10 - value chain análisis - seabuckthorn - mercy corps mongolia - 2007

8/10/2019 10 - Value Chain Anlisis - Seabuckthorn - Mercy Corps Mongolia - 2007

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Sea Buckthorn Value Chain Assessment

Sea buckthornValue Chain Assessment

Baruun BusWestern Region Economic Development Project

Mercy Corps Baruun Bus Project 1


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This assessment as ma!e possible through the important contributions o" the #erc$ Corps #ongolia%vs &""ice inclu!ing Chime!' Program Representative( Turtogtokh ' Program &""icer( )ombo Chuluun '

A!min an! *inance &""icer( BB RED Coor!inator( &+ &$ulham an! Dominic )raham o" #erc$ Corps#ongolia+

The assessment also bene"ite! greatl$ "rom in"ormation gathere! an! !evelope! b$ the %vs Branch o"Crop an! Research ,nstitute( Ch+&chir o" the Technological Test an! E-perimental Center o" the%niversit$ o" Science an! Technolog$( %vs Aimag .ocal )overnment( Sea buckthorn Pro!ucers(Processors( an! other Stakehol!ers+ Thanks also to the #erc$ Corps %laanbaatar an! Aimag Sta"" in/ov!( 0avhon an! )ovi'Altai "or assistance in organi1ing "ocus groups( collecting relevant !ata an!provi!ing use"ul "ee!back "or this assessment+

The Baruun Bus Regional Economic Development Project Phase , is !esigne! to contribute to thecreation o" income generation an! value a!!e! opportunities "or the rural her!er an! urban population "orselecte! aimags in the estern region o" #ongolia through integrate! local economic !evelopment+ Thisassessment aims to provi!e important in"ormation about coor!ination ith private sector components o"the program+



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TABLEOFCONTENTS

Introduction and Objectives....................................................................................................................Assessment Approach and Methodoo!"..............................................................................................Sea buc#thorn Sector Seection and Bac#!round................................................................................

Sector ,!enti"ication+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++2Characteristics o" Sea buckthorn Berries an! Bushes++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++3

Sea buc#thorn $ata Coection...............................................................................................................Internationa Sea buc#thorn Findin!s....................................................................................................Mon!oian Sea buc#thorn $onor Environment.....................................................................................%eevant Mon!oian &overnment 'ro!rams and 'oicies..................................................................()Mon!oian %esearch Findin!s.................................................................................................... .......... ((Overvie* Ana"sis+ ,estern %e!ion Sea buc#thorn -aue Chain.....................................................(

,nputs an! ,nput Suppliers+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +++++++ 45Pro!uction an! /arvest+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++46Processing++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 47#arket+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 47Western Aimag Situations+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 47

-aue Chain and Mar#et S"stem Maps................................................................................................. (Economic -aue Addition Ana"sis.......................................................................................................

Constraints and Opportunities Ana"sis b" Cate!or"....................................................................... ./In0ormation &aps Identi0ied in the Assessment.................................................................................. 1%ecommended Action Areas and Ne2t Steps......................................................................................1



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INT%O$3CTIONAN$OB4ECTI-ES

The Sea buckthorn Value Chain Assessment aims to

,!enti"$ primar$ actors( roles an! inter'relationships %n!erstan! sector markets ,!enti"$ suppl$ an! !eman! tren!s

%n!erstan! sector inputs( pro!uction8harvest( processing an! market s$stems ,!enti"$ constraints an! opportunities that promote value chain groth an! competitiveness

The objectives are to better un!erstan! the !$namics o" the Sea buckthorn sector in the Western Regionas ell as the broa!er conte-t ithin hich it "its+ The scope o" this assessment there"ore inclu!ese-ploration an! anal$sis o" available !ata regar!ing the international situation( the #ongolian conte-t an!speci"ic emphasis on the value chain o" Sea buckthorn in the Western Region( an! %vs provincespeci"icall$( o" #ongolia+ The Western Region inclu!es "or this assessment /ov!( )obi Altai( 0avhon an!%vs+ ,n"ormation about cultivate! an! il! sea buckthorn are both inclu!e! in the assessment though !ueto limitations in available !ata( more emphasis is on cultivate!+

,n a!!ition to "illing important gaps in in"ormation "or this sector( the result is to i!enti"$ core pilot activities"or phase , o" the project an! generate recommen!ations "or phase ,, o" the Western Region Economic

Development Program+

ASSESSMENTA''%OAC5AN$MET5O$OLO&6

The primar$ metho!olog$ as base! on the Action "or Enterprise approach to value chain assessments"or program !esign+ This process in"luence! sector i!enti"ication an! the sector anal$sis hich inclu!e!e-ploring stakehol!er roles an! relationships( governance an! government environment( mapping o" thevalue chain( an! constraints( opportunities an! local resources "oun! along the chain 9*igure :::;+ B$i!enti"$ing problems an! then opportunities an! local resources to a!!ress these( the assessment buil!son important strengths an! contributes to the broa!er environment+ #arket base! solutions that supportlocal business !evelopment provi!ers an! e-isting institutions are prioriti1e!+ A"ter this( recommen!ationsan! suggestions are ma!e regar!ing program involvement an! propose! ne-t steps+

*igure :::+ Action "or Enterprise Value Chain Anal$sis Components

The assessment also e-plore! components o" the market s$stem as i!enti"ie! b$ the Spring"iel! Centre9*igure :::;+ Together( these to approaches $iel!e! important in"ormation an! improve! un!erstan!ingo" the sector as a hole an! potentials "or market base! interventions+

*igure :::+ Spring"iel! Centre #arket S$stem Diagram



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SEAB3C7T5O%NSECTO%SELECTIONAN$BAC7&%O3N$

