BARLEY VALUE CHAIN ASSESSMENT REPORT FINAL REPORT ...

BARLEY VALUE CHAIN
ASSESSMENT REPORT
FINAL REPORT
May 2008

Value Chain Study Report
on Barley Production Sub-Sector
Compiled by:
G. Munkh-Erdene, Program Office in Govi-Altai aimag
Ch. Tsetsegmaa, Consultant, Executive Manager, Altai Swiss Foundation
D.Choijilsuren, PO for Agricultural Development
Ulaanbaatar
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Value Chain Study report on Barley subsector
2008.03.11
CONTENT
1. INTRODUCTION ....................................................................................................................................................... 3
3. SCOPE OF THE RESEARCH WORK ................................................................................................................ 4
4. METHODOLOGY.................................................................................................................................................. 4
5. CONSOLIDATION OF STUDY RESULTS............................................................................................................. 5
5.1 INFORMATION ON SURVEY PARTICIPANTS................................................................................................................. 5
5.2STUDY ON CROP PRODUCERS ..................................................................................................................................... 6
5.3 BARLEY FLOUR RETAILERS ....................................................................................................................................... 7
5.4 CONSUMERS.............................................................................................................................................................. 8
5.5 PROCESSING COMPANIES......................................................................................................................................... 9
5.6 INPUT SUPPLIERS....................................................................................................................................................... 9
5.7 BARLEY PRICE ........................................................................................................................................................ 10
6. BARLEY SUB SECTOR VALUE CHAIN MAPPING ......................................................................................... 11
7. CONCLUSIONS........................................................................................................................................................ 12
8. CONSTRAINTS AND OPPORTUNITIES FOR BARLEY SUB SECTOR VALUE CHAIN........................... 13
8.1 OPPORTUNITIES FOR BARLEY PRODUCTION IN GOVI-ALTAI AIMAG ........................................................................ 13
8.2 CONSTRAINTS FOR BARLEY SUB SECTOR AND POSSIBLE SOLUTIONS ....................................................................... 13
8.3 EVALUATION FOR POSSIBLE SOLUTIONS................................................................................................................ 16
8.4 THE MOST IMPORTANT SOLUTIONS FOR BARLEY SUB SECTOR DEVELOPMENT ...................................................... 16
8.5 PROGRAM INTERVENTION FOR IMPLEMENTATION OF MOST EFFECTIVE SOLUTIONS........... ERROR! BOOKMARK NOT
DEFINED.
9. APPENDIX.................................................................................................................................................................. 21
9.1 SURVEYED PEOPLE.................................................................................................................................................. 21
9.2 NUMBER OF GOVI-ALTAI AIMAG BARLEY PRODUCERS AND ENTERPRISES, BY SOUMS ............................................ 21
9.3 GOVI-ALTAI AIMAG BARLEY PRODUCTION FOR FOOD CONSUMPTION AND ITS YIELD ( 2004-2007) ........................ 21
9.4 VALUE ESTIMATION FOR IRRIGATED BARLEY PRODUCTION .................................................................................... 22
9.5 BARLEY FLOUR MAKING COST ................................................................................................................................22
9.6 PICTURES ................................................................................................................................................................ 23
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Value Chain Study report on Barley subsector
1. Introduction
Barley is a biologically unique product suitable for Mongolian soil and weather conditions that could grow in
elevated cold mountainous area, steppe condition, even in arid Gobi regions. Barley is cultivated in almost
all countries of five continents of the world and it occupies the fourth place in terms of plantation area
following the wheat, rice and corn. It is the second plant in Mongolia with regard to plantation area going
after the wheat. Our ancestors have used barley as a major foodstuff from the ancient times. It had been
planted on 20 thousands hectares in 1960s and on 95,000 hectares in 1980s respectively in our country.
During the socialist times, different types of vegetables such as potato, wheat and fodder were cultivated on
3500-5000 hectares of land equipped with 15 irrigation systems in 10 soums of Govi-Altai aimag. However,
as the country made its transition to market-oriented economy, the size of plantation area had been reduced
year by year because the entities involved in crop production were privatized, financial capabilities of
citizens and entities weakened, faced shortage of proper technology and equipment and lack of consolidated
organization and management.
In Govi-Altai, apart from a few professional growers, barley has been cultivated mainly at household and
herder level in relatively small quantities. As of today, barley is planted in 11soums of Govi-Altai aimag. In
Biger, Sharga, Taishir and Chandmani soums where our study was conducted, barley is cultivated by most
number of households on the largest area (60% of total barley production). Out of 162 households, that
grows barley, 80% plants on 0.5-3.0 hectares and 20% grew on 3 hectares and over. Biger, Sharga, Taishir
and Chandmana soums, which were included in this study
In accordance with the aimag's mid-term crop production program, Aimag Governor’s Decree and Green
Revolution Committee’s resolution were issued and sent to soum governors requiring them to form a seed
reserve from barley planted every year and increase plantation field by 20% annually with 15% for wheat
and 5% for barley area.
Barley plantation (2004-2007)
Table 1
№ Indicator 2004 2005 2006 2007
1 Harvested field ha 124.1 93.6 104.2 177
2
Harvested yield
ton 110.6 123.3 111.5 173
3 Yield per ha ton 0.90 1.30 1.10 1.00
Last years’ statistics show that crop amount has been increased and harvest yield from a unit is getting stable.
From the above table we can see just figures related with the harvested field size but not the increase of
plantation field. For example, “Tulga Altai” in Tsogt soum planted barley in 20 hectare in 2005 and 2006 but
they could not get any harvest out of the field because of the water availability and their plantation field has
not been included in this number.
From the study, there is a tendency for individuals and entities to increase the size of plantation field in 2008.
Govi-Altai aimag has harvested 129 tons of barley from 124-hectare areas over the last four years that means
one ton of barley from one hectare irrigated area.
Among the soums, Biger, Bugat, Taishir, Tugrug, Haliun, Chandmani and Sharga are the main barley
growers producing flour using the traditional methods, selling at markets and consuming for household need.
