative
exists. The component 4 will consult
herders to establish such
cooperatives so that every soum can
utilize the services of functioning
cooperatives. It demands
considerable efforts from the GG
component 4 to establish the
cooperative but this is seen as an
approach to establish sustainable
structures for the collection of raw
materials.

33
5 C O N C L U S I O N S A N D
R E C O M M E N D A T I O N S
Based on the results of supply study the following conclusions are drawn.
Consequently the following recommendations are made for consideration in
the value chain development strategy of the GG component 4:
1. Collection and selling of yak down: main conclusions
 From the entire Mongolian yak herd about 67 percent exist in the
project region in seven western aimags. Two important areas with
yaks are not part of the project region (Huvsgul and Ovorkhangai
aimags). The number of yaks has decreased against previous levels
but started to increase again since some years.
 25 soums from 6 aimags were surveyed with regard to yak down
which cover 68 percent of the total number of yaks in the project
aimags. The survey has found strong interest among herders to
better utilize the yak for collection of valuable fibres. Based on the
estimated yield of 0,4 kg yak down per animal the potential resource
of yak down in the project region amounts to about 120 tons.
 A large share of the potential resource of yak down is not utilized
because only 66 percent of yak herders collect the yak down at all.
Among those who do so only 26 percent comb nearly all of their
yaks. Especially herders with large herds cannot comb their yaks
due to the shortage of manpower. In the far western aimags many
herders still shear the yak hair since combing methods are not yet
known.
 The survey showed that only about 7 percent of yaks are light and
white colours, which is the most demanded colour from the market
side. Many herders believe that light collared yaks are inferior in
harsh winter conditions.
 According to the survey the majority of herders sell the yak don to
changes. One third to cooperatives and only a small minority directly
to processors.
 In order to increase the collection of yak down herders propose to
introduce an incentive premium similar to the one for camel wool
and demand higher sales prices for yak down. These appear
necessary in order to compensate for the hard work connected to
combing of yaks.
2. Collection and selling of yak down: main recommendations
 In order to increase the collection of yak down an increase in
income from yak down for herders is necessary. This can be
achieved by improving the effectiveness of combing (through
combing training and involvement of unemployed persons as
combers of large herds). As a second approach the project shall
support the direct selling of yak down from cooperatives to the
processors at higher prices than those offered by the changes.
 Herders also require information on the relationship between the
quality of raw materials and the quality of the final products. This
also includes training on sorting according to the criteria established
by the processors.

34
 The usefulness of introducing the governmental incentive premium
needs to be studied further since it may have negative effects on the
quality of the raw materials and it does not encourage sorting.
 There is a need to further research whether light collared yaks
indeed are inferior with regard to harsh winter conditions. In case
they are found not to be inferior there is then need to research
further the feasibility to support the breeding of light collared yaks in
response to the high market demand for this fibre.
3. Collection and selling of camel wool: main findings
 The camel herd of Mongolia has experienced a dramatic decline
and the herd is only slowly growing again. Only 36 percent of all
camels are living in the project region. Therefore the influence of
the project on the camel wool value chain is rather limited.
 The survey included 115,000 and based on the average yield of 5
kg of camel per animal the potential resource amounts to about 345
tons. However, so far herders only collect about 132 or 38 percent
of the potential resource.
 The main constraints for a higher volume of camel wool collection
are the low prices of the raw material and the shortage of
manpower for this time consuming activity. The incentive premium
offered by the government has not helped much since it does not
provide price incentives for collection of higher qualities such as
wool from baby camels. Consequently most herders do not engage
in sorting of camel wool which results in higher costs for
processing.
 In order to increase the collection of camel wool many herders
demand an improvement of the governmental incentive system so
that it provides incentives for collection of more valuable fibres.
Also the primary processing at the local level is seen as an
approach to increase the interest of herders.
 As regards the sales channels the majority of herders sell their
camel wool to cooperatives, 40 percent to changes and a small
minority directly to processors. The role of cooperatives is more
dominant that in the case of selling of yak down.
 For most herders the sales of camel only contributes a minor share
to their total income.
4. Collection and selling of camel wool: main recommendations
 It is necessary to restructure the governmental system of incentive
premiums for camel wool in such a way that it allows for price
differences according to the quality and rareness of the fibres. For
example camel wool from baby camel should then achieve higher
prices and encourage the herders to better utilize this valuable
source of fibre.
 There is a need for herders to better react on the market signals
from the demand side and to collect those camel wool fibres which
are in higher demand, for example baby camel wool. This also
demands better sorting of the fibres in order to support price
variations based on qualities.

35
 More research is required to investigate the appropriateness of
various camel wool fibres for new and high quality products, which
can be introduced to the international markets.
5. Role of cooperatives in the supply of yak down and camel wool:
main findings
 Among the 45 cooperatives which were surveyed 32 are
collecting yak down and 13 are collecting camel wool. In 2013
they sold 42 ton of yak down at 8000-13000 MNT/kg and 122 tons
of camel wool at 4000-5000 MNT/kg, representing a total value of
about 969 million MNT.
 Several longer existing cooperatives which are operating well
have sales contracts with processors while younger or smaller
cooperatives sell to the larger ones.
 Especially the cooperatives which were established in connection
to APUGs within the GG project function relatively well. Other
cooperatives are still weak as regards management, education
and participation of members. In several soums there is no
cooperative at all which could work effectively for the benefit of
the herders.
6. Role of cooperatives in the supply of yak down and camel wool:
main recommendations
 There is a need to strengthen the existing cooperatives with
regard to their institutional capacity and the participation of
members.
 In several soums the project should facilitate the establishment of
new and well- functioning cooperatives among the herders.
 In general the cooperation between PUGs and APUGs on one
side and cooperatives on the other side needs to be improved.
This will result in mutual benefits, since PUGs can help in
collecting the raw materials from herders while the surplus
generated in cooperatives can help to make the PUG/APUG
system more sustainable.
 There is also the need to bring cooperatives and processors into
direct contact and to enable them the conclusion of sales
agreements on the supply of yak down and camel wool. This will
be most beneficial for both sides: herders will receive higher
prices for the raw materials compared to those offered by
changes and processors can secure a steady supply of raw
materials in the qualities which they require.
 Together with the well-functioning cooperative it can be explored
further whether some primary processing stages can be
performed effectively at the soum level, especially the washing of
camel wool. Likewise the feasibility of manual spinning of yarn
from yak down in the soums can be further explored. However,
this demands that the volume of yak down collected has been
increased considerably.

Mongolia's Yak Down and Camel Wool Supply

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