Sector Identi0ication

The Sea buckthorn sector as i!enti"ie! "or its economic potential an! also the Western Regionsgeographic competitive a!vantage in pro!ucing this plant+ Discussions ith local stakehol!ers( !onors(an! input "rom the


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organi1ation the$ are still evolving an! groing ?uite rapi!l$+ ,SA hosts con"erences an! meetingsannuall$ ith the most recent one in 5==> in Cana!a+ The ne-t con"erence is propose! "or 5==7 in eitherChina or Russia+ The ,SA also manages a ebsite hich is a clearinghouse o" in"ormation aboutassociation nes( ho to join( an! current available resources+ Again( the ebsite is not available in#ongolian( rather in English( Chinese( an! Russia+

The Internationa Center 0or %esearch and Trainin! on Sea buc#thorn 8IC%TS9 as involve! in thecreation o" the ,SA an! is the current lea!ing international research an! training organi1ation "or thesector+ ,CRTS is locate! in China an! markets a clear opportunit$ "or research an! !evelopmentin"ormation an! training that is in close pro-imit$ to #ongolia+ The centre also pro!uces an! !istributesthe Internationa Sea buc#thorn %esearch and $eveopment 4ourna( the onl$ sector speci"ic peerreviee! publication o" its kin!+ ,t is publishe! in Chinese an! also English+ Revie o" most recentEnglish publications shos no evi!ence o" research on sea buckthorn "rom #ongolia+

&" the man$ countries pro!ucing sea buckthorn( there are to' Nepa and India' that have !evelope!particularl$ interesting private an! public sector partnerships+ ,n Nepa the Seeds 0or 'rosperit" 'rojectuses sea buckthorn mobile processing to assist small groers in a!!ing value to their pro!uct to make oil+The project also connecte! these groers to a bu$er( a burn unit o" a local hospital( ho then use! the oilas a skin treatment+ This as uni?ue in that the en! users ere not intereste! in a!!ing value themselvesas is the case in most

,n India( the government has !evelope! a nutritiona drin# suppementuse! e-clusivel$ b$ the ,n!ian#ilitar$+ This pro!uct has a ver$ stable an! niche national market that as ell connecte! to up to !ateresearch an! !evelopment+ )overnment an! private sector interest ere closel$ connecte! "acilitating aver$ strong polic$ environment as government support as clearl$ high an! have a veste! interest in the?ualit$ an! long'term viabilit$ o" the pro!uct+ This in turn has create! a speciali1e! an! uni?ue !omesticmarket "or sea buckthorn( hich gros in parts o"


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as $ou register there use at +ean'seabuck+org + #aterials have been translate! into severallanguages an! are no available in )erman( English( Chinese an! Russian+

Surve$ "in!ings "rom a recent market oriente! surve$ $iel!e! the best available market segment an! priceestimates available "or the sector+

MON&OLIANSEAB3C7T5O%N$ONO%EN-I%ONMENT

There are three !onor "un!e! projects currentl$ happening that involve the Sea buckthorn sector in!i""erent a$s+

&T: through a Conservation an! Sustainable #anagement o"


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%ELE-ANTMON&OLIAN&O-E%NMENT'%O&%AMSAN$'OLICIES

3vs Sea buc#thorn 'ro!ram9Western Region;Several $ears ago( a program as !evelope! in the %vs Aimag to promote the pro!uction an! sales o"sea buckthorn "or income generation an! povert$ alleviation in the aimag+ This program as establishe!to utili1e the natural resource in the aimag an! its regional competitive a!vantage+ This clearl$ insight"uli!ea is no becoming an e-ample o" perhaps misgui!e! $et goo! intentions+ The same program has no

been approve! in 2 estern aimags no 9names uncon"irme! but presumabl$ /ov!( 0avhon( Ba$an'%lgii( an! )obi Altai;+ The program has purchase! appro-imatel$ 45=(=== see!lings to be !isperse! toappro-imatel$ 4== poor househol!s+ These ere purchase! "rom Russia at appro-imatel$ 5 %SD each9totall$ 56=(=== %SD;+ Each househol! has receive! one training prior to the getting the plants an! illreceive one more once the$ have been !istribute!+ Accor!ing to the local citi1en horal lea!er an! "oun!ero" the program( househol!s ere also selecte! base! on some prior agricultural e-perience an! !ecentlan! 9primaril$ on the outskirts o" %laangom;+ Poor househol!s are e-pecte! to invest an! care "or theseplants "or the "irst @ $ears an! then ill bene"it solel$ "rom the sales o" berries harveste!+ The concept isa noble one though the viabilit$ o" this strateg$ in the long term has been brought into ?uestion especiall$in light o" pest issues an! the overall lack o" training an! support "or these ne crops+ /ousehol!s aree-pecte! to start receiving the plants this #a$ 5==+ The local government bu!get has also beenapprove! "or the construction o" a processing "acilit$ in %laangom+ Details are not $et clear about ho thisill ork but it coul! un!ermine the competitiveness o" several processors in the area !epen!ing in ho it

is rolle! out+

&overnment $ata,n meeting ith a representative at the #inistr$ o" Agriculture( it as !etermine! the best available !atacollecte! about sea buckthorn as inclu!e! in national berr$ pro!uction+ /oever( caveats ere ma!ethat this also inclu!e! blueberries( currants( sea buckthorn an! some others an! it as impossible to geta break !on b$ region or b$ pro!uct+ Pro!uction estimates belo all came "rom primar$ an! secon!ar$other sources+ E""orts to improve the availabilit$ o" the !ata