Barley sort and seed supply
In western aimags barley has different names and sort such as barley, barley with husk or hojgor, rye (long
bared barley), haltar arvai and zurgaadai and makes flour out of it for food consumption. There are also
many local sorts and types of barley in different areas. For example: yellow barley (undefined barley sort
with husk) and “hojgor” (local haltar arvai) barley are planted in Uvs aimag, Sutai sort barley in Hovd
aimag, Bugtur huh sort in Haliun, Biger, and Chandmani soums in Govi-Altai aimag, ‘Huh mundruush” sort
in Sharga soum, “Bujgar tsagaan” and “Haltar arvai” sort in Taishir soum, Govi-Altai aimag.
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Value Chain Study report on Barley subsector
An “Alag Erdene” and “Sutai” barley sort for food consumption is acclimatized in crop production areas of
Mongolia but they have not been used frequently because of the poor seed resource. Therefore, any sort of
barley and its mixture stored from the harvested yield usually has been planted locally.
Main challenge for Govi-Altai aimag crop producers is a lack of high quality barley seed. Even they try to
separate well ripened seed through traditional method of wind and seed weight from their harvest, during the
sowing producers don’t pay attention on seed multiplication, so different varieties of barley sorts has a bad
influence to the harvest and its ripening. Especially, different sorts of barleys by its maturity duration
planted in irrigated area has a negative influence to the ripening, wastage of harvest, and vegetation disease.
There is a high potential of supplying crop producers with high quality barley sort for food consumption
through multiplying the seed in Hovd aimag Agricultural school and Uvs branch of Vegetation and Crop
production research Institute. S.Saihanjargal, MC client, crop producer in Taishir soum, Govi-Altai aimag is
working on seed multiplication of “Haltar arvai” sort and accumulated seed for three hectares as of 2007
which showcase the good start of seed multiplication business among the crop producers.
2. Study objectives
Identify and evaluate Govi-Altai aimag barley production, communication and network among participants
in barley value chain, value addition in a process from production to final consumers and constraints faced in
these stages and sustainable solutions for overcoming these constraints, and program intervention for the
implementation.
Study team included:
G. Munkh-Erdene, Program Officer
Ch. Tsetsegmaa, Executive Manager, Altai Swiss Foundation
Ch. Dashdeleg, Program Representative
G. Batbold, Program Officer
3. Scope of the Research Work
In the research, Sharga, Biger, Taishir and Chandmani, the largest barley growing soums of Govi-Altai, were
selected. Also, interviews were conducted with selected business entities such as Haltar Arvai Company,
Tulga Altai Company and Altain Deej Cooperative during the research.
4. Methodology
We have conducted the study using the following methodology in accordance with a general 5-staged
methodology for value chain study.
Stage 1: Selection of sub-sector/value chain
1. Barley sub sector was selected for the research by its tradition of citizens use barley for food
consumption and its high health value, successful new product development activities due to
support and assistance from Swiss Development Agency and Altai Swiss Foundation (ASF),
product demand and its role in a local crop and food production sector.
Stage 1: Sub-sector/Value chain study
• The key data collected on barley production and sales (barley plantation area, amount of harvest,
harvest per hectare), information obtained from government officer in charge of crop production,
trade and service at Governor’s Office in Govi-Altai, statistical data from Department of Food and
Agriculture as well as information gathered from other sources are used for the report.
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Value Chain Study report on Barley subsector
• Research on the barley production channels was made conducting surveys and interviews with
barley growers, changers and some processors.
• The constraints being encountered by growers and producers were identified through conducting
focus group meeting, surveying and interviewing them.
Based on the result of the study sub sector mapping was developed.
Stage 3: Identify commercial or market solutions
We focused on identification of sustainable commercial solutions and its implementers for overcoming main
causes of defined constraints /opportunities/. We have selected through identification of the most feasible
solutions.
In order to identify commercial and market solutions, all encountered constraints faced were determined by
conducting surveys and interviews, and the identified ones were divided into those associated with
production and sales, with the specific solutions.
Solutions were defined and categorized by the following four groups:
−
−
−
−
Information
Production/Technology
Marketing/Product development
Finance
Stage 4: Evaluation of recommendations
Once the commercial recommendations were identified, these were evaluated and prioritized using the
following indicators:
− Impact of solution
− Feasibility to implement the solution
Solutions were evaluated according to the methodology was developed by the Program. (Page 18)
Stage 5: Program intervention and determination of activities to be implemented
• Building upon identified potential organizations to implement activities in line with the
recommendations with the highest impact and feasibility, its beneficiaries, program
intervention and participation were determined.
5. Consolidation of Study Results
5.1 Information on survey participants
15 growers participated in the survey including 6 growers from Sharga soum, 3 from Chandmani, 3 from
Biger and 3 from Taishir and 19 consumers from Yesunbulag soum and 5 changers.
1. “Haltar Arvai” company that operates in Govi-Altai aimag was also involved in the survey.
Established in 2005 with a goal of processing local barley and producing barley flour and
cookies, “Haltar Arvai” produced “Ashvai” brand product that became well known on the
market and being successfully sold through chain stores in Ulaanbaatar. Because of the raw
material, (barley) supply the company cannot run regular production activity. When the
company made a market research, the capacity of Ulaanbaatar market has been identified to
market 100 tons of barley per year and the company is selling one ton product to the market in
order to keet its share in a market. Also starting from October 2007 the company is providing
“Ashvai” cookie to the secondary school number 1 and 2 “Tea break” program on a weekly
basis. “Haltar arvai” LLC has produced 27,1 tons of barley flour and 14.3 tons of “Ashvai”
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Value Chain Study report on Barley subsector
cookies over the last three years and 70% of the product was marketed to UB and 20% to the
aimag market. In 2007, the company has bought 9 tons of barley from Sharga, Chandmana and
Biger soums in Govi-Altai aiming and 11.5 tons of barley from Darvi and Manhan soums in
Hovd aimag.
2. “Gazriin Uguuj Hurimt” cooperative in Taishir soum (Head of the cooperative is S. Saihanjargal,
State Best Crop Producer) plant barley in 10 hectares and harvest 1,5 tons from one hectare. In
2008, he plans to double the barley planting area up to 20 hectares. This year, he stored 3 tons of
barley for seed. He made flour from 10 tons of barley. The remaining 2 tons were used for
family consumption, paying labor fees and gifts to relatives and friends.
