001 SD 02

Climate-Resilient and Sustainable Livestock
Development Project (RRP MON 53038-001)
Technical Feasibility Study Report
Project Number: 53038

Loan and/or Grant Number(s):
December 2020
Mongolia: Climate-Resilient Livestock Sector

Development Project
ii
ABBREVIATIONS
AFSD - Aimag Food and Agriculture Departments

ALAMGAC - Agency for Land Management and Administration,
Geodesy and Cartography
AVSD - Aimag Veterinary Service Department
ESD - Ecological Site Description
FAO - Food and Agriculture Organization of the United Nations
FUG - Forest User Groups
GAFSP - Global Agriculture Food Security Program
GAVS - General Administration of Veterinary Services
GDP - Gross Domestic Product
HAACP - Hazard Analysis Critical Control Point
IFAD - International Fund for Agricultural Development
ISO - International Organization for Standardization
JFPR - Japan Fund for Poverty Reduction
JICA - Japan International Cooperation Agency
LCP - Livestock Competitiveness Project
LGRC - Livestock Genetic Resources Centre
LLC - Limited Liability Company
LMIS - Livestock Management Information System
LPCD - Livestock Development Policy and Coordination
Department
LSU - Live Sheep Units
M&E - Monitoring and Evaluation
MAHIS - Mongolian Animal Health Information System
MF - Male Flock
MNF - Mongolian Noble Fibre
MOFALI - Ministry of Food, Agriculture and Light Industry
MWCA - Mongolian Wool and Cashmere Association
NAMEM - National Agency for Meteorology and Environmental
Monitoring
NF - Nucleus Flocks
NFM - Nucleus Flock Managers
PABU - Private Animal Breeding Units
PCPU - Private Cashmere Processing Unit
PFLU - Private Feedlot Unit
PFU - Private Feeds Unit
PIC - Project Implementation Consultants
PIU - Project Implementation Unit
PLMU - Private Livestock Marketing Unit
PMU - Project Management Unit
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PUG - Pasture User Group

PVU - Private Veterinary Unit
QCBS - Quality Cost Based Selection
RDC - Research Development Center
RUA - Rangeland Use Agreements
SAU - Soum Agricultural Unit
SDC - Swiss Development Corporation
SFA - Sustainable Fibre Alliance
SPA - Soum Pasture Association
SPMWG - Soum Pasture Management Working Group
SSC - Soum Steering Committee
STT - Soum Technical Team
SVU - Soum Technical Support Group
SVU - Soum Veterinary Unit
TSF - Terminal Sire Flock
UNDP - United Nations Development Program
UNESCO - United Nations Educational, Scientific and Cultural
Organization
GLOSSARY
Aimag - First level administrative sub-division, equivalent to a province.
Bagh - Third level administrative sub-division, equivalent to a village
Dzud - Severe climatic event in winter
Govi - Desert area in southern Mongolia
Khangai - Mountain range in central Mongolia
About five herder families who stay together and have the
Khot ail -
same pasture or water sources.
Khural - Elected body at bagh, soum, aimag or national level
People who live in the same ecological environment, where
Neg nutag/usniikhan - herders together possess the same pasture or water
resources, and salt marshes.
Saakhalt ail - The few khot ails or families that live nearby.
The second level administrative sub-division, equivalent to a
Soum -
district
iv
CONTENTS
I. PROJECT CONTEXT AND RATIONALE 1
A. Need for Investment 1
B. Project Objectives and Outputs 5
II. PROJECT LOCATION 7
A. Project Area 7
B. Selection Criteria 9
III. LIVESTOCK SYSTEMS IN THE PROJECT AREA 11
A. National Context 11
B. Production Systems 12
C. Inputs and Services 16
D. Downstream Supply Chain 18
E. Subproject Implementation Arrangements 23
F. Inter-Aimag Pasture Use Administration 62
IV. LIVESTOCK SUBPROJECT DESIGN 65
A. Bulgan Aimag Subproject 65
B. Arkhangai Aimag Subproject 79
C. Uverkhangai Aimag Subproject 95
D. Bayankhongor Aimag Subproject 111
V. CAPACITY BUILDING 127
A. Overview 127
B. MOFALI 127
C. General Administration of Veterinary Services 133
D. Research Development Center 133
E. Inter-Aimag Pasture Use Administration 135
VI. IMPLEMENTATION AND OPERATING ARRANGEMENTS 137
A. Implementation Arrangements 137
B. Implementation Schedule 140
C. Operation and Maintenance of Project Investments 141
VII. CRITICAL RISKS 142
A. Lack of Water in Proposed Wells 142
B. Extreme Climate 142
C. Alignment with Interests and Expectations of Farmers and Other Stakeholders
142
D. Health Emergencies 142
E. Livestock Market 142
F. Operation and Maintenance of Project-Financed Infrastructure 142
List of Tables
Table 1: Selected Project Area................................................................................................... 7
Table 2: Features of Traditional Classification of Regions .......................................................... 9
Table 3: Herder Groups in the Project Area ..............................................................................12
Table 4: Pasture User Groups and Soum Pasture Associations in the Project Area ..................12
Table 5: Cooperatives in the Project Area .................................................................................13
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Table 6: Forest User Groups in the Project Area .......................................................................13

Table 7: Water Points in the Project Area..................................................................................15
Table 8: Animal Shelters and Storages in the Project Area .......................................................15
Table 9: Private Veterinary and Livestock Breeding Units in the Project Area ...........................17
Table 10: Registered Business Entities and Livestock Traders in the Project Area ...................23
Table 11: Template for Aimag and Soum Subproject Indicators and Targets ............................23
Table 12: Framework for Targets for PUG/RUA Establishment sub-agreements ......................33
Table 13: Scope of PUG/RUA development ..............................................................................34
Table 14: Herder numbers in Structures related to PUGs/RUAs ...............................................34
Table 15: Framework for Targets for PUG/RUA Implementation ...............................................35
Table 16: Targets for Animal Health ..........................................................................................39
Table 17: Framework for Targets for Livestock Marketing .........................................................42
Table 18: Targets for Sheep Breed Improvement......................................................................52
Table 19: Cashmere Marketing Targets ....................................................................................61
Table 20: Land Classes in Bulgan Subproject Area ..................................................................67
Table 21: Population and Households in Bulgan Subproject Area .............................................67
Table 22: Herder Groups in Bulgan Subproject Area ................................................................68
Table 23: Pasture User Groups and Soum Pasture Associations in Bulgan Subproject Area ....68
Table 24: Cooperatives in Bulgan Subproject Area ...................................................................69
Table 25 Forest User Groups in Bulgan Subproject Area ..........................................................69
Table 26: Water Points in Bulgan Subproject Area ....................................................................69
Table 27: Animal Shelters and Storages in Bulgan Subproject Area .........................................70
Table 28: Total Livestock Number in Bulgan Subproject Area for Selected Years .....................70
Table 29: Livestock Numbers by Soum in 2019 ........................................................................71
Table 30: Private Veterinary Service Units in Bulgan Subproject Area ......................................72
Table 31: Traders of Livestock Products Bulgan Subproject Area .............................................73
Table 32: Major Problem and Buyers in Bulgan Subproject Area ..............................................73
Table 33: Local Legislation in Bulgan Subproject Area..............................................................74
Table 34: Bulgan: Targets Related to Grazing Management Sub-agreements ..........................74
Table 35: Bulgan: Second-Generation Sub-agreements Targets ..............................................74
Table 36: Number of and Type of Sub-Agreements in Bulgan Subproject Area ........................75
Table 37: Bulgan Subproject Implementation Schedule ............................................................75
Table 38: Livestock Outputs Without- and With-Project in Bulgan Subproject Area...................76
Table 39: Pasture Degradation Targets in Bulgan Subproject Area...........................................77
Table 40: Costs of Sub-agreements for Bulgan Subproject .......................................................77
Table 41: Detailed Costs by Year for Bulgan Subproject ...........................................................77
Table 42: Land Classes in Arkhangai Subproject Area..............................................................82
Table 43: Population and Households in Arkhangai Subproject Area ........................................82
Table 44: Herder Groups in Arkhangai Subproject Area............................................................83
Table 45: Pasture User Groups and Soum Pasture Associations in Arkhangai Subproject Area
.................................................................................................................................................83
Table 46: Cooperatives in Arkhangai Subproject Area ..............................................................83
Table 47 Forest User Groups in Arkhangai Subproject Area .....................................................84
Table 48: Water Points in Arkhangai Subproject Area ...............................................................84
Table 49: Animal Shelters and Storages in Arkhangai Subproject Area ....................................85
Table 50: Total Livestock Number in Arkhangai Subproject Area for Selected Years ................85
Table 51: Livestock Numbers by Soum in 2019 ........................................................................86
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Table 52: Private Veterinary and Animal Breeding Units in Arkhangai Subproject Area ............87
Table 53 Traders of livestock products in Arkhangai Subproject Area .......................................88
Table 54: Major Problem and Buyers in Arkhangai Subproject Area .........................................88
Table 55 Local Legislation in Arkhangai Subproject Area..........................................................89
Table 56: Arkhangai: Targets Related to Grazing Management Sub-agreements .....................90
Table 57: Arkhangai: Second-Generation Sub-agreements Targets .........................................90
Table 58: Number and Type of Sub-Agreements in Arkhangai Aimag.......................................91
Table 59:Arkhangai Subproject Implementation Schedule ........................................................91
Table 60: Livestock Outputs Without- and With-Project in Arkhangai Subproject Area ..............92
Table 61: Pasture Degradation Targets in Arkhangai Subproject Area ......................................93
Table 62: Costs of sub-agreements for Arkhangai Subproject...................................................93
Table 63: Detailed Costs by Year for Arkhangai Subproject ......................................................93
Table 64: Land Classes in Uvurkhangai Subproject Area..........................................................98
Table 65: Population and Households in Uvurkhangai Subproject Area ....................................98
Table 66: Herder Groups in Uvurkhangai Subproject Area ........................................................99
Table 67: Cooperatives in Uvurkhangai Subproject Area ..........................................................99
Table 68: Water Points in Uvurkhangai Subproject Area .........................................................100
Table 69: Animal Shelters and Storages in Uvurkhangai Subproject Area ..............................100
Table 70: Total Livestock Number in Uvurkhangai Subproject Area for Selected Years ..........101
Table 71: Livestock Numbers by Soum in 2019 ......................................................................102
Table 72: Private Veterinary Service Units in Uvurkhangai Subproject Area ...........................103
Table 73: Traders of Livestock Products in Uvurkhangai Subproject Area ..............................103
Table 74: Major Problem and Buyers in Uvurkhangai Subproject Area ...................................104
Table 75 Local Legislation in Uvurkhangai Subproject Area ....................................................104
Table 76: Uvurkhangai: Targets Related to Grazing Management Sub-agreements ...............105
Table 77: Uvurkhangai: Second-Generation Sub-agreement Targets .....................................106
Table 78: Number and Type of Sub-Agreements in Uvurkhangai Aimag .................................106
Table 79: Uvurkhangai Subproject Implementation Schedule .................................................106
Table 80: Livestock Outputs Without- and With-Project in Uverkhangai Subproject Area ........107
Table 81: Pasture Degradation in Uverkhangai Subproject Area .............................................108
Table 82: Costs of Sub-agreements ........................................................................................108
Table 83: Detailed Costs by Year for Uvurkhangai Subproject ................................................109
Table 84: Land Classes in Bayankhongor Subproject Area .....................................................113
Table 85: Population and Households in Bayankhongor Subproject Area ...............................114
Table 86: Herder Groups in Bayankhongor Subproject Area ...................................................114
Table 87: Pasture User Groups and Soum Pasture Associations in Bayankhongor Subproject
Area ........................................................................................................................................114
Table 88: Cooperatives in Bayankhongor Subproject Area .....................................................115
Table 89: Forest User Groups in Bayankhongor Subproject Area ...........................................115
Table 90: Water Points in Bayankhongor Subproject Area ......................................................116
Table 91: Animal Shelters and Storages in Bayankhongor Subproject Area ...........................116
Table 92:Total Livestock Number in Bayankhongor Subproject Area for Selected Years ........116
Table 93: Livestock Numbers by Soum in 2019 ......................................................................117
Table 94: Private Veterinary Service Units in Bayankhongor Subproject Area ........................118
Table 95: Traders of Livestock Products in Bayankhongor Subproject Area ...........................118
Table 96: Major Problem and Buyers in Bayankhongor Subproject Area ................................119
Table 97: Local Legislation in Bayankhongor Subproject Area ................................................120
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Table 98: Bayankhongor: Targets Related to Grazing Management Sub-agreements ............120