Mon!oian StandardsThere are "our major stan!ar!s that have been !evelope! "or Sea buckthorn in #ongolia+ Three are "orprocesse! pro!ucts 9juice( oil( an! s$rup; an! one is "or sapling8bush pro!uction+ The$ ere !evelope!!uring the earl$ to mi! 477=s+ These stan!ar!s have been establishe! to protect businesses an!consumers an! promote the pro!uction o" sa"e an! ?ualit$ pro!ucts in #ongolia+ En"orcement o"stan!ar!s an! the rigor o" the stan!ar!s ere both !eeme! lo b$ various stakehol!ers+ Businesses allreporte! compliance an! regular testing ith no one reporting major issues aroun! these+ The stan!ar!saroun! the pro!uction o" Sea buckthorn ere the least ell knon an! e""ect the most number o" smallan! me!ium si1e pro!ucers+ .ocal level authorities an! pro!ucers e-presse! animosit$ !uringstakehol!er meetings as their relationship ten!s not to be a ver$ strong an! $et the stan!ar!s are in placeto support health$ an! ell care! "or crops+

Sea buckthorn pro!ucers an! processors businesses interact "re?uentl$ ith the ta- o""ice( lan! o""ice(an! local stan!ar!s o""ices regar!ing compliance( certi"ication an! registration o" their propert$ an!business entit$+ These are all potential entr$ points "or program private an! public partnership activities topromote local economic !evelopment+

Mon!oian Business Associations and Events

Recentl$ 9September 5==>; the #ongolian


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organi1ation an! represent %vs aimag nationall$ an! internationall$+ ,t is !i""icult to sa$ hat e-actl$ thererelationship is or ill be to the


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O-E%-IE,ANAL6SIS+ ,ESTE%N%E&IONSEAB3C7T5O%N-AL3EC5AIN

Inputs and Input Suppiers

Cultivate! sea buckthorn re?uires several important inputs inclu!ing ?ualit$ see!lings or saplings(consistent ater( natural "ertili1ers an! protection "rom small animals an! bir!s+ Recentl$ there is groing

interest in pestici!es hoever these are currentl$ minimall$ use!+ ualit$ see!lings ten! to come "rom the"olloing sources

The plant gros best along rivers or near ater sources+ Currentl$ there are some lo input irrigationcanals being use! b$ small plantations+ People !o not usuall$ pa$ "or ater or inclu!e this in their inputcosts+ )roers o"ten use natural "ertili1ers on there soil an! !o not pa$ "or these either+ ,t is possible the$barter or receive these "or "ree "rom local "arms+ There is groing interest( especiall$ in larger scale"arming about the use o" commercial "ertili1ers+

Currentl$( there is increasing concern about the negative impact o" the sea buckthorn "l$ on sea buckthornpro!uction+ Tra!itionall$( groers !o not use pestici!es o" an$ kin! an! are not ell e?uippe! ith pestprevention knole!ge+ There is concern about the e""ect o" this pest on pro!uction levels an! berr$?ualit$+ Recent intervies ith groers o" saplings an! sea buckthorn bushes reporte! interest ina!!ressing this problem an! also a illingness to pa$ a small "ee "or this assistance+ ,t as !i""icult toestimate ho much given currentl$( there is no local provi!er o" such in"ormation+ #ost people getcultivation assistance or in"ormation "rom the local branch o" the Crop an! Research ,nstitute hoever noone knos ho to !eal ith this pest issue+

Accor!ing to the !ata "rom the %


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.ocall$ Businesses 56==

,n!ivi!uals 3==

Tota ))< /1))

5==>

%laanbaatar 45@==

&ther aimags 5@7==.ocall$ Businesses

,n!ivi!uals 423==

Tota ))> 1(?))

Appro-imatel$ 62H o" sapling groers note! that the$ planne! to e-pan! sapling pro!uction an! startpro!ucing "ruit bearing bushes o" there on+ Another @=H planne! to get out o" sapling pro!uction an! toshi"t toar!s their on bush pro!uction "or "ruits+ These businesses reporte! having 5+5 million #


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&rkhon( Selenge basin( &hin!i Valle$ an! along &rkhon river o" Selenge aimag an! 0avkhan river inDorvoljin soum an! Borkh river an! Al!arkhan soum o" 0avkhan aimag+ Also !iscovere! thatSeabuckthorn areas along Tes river o" %vs aimag an! Jhov! river an! Bohmorin river+

Besi!es using natural seabuckthorn( #ongolians 9Especiall$ #r+B+.aagan; ma!e signi"icant e""ort tocultivate seabuckthorn starting 473@+As result o" these e""orts( as o" 47( agricultural research instituteith @== hectare area ith cultivate! seabuckthorn in %laangom an! 4== hectare area ith cultivate!seabuckthorn in Bulgan Agricultural research institute in Jhov! aimag an! Bee research institute inBatsumber soum an! agricultural research institutes in Darkhan( Jhalkh')ol an! seabuckthornplantations in Biger soum o" )obi'Altai aimag an! some areas o" Selenge aimag emerge!+/oever(these have !isappeare! no+ #ain reason "or this is privati1ation o" these entities to rong people hohave ina!e?uate knole!ge an! skill about seabuckthorn+ As o" 47( cultivate! seabuckthorn asgroing in 2== hectare area an! b$ 5===( the area re!uce! into no more 4= hectare+ /oever( b$ 5==4(seabuckthorn groing has picke! up again an! ne investments are ma!e to establish seabuckthornsapling an! berr$ pro!uction areas+ Aroun! @3 hectare area to seabuckthorn plantation as establishe!in Batsumber soum o" Tov aimag an! 7= ha o" seabuckthorn in Jharkhorin soum o" %vurhangai aimag in5==> ith the potential to e-pan! ith an a!!itional 5== ha area in 5== an! @=== ha area eventuall$+