3. “Altain Deej” cooperative in Guulin bagh, Delger soum planted barley in 1 hectare of land. In
2008, they wishes to expand plantation area to 5 hectares and making a study to export barley
flour.
4. “Hurhreen Dolgio” cooperative in Chandmani soum in addition to growing barley on own also
buys barley from Biger soum residents, make flour and sell it on the market.
5. “Tulga Altai” company in Tsogt soum is one of the biggest companies with a high finncial and
production capacity in Tsogt soum which has 832 hectares of sirculating plantation areas where
mostly wheat is planted. The company has made studies on barley product development and they
were planting barley up to 20 hectares. In 2005 and 2006 the company lost its yield because of
water availability. In 2007 the company planted barley in 1 hectare and this year's target is to
grow barley on 10 hectares.
5.2Study on crop producers
At the aimag level, on average 163 households and 7 entities plants barley and receives certain revenue from
its sales.
15 barley growers who took part in the survey and are 9.2% of total crop producers, plant barley on 43
hectares in 4 soums and they harvest 42 tons (on average 0.97 tons per hectare) of barley which means 24%
of total planted area and harvested yield .
Chart One. Current use of barley of survey respondents
5% 10%
85%
Household consumption
Stored as seed for next year
Sold at markets
Barley growers consumes 5% of harvested barley for own needs, stores 10% as seeds for next year's planting
and the remaining portion or 85% sells on the market.
If crop producers get 1.2 tons barley from one-hectare area, they keep 120 kg of unsorted seed and around 96
kg of sorted seed and according to the technology of that region, this amount of seed is enough for onehectare
area plantation.
Chart Two. Sales distribution channels of the survey respondents
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Value Chain Study report on Barley subsector
Sales of harvested barley
28%
16%
23%
33%
Processors
Flour for aimag traders
Barley for consumers
Seed for own use
According to the interview and questionnaire from producers, 23% of the respondents sell the barley to
households and small factories produce flour, 28% of them market barley to consumers produce flour for
their consumption by cash or mostly for livestock and vegetable. 33% of marketed barley was processed to
flour and sold to aiming changers, shops and small sales points by a wholesale price and use 16% of
harvested barley for their own consumption and seed for the next year’s plantation.
In Govi-Altai aimag even all the crop production process is done manually except soil cultivation, the
harvest yield is very low. On an average of last four years, crop producers are harvesting 1 ton of barley from
one-hectare land and even we consider the specifically dry climate condition this is very unsatisfied figure.
During the interview with producers they were talking that in 80s up to 3 tons barley was harvested from 1
hectare area and even now some producers are harvesting 1,5 tons of barley from a hectare. In addition, most
of the producers are having the circulated plantation in a land by 2-3 years that can be named an improved
version of circulating crop production system of leaving land fallow. Field utilization is poor in Govi-Altai
aimag and takes no actions on soil fertilization and enrichment.
Because of the high crop production cost and lower yield, it is not so profitable to sell the barley as it is.
Therefore, producers are interested to add value through producing flour by processing the barley. According
to our estimation, cost for 1 kg barley is 831 MNT when there is 1 ton of yield from an irrigated field.
(Appendix 9.4), cost for 1 kg of barley flour is 1238-1720 MNT depending on a flour output, (Appendix
9.5), and these costs can be reduced by 60 MNT each if the barley is harvested by combine. From this, we
can see that if producers sell the barley by less than 835 MNT there will be no profit. This happens often, but
producers usually do not calculate labor fee of the family members in the cost. It is profitable for producers
to sell the flour by 1800-2000 MNT wholesale prices once there is a demand for the flour in a market, so
they have more interest to process the barley by themselves and market it. From the above estimation, it is
necessary to increase harvest yield through improvement of plantation technology for barley production,
usage of appropriate mechanization and local fertilizer, and improve rotation structure and irrigation
technology.
5.3 Barley flour retailers
Total of 25-30 people including 9 dairy product vendors in the aimag “Ikh Ovoo” market and other small
food shop point and grocery sellers buys barley flour by a wholesales price and sell it to the consumers.
According to the vendors, barley flour is generally a demanding and it is easy for them to sell product. Also,
compared to 2007 this year they have a regular flour supply in more amount. Herders like to use the flour for
their food consumption during the high loaded offspring and cashmere-combing season, because of its time
saving and high calorie specification. During “Tsagaan sar” holiday the barley flour sales has been increased
because of the traditional use of barley for servings. In addition, local residents like to send and take barley
to Ulaanbaatar and other aimags as a local brand product especially during the summer and this time of the
year the flour demand gets comparatively high. During the peak season, vendors sell around 60 kg of flour
per week. Taking into account this information, we are making estimation that four months of the year is
high income and the sales will decrease by one fold in other months; one vendor will sell 10 kg of flour per
day, 260 kg per month and 2800 kg per year. If we estimate 25 people to sell this type of product, it is able to
sell 52 tons of flour totally. Flour sellers do not have a big challenge and they buy 1 kg of flour by 2000MNT
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Value Chain Study report on Barley subsector
and sell it by 2500 MNT. Sellers think that the Maintaining unique aroma, taste, color and pulveration of
barley have to be a focus for producers.
5.4 Consumers
Totally 19 consumers in Yesunbulag soum were involved in a survey. All of them were consumers of barley
flour in certain extent and 3 households or 16% of them are regular users and 84% of them use sometimes.
47 % of consumers buy a flour from the market and 53% of them get the flour from the producers, relatives
and through other channels which means the channel for flour to reach the customers is wider and aimag
market can not be as a monopole source for them. 31% of consumers buy the flour as a gift for others,
which verify the determination that the barley flour is sold for the gift purpose otherwise it shows that 69%
of total respondents are real users. Current barley flour price is evaluated as reasonable by 53% of total
consumers and 47% think that the flour is expensive which states that the flour is a demanding product. From
the interview it is clear that most people especially children like to eat barley flour with butter and sugar but
their consumption is restricted by rare purchase of flour. The main type of using the flour is to make dough
with butter and sugar and drink tea with flour in it. “Ashvai” cookie made by “Hltar arvai” company is
expensive and produced in a small amount so it is unable for consumers to use frequently. Therefore,
development of new product made by barley flour is getting crucial which is cheap, tasty, and available for
everyone’s use and has a long shelf life.