Table 99: Bayankhongor: Second-Generation Sub-agreement Targets ..................................121
Table 100: Number and Type of Sub-Agreements in Bayankhongor Aimag ............................121
Table 101:Bayankhongor Subproject Implementation Schedule .............................................121
Table 102: Livestock Outputs Without- and With-Project in Bayankhongor Subproject Area ...123
Table 103: Pasture Degradation in Bayankhongor Subproject Area ........................................123
Table 104: Costs of Sub-agreements ......................................................................................124
Table 105: Detailed Costs by Year for Bayankhongor Subproject ...........................................124
Table 106: ...............................................................................................................................128
Table 107: Equipment Required for Livestock Management Information System ....................130
Table 108: Consultant Package for Developing Livestock Management Information System ..131
Table 109: ...............................................................................................................................132
Table 110: ...............................................................................................................................133
Table 111: Draft Capacity Building by Year and Cost ..............................................................134
Table 112: Proposed Equipment and Support for Capacity Building Research Development
Center, Aimag Agriculture and Soum Agriculture Unit .............................................................134
Table 113: Investment in Equipment by Inter-aimag Reserve Area .........................................136
Table 114: Investment in Capacity Building for Inter-aimag Pasture use Administration by Year
...............................................................................................................................................136
Table 115: Project Steering Committee ...................................................................................137
Table 116: Staffing of the Project Management Unit ...............................................................137
Table 117: Staffing of an Individual Project Implementation Unit .............................................138
Table 118: Inputs of the Project Implementation Support Consultant. .....................................138
Table 119: Proposed Consultant Team to be Financed from JFPR Grant ...............................139
Table 120: Composition of Soum Steering Committee ............................................................140
List of Figures
Figure 1: National Livestock Number Compared to Mongolian National Livestock Program ....... 3
Figure 2: Stocking Rate and Output ........................................................................................... 4
Figure 3: Goats as a Percentage of Livestock Sheep Units ........................................................ 5
Figure 4: Project Area ................................................................................................................ 8
Figure 5: Meat Production in Project Aimags (2010-2018) ........................................................16
Figure 6: Cashmere Production in Project Aimags (2010-2018) ................................................16
Figure 7: Supply Chain of Livestock and Meat ..........................................................................21
Figure 8: Structure of Sub-Agreements .....................................................................................25
Figure 9: Overview of First- and Second-Generation Sub-Agreements .....................................26
Figure 10: Approach of Soum Renting Facilities to Business Units ...........................................29
Figure 11: PUG Development Structures and Relationships .....................................................31
Figure 12: Structures and Relationships in Animal Health .........................................................38
Figure 13: Structures and Relationships on Livestock and Meat Marketing ...............................41
Figure 14: Structures and Relationships for Feed-Livestock-Markets ........................................44
Figure 15: Fodder-Livestock- Market Value Chain ....................................................................45
Figure 16: Sheep and Goat Breed Improvement Structures and Relationships .........................48
Figure 17: Detailed Structures of Sheep/Goat Breed Improvement ...........................................52
Figure 18: Structures and Relationships for Terminal Sire Flocks .............................................57
Figure 19: Detailed structures and relationships of the Terminal Sire Flock ..............................58
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Figure 20: Structures and Relationships on Cashmere Marketing .............................................61

Figure 21: Project Area in Bulgan Aimag...................................................................................65
Figure 22: Livestock Number Trend in Bulgan Subproject Area ................................................71
Figure 23: Project Area in Arkhangai Aimag..............................................................................80
Figure 24: Livestock Number Trend in Arkhangai Subproject Area ...........................................86
Figure 25: Project Target Area in Uvurkhangai Subproject Area ...............................................96
Figure 26: Livestock Number Trends in Uvurkhangai Subproject Area ....................................101
Figure 27: Project Area in Bayankhongor Aimag .....................................................................111
Figure 28: Livestock Number Trend in Bayankhongor Subproject Area ..................................117
Figure 29: Steps in Supporting the Legal and Socio-economic Environment for Pasture
Management ...........................................................................................................................127
Figure 30: Livestock Management Information System Overview ..........................................130
Figure 31: Process of Work on Carcass Feedback systems....................................................132
1
I. PROJECT CONTEXT AND RATIONALE
A. Need for Investment
1. There is a need for investment to support government and herder efforts aimed at
conserving the natural resources on which herders rely to raise their livestock. These resources
are being progressively degraded by excessive livestock stocking rates, exacerbated by climate
change, and in some areas by increased mining activity. The overall effect is that the productivity
of the livestock sector is in decline. The sector is becoming more and more susceptible to natural
disasters such as dzuds. With each successive dzud, more herders, especially those with few
livestock, have their businesses destroyed and move to urban centres.
2. There is a need for investment to reduce carbon emissions from livestock and increase
carbon sequestration in soils. Mongolia’s large livestock population and extensive grasslands
present both a challenge and an opportunity to reduce net emissions. This project has the
opportunity to pilot systems to reduce emissions and sequester carbon into soils in 20 soums,
representing approximately 4.2% of the land area of the country. A successful pilot will contribute
to later expansion of systems to the whole country.
3. Stocking rates continue to increase, even though the impact on the environment is well
recognized. This is testament to the complexity of the issue, and the scope of the challenge faced
by the government and herders themselves. The Mongolian National Livestock Program (MNLP),
approved in 2009, outlined the strategic, policy and operational steps needed for the sector to
meet these challenges, and developed specific time-based targets for the sector. Much good
progress has been made in recent years with progress towards laws on pasture management,
laws on animal health, animal genetic improvement, and livestock insurance1. Processes are also
well underway to strengthen marketing systems. However much more needs to be done. This
project is well-placed to make a significant contribution to regulatory and market-based incentives
for herders to reduce stocking rates.
4. Protection of natural resources requires investment in all areas that impact on livestock
productivity. This includes water supply to enable access to relatively less used pastures and take
pressure of over-used areas, improved livestock housing, improved animal health services, breed
improvement, feeding and marketing of livestock products. The project aims to do this in 20 soums
in four aimags from which lessons can be learnt for potential later adaptation and expansion on a
national basis. Livestock identification systems for livestock and product marketing, and breed
improvement are key areas for project investment. The project will work in the field, and at a
national level in terms of capacity building.
5. The project will build on experience of many project investments in Mongolia over many
years in the areas of grazing management, and livestock productivity. This project builds
especially on the experience of the Swiss Development Corporation (SDC) project on pasture
management; on the business-planning and demand-driven approaches piloted in the Global
Agriculture Food Security Program (GAFSP)-funded project, the Livestock and Agricultural
Marketing Project (LAMP) managed by World Bank with FAO technical support, and the ADB
supported project Mongolia: Establishment of Climate-Resilient Rural Livelihoods (Financed by
the Japan Fund for Poverty Reduction).
1 Rangeland protection law was submitted to Parliament in November 2017. The new “Animal Health Law” and “Animal
genetics law” were approved by the Parliament on 8th December, 2017, 10 years after it has been initiated and
discussed through 3 Parliaments.
2
6. The design of the project takes into account the current context of the country in terms of
previous and ongoing investments in the sector. The project will work on all areas affecting
livestock productivity in the 20 target soums. The project will take a capacity building approach in
a national strategic sense in pasture management, focusing on the first and fourth priorities of the
Mongolian National Livestock Program (Box 1).
Box 1: Priorities of the Mongolian National Livestock Program
The Mongolian National Livestock Program was developed in 2010 and remains a key policy document
to guide investments in the sector. The program has five priority areas:
1) To drawing special attention from the State to the livestock sector as the main traditional
economic activity of the country, to assist in the formulation of a favorable legal, economic and
institutional environment for sustainable development, and to develop a good governance in
the livestock sector;
2) Improving animal breeding services based on social need/demand, increasing the productivity
and production of high quality, bio-clean livestock products and raw materials and increasing
market competitiveness;
3) Raising the veterinary service standard to international levels and protecting public health
through securing Mongolian livestock health;
4) Developing livestock production that is adaptable to climatic, environmental, and ecological
changes with strengthened risk management capacity; and
5) Developing targeted markets for livestock and livestock products; establishing proper
processing and marketing structures and accelerate economic turnover through an incentive
system.
7. Context. Pastoralism has prevailed in Mongolia for many centuries and remains dominant
in the country. The livestock sector engages 26% the country's labor force and produces 19% of
gross domestic product (GDP). The livestock system is highly dependent on availability of pasture
resources and natural and climatic conditions. Intensive or semi-intensive systems for the major
livestock types essentially do not exist.
8. Livestock grazing pressure, measured as Livestock Sheep Units (LSU)2, has more than
doubled since the 1990s, reaching 118 m LSUs in 2019. This is well above what is considered a
sustainable stocking rate. National LSUs were between 50-55 million from 1961 to 1994 with no
significant fluctuations. After 1994, LSUs rose to 72 million in 2000, dropping again to 46 million
in 2004. The LSU rose to 69 million in 2009, before dropping again to 55 million in 2010. It rose
again to 11 million in 2018. The rapid falls are due to a combination of poor summers and harsh
winters, known as dzuds. Combined with high stocking rates, livestock enter the winter with
relatively low bodyfat reserves needed to survive the winter. With each dzud, many herders who
have lost livestock and cannot rebuild, stop herding and move to urban centers.
9. The Mongolian National Livestock Program developed targets for national LSU from a
baseline of 71 m LSU in 2008, falling to 61 m LSU in 2012, before rising to 82 m LSU in 2021
(Figure 1). At current rates of increase in livestock numbers, Mongolia is on track to have an LSU
of 160% of the MNLP 2021 target. With climate change and the impact of mining, creating a target
for sustainable stocking rates is even more challenging.
2 In this system, sheep, goat, horse, cattle and camel are rated as 1, 0.9, 7, 6, and 5 Livestock Sheep Units respectively.
3
Figure 1: National Livestock Number Compared to Mongolian National Livestock