Also( there are 25 hectare area in %l1iit !istrict an! Bohog area o" %laanbaatar an! 4= hectare area inParti1an( @ hectare area in Baganuur an! total 4= hectare area in Batsumber soum o" Tov aimag an! 2+=hectare area in argalant soum an! total 6= hectare area in Shaamar( 0uunburen( Tsagaantolgoi( 0elter

soums o" Selenge aimag an! 6 hectare area in Agricultural Research ,nstitute o" %vs aimag an! @=hectare area o" or!inar$ local resi!ents an! 2= hectare area o" %vs *oo! compan$ an! += hectare areain Dorvoljin soum o" 0avkhan aimag an! 4= hectare area in Jhov! aimag hich gros seabuckthorn+

Currentl$( F)angar ,nvestG ..C has capacit$ to prepare @==+='2==+= thousan! saplings an! AgriculturalResearch institute o" %laangom o" %vs aimag has capacit$ to prepare @=+= thousan! saplings annuall$+

Fi!ure @@@+ Status o0 seabuc#thorn pantation and harvest 8As o0 Ma" ) ))?.19

Aimag47 5=== 5==>

Area9hectare;

/arvest9#T;

Area9hectare;

/arvest9#T;

Area9hectare;

/arvest9#T;

4 %vs 5== @@@ 3 4= 6 =+=

5 Batsumber o" Tovaimag

4= 3+= ' ' 63 6=+=

@ %laanbaatar 5 @+= @= 6=+= 25 2=+=6 Jhentii 5 ' ' ' @+= 5+=

2Bulgan o" Jhov!aimag

2 3+= ' ' 4=+= 2+=

3Jhalkhgol o"Dorno! aimag

@+= ' ' @+= 5+=

> Shaamar o" Selenge 5= @=+= @ 3+= 6=+= 6=+= Dorvoljin o" 0avkhan 5 @+= ' ' += 2+=

7)angar ..C o" %B9Jharkhorin o"%vurhangai;

' ' ' ' >=+= '

4= Bog! o"Ba$anhongor

4= ' ' ' '

Tota 52> 6== @7 2= @43 556

%*C 9oral communication; sets the pro!uction in %vs an! nationi!e at the same level 9aroun! = #Tan! 55= #T o" ra berries respectivel$;+ As %*C also imports ra berries "or processing "rom Russia9aroun! 43= #T per $ear;( the$ estimate total processing in #ongolia 9inclu!ing imports; at aroun! @=#T per $ear+



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)raphic 4 Cultivate! Seabuckthorn an! its harvest

Accor!ing to the above graphic( b$ 5===( cultivate! seabuckthorn area has re!uce! onl$ to @7 hectare innational level+ ,n other or!s( total seabuckthorn cultivate! area has been !ecrease! b$ 3+3 times an!harvest amount !ecrease! b$ times+ /oever( since 5===( #ongolian people an! businesses starte! to

reali1e bene"it o" seabuckthorn an! have been intensivel$ planting seabuckthorn !uring last >' $ears+ ,nne-t "e $ears( seabuckthorn cultivate! area ma$ reach up to 6=== hectare+ Along ith this groth(seabuckthorn processing has improve! an! pro!uction o" various seabuckthorn pro!ucts such as !rinks(

juice( s$rup( jam( jell$( mi-ture( oil has increase!+ Also starte! to import natural seabuckthorn an!cultivate! sapling "rom Russia in large ?uantities+ #ain seabuckthorn pro!uction is !one an! sol! in%laanbaatar+ >=H o" all seabuckthorn pro!ucts are sol! in %laanbaatar an! remaining @=H is sol! in %vs(/ov!( )obi'Altai( 0avhan( Selenge aimags+ During last $ears( #ongolia ha! potential to process 4+=thousan! tons o" seabuckthorn+ This nee!s to be increase! ever$ $ear+ *or this( #ongolia nee!s toharvest 4@+= thousan! tons o" seabuckthorn an! pro!uce 5+= thousan! tons o" pure seabuckthorn oil an!>+ thousan! tons o" pure seabuckthorn juice an! other seabuckthorn pro!ucts+ Current seabuckthornplantation area shoul! be increase! 4='45 times in or!er to pro!uce these amounts o" seabuckthornpro!ucts ithin ne-t 4= $ear+

Nationa and internationa demand and need 0or Seabuc#thorn


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Also(*e!eral Republic o" )erman$ are intereste! to bu$ seabuckthorn pro!ucts "rom #ongolia an!cooperate in this "iel!+ ,n )erman$( natural seabuckthorn gros in sea coastal areas an! it has severalseabuckthorn processing plants an! !evelope! several varieties o" cultivate! seabuckthorn+

&ne main approach "or us to !evelop is to make Fseabuckthorn as strategicall$ important plant o"#ongoliaG+

Cost and pro0itabiit" o0 !ro*in! seabuc#thorn in one hectare area, have estimate! pro"itabilit$ o" groing seabuckthorn in one hectare area "rom economic stan!point o"vie+ ,n table no+5 shon cost break!on such as price o" sapling( cost cultivation o" soil( irrigation an!protection associate! ith groing seabuckthorn in one hectare area+

Tabe no. Annua cost o0 estabishin! seabuc#thorn in one hectare area 8))?9

No $escription o0 cost 3nit ;t"3nit Cost Tota

9#(2==(=== Pro"it 4(267(5==

'rocessin!