In addition, traditional method of making barley flour storage period longer through keeping a dried curd
in it can be tested and study possibility of consumption culture and make it easier for consumption by
producing different shaped flour dough covered with chocolate.
Chart Three. Barley flour demand
Monthly barley flour consumption of consumers
7%
36%
57%
to 3 kg
3-6 kg
over 6 kg
For demand estimation, we did not include herders and crop producers who have more usage of the
flour.
Demand for barley flour per year and raw material supply 1 Table 2
Demand for
flour demand
ton
Demand
for barley Barley supply 2007
Monthly
demand
(classified by
survey)
Estimated
amount
kg
Percentage
per total
household
%
Number of
households
15600
Per
month
Per
year
demand
ton
Amount
ton %
Up to 3 kg per
month 1 57 8892 8.9 106.7 128.0
3-6 kg 3 36 5616 16.8 202.2 242.6
6kg< 6 7 1092 6.6 78.6 94.3
Total demand 32.3 387.5 465.0 156 2 33.5
1 Estimated the demand based on the demand of 19 consumers participated in a survey
2 Subtracted seed demand from 2007 production
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Value Chain Study report on Barley subsector
If we take into account, current production size of 124 tons of barley flour in an aimag level,
only 32% of total market demand is met. In order to produce barley flour in Govi-altai aimag, 465
tons of food barley needed to be produced which results in necessity of increasing size of plantation
field and seed amount. There are still certain market demand for companies produce barley products
such as “Haltar arvai” company in Ulaanbaatar city, Zavkhan and Bayankhongor aimags. However,
in order to meet this unmet demand, we should intensify and increase harvest yield from a unit not
only through the production increase. It would meet today’s requirement, if at least 50% of unmet
demand needs to be met through intensification and 50% by expanding production
5.5 Processing companies
We included barley flour and other production activities under the processing. We can include
household producers who buy barley and produce flour by hand or by electric mill for selling it to
aiming and soum consumers and retailers. Even we can include crop producers in this classification;
we made a separate mapping for group of people who buy barley and add value by making flour.
We have mentioned about “Haltar arvai” company. They buy barley by a wholesale price from
producers in cash or in-kind (animal or vegetable etc), mill by hand and sell most of the flour to the
aiming retailers and consumers live in soums where no barley production is. Burmaa, a resident in
Chandmani soum and Natsagdorj in Sharga soum make flour by small size electric mill. It is heard
that in Sharga soum flourmill with capacity to make 2 tons of flour per hour would be installed.
This mill is not for the barley flour making purpose but in the case if needed it can be used for
making barley flour.
“Haltar arvai” company has been producing two types of products such as barley flour and cookie
since 2005 and they have capacity to produce 15 tons of packaged barley flour and 54000 boxes or
27 tons of “Ashvai” cookies if the company works in its normal capacity. The company cooperated
with crop producers and ASF and provided 5 tons of seed in 2006 and 7 tons in 2007 by cash and
loan in order to increase the raw material supply.
5.6 Input suppliers
The current main input supplier is ASF. ASF has provided 16.7 tons of seed to 59 crop producers in
7 soums and small size combine worth 13.4 million MNT to Sharga, Guulin, Chandmani and
Taishir soums by a loan through 2005-2007. Usage of these combines differs in each soum. Taishir
and Chandmana soum producers are using the combine fully; Sharga soum sometimes and Guulin
soum refused to get this combine so from the unreliable source it is heard that they gave it to Dariv
soum in Hovd aimag. In a field with box type irrigation ditches it was difficult to harvest the barley
by combine so Sharga soum producers harvested barley from over 10 hectare area by hand and
threshed it by combine. These small size combines can be used in a field based on small water
sources and field distribution and irrigation method need to be selected specifically for a normal
operation of combines. Some producers sell extra seed to others or give by a loan. According to the
local tradition if producer get the seed by a loan in spring they pay back it with 50-100% interest
rate from their harvest in autumn. Besides preserving the seed for next year’s plantation local
producers are also able to get the seed by a loan so they don’t face the lack of seed and only have
seed quality problem. Crop producers apply to the bank if they need more investment but the bank
loan condition is unfavorable for them with shorter loan duration and higher interest rate. However,
52.9 million MNT loan given through ASF from 2006 is having a high importance for production
restoration. Producers also get small size tractor and its accompanying spare parts through
Ministry of Food and Agriculture according to the schedule. They buy fuel and other inputs such as
spare parts for the machinery from the market, and do not use manure and pesticides. Most of the
technology operations made by hand, working force is sometimes hired, and sometimes producers
work together. In an average fee for one working day is 5000 MNT or 500 MNT per hour.
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Value Chain Study report on Barley subsector
5.7 Barley price
There are three different types of product sales including barley, barley flour and ashvai. If we estimate that
cost for 1 kg of barley is 831 MNT, if it is harvested by combine the cost is 767 MNT, and cost for 1 kg of
barley flour made by the traditional method it is 1238-1720 3 MNT. Then producer can sell barley without
processing by 700-800 MNT, processed barley flour by 1900-2000 MNT, and is able to get 280-380 MNT
profit out of 1 kg flour. Retailers will get 200-500 MNT profit by selling 1 kg of flour by 2200-2500 MNT.
Therefore, crop producers are interested to process barley and sell it as flour. As of 2008, “Haltar arvai”
company is selling 1 box or 500 gram of cookie by 1800 MNT and one sack (0.5 kg) of flour is by 2000
MNT.
Before we mentioned that, there is a demand for flour but supply side is weak. Increase of the yield from a
hectare is the main way of decreasing the price of barley and products made of barley and increasing the
supply of market demand. Below chart shows the price increase for barley and barley flour.