Program
120
Live Sheep Units (millions) 100
80
60
40
20
1990 2000 2010 2020
Year
Live sheep units Mongolian National Livestock Program LSU
Source: FAOstat, Mongolian National Livestock Program
10. Rising stocking rates have damaged the pastureland. According to the National Report on
the Rangeland Health of Mongolia (SDC 2018), and based on 2016 monitoring data, 42% of
monitoring sites were judged to be in a “reference” or non-degraded state; 14% in slightly
degraded, 21% in moderately degraded; 13% in heavily degraded and 10% in fully degraded
level. The same report suggested that recovery would require 10 years but would be possible.
11. The general relationship of stocking rate to output through the two factors of output per
unit of livestock and per unit of land is shown in Figure 2. The optimum stocking rate for output
maximization is considered to be to the left of maximum output per unit area. In reality, the
optimum stocking rate varies according to good or poor seasons. In the Mongolian situation,
herders who increase their livestock numbers may not necessarily view this as an increase in
stocking rate, which is one problem at the heart of the “tragedy of the commons”. The other major
problem being a perceived lack of care for natural resources by individuals when those natural
resources are in common use.
4
Figure 2: Stocking Rate and Output
Source: TRTA Consultant
12. At present, national stocking rates are to the right of the optimal zone. Both output per
animal and output per unit of land area is relatively low. This is seen as relatively low reproduction
rates, growth rates, survival rates, and product quality, as well as relatively high morbidity and
mortality and high susceptibility to dzuds and other natural disasters. Natural resources are being
degraded. Carbon emissions are relatively high and soil sequestration of carbon is low.
13. The project aims to provide some incentives for herders, and supporting systems and
policies, to shift stocking rates in the direction of the “optimal zone”. A shift in the direction of the
optimal zone will increase all these factors of productivity, and allow for natural resource recovery
to proceed, all else being equal. Along with a shift in the direction of the optimal zone for stocking,
the project will support improvements in other areas that affect productivity – breeding, genetics,
health and marketing.
14. Climate change has the effect of shifting the optimal zone further to the left due to the
impacts of lower rainfall and higher temperatures on pasture growth. Over the past 60 years,
Mongolia's average air temperature has warmed by 1.60 degrees Celsius, rising 3 times faster
than the world average. Climate change has led to a decline in pasture structure and composition,
a decline in yields, and the replacement of native species with derivatives, increasing the
likelihood of livestock food shortages.
15. Another key question related to optimal stocking rates and environmental impact is the
role of goats. While goats are valued at 0.9 LSU based largely on the fact that they are smaller
5
than sheep and eat less feed, there is concern that this underestimates the impact on the
environment of their grazing habits, both what and how they eat and how their hooves affect the
soil. The goat population LSU as a percentage of total LSU, as shown in Figure 3, varied between
17% and 22% from 1961 to 1994. It rose to 41% in 2008, before dropping to 37% in 2018. The
MNLP called for a reduction in the percentage of goats as LSU to 32% in 2021. This could be
achieved if recent trends continue.
Figure 3: Goats as a Percentage of Livestock Sheep Units
Source: FAOstat
16. Another issue related to stocking rates is optimal herd structure within sheep and goat
herds. For sheep self-replacing flocks, technically an optimal structure is one that has a high
proportion of breeding ewes, and which turns off as many young sheep or older culls as possible
which are not needed as flock replacements or for home consumption, before the winter. This has
to be balanced with financial considerations of price fluctuations that mean sheep prices are lower
as winter approaches due to high supply. For goats, optimal herd structure would generally mean
that castrated males should be culled at around 4 years old, due to cashmere quality issues.
B. Project Objectives and Outputs
17. The project is aligned with the following impact: competitiveness and sustainability of
Mongolia’s livestock sector improved (Mongolian Sustainable Development Vision 2030).3 The
project will have the following outcome: efficiency and sustainability of climate-resilient livestock
production increased.
18. The project will have three outputs: (i) climate resilience of livestock, pasture, and water
management improved; (ii) livestock value chains strengthened; and (iii) livestock sector
regulatory framework and capacity enhanced
19. The project will focus on reducing stocking rates. Reducing stocking rates will in itself
increase livestock productivity, but the project will also support improved productivity through
improved animal health, breeding and genetic improvement, animal feeding and value-adding.
20. The project is designed so that it provides a set of incentives for herders to reduce stocking
rates. Herders who join together to form Pasture-User Groups (PUGs) and who enter into
3 Government of Mongolia. 2016. Mongolia Sustainable Development Vision 2030. Ulaanbaatar.

6
Rangeland Use Agreements (RUAs) with the soum to reduce stocking rates, gain access to
additional project support. Only herders who join into PUGs and agree on RUAs are eligible to
receive direct project benefits.
21. The project will achieve the first two outputs through support to five areas of work in the
20 project soums which aim to improve livestock productivity:
(i) Development of Pasture User-Groups (PUGs) who then enter into agreements
with the soums on Rangeland Use Agreements (RUAs) to reduce stocking rates
and adjust herd structures. The project will support the implementation of the
RUAs, through continued support on factors that improve livestock productivity.
(ii) Animal health improvement through improving the quality and quantity of animal
services to herders through Private Veterinary Units.
(iii) Improved livestock marketing, focused on the meat and cashmere value-chain,
and strengthening linkages between herders and processors; and support to
cashmere sorting at soum level.
(iv) Improved livestock feeding, including support to fodder production and
infrastructure for fodder storage, and linking through to fattening lambs and to
processors.
(v) Improved sheep and goat breeding and genetics, and development of sheep
terminal sire flock systems.
22. The project will take a demand-driven approach to investments at the soum level. This will
strengthen business planning and analysis along the livestock supply chains.
23. The project will support the third output through capacity building activities, including:
(i) Strengthening of the legal environment for pasture management;
(ii) Development of a pilot livestock management information system and its testing in
the project area;
(iii) Establishment of a system of carcass feedback to suppliers, including animal
identification systems, that will enable suppliers and processors to comply with
market requirements;
(iv) Strengthening the capacity of the General Administration of Veterinary Services
(GAVS) in the traceability of livestock and livestock products through the
establishment of the Mongolian Animal Health Information System (MAHIS) in the
project area
(v) Capacity building of the Research Development Center (RDC), formerly known as
the National Agricultural Extension Center as well as capacity building of the four
Aimag Agricultural Extension Centers under the Aimag Food and Agriculture
Departments (AFADs) and 20 Soum Agricultural Offices (SAUs); and
(vi) Supporting the development of three inter-aimag reserve areas—Chilen in Tuv and
Bulgan aimags covering 34,100 ha, Khukhdel in Uvurkhangai Aimag covering
37,900 ha and Argalant in Bayankhongor and Govi-Altai aimags covering 118,600
ha.
7
II. PROJECT LOCATION
A. Project Area
24. Based on agreed selection criteria, three options for the project aimags and soums were
identified during the inception phase. During the review meeting the mission noted that option 1
had a high potential overlap in terms of project area and supported activities with a recently
approved World Bank project.4 MOFALI assured the mission that it will coordinate the ongoing
detailed project design of the World Bank project with the planned interventions for the ADB
project in order to maximize synergies and avoid duplication. At the request of the mission, the
Consultant has organized coordination meetings with the World Bank project implementation
team to avoid overlap between the projects. Based on this the project area was agreed with
MOFALI to comprise 4 aimags and 20 soums (Figure 4). The 20 selected soums are: Mogod,
Saikhan, Khishigundur and Gurvanbulag in Bulgan aimag; Khairkhan, Ulziit, Erdenemandal,
Battsengel, Ugiinuur and Khashaat in Arkhangai aimag; Erdenetsogt, Bayan Ovoo, Ulziit, Jinst,
Bogd in Bayankhongor aimag; and Baruunbayanulaan, Khairkhandulaan, Nariinteel, Taragt and
Guchin Us in Uvurkhangai aimag. (Table 1).
Table 1: Selected Project Area

No Target aimag Distance Number Names of target soums
from of target
Ulaanbataar, Soums
(km)
1 Bulgan 350 4 Mogod, Saikhan, Khishig-Undur, Gurvanbulag
2 Arkhangai 465 6 Khairkhan, Ulziit, Erdenemandal, Battsengel,
Ugiinuur, Khashaat
3 Bayankhongor 630 5 Erdenetsogt, Bayan-Ovoo, Ulziit, Jinst, Bogd
4 Uvurkhangai 450 5 Baruunbayanulaan, Khairkhandulaan, Nariinteel,
Taragt, Guchin-Us
Source: Asian Development Bank and MOFALI
25. Bulgan aimag is located in central part of the Orkhon and Selenge river basins, and
borders with Arkhangai, Khuvsgul, Selenge and Tuv aimags. The biggest mountains are
Bulgankhan, Buregkhangai, Dulaankhaan, Buteel and Khantai Darkhan khaan in the aimag. The
rivers such as Selenge, Orkhon and Khanui flows through the aimag territory and there are the
lakes of Khargal, Khunt and Airkhan and the spars such as Khulij, Khunt, Khanui and Asgat.
26. Arkhangai aimag is located in a central economic region, and borders with Zavkhan,
Khuvsgul, Bulgan, Uvurkhangai and Bayankhongor aimags. The biggest mountains are
Tarvagatai in the aimag. The rivers such as Orkhon, Khanui, Tamir and Chuluut flows through the
aimag territory and there are the lakes of Ugii and Terkhiin Tsagaan.
27. Uvurkhangai aimag is located in central part of the country, and borders with
Bayankhongor, Arkhangai, Bulgan, Tuv Dundgovi and Umnugovi aimags. The biggest mountains
are Khitruun, Bituug, Bagabogd and Myangan Yamaat in the aimag. The rivers such as Ongi,
Taats and Ar Aguit flows through the aimag territory and there are the lakes of Naiman Nuur and
Taatsiin Tsagaan Nuur and the spars such as Khujirt, Mogoit, Khitruun, Khuremt, Taats, Must,
Khuren Khad, Khorkhoin Turuu and Takhiin.
4 World Bank 2019: Livestock Commercialization Project. Project Appraisal Document. 19 November 2019.
8
Figure 4: Project Area

9
28. Bayankhongor aimag is located in west of the country and borders with Gobi-Altai,
Zavkhan, Arkhangai, Uvurkhangai and Umnugovi aimags. The biggest mountains are Altain
Nuruu and Ikh Bogd in the aimag. The rivers such as Tuin flows through the aimag territory the
lakes of Buutsagaan Nuur the spars such as Shargaljuut, Khuremt, Khaliut and Urguut.
29. Bulgan aimag represents the khangai and steppe regions, Arkhangai represents the
khangai region, Bayankhongor represents the khangai, steppe and govi regions, and
Bayankhongor represents the khangai, steppe and govi regions. General characteristics of the
khangai, steppe and govi regions are below summarized in Table 2.
Table 2: Features of Traditional Classification of Regions