The ne-t major step( hich a!!s value to the pro!uct( is processing+ uice an! oil processing is !one inone o" several a$s !epen!ing on the level o" investment an! scale o" the operation o" this business+#ost businesses make both since pulp can "irst be e-presse! "or juice an! then the see!s an! skinremains later presse! "or oil+ &il "rom settle! presse! pulp also ten!s to rise an! can be skimme! o"" asell+ &il contents var$ beteen the presse! an! skimme! pulp but are not markete! an$ !i""erentl$ in#ongolia+

The assessment acknole!ges that home processing o" berries into juice is a market "or berries in theWestern Region but the costs an! t$pes o" processing at this scale ere not e-plore! e-cept that it asusuall$ "or personal consumption or in some cases school consumption+ %suall$( berries are presse! an!then either the juice bottle! !irectl$ or boile! to prevent "ermentation+

Packaging an! storage are to important steps that happen alongsi!e processing+ %laangom College hasa ne "oo! laborator$ that inclu!es a ne bottling machine+ Stu!ents learn metho!s "or improve! bottlingan! "oo! sa"et$+ .abeling is "airl$ limite! in all but the %*C compan$ in the Western Region an! asi!enti"ie! b$ most businesses as an area the$ ere intereste! in orking on( along ith the overallpresentation o" their pro!uct through bottling+



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Mar#et

Sea buckthorn gron in the Western Region is primaril$ sol! as ra berries( juice or oil ithin the aimag itis gron in or at regional an! national markets ithin #ongolia+ Prices range "rom : to : "or juice( : to :"or oil( an! beteen 44=='55== "or berries+ Variation in prices occurs "or ?ualit$ as ell as location an!speci"ic market sales points+ Ra berries are sol! at local soum( aimag( an! %B markets+ #ost berriesare sol! !irectl$ to processors through verbal contracts b$ pro!ucers in the aimag centers or through

mi!!lemen ho bring berries 9usuall$ il! though can be cultivate!; to the processors "or sale+ .ocalmarkets are a major venue "or both processe! an! ra pro!ucts+ School lunch programs in soums asell as in aimag centers ere common !irect markets "or processors i!enti"ie! in all aimags in theassessment area+ #ore attention to these markets coul! be goo! "or not onl$ the businesses but also theschool chil!ren+

Berries are sol! primaril$ !irectl$ to processors as mentione! earlier an! the major one in %vs being%*C+

There is interest internationall$ b$ apanese e-perts an! companies "or %vs Sea buckthorn oil+ This is thesecon! $ear one compan$ is selling the oil to a apanese cosmetic compan$( evi!ence that the "irst salesere ell receive!+ This $ears purchases are much larger than other the previous $ears+ The compan$as unable to "ull$ meet the !eman! !esire! b$ the compan$ so as tol! recentl$ that the apanese "irm

as e-pan!ing the companies it as purchasing "rom+

,estern Aima! Situations

As mentione! previousl$( the assessment covere! 6 aimags o" the Western Region inclu!ing )obi Altai(/ov!( 0avhon( an! %vs+ Each ha! !i""erent characteristics( levels an! t$pes o" seabuckthorn pro!uction+ &verall( %vs ha! the highest pro!uction( the most !evelope! localbusiness !evelopment service provision services an! potential( as ell as the mostestablishe! processors an! businesses as a hole "or sea buckthorn+ There are o" coursee-ceptions an! there are some uni?ue value chain opportunities in each+

Zavhan AimagSea buckthorn in 0avhon aimag is primaril$ locate! in @ soums 9Durvuljin( Al!arkhaan( an! Tes; an! isprimaril$ il!+ Cultivate! plant pro!uction is small an! in earl$ stages mostl$+ ,n Durvuljin there are >

partnerships that have been !evelope! that have taken responsibilit$ "or protection( cultivation an!restoration o" sea buckthorn in the il!+ Accurate pro!uction in"ormation as not available+ ,t is knonthat signi"icant ork as un!ertaken here ith )T0 an! more "ollo up coul! provi!e a!!itionalin"ormation+ The aimag government supports sector pro!uction an! !evelopment as the$ just approve!the %vs Sea buckthorn program "or their aimag in 5==>+ ,t is unclear the status o" its implementation oran$ plans "or progress to implement such activities+

Gobi Altai AimagThere are 6 entities groing sea buckthorn in 6 soums over 5+5 hectares o" mostl$ il! but also somecultivate! sea buckthorn+ Wil! sea buckthorn harvests are estimate! at == to 4=== kgs per househol!though it is unclear ho man$ househol!s harvest in these soums+ #ost o" the berries harveste! aresupplie! to local markets an! processors in the aimag center+ There are currentl$ no !onor'"un!e!projects in this aimag e-plicitl$ supporting the sector in an$ a$ as most entities are small ith 4 large

entit$ accounting "or most o" the lan! area+ The aimag government has also approve! the %vs AimagSea buckthorn Program+

Hovd AimagThere are > pro!ucers o" cultivate! sea buckthorn in 5 soums 92 cooperatives an! 5 ..Cs;+ Combine!these pro!ucers have appro-imatel$ 4@+ hectares an! in 5==3 harveste! close to 4= tons o" seabuckthorn+ Currentl$ pro!uction is e-pan!ing through an aimag re"orestation "un! that has been plantingin 5 a!!itional soums an! e-pecte! to continue into ne areas+ The "irst business as establishe! asearl$ as 47> in the aimag though cultivation began more in earnest in the earl$ an! mi! 477=s+ The



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most recent pro!ucer began in 5==>+ Pro!uction areas range "rom +@ to 6 hectares each in si1e+ Crop$iel!s ill increase as man$ o" these nel$ plante! bushes mature in the coming $ears+

-AL3EC5AINAN$MA%7ETS6STEMMA'S

*igure :::+ Value Chain #ap o" Sea buckthorn Sector 9Emphasis on %vs Aimag;

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*igure :+ &vervie o" Basic #arket S$stem Components

The above picture !emonstrates the !i""erent levels o" the s$stem as ell as some core components+Starting at the base are the inputs( then the pro!uction an! harvest o" sea buckthorn berries( thenprocessing an! ultimatel$ sales to various consumers through markets+ At !i""erent points along this chainin!ivi!uals or businesses come into contact ith !i""erent business !evelopment services hen the go toa bank( purchase e?uipment or see!lings( seek technical or business a!vice+ All o" these pla$ers areimportant "or sea buckthorn+ The le"t han! si!e