From the chart, you can see that price difference between barley and flour is 850-1300 MNT for each year
and it is related with demand for flower and technology specification for making the flour (everyone can not
produce the barley flour because of the special equipment and experience making flour).
Chart Four. Barley and barley flour wholesale market price in Govi-Altai aimag
(2005-2007)
2500
2000
1800
2000
1500
1000
1200
500
700
500
350
0
2005 2006 2007
barley price
flour price
3 Estimated flour yield by 80%, 85%, 90% and according to the producers flour yield is high from handmill and has low
wastage.
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Value Chain Study report on Barley subsector
6. Barley sub sector value chain mapping
Ulaanbaatar
market
Aimag and soum consumers
(Govi-Altai)
Consumers (Zavhan,
Bayankhongor)
5 т
2 т
43 т
"Haltar arvai"
LLC
Retailers
Household
producers, smal
size mill
1 т
9 т 48 т
43 т
31 т
2 т
Barley flour
Barley
Producer -
Finance Seed Machinery Working
force
Based on research materials we developed harvest sales balance in 2007. We estimated harvested yield by
173 tons, 16% or 28 tons of barley is for seed preservation and for their own consumption, and flour yield by
80%. (Flour yield is 80% in a factory and according to people make flour the yield is more in homemade
condition). There are three main sales channels including aimag retailers, small shops, electric mill and
household producers, crop producers.
One. Crop producers preserve the seed (most producers get seed out of their harvest) and use certain amount
of barley for their own consumption from the harvested barley. They sell 1/3 of the crop to the consumers
in-kind by a retail price. For example, a sack of potato, two yearling goat and sheep is bartered with around
30 kg of barley. These sales take place according to “Demand based” principle. These consumers are usually
herders, regular customers of barley flour. They make flour for their consumption by their own mill or
borrow mill from their neighbors. Many herders and rural residents have these stone mills kept from their
generation.
Two: People make flour by hand mill (There are also electric mills in soum centers) and sell the flour, buy
around 1/5 of barley for sale from crop producers by market price at that time. New harvest barley flour is
sold in a market before crop producers finishes harvesting the barley.
Three: Crop producers make flour by around 35% of total harvest for sale and sell it to the aiming wholesale
buyers. We mentioned before about flour cost and price. Crop producers also have transportation cost for
carrying the flour to the aimag center. The least amount of product is sold for Zavkhan, Bayankhongor aimag
and Ulaanbaatar consumers. For example, “Altain deej” cooperative in Govi-Altai aimag makes the flour and
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Value Chain Study report on Barley subsector
sells it in Otgon, Shiluustei soums in Zavkhan aimag, in Hureemaral and Bayanbulag soums in Bayanhongor
aimag. During the organized event such as trade fair some crop producers sell small amount of flour in
Ulaanbaatar. For instance, “Gazriin Uguuj Hurimt” cooperative in Taishir soum participated in Tsagan sar
trade fair in 2007 and 2008 and sold 1 ton of flour each year. In doing so, most crop producers have less
animals and operate seasonal production so they are able to make and sell flour throughout the winter.
Four: “Haltar arvai” company in cooperation with ASF is a main input supplier, however they can not have
a big role for product sales. The company buys in an average 9 tons of barley from Govi-Altai producers and
10 tons of barley from Hovd aimag producers and produces packaged flour and ‘Ashvai” cookie. 70% of
their product is sold in Ulaanbaatar and 30% is sold in the aimags. Main reason for not supplying the barley
to “Haltar arvai” company is product price (700-770 MNT/kg) proposed by the company. (Price for selling
to herders and household barley flour producers is also not enough but it is usually goes in-kind throiugh
“Demand based” principle. 1100-1200 MNT for selling the barley is a reasonable price for crop
producers and it matches with our estimation. But you need to consider that our estimation is not
based on very detailed written picture and just based on oral survey findings. From the other hand,
production process of “Haltar arvai” company consists mostly from mechanic operations at the
small size factory level so their products are produced with high value and raw material price
increase makes difficult to increase the product price.
Flour made by electric mill and in a factory loose its unique aroma and taste so consumers do not like to buy
them. Therefore, opportunity to support and develop hand mill production needs to be explored.
7. Conclusions
Barley production
• Barley is cultivated mostly at household level with predominated hand operations based on a poor
water source.
• Crop producers has rotational use of land by 3 years and make simple (surface) irrigation without
any chemicals and herbicide and get one ton of yield in an average from one hectare area. Even this
is a pure natural product; it is the most ineffective and high cost plantation.
• Barley production has to be expanded based on market demand but special attention need to be paid
on decreasing cost through increasing the yield from the unit not expanding the plantation area.
• This traditional production is an initiative of local residents after the collapse of entities with
mechanized production in 1990s and now there is almost no support from the local government side.
• Based on water sources available locally, local government need support citizens initiative with a
clear policy through making a study on size of available for plantation area, its purpose, and
methodology.
Plantation technology
• Depending on a size of field, need to use different size of agricultural machinery and mechanize
technology activities. Processing companies demand for raw materials such as “Haltar arvai”
company, need to work more actively by establishing machinery service and rental group etc. which
will result to reduction of raw material cost and expansion of production size.
• Need to create an appropriate rotational use including perennials and vegetation for fodder,
improve soil fertility by using local fertilizer, and cooperate with professional organizations
on development and use of soil enrichment technology.
• Aimag and soum government has to work with professional organizations to develop barley
plantation technology, which is suitable for specific soil and climate characteristics of that region
and improve knowledge and skill of crop producers.
Barley processing and a new product
• Support business initiative of establishing processing factories based on soums with highest number
of barley production or on group of producers.
• Study possibility of mechanization for household small production and provide them with relevant
information. During the survey we had a meeting with Batjargal, a director for Tulga Altai LLC and
according to him there are many different capacity electric mills (Appendix photo 9.6)
• The main types of using barley flour are very limited with barley flour dough with butter and sugar
and tea with flour in it, which is not so suitable for consumption especially for youth and children.
Therefore, there is an opportunity to study and test new product development such as barley flour
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Value Chain Study report on Barley subsector
sweet, barley flour mixture and aarts, and use traditional technology of long life storage by keeping
dried curd in barley.