Indicators Khangai Steppe Govi
-21.6ºC in Jan, -21.0ºC in Jan, -17.7ºC in Jan,
Temperature:
15.7ºC in July 18.50ºC in July 20.80ºC in July
Precipitation: 289 mm 234 mm 113 mm
Cumulative temperature above 5ºC 1500ºC -2000ºC 2000ºC -2500ºC 2500ºC -3000ºC
Days above 5ºC 140 160 170
Source: Technical team
B. Selection Criteria
30. Agreed criteria for selection of the project aimags and soums, and herder communities
(herder groups, pasture user groups and forest user groups), are outlined as follows.
31. Selection criteria for project aimags are as follows:

(i) moderate livestock density;
(ii) pasture degradation;
(iii) low coverage/enrollment by other donor projects in the same areas as the
proposed project;
(iv) geographical representation of khangai, steppe and govi regions;5
(v) need for water points in pasture;
(vi) easy access to the millennium road network or transportation corridor;
(vii) local development strategy or plan should be consistent with proposed project
area;
(viii) interest in involvement (response and cooperation): and
(ix) national or aimag level administrated pasture reserves located in the aimag.
32. Selection criteria for project soums are as follows:

(i) moderate livestock density;
(ii) pasture degradation or underutilized pasture;
(iii) low coverage/enrollment by other donor projects in the same areas of proposed
loan;
(iv) neighboring soums;
(v) geographical representation of khangai, steppe and govi regions;
(vi) need for water points in pasture;
(vii) local development strategy or plan should be consistent with proposed project
area;
(viii) interest in involvement (response and cooperation); and
5 This is a traditional way of ecological and landscape classification. These categories are further elaborated in
Appendix 3.
10
(ix) soums without national protected areas, or international protected areas (e.g.,
UNESCO Biosphere Reserves, IBA sites, Ramsar wetland sites), or project siting
that is not near or within the drainage catchments of national or international
protected sites within the soum.
33. Selection criteria for herder communities are as follows:

(i) members of the herder communities must be citizens of the relevant soum;
(ii) must have some pasture or water sources (traditional terminology neg nutag, gol
usniikhan);
(iii) must have current experience working together (e.g., pasture use, hay production,
“khot ail”- neighboring group of households, and overcoming dzud and drought,
etc.);
(iv) must have accepted project concept and design and have willingness to cooperate
with proposed loan under its prescribed terms and conditions including safeguards;
(v) must have accepted to use pasture and water resources within carrying capacity
under commonly agreed plans;
(vi) should not be currently benefitting from similar activities of other donors;
(vii) for current herder communities,
a) 70% of members should not have changed since the establishment of the
community, and
b) the herder community is accepted by other herders and local government;
(viii) should include female-headed herders as community members;
(ix) involvement of poor herder households as at least 15% of total members;
(x) should include women in decision-making roles in the community and
(xi) should be willing to contribute to a soum pasture development fund (existing or
newly created), equal to at least 20% of the project investments.
34. Selection criteria for the locations of proposed pasture water-points are as follows:
(i) potential water point locations should not be located in national protected areas,
cultural and sacred sites, national or international conservation significance;
(ii) intended water users must meet with the above-mentioned criteria set for herder
groups; and
(iii) intended water point must be used following the pasture use plan of herder groups
III. LIVESTOCK SYSTEMS IN THE PROJECT AREA
A. National Context
35. The livestock systems in the project area are representative of the three major systems
found in the country – that of the Khangai, Steppe, and Gobi systems. Across all these systems,
natural resources are being degraded by overstocking.
36. The nationally-accepted classification systems for land degradation and land recovery are
shown in Box 2 and Box 3.
Box 2: Definition of Land Degradation Levels

Land Degradation Level
I. Non degraded All dominants are in place.
II. Slightly degraded Key dominant are still dominating; some grazing sensitive forbs are in decline and
grazing resistant species are in increase.
III. Moderately degraded Dominants are in decline and replaced by other subdominants, number of
species drops down.
IV. Heavily degraded Remnants of key species are thinning, and abundance of degradation indicator
species increases.
V. Fully degraded Total vegetation cover is reduced or dominated by very few degradation indicator
species.
Source: Meteorological National Agency for Meteorology and Environmental Monitoring, SDC
Box 3: Definition of Land Recovery Classes

Land Recovery Class
I. The plant community is at or near reference conditions (non-degraded) or requires 1-3 growing
seasons for recovery from minor changes (slightly degraded); match stocking rate to forage supply and
use temporary seasonal deferment as needed.
II. The plant community is altered and may be rapidly recovered (3-5 growing seasons) with favorable
climatic conditions or a change in management (e.g., stocking rate reduction, seasonal deferment,
rotation). The nature of alteration is not regarded as a significant long-term threat to the provision of
forage and other ecosystem services.
III. The plant community is altered and may take 5-10 growing seasons to recover with changed
management (stocking rate reduction, seasonal deferment, and long-term rest). Alteration represents a
significant loss of important ecosystem services (and are clearly related to anthropogenic drivers), but
recovery is possible in time.
IV. The plant community is altered due to the local loss of key plant species, invasion of noxious plant
species, or alteration of hydrology that is unlikely to be recovered for over a decade to many decades
without intensive interventions such as species removal, seeding, or manipulations to recover historical
hydrological function (i.e. an ecological threshold was crossed). Previous ecosystem services have
been lost and are usually costly to recover.
V. The plant community is altered due to extensive soil loss, accelerated erosion rates, or salinization.
Altered plant-soil feedbacks or permanent changes in the soil profile maintain the degraded state.
Previous ecosystem services have been lost and it is usually impractical to recover them (often regarded
as true desertification).
Source: Meteorological National Agency for Meteorology and Environmental Monitoring, SDC
12
B. Production Systems
1. Livestock Management
37. Herder groups. Between 2002 and 2019, 232 herder groups were established in project
area with a total of 4,357 members who used about 25% of the pasture area. On average, 31%
of households enrolled to the herder groups (Table 3).
Table 3: Herder Groups in the Project Area

Aimags
Indicator Unit Overall
Bulgan Arkhangai Uvurkhangai Bayankhongor
Households no. 3,556 6,725 4,389 4,746 19,416
Herder households no. 2,677 5,332 3,202 3,448 14,659
Herder groups no. 48 90 36 58 232
Member households no. 577 1,919 423 1,438 4,357
Coverage of herders % 24% 39% 18% 44% 31%
Pasture used by herder % 14% 39% 17% 31% 25%
groups
Source: Aimag governments, Feb-May 2020
38. Pasture User Groups. There are 73 pasture use groups (PUGs) in the project area of
which 4 are in Bulgan Aimag, 43 in Arkhangai Aimag and 26 in Bayankhongor Aimag (Table 4).
Total membership is 3,496 persons, accounting for about 24% of the 14,576 herder families in
the project area. Arkhangai and Bayankhongor aimags are the main locations for pasture user
groups. These groups were established by the Mercy Corps. Under the “Gobi Initiative”, UNDP
under “Sustainable Land Management for Desertification”, IFAD under “Market and Pasture
Management”, JICA under “Well Water Point”, SDC under its “Green Gold Program”, and by local
government units.
Table 4: Pasture User Groups and Soum Pasture Associations in the Project Area
Pasture User Groups Soum Enrollment to
Herder
Aimag name Pasture Pasture User
Number Members families
Associations Groups
Bulgan 4 28 2 2,759 1%
Arkhangai 43 2,522 - 4,894 52%
Uvurkhangai - - - 3,286 0%
Bayankhongor 26 946 2 3,637 26%
Total 73 3,496 4 14,576 24%
39. Soum Pasture Associations. There are 4 Soum Pasture Associations (SPA) in the
project area, of which two are in Bulgan Aimag (Mogod and Saikhan soums) and two are in
Bayankhongor Aimag (Jinst and Bogd soums).
40. Cooperatives. There are 132 cooperatives in the project area of which 15 are in Bulgan
Aimag, 36 in Arkhangai Aimag, 40 in Uvurkhangai Aimag and 41 in Bayankhongor Aimag (Table
5). Total membership is 6,063 persons, accounting for about 34% of the herder families. Of these
cooperatives, 72 are herder cooperatives with a total of 4,917 members.
13
Table 5: Cooperatives in the Project Area

Cooperatives Herders cooperatives Herder Enrollment to
Aimag name
Quantity Members Quantity Members families cooperative
Bulgan 15 209 10 200 2,759 7%
Arkhangai 36 2,280 25 1,968 4,894 40%
Uvurkhangai 40 1,177 14 1,345 3,286 41%
Bayankhongor 41 2,397 23 1,404 3,637 39%
Total 132 6,063 72 4,917 14,576 34%
41. In accordance with the Law on Cooperatives, a cooperative should have at least 9
members. In this regard, the cooperatives created in rural areas have a small number of members.
The government’s policy of “one bagh-one cooperative” together with the policy on wool
incentives has resulted in formation of many rural cooperatives with larger herder membership.
Because the wool incentive or premiums in cash was only distributed to herder members of the
cooperatives they were informally called “herder cooperatives”. These cooperatives do not carry
out any pasture protection activities, but trade in livestock products. Hence, it would be
appropriate to cooperate with them to link herders with processing factories.
42. Forest user groups. There are 24 forest user groups (FUGs) in the project area, where
there are project forest resources, of which 15 are in Bulgan Aimag, 3 in Arkhangai Aimag, 3 in
Uvurkhangai Aimag and 3 in Bayankhongor Aimag (Table 6). The purpose of FUGs is to protect
the forest resources and not the pasture. FUGs in the project area have a total of 929 members,
6% of the total herder households.
Table 6: Forest User Groups in the Project Area