CONST%AINTSAN$O''O%T3NITIES ANAL6SISB6CATE&O%6

Constraints Soutions

Technolog$8Pro!uctDevelopment

4+ Presence o" pests5+ Problems ith bir!s an! ro!ents@+ ,nsu""icient knole!ge o" most pro!ucers

regar!ing technolog$ an! husban!r$practices

6+ ualit$ testing o" berries is onl$ availablein %B

2+ Pro!ucers not "amiliar ith concept o"Ftraining "eeG

3+ *emale an! male trees not son incorrect proportions

>+ Tree varieties are mi-e!( resulting in

berries o" var$ing in!ustrial ?ualit$+ ,nsu""icient goo! areas here ater an!

goo! arable lan! a!e?uate "or SBT groing7+ Collection schemes !o not consi!er

su""icient pa$ment "or ?ualit$(4=+ Deterioration o" ?ualit$ !uring transport44+ ,nsu""icient commercial pro!uction o" b$'

pro!ucts hich coul! be economicall$interesting

4+ Train pro!ucers on !iseasecontrol

5+ Provi!e !isease control services"or pro!ucers

@+ Provi!e in"ormation on e?uipment"or control bir!s an! ro!ents

6+ Train pro!ucers on seabuckthorntechnolog$ an! husban!r$practices

2+ Establish small laborator$ in %vs3+ ,ntro!uce a training "ee gra!uall$>+ Train pro!ucers on ho to

recogni1e male an! "emale trees+ #ap suitable seabuckthorn

groing areas in %vs aimag7+ ,ntro!uce stricter ?ualit$ control

s$stem !uring collection ith moreprice !istinction

4=+ ,mprove berr$ transport44+ Stu!$ use o" b$'pro!ucts45+ Train pro!ucers an! pickers on

Mercy Corps Baruun Bus Project 1"

$ocal Business

%e&elopment Ser&ices

- Lending Institutions

- Crop & Research Institute- Ulaangom College

- Business ssociation! Businesses

- Consultants

'etailers( Consumers

Processin)

*+il an, -uice.

Pro,uction an,

Berry /ar&est

0nputs

0nternational(

ational( $ocal

Policy an,

conomic

n&ironment


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45+ Picking techni?ues !amage bushes correct harvesting techni?ues

#arketAccess an!Support

4@+ + Train pro!ucers on ?ualit$

aspects o" saplings4+ Regulate sapling pro!uction an!

implement current stan!ar!s47+ Establish a certi"ication s$stem

"or ?ualit$ saplings5=+ Set up a pro!ucer base! mo!el'

"arm to sho the bene"its o"me!ium'input me!ium'output

approach

#anagement8organi1ation

5>+ Pro!ucer 8 processor links ver$ eak(5+ Access to an! control over il! SBT area

b$ local communities uncertain

57+ .ittle alliances beteen businesses areestablishe!@=+ Research institutes are un!er'"un!e! an!

!o not pro!uce much a!apte! research@4+ Potentiall$ large groth in number o"

small pro!ucers couple! ith processormoving into an integrate! value chain coul!limit small pro!ucer bargaining poer

54+ )ive onership ith legalen"orcement to localcommunities

55+ Establish a orking group

Polic$regulation

@5+ ,nsu""icient !ata available on nationalpro!uction

@@+ )overnment role in SBT !evelopment notagree! ith the private sector

@6+ Stan!ar!s regar!ing SBT pro!uction are

unclear@2+ .icenses "or lan! an! SBT pro!uction

5@+ ,nclu!e seabuckthorn in the + Pro!ucers have insu""icient access to

"inancial resources "or investment@+ Small pro!ucers have lo amount o"

collateral to secure bank loan@7+ /igh interest rates

52+ Banks provi!e an appropriateloan pro!uct "or seabuckthornpro!ucers

53+ Provi!e a!!itional cashcollateral

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The potential solutions have been groupe! accor!ing to the possibilit$ to stimulate income groth an! thepotential number o" bene"iciaries involve!

Possibilitiesofincomegrowth

/igh 9 4742 9inclu!es 4( 6( >( 45( 4>(56; 52 53

#e!ium 11 2; 1; 1!; 1" 2 43 9inclu!es @;

.o 22 #; 2! "; 1$; 2; 21;.o #e!ium /igh

Number o0 bene0iciaries o0 the soutions

ANAL6SIS OF T5E SOL3TIONS

,n more general terms( the main reasons h$ business services are currentl$ provi!e! ver$ limite! an!o"ten in a non'commercial a$ all relate to the same basic elements( hich are

The seabuckthorn value chain is a interesting opportunit$ "or those involve!( but is still a ver$small sector ith aroun! 3= pro!ucers 9inclu!ing sapling an! berr$ pro!ucers;+ This constitutes aver$ small market "or an$ service provi!er( hich oul! seem to impl$ that speciali1e! servicesare not economicall$ viable

Pro!ucers opt "or a lo'input lo'output approach an! there"ore e-clu!e an$ pa$ments "orservices as a viable option

Soution 1: Establish small laborator$ in %vs

Soution descriptionCurrentl$( there is no laborator$ capacit$ to make anal$sis on berr$ ?ualit$( seabuckthorn !iseases or soil?ualit$+ The establishment o" a small laborator$ oul! allo harnessing available local capacit$ "or thisservice+ The solution oul! be sustainable i" !eman! "or these three t$pes o" anal$sis 9income; oul!e?ual the !eliver$ cost'ossibe service providers 0or the soutions impementation Research institute %vs *oo! compan$Motivation 0or the soution+ Research institute ' cost recover$ as this is a para'statal institute %vs *oo! compan$ ' embe!!e! service partiall$ o""ere! on a "or'"ee basis'ossibe obstaces in soutions impementation