8. Constraints and opportunities for barley sub sector value chain
8.1 Opportunities for barley production in Govi-Altai aimag
• Traditional irrigated barley production methodology and specific technology has
been widely used
• Crop producers and residents are working actively and with an initiative for
having irrigated plantation
• Favorable by its warm temperature and maturity duration
• Big demand foe barley and barley flour
• Certain limited number of water source availability and field appropriate for
plantation based on these water sources
• Different support and concession of Mongolian Government on crop production
development
• Able to get a support from International projects and programs (ASF)
• Existing acclimatized barley sorts and samples for food consumption.
Availability of barley production and supply (based on information sent by the soums)
Table 3
# Soum
Average harvest
Number of
Size of plantation yield from the unit Total yield
household able to
area
(centner-1
Centner
plant
centner=100 kg)
1 Biger 50 60 12 75
2 Sharga 100 100 15 150
3 Haliun 30 50 10 50
4 Chandmana 30 50 16 80
5 Taishir 20 100 12 120
6 Tsogt 20 200 15 300
7 Jargalan 15 30 10 30
8 Tugrug 15 15 11 16,5
9
Bugat (Tahi
steppe) 30 50 14 70
10 Delger 20 30 10 30
Total 330 685 12.5 8562.5
From the above table, Govi-Altai aimag crop producers are able to produce 856,2 tons of barley in
total. Nevertheless, this number can be reached when there is a favorable situation is created for
work force, finance, machinery etc. 4
8.2 Constraints for barley sub sector and possible solutions
4 During the survey revision process, we have been informed that Sharga soum has possibility of plantation in 640
hectare area. So more surveys need to be done with the support from professional organizations for accurate estimation.
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Barley Value Chain Sub sector study report
Constrains Reason of constraints Solutions
1
3
Information
Growers have limited access to
information and knowledge
where equipment and input for
their production is sold at what
price
Growers can not get loan and
participate in a bid announced
by the government organization
on crop production
Production technology
There is a lack of sufficient
water source
• They can not get any information
because of the poor infrastructure and
the farther distance
• Growers do not have sufficient
knowledge in developing project
proposals and making sound financial
projections even they wish to be in
cluded in.
• It gets unavailable to water the field
according to the technology because of
discharge of river, springs and ponds,
break down or damage of irrigation
points, systems, ditches, and channels;
and increase of plantation area.
1. At the local level, develop policy and disseminate information on
appropriate use of machineries specific for the plantation of that region
2. Disseminate information through BDS providers, projects and
program
3. Facilitate growers with BDS providers organize these types of
trainings and services
4. Local government needs to renovate field resource information able
for irrigated plantation locally, repair irrigation system with water
sources, build water collection constructions, repair or build new
ditches and channels, support local initiatives, include them in
Mongolian Government programs and provide low interest loan
program
4
Most growers harvest manually
and thresh the barley using
horse, so it needs lots of labor,
time, and cost and limits
production expansion.
• Lack of harvesting machinery and too
many small fields are the reason for the
constraint. Combines usually do not
reach the farther small field, so growers
plant barley on a small area considering
their harvesting capacity. Even it is
difficult to use small size tractor
depending on irrigation methodology
and field structure.
5. With the participation of growers, local government has to organize
and implement following activities: classify and group barley
production field and develop mechanization policy suitable for the
filed size at the local level, choose field classification and irrigation
methodology depending on type of mechanized harvesting.
6. Barley producers could combine funds and buy small and medium size
combines.
7. Central and local Government organizations need to support
businesses provide services with its small and medium size combines
for growers, create fund through financial support from the crop
producers, involve them in low interest loan programs.
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Value Chain Study report on Barley subsector
5
Plantation technology is poor
and crop producers are inactive
for technology renovation.
Crop producers are keen to use traditional
technology, and there are not sufficient
promotional and training activities carried for
them.
8. Link crop producers to BDS providers organize technology trainings
and consultancies, develop and disseminate handouts.
6
7
Seed quality is poor and barley
sort has been contaminated.
Producers use mostly seeds
named local with unclear origin.
Marketing and product
development ,
There are not so many types of
barley products, and these
products can not be kept for
longer period and have poor
packaging.
• There is no systematic national seed
policy for plantation. Even there are
available some localized barley sorts for
food consumption, producers pay poor
attention on seed stocking and renewal.
They have poor knowledge on seed and
sort and usually prefer seeds used for
longer time in that region and consider
them as the best one.
• The main types of using barley flour are
very limited with barley flour dough
with butter and sugar and tea with flour
in it, which is not suitable for frequent
consumption. There is a product (called
ashvai) made of barley flour but it is
expensive and barley flour has less
storage period.
9. Link them with BDS providers capable to provide trainings and
consultancies on seed, sort and plantation.
10. Provide pure seed material to the entities and producers who has
bigger field and interest to stock the seed and make agreement with
them.
11. Support businesses which will develop new product such as barley
flour sweet, barley flour mixture with different ingredients, barley with
dried curd which has longer shelf life and able for public use.
8 Finance
Growers do not have financial
source to purchase equipment
and machinery with sufficient
capacity.
• The main reason is that most of them
are low-income people with a few
number of livestock, plant barley at
household scale, therefore could not
buy expensive equipment by short
maturity loan with higher interest rate.
12. Purchase the needed equipment combining funds
13. Engage in loan programs with soft lending terms
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Barley Value Chain Sub sector study report
8.3 Evaluation for possible solutions
The following two criteria were used for evaluation of above-mentioned solutions and selected
them according to their ability to indicate result after implementing the solutions.
