The Ministry for Food, Agriculture and Light Industry and the Mongolian Stock Exchange recently signed a cooperation agreement to be the first step in establishing a livestock commodity exchange. A draft law on the matter will still have to be approved by Parliament before livestock commodities exchange can be set in earnest. The Ministry will be responsible for preparing the rules and methods of offering farm products on sale and the Stock Exchange will develop an electronic trading system with links to the provinces. It is hoped this will free herders from the clutches of traders and thus guarantee a fair price for livestock products.

Providing fair prices for livestock is vital for the herders and also extremely important for Mongolia’s government as it will spur a failing rural economy. The World Bank has warned that various pressures on herder households have already resulted in their migration to soum and aimag centers, and finally to cities. This will raise the unemployment and poverty indices of urban areas. The Bank sees further difficulties for herders as they are forced to slaughter herds before the animals die of the cold and then to sell the meat at a low price because of lack of access to the market. Middlemen and traders will offer only distress sale prices.

Fair price for livestock products will heighten living standards in rural parts of the country, slow rural migration, and motivate herders to be more “entrepreneur” as well as allow them to be better organized thus better prepared two face a natural disaster such as this winter’s zud.