.o overall !eman! "or these t$pes o" anal$sis combine! ith high operating costs .o esteem "or ?ualit$ pro!uction *or'"ee provision o" this service is ?uestionable

Soution (1 8incudes ( = > ( (> and =9+ Deliver better ?ualit$ servicescommercial an! !eman! !rivenSoution description

Access to knole!ge an! in"ormation is a "re?uent recurring problem( ith businesses having a i!erange o" !eman! "or management( business an! technical aspects o" seabuckthorn pro!uction+ A local



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service provi!er oul! be able to satis"$ the !eman!+ /oever( !ue to the limite! market 9aroun! 3=businesses; an! the absence o" L"or "eeL services( an$ action to improve commercial service !eliver$ illhave to be intro!uce! slol$( "ocusing on ?ualit$ service !eliver$ ith businesses slol$ learning theeconomic value o" the services o""ere!+ This has alrea!$ been starte! un!er the BB RED program ithsome businesses pa$ing "or better ?ualit$ services rather than atten!ing L"reeL service( but there is still along a$ to go+ The pre"erre! solution oul! be mo!ele! aroun! #erc$ CorpsM approach to BDS supportas has been alrea!$ triale! in other aimags+'ossibe service providers 0or the soutions impementation Research ,nstitute ' participants at the orkshop in %vs i!enti"ie! the Research ,nstitute

as the organi1ations ith most knole!ge on the technical si!e o" seabuckthorn pro!uction+ TheResearch ,nstitute is currentl$ not provi!ing L"or "eeL services an! ill also have to learn to provi!ecommerciall$ viable services+ As such( it is recommen!e! to provi!e services on a cost'share basesthrough the Research ,nstitute !uring the current phase o" the BB RED program

Sain Tus


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Soution (+ Establish a certi"ication s$stem "or ?ualit$ saplingsSoution descriptionSapling pro!ucers !o not a!here to minimum ?ualit$ stan!ar!s "or the pro!uction o" saplings+ Pro!ucersare not able to recogni1e ?ualit$ !i""erences+ Saplings are pro!uce! "rom an$ kin! o" parental source( notcontrolle! "or ?ualit$+ The general approach seems to be to LregulateL these sapling pro!ucers( hich has

been ine""ective over the past $ears+ ,n stea!( a more "le-ible approach coul! be envisione! ith acerti"ication s$stem "or sapling pro!ucers ho a!here to minimum stan!ar!s+ With a certi"ication s$stemin place( a price "or ?ualit$ !i""erence coul! be promote! ith oul! stimulate all sapling pro!ucers tomove toar!s a better ?ualit$ sapling+'ossibe service providers 0or the soutions impementation Research ,nstitute ,nstitute "or Stan!ar!s an! #easurementsMotivation 0or the soution+

This is part o" the man!ate o" both organi1ation an! the$ oul! continue to operation o" thecerti"ication scheme once it has been set up+ Buil!ing un!erstan!ing aroun! the !i""erences beteena certi"ication scheme an! Len"orcement o" regulationsL is crucial "or the scheme to be runsuccess"ull$ in the long term+ ,nitial costs oul! be covere! b$ #erc$ Corps

'ossibe obstaces in soutions impementation

)ather su""icient stakehol!ers ho support this approach+ ," the certi"ication scheme !oes notmanage to i!enti"$ an! there"ore market the better ?ualit$ sapling( pro!ucers ill remain con"use!an! there ill not be an automatic price !i""erence "or ?ualit$+

Soution 1+ Banks provi!e an appropriate loan pro!uct "or seabuckthorn pro!ucersSoution description,nvestments in seabuckthorn pro!uction re?uire a long loan perio!( longer than the current 5 $ear cap thebanks have impose! to !ate+'ossibe service providers 0or the soutions impementation All commerciall$ operating banks in %vs aimag *ormall$ establishe! Cre!it %nions or :asM banks *ranchise Cre!it an! Savings

CooperativesMotivation 0or the soution+Provision o" commercial cre!itPossible obstacles in solutions implementation%

Bank have not been illing to entertain longer loan perio!s an! ma$ not ant to engage in a!iscussion on this subject

The cre!it s$stem in #ongolia seem to be a bit overheate! an! the #ongol Bank gave a armingin #arch 5==+ Acting on this recommen!ation( banks has limite! rural len!ing hich ma$in"luence loan pro!ucts at aimag an! soum level

,n"lation has risen sharpl$ in #ongolia over the "irst 2 months o" 5== hich ill ten! to makecre!it more costl$ an! ma$ make long term cre!it too e-pensive consi!ering the potential R&, inthe Seabuckthorn sector+

Soution


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Motivation for the solution

.oan collateral ill be provi!e! as part o" the business !evelopment services #erc$ Corps hasestablishe! in #ongolia+ .ong term sustainabilit$ can be reache! through a change in the bankappraisal o" moveable collateral( base! on increasing aareness o" the cre!itorthiness o" rurallen!ers+

Possible obstacles in solutions implementation%


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pro!ucers to a !i""erent pro!uction s$stem+ The mo!el "arm oul! appl$ a more scienti"ic approach onpart o" its pro!uction( recor!ing inputs an! outputs care"ull$+ At the en! o" the groing season( a care"ullcomparison oul! be ma!e on base! on technical an! economic in!icators 9?ualit$( increase inpro!uction( sales( etc+; This mo!el "arm oul! have to be base! on a LrealL "arm in or!er "or otherpro!ucers to see ho changes can a""ect them !irectl$+ ," this mo!el "arm oul! be base! on theResearch ,nstitute( it ill lose a large part o" the LargumentL that improvements can be ma!e b$ smallpro!ucers+ The Research ,nstitute oul! be involve! to !e"ine the improve! pro!uction s$stem 9base! onan economic assessment an! "easibilit$ stu!$; an! oul! help collect the !ata to compare the changes ininputs an! outputs+Possible service providers for the solutions implementation% .ocal pro!ucer Research ,nstituteMotivation for the solution