1. Feasibility of solutions
2. Number of beneficiaries
While these two indicators were placed in matrix vertical and horizontal axis, solutions were placed
and evaluated in three levels
Feasibility of solutions
12
3, 10,14
7,
High
6, 11, 1, 5, 8, 2, 4,
Medium
Low
9,
Limited
Medium
Wide
range
Framework of beneficiaries
8.4 The most important solutions for barley sub sector development
Solution 4:
Definition of the solution:
Local government needs to renovate field resource information able for irrigated plantation locally, repair
irrigation system with water sources, build water collection constructions, repair or build new ditches and
channels, support local initiatives, include them in Mongolian Government programs and provide low
interest loan program with soft lending terms
Problems for solution:
There is a limited water source available for irrigated plantation. Currently at the local level the plantation is
based in fields were used as an irrigated field during 1980s and 1990s. Capacity of these systems has been
decreased which were caused by dryness and climate change and its capacity is now unclear. Everyone say
different figures on for how many hectare areas are is it able to irrigate. Even many people want to have a
crop production they do not have an access to the irrigated field and some places have unused field with
enough water resources if needed constructions will be built.
Potential solution providers:
• Commercial banks and non bank financial institutions operate locally
• Ministry of Food and Agriculture and Aiming Agriculture office
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Value Chain Study report on Barley subsector
• Local Government organizations
• Hydrological professional organizations
• ASF, other projects and program
• Local crop producers group, cooperative and producers
Constraints to implement the solution:
• People will use water may not have an organized activity and not be responsible. Because of that, no
one can take care of this activity with no action.
• Financial capability to get assistance from professional organizations
• Financial constraint for making calculations, project and plan development.
• Inactive participation from local government side
Sustainable impact: Barley plantation will be expanded and product production will be increased through
making a concrete estimation for irrigated plantation and repairing the main water collection points. More
working places will be created thus workers live quality will be improved. Supply of barley, barley flour and
flour product will be improved.
Solution 7
Definition of the solution:
• Central and local Government organizations need to support businesses provide services with its
small and medium size combines for growers, create fund through financial support from the crop
producers, involve them in low interest loan programs.
Problems for solution:
• Most growers harvest manually and thresh the barley using horse, so it needs lots of labor, time, and
cost and limits production expansion.
Potential solution providers:
• Commercial banks and non bank financial institutions operate locally
• Ministry of Food and Agriculture and Aiming Agriculture office
• Soum Government organizations
• ASF, other projects and program
• Local crop producers group, cooperative and producers
Constraints for solution implementation:
• Financial problem. Crop producers may not trust to each other for creating combined fund to
purchase comparatively expensive medium size combine.
• Businesses initiated to provide the service may not have enough collateral for getting loans with soft
lending terms through Government and Programs’ support.
• Communication. Lack of communication and information for selection and purchase of appropriate
capacity techniques
Sustainable impact: Barley plantation size, yield and market supply will be increased through having
businesses and crop producers who have combines with capacity to harvest all crop yield in the soums within
the technology period. Combine harvest will result to less work overload and product cost reduction. Due to
this, supply of raw material to barley producers and as well as product development and its types will be
increased and cost will be decreased.
Solution 10
Definition of the solution:
• Provide pure seed material to the entities and producers who has bigger field and interest to multiply
the seed and make agreement with them.
Problems for solution:
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Value Chain Study report on Barley subsector
Seed quality is poor and barley sort has been contaminated. Producers use mostly seeds named local with
unclear origin.
Potential solution providers:
• Ministry of Food and Agriculture and Aiming Agriculture office
• ASF, other projects and program
• Scientific organizations work on crop plantation selection and seed stocking.
Problems for solution:
• Lack of high quality pure sort seed suitable for specific soil and climate condition of that region
• Crop producers and residents may not be interested to multiply the pure seed and plant the seed
without mixing different seed.
• Seed multiplier may prepare poor quality seed because of insufficient knowledge on seed plantation
requirement, may lack necessary techniques and equipment for seed purification and sorting; and
may use seed for consumption but not for production
Sustainable impact: Total and unit crop yield and crop quality will be improved if crop producers use
acclimatized sort and good quality seed for sowing. Further, everyone who has a big or small plantation
field do not need to prepare seed and there will operate some qualified businesses with seed multiplication
and supply purpose techniques and warehouses.
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Value Chain Study report on Barley subsector
8.5 Program intervention for implementation of most effective solutions
Solutions Program intervention Conclusions
• Link with BDS providers that provide
services on business plan development,
plan and document development and
training provision.
• Involve interested businesses in loan
programs with soft lending terms,
according to the rules and requirement.
• Propose “Irrigated plantation
opportunity” survey to the local Citizens
Representative Hurals.
Local government needs to renovate field
resource information able for irrigated
plantation locally, repair irrigation system
with water sources, build water collection
constructions, repair or build new ditches
and channels, support local initiatives,
include them in Mongolian Government
programs and provide low interest loan
program with soft lending terms
• Crop producers will gain skill and knowledge on project
and tender material development. By receiving project and
program development service, they woul be able to
participate in Government annonced programs and have
financial sources for irrigation system renovation and
building.
• They will be able to increase size of irrigated field and
expand crop production.
• Survey on identification of irrigated field availability
would be reflected in a work plan of relevant organization
and have opportunity to be implemented.
Central and local Government organizations
need to support businesses provide services
with its small and medium size combines for
growers, create fund through financial
support from the crop producers, involve
them in low interest loan programs.
• Provide information on appropriate
small and medium size combines and
facilitate them to the supplier.
• Link them with BDS provider and
provide trainings and consultancies on
irrigated plantation technology, crop
harvest and machinery and equipment
maintenance.
• Develop and disseminate handout on
irrigation methodology and technology
• Involve interested businesses in loan
programs based on their business plan
and cost analysis.
• The condition, to select and purchase combines
appropriate for production size and specifics, will be
created.
• Crop producers will be able to select and use appropriate
irrigation technology and machinery, taking into
consideration the harvest technology.
• Crop producers will be able to ease their labor, buy
interested combines, increase working capacity and
expand production by purchasing the needed combines.
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Value Chain Study report on Barley subsector
Provide pure seed material to the entities and
producers who has bigger field and interest
to multiply the seed and make agreement
with them.
• Link interested entities and producers
with Scientific Organizations and
facilitate to create high quality seed
suitable for specific types of climate
condition in the region, which gives high
yield barley for food consumption.
• Link them with BDS providers and
provide seed plantation technology, seed
and sort quality trainings and
consultancies.