Forest User Groups Herder Enrollment to Forest
Aimag name
Quantity Members families User Groups
Bulgan 15 866 2,759 31%
Arkhangai 3 15 4,894 0%
Uvurkhangai 3 - 3,286 0%
Bayankhongor 3 48 3,637 1%
Total 24 929 14,576 6%
43. Pasture User Organizations. Pasture user organizations, including herder groups and
the pasture user groups, were analyzed in terms of institutional characteristics to understand their
structure, governing rules, operations, resource use, maintenance and control to determine if they
use pasture resources in a long-term sustainable manner.
44. Pasture user organizations were mostly established on the initiative of donors and operate
following the donor’s approach: a few were established through the herders’ own initiative.
Organizations have their own rules, but most are not written down, the herders maintaining and
transmitting them verbally. Each organization consists of a group leader and members:
sometimes there are also governing and control boards, and a person in charge for finance and
mutual funds. It has free membership, usually one herder household is considered as one
member. Enrolment of the herder households of the soum is comparatively low, for example 18-
24% in the project area in Uvurkhangai and Bulgan aimags, and 39-44% in Arkhangai and
Bayankhongor aimags. The main objectives of the organizations are to use and protect pasture
areas in a sustainable manner, develop and maintain water wells, prepare hay and fodder, build
shelters, and undertake heavy work communally.
14
45. Pasture user organizations normally meet at least twice a year, and the leader is elected
from the members democratically. The organizations decide when to move or seasonal otor
movements and pasture release. Most have a pasture management plan, which is usually agreed
verbally. Although they make joint decisions, planned activities are not always successful due to
many internal and external factors.
46. The project soums reported they use pasture in accordance with the land law. However,
herder groups lack understanding of such legislation. Attempts have been made to regulate
pasture use and protection in various ways in the soums. For example, Battsengel and
Erdenemandal soums in Arkhangai Aimag; Erdenetsogt Soum in Bayankhongor Aimag; and Jinst,
Bayan-Ovoo and Guchin-Us soums in Uvurkhangai Aimag have a regulation on responsible
pasture use, and Mogod Soum in Bulgan Aimag, Khairkhan and Ulziit soums in Arkhangai Aimag,
Guchin-us Soum in Uvurkhangai Aimag, and Taragt and Ulziit soums in Bayankhongor Aimag
have developed pasture management plans and discussed them at bagh citizens meetings.
Ugiinuur Soum in Arkhangai Aimag, has no clear local regulations for use of the pasture. Some
project area soums have included the tasks relevant to pasture carrying capacity, pasture
utilization, and water well management in their Soum Development Plan for 2000-2025.
47. The members of pasture user organization cooperate to undertake heavy work. However,
tasks relevant to pasture use such as rotation, release and protection are rarely undertaken.
Soum and bagh governors unanimously agreed that this activity has stopped in the soums and
rated implementation of the pastureland management plan as average to poor. Bogd Soum in
Bayankhongor Aimag rated it as bad to good but could not be specific about the meaning of good.
48. Soum governments accept pasture user organizations, and the soum administration has
a record of these organizations. A few local government units in the project area have helped
them to receive loans from the Small and Medium Enterprise Fund and Soum Development Fund.
49. Only a few herder groups have created group funds, for example the groups in Ugiinuur
Soum of Arkhangai Aimag and Nariinteel Soum of Uvurkhangai Aimag have about MNT3.0 million
and MNT2-7.2 million, respectively in their funds. Individual herder contributes about MNT50,000
to groups funds. Some of the groups, especially those funded by the SDC Green Gold project,
have contributed to the credit and saving cooperative in the soum, and others have created a
matching fund, which receives matching contributions from the SDC project against herders’
contributions. As herders reported, it takes at least 30 days to receive a finance from the matching
fund because it is administered by the aimag pasture association, which has a representative in
the soum. This suggests that there is no soum pasture association, but a branch or representative
of the aimag pasture association in the soum.
2. Pasture Infrastructure
50. There are 919 deep wells in pastureland, 723 springs, 190 lakes and ponds, and 167
rivers in the project area (Table 7). There is reported a need for an additional 382 deep wells to
be established to ensure sufficient drinking water for livestock numbers within the carrying
capacity and to relieve grazing pressure from pastures near existing wells. Grazing pressure will
be reduced because currently underused pasture will be improved thus expanding the livestock
pasture resources. Water supply infrastructure for pasture lands is in serious disrepair and
urgently needs to be improved, not only as drinking water for the livestock but also to prevent
pasture degradation. Traditionally, individual water points constructed for livestock watering
include both comparatively high yielding deep wells and shallow/hand-made wells. Due to lack of
maintenance issues, deep wells in particular have degraded since the transition period and the
15
number of operational wells has sharply declined. This has forced herders to move their stock to
areas around the decreasing number of operational wells and close to rivers. Thus the carrying
capacity of pastures in these areas is far exceeded, causing serious land degradation and leading
to unsustainability.
Table 7: Water Points in the Project Area

Lakes and Additional wells
Aimag Deep wells Springs Rivers
ponds required
Arkhangai 353 137 127 22 172
Bulgan 163 124 28 43 76
Uvurkhangai 250 196 10 34 56
Bayankhongor 153 266 25 68 78
Total 919 723 190 167 382
Source: Aimag governments, Dec 2019
51. There are 7,288 open livestock enclosures without a roof, 9,281 semi-roofed livestock
enclosures, 2,086 livestock sheds with wall and roof, 8,414 winter and spring camp with
certificates,6 and 40 fodder storages in the project area (Table 8). Achievement of sustainable
pasture management that does not exceed the carrying capacity of pasture through rehabilitation
of degraded pasture requires open alternative pasture with improved livestock enclosures,
livestock sheds and fodder storage.
Table 8: Animal Shelters and Storages in the Project Area

Open Semi-roofed Livestock Camps with Fodder
Soum name
enclosures enclosures Sheds certificate storage
Arkhangai 1,885 4,226 1,549 1,326 5

Bulgan 1,504 1,902 65 2,483 6
Uvurkhangai 1,770 1,566 - 2,383 8
Bayankhongor 2,129 1,587 472 2,222 21
Total 7,288 9,281 2,086 8,414 40
Source: Aimag governments, Dec 2019
3. Livestock Numbers and Output
52. There were 20.1 million head of livestock in the four project aimags in 2019, which
accounted for about 28.3% of the country's total livestock number. The project aimags produced
about 140,000 tons of meat in 2018, accounting for 27% of national production: Arkhangai Aimag
produced 41,500 tons, Bayankhongor Aimag 18,800 tons, Bulgan Aimag 37,000 tons, and
Uvurkhangai Aimag 43,100 tons (Figure 5).
53. There were 6.2 million head of livestock in the project area in 2019, which accounted for
8.7% of the country's total livestock number. Output of livestock products is seasonal due to the
pastoral production system, which depends on the production of pasture with the project area
accounting for of 5.3% of the national total. Annual production of meat by project soum ranged
between 484 tons and 3,190 tons in Arkhangai Aimag, 170 tons and 1,315 tons in Uvurkhangai
Aimag, and 640 tons and 757 tons in Bayankhongor Aimag.
6 According to the Law on Land clause 52.7, land under winter and spring camps can be possessed by khot ail. As per
this legal ground, the certificate has been issued for such camps by the soum government.
16
Figure 5: Meat Production in Project Aimags (2010-2018)

50,000
45,000
40,000
Slaughtering weight, tons
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Arkhangai Bayankhongor Bulgan Uvurkhangai
Source: National Statistical Office, 2020
54. The project aimags produced a total of 2,930 tons of cashmere in 2018, which accounted
for 29.3% of the national production of 10,000 tons. Production by aimag was 490 tons in
Arkhangai, 1,180 tons in Bayankhongor, 330 tons Bulgan and 970 tons Uvurkhangai (Figure 6).
Individual soums in Arkhangai Aimag produced between 26 and 30 tons, in Uvurkhangai Aimag
between 37 and 67 tons and in Bayankhongor Aimag between 45 and 70 tons.
Figure 6: Cashmere Production in Project Aimags (2010-2018)