.ocal pro!ucer ill provi!e labor "or "ree( but ill receive the input an! a!!itional pro!uction inchange

Research ,nstitute oul! lea! this initiative as part o" their man!ate( ith costs covere! b$ #erc$Corps

Possible obstacles in solutions implementation%

Willingness o" local pro!ucers to participate

%ECOMMEN$E$ACTIONA%EASAN$NE@TSTE'S

Detaile! action plans o" partner organi1ations shoul! be inclu!e! here ' mainl$ Sain Tus an! theResearch ,nstitute+ &nce these have been inclu!e!( the VC Assessment has conclu!e!+

%ESO3%CESAN$%EFE%ENCES

%e0erences and Bibio!raph"Sea buckthorn Program in 'vs+ 5==2+ Approve! b$ Resolution @82 o" Aimag Citi1enM RepresentativesM/ural on 55 December( 5==2+ %laangom( #ongolia+

)+ Ba$araa+ 5==3+ Surve( )e*ort on +istribution and )eserve o, -ild Sea buckthorn in .hovd Soum/'vs Aimag+ %vs Branch o" the Research ,nstitute o" Plants an! Crop Cultivation+ %laangom( #ongolia+

%+ Semi0Annual Progress )e*ort& ommunit( ased onservation o, iological+iversit( in the 3ountain 4andsca*es o, 3ongolia5s Altai0Sa(an 6co0)egion& anuar$ to une 5==>+#&+ Geogra*hic 7ndicationsPresentation+ %laanbaatar( #ongolia+

Ts+ Enkh'Amgalan( SDC #ongolia+ &ctober 5==3+ Summar( o, the ,indings on the areas o, interventionso, donor *ro8ects in the value addition sector and related to it issues in 3ongolia& 9Courtes$ o" SDC;

)+Chime!'&chir+ 5==>+ )eview o, Scienti,ic and )esearch -orks on Sea buckthorn& echnological estand 6:*erimental enter o, the 'niversit( o, Science and echnolog(+ 9Research Report Commissione!b$ Case Stu!$( BB;+ %laanbaatar( #ongolia+

EA+9Website( Registere! to authori1e permission o" use;+ Reports( resources( an! !ocuments o" re"erenceinclu!e

6A0Seabuck


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ualit( and Sa,et( Standards)esearch and Polic( )ecommendations4ists o, .e( Actors and Stakeholdersatalogue o, Selected est Available echnologiesraining 3odules and Handbooks ,or

a? ultivation and Harvestingb? Processingc? Product +evelo*mentd? >ualit( and Sa,et( 3anagemente? 3arketing and ommerciali@ation

D+Ba!gaa an! Oa+am$ansuren+ 5==3+ 3ongolian Standards ,or Sea uck0thorn Oil& 3S "!%""+&""icial E!ition+ 9Pamphlet an!some presentation in"o gaine! !uring in"ormation;

V+ Tsogt'&chir+ 5==>+ 6nter*rise 3ongolia Pro8ect% ogether with 6ntre*reneurs& Annual re*ort& anuar$'December 5==>+ +enterprisemongolia+mn

Av!ai( Ch+G Current situation o" seabuckthorn research( pro!uction o" #ongolia an! its "uture perspectiveGSeabuckthorn'5==2+%B( page 3'4@

Deji!khuu( Jh+G&utcome o" e-periement o" planting seabuckthorn in estern region o" Baga Jhentii usingin!ustrial metho!G( Seabuckthorn'5==2( %B+Page 27'3=

.aagan B+ F )roing seabuckthorn in #ongoliaG( Barnaul( 47>3( page @2+

&chirbat+)( F %sing biolog$ an! ecological aspect o" seabuckthorn 9/ipphophae rhamnoi!es .+; incombating against !eserti"ication an! soil erosionG Seabuckthorn'5==2( page 34'33+

&chirbat+)( FSeabuckthorn bree!ingG %B( 5==( page 5=

Tsen!eekhuu Ts+GD$namics an! locali1ation o" various organs o" seabuckthornG Thesis o" PhD "orBiological Science( %B( page 4=>

,ebsites %e0erenced+

http://www.enterprisemongolia.mn/http://www.enterprisemongolia.mn/


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,nternational Sea buckthorn Association( ,nternational Center "or Research an! Training on Seabuckthorn+ http88+icrts+org8

)lobal *acilitation %nit "or %n!erutili1e! Species Sea buckthornhttp88+un!erutili1e!'species+org8species8species!etails+aspQi!5>

,n"luence o" /arvest Time on the ualit$ o" &il'Base! Compoun!s in Sea Buckthorn 9/ippophaerhamnoi!es .+ ssp+ sinensis; See! an! *ruit Susan D+ St+ )eorge an! Ste"an Cenkoskihttp88pubs+acs+org8cgi'bin8abstract+cgi8ja"cau8asap8abs8j"=>=>>5"+html

5==@'=>'44 Volume 43 + +onor 7nterventions in Dalue hain +evelo*ment -orking Pa*er+ Communit$ o" Practice onValue Chains in Rural Development "inances b$ SDC Berne( ul$ 5==>+

/itchens R( Elliot D( )ibson A+ 5==6+ 3aking usiness Service 3arkets -ork ,or the Poor in )ural Areas%A )eview o, 6:*eriences+ Spring"iel! Centre
http://www.icrts.org/http://www.icrts.org/http://www.icrts.org/

10 - value chain análisis - seabuckthorn - mercy corps mongolia - 2007

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