• By the request of businesses who met
the requirement, make an agreement to
multiply the seed.
• Original seed source of sorts appropriate for local
condition will be created.
• Knowledge of crop producers on seed and sorting will be
improved and it will help to have a sustainable mechanism
of seed multiplication and supply, thus seed quality will be
improved.
• Seed supply for food consumption barley will be
improved.
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Barley Value Chain Sub sector study report
9. Appendix
9.1 Surveyed people
Table 1
Soum Number of surveyed people Field size Yield size
Sharga 6 20 19.8
Biger 3 4 2.3
Chandmana 3 13.5 13.6
Taishir 3 5.5 5.3
Total 15 43 42
9.2 Number of Govi-Altai aimag barley producers and enterprises, by soums
Table 2
Soum Number of households plant barley Number of entities
Sharga 80
Biger 32
Chandmani 18 1
Haliun 12 2
Taishir 10 1
Delger 5 1
Tsogt 6 1
Bugat 10 1
Total 162 7
9.3 Govi-Altai aimag barley production for food consumption and its yield ( 2004-2007)
Table 3
# Soum
1 Altai
2 Bayan-Uul
2004 2005 2006 2007 2004-2007 %
Field
Yield ton
Field
Yield ton
Field
Yield ton
Field
Yield ton
Field
Yield ton
ha Total 1 ha ha Total 1 ha ha Total 1 ha ha Total 1 ha ha Total 1 ha
3 Biger 12 12.8 1.1 13 17 1.3 8 11 1.4 7 9.5 1.4 10.0 12.6 1.3 8.0
4 Bugat 24 24 1.0 3.5 3.5 1.0 8 9 1.1 11 1.7 0.2 11.6 9.6 0.8 9.3
5 Dariv
6 Delger 1 1 1.0 10 2 0.2 2.8 0.8 0.3 2.2
7 Jargalan 3 2.3 0.8 0.7 0.9 1.3 0.7 0.5 0.7 0.75 0.7 0.9 1.3 1.1 0.9 1.0
8 Taishir 8 7.2 0.9 5.8 7.1 1.2 11.6 12.3 1.1 14.5 12.6 0.9 10.0 9.8 1.0 8.0
9 Tonhil 1 1.6 1.6 0.3 0.4 1.6 0.2
10 Tugrug 3.2 0.8 0.3 6 3.6 0.6 2.3 2.1 0.9 0.9 0.9 1.0 3.1 1.9 0.6 2.5
11 Haliun 7.5 4.2 0.6 20.6 37 1.8 12.1 12.8 1.1 13.1 9.8 0.7 13.3 16.0 1.2 10.7
21
Field
ha

Value Chain Study report on Barley subsector
12 Huhmorit 4 7 1.8 1.0 1.8 1.8 0.8
13 Tsogt 4 0.0 10 10 1.0 36 43 1.2 12.5 13.3 1.1 10.0
14 Tseel
15 Chandmani 21 13.5 0.6 17.6 13.6 0.8 10.2 10 1.0 34.9 35 1.0 20.9 18.0 0.9 16.8
16 Sharga 40 44 1.1 25 39 1.6 38 40 1.1 40 45 1.1 35.8 42.0 1.2 28.7
17 Erdene 0.3 0.7 2.3 0.1 0.2 2.3 0.1
18 Yesunbulag 1.4 1.8 1.3 1.4 1.6 1.1 2.3 2.8 1.2 3.5 3.9 1.1 2.2 2.5 1.2 1.7
Total 124.1 110.6 0.9 93.6 123.3 1.3 104.2 111.5 1.1 176.95 173.4 1.0 124.7 129.7 1.0 100.0
9.4 Value estimation for irrigated barley production
Table 4
# Technology activities Unit Amount
Cost ¥
Per unit Amount
1 Ditch building Person/hour 50 500 25000
2 Fencing repair Person/hour 40 500 20000
3 Plough 1 90000 90000
4 Box making 1 10000 10000
5 Seedling Person/hour 2 500 1000
6 Repair box Person/hour 96 500 48000
7 Irrigation Person/hour 360 500 180000
8 Guard Quarter 43000
9 Hand harvesting Person/hour 96 500 48000
10 Harvesting by combine ha 1 90000
11 Make tsan Person/hour 48 500 24000
12 Grain drying Person/hour 36 500 18000
13 Horse rent Horse 8 3000 24000
14 Peeling (hire assistant) Person/hour 48 500 24000
15 Cleaning Person/hour 32 500 16000
16 Put in a sack Person/hour 4 500 2000
17 Barley transportation 15000
18 Transportation for workers Times 10 10000 100000
19 Own transportation Times 30 1560 46800
20 Seed Kg 100 900 90000
21 Sack pcs 24 250 6000
22 Land rent 1200
Total cost
Harvest by hand 830800
Harvest by combine 766800
Cost for 1 kg barley
Harvest by hand 831
Harvest by combine 767
9.5 Barley flour making cost
Cost for making a flour by hand mill
Barley 10 kg
Flour yield 90%, 85%,80%
Table 5
Cost ¥
¹ Type of expense Unit Amount Per
Amount
unit
1 Barley kg 10 831 8308
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Value Chain Study report on Barley subsector
2 Fuel Sack 1 1200 1200
3 Barley cleaning Person /hour 0.5 500 250
4 Fry the barley Person /hour 1 500 500
5 Peel the barley 1 500 500
6 Mill the barley Person /hour 6 500 3000
Total cost 13758
Flour yield 90% 1238
Cost for 1 kg barley flour Flour yield 85% 1619
Flour yield 80% 1720
Explanation: Estimated by barley value harvested by hand
9.6 Pictures
Picture 1: Barley flourmill 5
Generator: 220 V
Capacity: 5kg/hour
Picture Two. Medium size combine produced in Autonomous Republic of Shinjan and Uigur, Republic of
China.
- Mark 4LD2A
- Jatok width 2,3 m
- Thresh capacity 2-2,5 kg/sec
- Weight 4360 kg
5 According to the introduction by Batjargal, General director for Tulga-Altai LLC
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Value Chain Study report on Barley subsector
24