1.40
1.20
1.00
0.80
0.60
0.40
0.20
-
2010 2011 2012 2013 2014 2015 2016 2017 2018
Arkhangai Bayankhongor Bulgan Uvurkhangai
Source: National Statistical Office, 2020
C. Inputs and Services
1. Government Offices
55. There are about 30 public servants in each Soum Government Administration. The Soum
Agricultural Unit (SAU) belongs to the Soum Government Administration in terms of the salary
17
and operational costs but works with MOFALI and its affiliated organizations in terms of
professional activities and directions. The SAU consists of 2 or 3 specialists, who are responsible
for pasture, crop production, small and medium enterprises, trade, livestock planning, breed
registration, safety of raw materials, livestock forages. The Soum Veterinary Unit (SVU), which
belongs to the Aimag Veterinary Service Department, consists of 1 or 2 specialists who are a
veterinarian and an epidemiologist. The SVU is responsible for monitoring implementation of
sectoral policies, laws and decrees in the soum territory, provision of professional and
methodological support to the activities of private veterinary service units and contracted
veterinarians, and ensuring the implementation of laws and standards, monitoring the
implementation of technologies and quarantine measures to combat and prevent animal
diseases, and implementing the investigation and resolution of violations within the framework of
relevant legislations. The SVU also monitors the PVUs and the movement of livestock, and
prevention of infectious and parasitic diseases of animals on the basis of epidemiological studies,
orders the necessary drugs and biopreparations, and collects and distributes them to the PVUs.
56. The soum land officer belongs to the Aimag Land Administration Department and is
responsible for carrying out annual land management planning and implementation, updating and
enriching the land cadaster database, concluding and evaluating contracts with land owners,
possessors and users, land tax and payment, and carrying out annual assessment of pasture
photo-monitoring.
57. The soum state environmental inspector belongs to the Aimag Professional Inspection
Department and is responsible for organizing and ensuring the implementation of environmental
protection legislation, decisions of aimag and soum Citizens' Representatives Khural and local
governors, implementing environmental inspection duties, coordinating the activities of the
government, citizens and business entities, providing methodological guidance for the rational
use of natural resources, and enforcing relevant laws and regulations.
2. Animal Health
58. There are 54 private veterinary units (PVUs) in the project area (Table 9). Legally, PVUs
must provide general or specialized professional care and services in the field of prevention,
diagnosis, treatment of all or certain types of animal diseases, combating infectious diseases,
ensuring safety of animal originated raw materials.7 PVUs must be a legal entity with a
veterinarian accredited to provide professional services, premises and equipment that meet the
standard requirements.
Table 9: Private Veterinary and Livestock Breeding Units in the Project Area
Aimags Private veterinary Units Private livestock breeding units
Bulgan 16 -
Arkhangai 15 2
Uvurkhangai 12 2
Bayankhongor 11 1
Total 54 5
Source: Technical team survey, Feb-May 2020
7 The PVUs can also provide the special specialized veterinary care and services in mobile and localized means.
18
D. Downstream Supply Chain
59. Since transition to a market economy, the state-centralized supply system of livestock
products has collapsed. While there is an organized market system with infrastructure to ensure
free flow of agricultural and industrial goods there are many intermediaries who collect livestock,
meat and livestock raw materials from herders to deliver to buyers. Thus herders face significant
difficulties in selling their livestock, meat, wool, cashmere, leather and other by-products for a
reasonable price. The marketing system is currently uncontrolled with intermediaries, who are
called “changers”, the main players in the supply of raw materials. Livestock or meat comes from
the herder to the markets directly or through these intermediary traders in soum and aimags.
60. The herders reported that their products are sold at low prices due to (i) lack of the
centralized state system, (ii) lack of a local soum slaughterhouse, and (iii) lack of the local factory
representatives enabling them to sell to the factory. Major players in the meat supply chain are
herders, middleman traders in the soum and aimag, abattoirs, meat factories and the state
veterinary authority. Main markets are the wholesale and retail markets in aimag centers and
Ulaanbaatar, and meat factories. Major domestic markets are the Emeelt and Khuchit Shonkhor
markets in Ulaanbaatar. During cold seasons, meat is mostly traded while in warm seasons live
animals are largely traded depending on the road connection between the soum and
marketplaces. For this reason, 90% of meat is slaughtered in a traditional way in local areas and
the remaining 10% is prepared by meat factories. Forty eight percent of slaughter houses, 66%
of processing plants, and 79% of storage capacity are located in Ulaanbaatar city and its
surrounds, and the remaining 52% of slaughter houses, 31% of processing plants, and 21% of
storage capacity located in local areas.
61. Collection of the livestock or meat (inputs) is usually done by rural and urban traders,
herders, and producers. Rural traders collect inputs from their areas and bring them to the markets
and/or factories of the company in Ulaanbaatar or the aimag center. Among input buyers, Chinese
traders are strong players. Shipment of inputs are managed mainly by sellers when they bring
them to urban markets. Different kinds of lorries—made in Korea, China or Russia—are used for
transportation, despite delivery on foot.
62. Availability of livestock and meat in the market differs by month and season: typical slack
months for input supply to factories are March to May, which may also extend into February and
June depending on factory capacity. The peak period for input supply is from September to
November, when animals are fattened. Supply of the livestock increases but at the same time
buyers’ competition increases. During this period, factories try to buy and store sufficient livestock
or meat to cover their annual production, depending on their financial and storage capacity. Thus
a large storage inventory needs to be maintained. The quality of livestock also differs by season
due pastoral livestock production system and the livestock only gain weight during autumn.
63. The problems that affect the reliability of input supply include: (i) supply variation by
season and price fluctuation; (ii) lack of a consistent quality; (iii) financial problems along the
supply chain; and (iv) outbreaks of animal diseases, which are a major problem particularly when
there is an outbreak of a class A animal disease8 that results in a ban on meat exports. Processes
8 Transmissible diseases that have the potential for very serious and rapid spread, irrespective of national borders, that
are of serious socio-economic or public health consequence and that are of major importance in the international
trade of animals and animal products. Examples: Foot and mouth disease, Swine vesicular disease, Peste des petits
ruminants, Lumpy skin disease, Bluetongue, African horse sickness, Classical swine fever, Newcastle disease,
Vesicular stomatitis, Rinderpest, Contagious bovine pleuropneumonia, Rift Valley fever, Sheep pox and goat pox,
African swine fever, Highly pathogenic avian influenza.
19
at factories differ depending on local conditions, including the methods of animal preparation,
slaughter, skinning, chilling, cutting, sorting, freezing, deboning, sorting, packaging, and freezing,
which continue for up to 9 months depending on the factory. Those with heat treatment lines can
process for longer. Most factories have introduced, or are in the process of introducing, Hazard
Analysis Critical Control Point (HAACP) and certain ISO standards.
64. The main destinations of exports are China, Russia, Kazakhstan, and the Middle East.
Purchasers of the export products are exclusive buyers, foreign wholesale distributors, and a few
large factories. Sale of the product to the purchasers is managed by the producers. Delivery of
the product is managed by the shippers or buyers. Shipment of products depends on seasonal
availability of the inputs. Exports are made by road, rail, and sometimes by air. Terms of sale are
ex-factory, border, or loading port. The factories obtain the sanitary certificate, certificate of origin,
conformity certificate, certificate of quarantine, and custom declaration, which takes up to 7 days.
65. Factories reported that weaknesses in inbound supply chain are disease outbreak,
financial resources, seasonal input supply, special transportation means, and road conditions,
and the weaknesses in outbound supply chain are dealing with government institutions
(professional inspection), difference of laboratory analysis in China, limited quota on export,
prices, special transportation means, and improper application of tariff in Russia.9
66. There are nine meat factories in the project aimags, including one in Bulgan, three in
Arkhangai, four in Uvurkhangai, and one Bayankhongor:
(i) Bulgan Aimag.
• Makh Market LLC, a slaughtering capacity of 150 big and 250 small animals
per day, which has heat treatment processing;10
(ii) Arkhangai Aimag,
• Khangain Khuns LLC, a slaughtering capacity of 200 big and 1,000 small
animals per day, which has heat treatment processing,
• Nairulga LLC, a slaughtering capacity of 100 big and 800 small animals per
day, and
• Arbuka LLC, a slaughtering capacity of 30 big and 100 small animals per day;
(iii) Uvurkhangai Aimag,
• Delkhiin Khuns LLC, a slaughtering capacity of 15,000 tons of heat-treated
meat,
• Deejiin Urguu LLC, a slaughtering capacity of 100-250 big and 500-1,000 small
animals per day,
• Uv Meat LLC, a slaughtering capacity of 40-50 big and animals per day, and
• Dalai Odod LLC, a slaughtering capacity of 100 big and 250 small animals per
day: and
(iv) Bayankhongor Aimag,
9 TTFA for Mongolia Agricultural Export: Survey of Selected Meat Companies, D.Nyamdorj, B.Ariunbold, 2018
10 The company was supported by ARDP in December 2019 for an abattoir equipment replacement in Erdenet city,
implementing a pilot project on meat traceability in Bulgan and Khuvsgul aimags, producing new products such as
canned meat.
20
• Makh Mart LLC, a slaughtering capacity of 100 big and 1,000 small animals
per day, 3 storages each of 600 tons (-16ºC to -18ºC), refrigerator of 6 and 2
tons (-25ºC to -32ºC).
67. Meat and cashmere are major sources of income for the herder households.
Cooperatives, factories and private traders (middleman called “changers”) compete with each
other in the collection and supply of livestock and livestock products such as meat, cashmere and
wool, and hides and skins to markets. Among them the middleman play a significant role. The
market channel of livestock and livestock products is mostly similar in all the project soums (Figure
7).
21
Figure 7: Supply Chain of Livestock and Meat

22
68. Herders mostly transport to the central markets, either with their own lorry or pay a fee per
head of livestock or per ton for hired transport. In general, in the warm seasons live animals are
transported and in cold seasons carcasses. 11
69. Cashmere supply chain. Cashmere is prepared by local herders and collected by local
cooperatives or middleman in a similar way to other livestock products. There are 15 deep
processing plants, 23 primary processing plants, 59 small and medium-sized knitting factories
and 150-200 small household workshops in Mongolia. There are no cashmere factories in the
project aimags.
70. ADB has collaborated with MOFALI to develop a Mongolian Noble Fibre certification mark
for cashmere.12 Mongolian Noble Fibre (MNF) certification mark was officially registered at the
Mongolian Intellectual Property Office in 2013. MNF certification mark registration to selected
target countries was done through the World Intellectual Property Organization and received grant
protection from 33 countries in target markets. Obligations to grant MNF certification mark was
subcontracted by MOFALI to the Wool and Cashmere Association of Mongolia on 18 Oct 2018.
Potential participating private enterprises were selected which are suitable for meeting and
maintaining MNF levels of performance. Required technical training is in progress. Currently three
enterprises have been awarded MNF certification for final products and de-haired fiber, one which
has signed a memorandum of understanding with their international partner during the MNF
international forum.
71. Also Sustainable Fibre Alliance (SFA) Mongolia, a non-profit international organization,
works with the extended cashmere supply chain, from herders to retailers, aiming to promote a
global sustainability standard for cashmere production in order to preserve and restore
grasslands, ensure animal welfare and secure livelihoods. SFA has a global membership of 50
companies with 102 brands13 in 10 countries.14 Delegations of SFA has been working since 2015
and SFA Mongolia officially opened in 2019. SFA Mongolia is currently working with 70 herder
organizations (cooperatives, partnerships, herder groups) in the country. SFA certifies those
herder organizations, who wish to cooperate with SFA member factories, in areas of “Animal
husbandry and cashmere fibre harvesting code of practice C001”, and “Rangeland stewardship
code of practice C002”. Those national factories who wish to cooperate with SFA member
factories abroad are certified in areas of “Sustainable fibre processing code of practice (C003)”.
SFA Mongolia links certified herder organization directly to its certified national companies.
72. There are 226 registered business entities in the project area, of which 76 are in Bulgan
Aimag, 56 in Arkhangai Aimag, 67 in Uvurkhangai Aimag, and 27 in Bayankhongor Aimag who
trade livestock raw materials, animal feeds, poultry, medicine, construction materials and cement;
and engage in banking, logging, hotels, carpentry, cafeterias, and food trade. Of these, there are
61 trading entities and 8 citizens that collect, and trade, livestock originated products (Table 10).
11 Typical lorries used for transportation include: Porter-1.2 tons, Frointer-1.5 tons, Bongo-1.5 tons, Istana, microbus,
ISUZU -3 tons, Kanter-3 tons, Мighty-3.5 tons, Daewoo-3.5 tons, FUSSO-7 tons, Shalaanz Hino-10 tons. A Porter
contains 20-25 small animals, Frontier-25-30 small or 6 big animals or 70-80 carcasses, Istana- 50 carcasses,
Shalaanz 100-120 small animals or 50-70 big animals.
12 Asian Development Bank. 2020. Loan 3287/3288-MON: Agriculture and Rural Development Project- Additional
Financing (ARDP AF) and TA 8960-MON: Supporting Agriculture Value Chain. Memorandum of Understanding
13 Among the brands are Alex Begg, Artwell, Brodie Cashmere, Burberry, C&A, Colombo, Erdos, Falconeri, Hebei
JiaXing Cashmere Co.,Ltd, Hongtai, Inditex, J.Crew, John Lewis , Jonstons of Elgin, Joshua Ellis, London Cashmere,
LVMH, M&S, Madewell, Ningbo Zhongxin, Oyuna, Robert Todds, Schneider, and UPW.
14 Participating countries include the United Kingdom, Hong Kong, Belgium, Italy, USA, France, China, and Mongolia.
23
Table 10: Registered Business Entities and Livestock Traders in the Project Area
Aimag Business Traders of Meat, By-products, Individuals and Legal Entities
Entities Wool and Cashmere for Primary Processing
Bulgan 76 14 1
Arkhangai 56 17 -
Uvurkhangai 67 15 1
Bayankhongor 27 15 6
Total 226 61 8
Source: TRTA Consultant, Feb 2020
E. Subproject Implementation Arrangements
1. Aimag Level Subprojects
73. The investments in project soums will be structured through four aimag subprojects. Each
aimag subproject will consist of an aggregation of soum-level annual targets which align with the
project outputs: grazing management, animal health, breeding, feeding, marketing and
environment. The structure for soum indicators and targets is shown in Table 11.
Table 11: Template for Aimag and Soum Subproject Indicators and Targets
Soum …….
Indicator Base 1 2 3 4 5 6
Livestock population (LSU) in soum
LSU as a % of starting LSU 100% 100% 100% 100% 94% 94% 88%
No. PUGs/RUAs
No. Bag-level PUG alliances functioning 6
No. soum-level Pasture Societies 1
functioning
No. PVUs functioning
No. sheep PABUs registered
No. ewes in sheep PABUs
No. goat PABUs registered
No. does in goat PABUs
No. of Terminal Sire Flocks
No. Private Feeds Units functioning
No. Private Livestock Marketing Units
(PLMU) functioning
No. sheep marketed through PLMUs
No. Private Lamb Fattening Units
(PLFU) functioning
No. lambs fattened in PLFU
No. Private Cashmere Processing Units
(PLMU) functioning
No. tonnes cashmere processed
through PCPUs
74. The soum- and aimag-targets are living targets that can be updated each year, based on
experiences during implementation. The development of the targets for the aimag subprojects,
based on the targets for each soum, will be a participatory process. However, it is part of the
overall project agreement that each soum should have reached 88% of starting LSU by the end
of the project, and have RUAs in place by the end of the project that will lead to a level of 82% of
starting LSU by the end of Year 8.
24
2. Soum Level Subprojects
75. Once the aimag subprojects are agreed, soum-level entities can submit proposals for first
generation sub-agreements. The PMU in collaboration with the PIC, will provide the templates
and guidelines for the sub-agreement proposals, the basic structure of which will be similar across
all soums for the specific types of sub-agreements. The process is therefore demand-driven but
within an agreed framework.
76. The sub-agreement proposal process of itself builds capacity in business planning, and
principles of investment. The approach recognizes that the major factor affecting success or
otherwise of an investment is the motivation of the people involved.
77. Objectives. The sub-agreements aim to establish the organizational structures,

relationships and agreements to create an enabling environment for value-chains to function.
They support the development of value-chains through project support to the key private or public
sector entities along the value-chain, and to the support to forward and backward linkages along
the value-chain.
78. Project support is designed to reduce some of the risk of investment in improving the
value-chains, through financing civil works, equipment and supplies, and services. The sub-
agreements will contribute to all three project outputs. The general structure of a sub-agreement
is shown in (Figure 8). The project finances civil works, equipment and supplies and services to
soum government bodies or equipment, supplies and services to various business units that are
engaged in a value chain. The project des not finance any civil works that go directly to private
business units. The project can finance construction of civil works in the soum that belong to the
soum government. The soum can rent or (issue of user-rights) to private business units. In any
sub-agreement, the soum government or the business units will be expected to contribute their
own human, physical and financial resources. The feasibility of the sub-agreement is measured
by the feasibility of the individual business plans of the business units and the soum government,
and the functionality of the linkages between them. The investment analysis of the project is
measured against the project costs and the contribution to the project outputs, comparing with-
and without-project scenarios. The general structure of a sub-agreement proposal is shown in
Figure 8.
25
Figure 8: Structure of Sub-Agreements
79. The sub-agreements in combination with the capacity building aim to strengthen vertical
and horizontal linkages at the soum, aimag and national level. This is explained further under
each sub-agreement description.
80. Types of sub-agreements. There are seven types of sub-agreement falling into two
major categories – first- and second-generation sub-agreements (Figure 9).
81. The first-generation sub-agreements are:

(i) PUG/RUA development sub-agreements (1 per soum15)
(ii) PUG/RUA implementation sub-agreements. (1 for each bagh. 6 per soum)
82. The second-generation sub-agreements are:

(i) Private Veterinary Units (PVU) development sub-agreements (1 per soum)
(ii) Private Livestock Marketing Units (PLMU) development sub-agreements (1 per
soum15)
(iii) Private Animal Breeding Units (PABU) development sub-agreements (1 per
soum15)
(iv) Private Feeds Units (PFU), Private Feedlot Units (PLFU) and Herder Feeding (1
per soum15)
15 The number of sub-agreements per soum are indicative only, since the sub-agreements are demand driven. There
is no set budget for aimags and soums.
26
(v) Private Cashmere Processing Unit (PCPU) development sub-agreements (1 per

soum15)
Figure 9: Overview of First- and Second-Generation Sub-Agreements
83. First-Generation sub-agreements. The soum can submit proposals for PUG/RUA
establishment sub-agreements from the start of the project. When an individual bag has 80% of
herders in the bag registered as PUGs and with RUAs, a proposal can be submitted for a
PUG/RUA implementation sub-agreement. The PUG/RUA sub-agreement continues until either
PUG/RUA targets are reached or the soum believes it cannot develop any more.
84. Second-Generation sub-agreements. Proposals for second-generation sub-

agreements will only be accepted when two pre-conditions have been met. Firstly, that two bagh-
level PUG/Neg Nutag Pasture Alliances have been established, with membership of 80% of
herders in the bagh who have established PUGs and entered into RUA agreements with the
soum; and that the minutes of the first Alliance meeting have been tabled. Secondly that the
soum-level Soum Pasture Society has been established based on the membership of at least two
PUG/Neg Nutag Pasture Alliances, and the chiefs of the other baghs, which have not formed
PUG/Neg Nutag Pasture Alliances, and the minutes of one meeting have been tabled.
27
85. Improving grazing management and reducing stocking rates thereby improving
productivity and protecting the natural resource is the most important work of the project. The
PUG/RUA implementation sub-agreements, and those on breeding, feeding and marketing are
part of the incentive system for herders to form RUAs and agree on RUAs with the soum. Another
way of stating this is that if herders are interested in improving productivity and protecting the
natural resource for future generations, the most important thing they need to do is reduce
stocking rates to increase the average dry matter intake per head which is the most important
determinant of productivity.
86. Process: The sub-agreement proposal process varies between sub-agreements but will
generally be a two-stage process. In the first stage, the applicants will submit a sub-agreement
profile to the Soum Steering Committee (SSC) with a copy to the PMU. If the profile is approved
by the SSC for further development, the business units will develop a full proposal. The business
units submit the final proposal to the GS, with SSC in copy. The GS makes recommendations to
the Project Coordinator to approve or otherwise the proposal.
87. Content: The sub-agreement proposals include a business plan for each of the business
units along the value chain, whether they be public or private sector entities. The business plan
should include a with- and without-project analysis to show how each unit will benefit from the
sub-agreement. For private sector units the business plan should show costs and income, while
for public sector units only costs will be relevant. The final business unit in each proposal should
either be herders, or downstream processors of livestock or livestock products. The sub-
agreement proposal must show how the sub-agreement will contribute to one or more of the three
project outputs. The investment analysis takes account of the whole of the investment measured
against the contribution to the project outputs, as well as the feasibility of the business plans for
each entity in the value-chain. The proposal should show the proposed contributions of each of
the entities to the sub-agreement implementation.
88. The period of the business plan may well go beyond the period of the sub-agreement or
the period of the project. The business plan should reflect the actual plan to make the business
work, including replacement of major capital items.
89. The project loan contribution to the sub-agreement includes provision of civil works,
equipment and supplies and services. Where the project loan procures items that fall into various
categories of assets, the ownership, and use of such assets, including operation and
maintenance, will be determined by government regulations.
90. The business units’ contributions will be the human and physical and financial resources
that they can bring to the sub-agreement. The project will not finance salaries of the staff or
members of the submitting entities. If business units can raise loans to contribute to the sub-
agreement, then they are free to propose as such.
91. The proposal should include a description of the number and type of beneficiaries, how
they will benefit, and the system of monitoring and evaluation.
92. The proposal should be signed by any entities who propose to receive project-financed
items or services. Depending on the value chain, which is the topic of the proposal, it may need
to be co-signed or have a supporting letter from government agencies responsible for regulations
or guidelines related to the value-chain.
28
93. Period of the proposal: The period of the sub-agreement should be sufficient to show the
business units making a return on investment, and of sufficient period to be able to show how the
investment is contributing to one or more of three project outputs. The period of the business plan
should be sufficient to show when major capital items are replaced. Business plans will often
extend beyond the life of the project, although obviously there can be no contributions from the
project after the end of the project. For private sector units, return on investment is measured in
income; for public sector units, the return can be estimated by monetizing against project outputs.
94. The proposal should describe with- and without-project scenarios. It should show
investment costs, operation and maintenance, technical support, and income over a period long
enough to include replacement of major capital items. The proposal should include the with- and
without project analysis of herders downstream from submitting entity. This is to ensure that the
sub-agreements impact on herder productivity can be clearly shown.
95. Approval: Upon approval, the sub-agreement proposal becomes a tri-partite agreement
between the soum, the project and the entities who submitted the proposal. Sub-agreement
proposals should be signed by the submitting entity, with supporting letters from other important
stakeholders. Since there will be many similar sub-agreements across the 20 soums, PMU works
to aggregate project financial commitments from a number of approved sub-agreements. This
includes procurement of civil works, equipment and supplies and consulting and non-consulting
services. The consulting firm will sub-contract services, based on the list of pre-approved service
providers developed by the PMU.
96. Amendments: While the approved sub-agreements have a specified time period, they can
be amended by mutual agreement between the parties to the agreement. The amendment could
extend the period of the agreement. The amendment can modify the total budget or budget lines
according to internal project guidelines, for example in cases where costs vary from estimates in
the proposal.
97. Civil works: The ownership and maintenance of assets and replacement, if necessary, at
the end of the asset useful use will be decided according to standard government procedures. In
general, buildings and other civil works will be the property of the soum and use of them by private
entities will be through rental or other arrangements, such as operation and maintenance and
replacement, according to government regulations.
98. Services: The Project Implementation Consultants (PIC) and the JFPR consultants will be
the main source of services for each of the sub-agreements. The aimag PIC will assist with aimag
coordination.
99. Equipment and Supplies: The project will procure these items according to standard
procedures. The ownership of these assets will follow government and project guidelines.
100. The PMU will aggregate the civil works, equipment and supplies and services to be
produced across sub-agreements from various soums to facilitate procurement procedures.
101. A central theme across several of the sub-agreements is that the soum authority will be
supported by the project to build facilities that will be rented to private sector entities (or user-
rights agreement) under arrangements to be included into tripartite agreements between the
soum, the entity and herder’s Bagh or Soum Khural representatives (Figure 10). Rental costs
should be included in the business plans of the business units. Any income should be included in
the business plan of the soum for the relevant sub-agreement.
29
Figure 10: Approach of Soum Renting Facilities to Business Units
102. Monitoring: The soum will appoint a Monitoring Focal Point. The focal point should join a
six-monthly monitoring workshop with all soum monitoring focal points from all 20 soums,
organized by the PMU M&E officer. The focal points should enter key sub-agreement activity and
indicator data into the MIS developed by the PMU. The soum coordinator should submit a 6-
monthly and annual report of all sub-agreements being implemented in the soum, according to
templates developed by the PMU.
103. Capacity building: Structures and units involved in sub-agreements will have their capacity
increased through the processes of developing and implementing sub-agreements. But there will
be a need for capacity building driven from the national level, such as training and accreditation
programs to support the systems being developed by the subprojects. These activities will be
addressed in the capacity building output.
104. Governance. Issues around governance of the value-chains or institutions involved in the
sub-agreements will be addressed in the capacity building component, not within the sub-
agreements.
3. Subproject Implementation Schedule
105. Subproject and Sub-Agreement Planning and Training Workshop. The project will
support a three-day workshop for all PMU and PIC staff to discuss and clarify the subproject and
sub-agreement systems and processes. The procedures for sub-agreement proposal
development will be agreed for the different types of sub-agreements. The emphasis will be on
first-generation sub-agreements, that is PUG/RUA establishment and PUG/RUA implementation.
The workshop will also include discussion on sub-agreement processes and content including
30
business planning and investment analysis. Workshop costs are included under project
management (Output 4).
106. Soum Technical Team Training Workshop. The project will support a three-day training
course held in Ulaanbaatar. The Consultant and relevant staff from the PMU will train the Aimag
Focal Points, and Soum Technical Team (STT) on the project overview, aimag subproject and
sub-agreement structures, processes, and M&E systems. As a part of the training, all participants
will develop example soum targets and indicators to be aggregated into aimag subprojects.
Participants will develop example sub-agreement profiles and proposals, and present to the
group. The budget for this activity is in the project management budget (Output 4).
107. Aimag subproject development workshop. The PMU, PIC, STT from all soums and
Aimag Focal Points from all aimags will participate in a regional (four-aimag) workshop to agree
on the targets for each soum, to be aggregated to an aimag subproject. For budgeting purposes
during detailed subproject design, each soum will have one sub-agreement on PUG/RUA
establishment. There will be one PUG/RUA implementation sub-agreement per bagh. This will
form the basis for targets related to these sub-agreements. However, it will be up to the soums
and aimags, in consultation to develop targets for LSU targets and degradation levels. Each soum
should have a minimum target of 12% reduction in LSU at the end of the project, and a minimum
of 18% reduction in LSU by the time all LSU reductions have taken place according to the RUAs.
The budget for this activity is in project management (Output 4).
108. Annual Aimag subproject workshop. The PMU, PIC, STT and Aimag Focal Points will
participate in annual workshops to be held in each aimag to report progress on the targets and
indicators and to update aimag indicators and targets in light of field experience to date. The
budget for this activity is in project management (Output 4).
109. Information Campaign in the soums. After the aimag subprojects are agreed, the STT
and PIC will make a concerted effort to make soum stakeholders aware of the objectives and
activities of the project, especially those who are eligible to submit proposal for sub-agreements.
The project will procure communication materials on the project with contact details and distribute
them in the target soums. The budget for this activity is in project management (Output 4). This
will include:
(i) large signboards in each soum showing the soum targets and indicators;
(ii) posters for distribution in soum offices;
(iii) leaflets to explain the project to distribute to herders;
(iv) hats and jackets with project logo for distribution; and
(v) writing pens with project logo, and writing books with project information.
110. Soum authorities and PIC will hold specific meetings and training for entities who are
eligible to submit sub-agreement proposals. Eligible entities will need support from the PIC
through the process of submission of profiles and full proposals to ensure that they are of
adequate quality before submission. The PMU will develop the templates for profiles and
proposals. The PIC will be able to inform the submitting entity of the project and submitting entity
contributions to the sub-agreement.
31
4. First Generation Sub-agreements
a. PUG /RUA establishment sub-agreement
111. Objective: The objective of the sub-agreement is to establish the organizational structures,
relationships and agreements that can lead to sustainable pasture management in the soum. At
the heart of these arrangements is that of the PUG, and the RUA that the PUG enters into with
the soum government.
112. Structures: The overall structure is summarized in Figure 11. There is an average of 120
herder households per bagh. Each five households form a Khot Ail. Five of the Khot Ails form a
Neg Nutag Alliance (each of 25 herders). About five of the Neg Nutag Alliance form a Nutag
Pasture Council (each of 125 herders). The Nutag Pasture Council should include all herders in
the bagh. There should be six Nutag Pasture Councils per soum. The term PUG is considered to
be equivalent to the more traditional term “Neg Nutag Alliance”.
Figure 11: PUG Development Structures and Relationships
113. The neg nutag/usniikhan is the people live in the same ecological environment, where
herders together possess the same pasture or water resources, and salt marshes. There are
several neg Nutag in a bagh. The khot ail is a few (about five) herder families who stay together
and have the same pasture or water sources. The saakhalt ail is the few khot ails or families that
live nearby.
32
114. The key organizational unit is the Neg Nutag Alliance (or PUG) which makes the
Rangeland Use Agreement (RUA) with the soum government.
115. Once 80% of herders in a bagh have joined into PUGs/RUAs, they can establish a bagh-
level Nutag Pasture Council. Once there are at least two Nutag Pasture Councils, the Soum
Pasture Society can be established.
116. The Soum Pasture Management Working Group (SPMWG) acts to bring together the
Soum and Bagh Khural, the Soum Pasture Society and the Soum Government. Until the Soum
Pasture Society is formed, the SPMWG can operate with the other entities.
117. The Terms of Reference and by-laws, and other functions of these bodies will be
developed in the capacity building component of the project in order to be standard across the
project area, and be consistent with national practices already in place in other areas of the
country, in particular based on experiences of the SDC-supported projects. Structures above the
level of aimag will be addressed in the capacity building component of the project.
118. There are 73 pasture-user groups in the project soums. However there appears to be a
lack of formal structures and processes in many of them, and lack of RUAs. Given this, the first
work of the soums is to establish PUGs in a formal sense consistent with national standards and
agree on RUAs. The RUAs should include a both a long-term target for total livestock numbers,
numbers of herder households and stocking rates and productivity to match the environment of
the PUG grazing area, and the achievable annual and end-of project targets.
119. There are four Soum Pasture Associations (SPA) in the target soum: two in Bulgan
(Mogod, Saikhan) and two in Bayankhongor (Jinst, Bogd).
120. A key issue for the project will be to clearly define what is a PUG and what is an RUA,
especially since there are many types of herder groups and cooperatives in the project area. In
the project, a PUG will be defined as group of herders who have entered into a RUA with the
soum that includes:
(i) a grazing management plan for the PUG area and soum reserve areas
(ii) annual targets over a 15-year period for matching stocking rates to the
environment of the PUG grazing area, and a strategy for managing the transition
from current stocking rates to the target. In keeping with the approach of the project
across all activities, the RUA should include a with- and without-project analysis.
As a guide, the RUA should have a target of 80% of initial LSU by the end of year
four, with annual targets of 95%, 90%, 85% and 80%. The final LSU should be a
minimum of 80% of the starting LSU.
(iii) the RUA should include a description of the baseline of the PUG herders, including
livestock ownership (species, age and sex), and details of head of herder
household (age, gender, education level), and transition plan and target for each
herder household.
121. Proposal: The soum government in collaboration with bagh governor (as representative
of herders) will develop the proposal. The proposal will describe the activities required to establish
the PUGs/RUAS, the Nutag pasture council at the level of the bagh, the soum pasture council at
the level of the soum, and the soum pasture management working group (SMPWG). The SMPWG
will consist of representatives of the bagh and soum khurals, soum government and soum pasture
33
society. The proposal will specify the civil works, equipment and supplies and services required
to support implementation.
122. The sub-agreement proposal should include baselines and targets for key structures and
arrangements. These indicators will form the core of reporting and feed into the reporting of
against the targets in the aimag subprojects (Table 12).
Table 12: Framework for Targets for PUG/RUA Establishment sub-agreements

Indicator Baseline Year 1 Year 2 Year 3 Year 4 Year 5
No. National Pasture /PUG
Society meetings
No. Aimag Pasture /PUG
Society meetings
No. Soum Pasture /PUG Society
meetings
No. Nutag Pasture Council
(bagh/PUG) functioning
No. PUGs/RUAs signed
123. The activities in the sub-agreement will be led by the soum land manager in close
collaboration with SAU and include:
(i) Awareness raising among herders and traditional grazing management
(ii) Baseline survey of PUGs/RUAs and other relevant structures and arrangements
(iii) Soum and bagh authorities will facilitate a series of meetings, workshops and site
visits with groups of herders that the bagh considers are likely, due to their
traditional grazing areas, to be interested in forming into PUGs, and then
developing RUAs. Initial meetings will be with large numbers of herders but will
then break up into smaller groups of herders who are likely to join into individual
PUGs/RUAs.
(iv) Establishment of PUGs and related organisational capacity building, including
PUG registration
(v) Ecological Site Description (ESD) mapping and rangeland assessment of PUG
grazing area
(vi) Estimate carrying capacity of PUG area and PUG area mapping
(vii) Development of Rangeland Use Agreement. The RUA describes grazing
management and transition to stocking rate targets that are matched to carrying
capacity. The RUAs should cover a 15-year period.
124. Services: Consultants provide technical support to sub-agreement development and

implementation.
125. Equipment and supplies. The sub-agreement will include provision for training and
information materials and supplies related to PUG/ RUA development.
126. Civil works: There are no civil works envisaged to be needed in the sub-agreement.
127. Period: The sub-agreement proposal should cover the whole period estimated by the
34
soum/baghs to be able to reach the targets for PUGs/RUAs as stated in the aimag subproject.
Given the time to establish PUGs/RUAs, the period should be at least three years.
128. Investment analysis: The sub-agreement is non-income generating and the output cannot
be monetized so there is no need to do an investment analysis. However, an estimate of cost per
PUG/RUA should be calculated as simply the total cost of the sub-agreement divided by the
expected number of PUGs/RUAs.
129. Approval process: The sub-agreement proposal should be submitted directly to the Grants
Secretariat of PMU with a cover letter from the Soum Steering Committee.
130. The services should include the entering into national databases related to PUGs
registration, ESD mapping, PUG area mapping, stocking rate estimates, and adjustments, and
RUAs.
131. Potential scope of the PUGs/RUAs: There will only be one PUG/RUA development sub-
agreement per soum. Assuming an average of 25 herders per PUG/RUA and that 80% of herders
will join, then there is scope for 466 PUGs/RUAs in the 20 soums. These figures are shown in
Table 13. This could vary during implementation, with the baseline suggesting up to 585 PUGs
may be needed in the 20 project soums. The establishment of the PUGs and RUAs will be a major
effort for the project. The existing pasture-user-groups could prove to be a basis on which to start.
Table 13: Scope of PUG/RUA development

Items Bulgan Arkhangai Bayankhongor Uvurkhangai Total
No. Herder households 2,759 4,894 3,637 3,286 14,576
No. PUGs/RUAs 88 157 116 105 466
Average no. herders per
25 25 25 25 25
PUG/RUA
No. Herders in PUGs/ RUAs 2,376 4,925 3,077 2,578 12,956
% of herder households in
80% 80% 80% 80% 80%
PUGs/RUAs
% of pasture area covered by
80% 80% 80% 80% 80%
PUGs/RUAs
Source: Consultant’s estimates
132. While the PUGs/RUAs are the basic building block for improved grazing management, it
is also important to develop other structures. The number of organizations and of herder
household members is shown in Table 14.
Table 14: Herder numbers in Structures related to PUGs/RUAs

Herder
Herder Household
Household
Unit Number Members
Members
(no./unit)
(no.)
Aimag Pasture Association 4 3239 12,956
Soum Pasture Society 20 648 12,956
Nutag Pasture Council (Bagh level) 120 108 12,956
Neg Nutag Alliance / Pasture User Groups 585 22 12,956
Khot ail 3,000 5 2,932
Herders 14,659 1 14,659
35
b. PUG/RUA Implementation Sub-agreement
133. Objective: Herders who have joined into PUGs/RUAs have improved productivity through
improved grazing management, stocking rates and herd structures.
134. Justification: Support is needed to implement the RUAs and the implementation sub-
agreement embodies some of the incentives that provide motivation for herders to form into PUGs
and develop RUAs.
135. Proposal: The sub-agreement proposal should be submitted by the business units
involved in implementation: a grouping of a minimum of five PUGs/RUAs in a contiguous area,
preferably within one bagh; the soum land manager; and the SAU.
136. While there is scope for 585 PUGs/ RUAs in the project soums, it would be impractical to
have this many sub-agreements. Ideally, the sub-agreement proposals would be lumped at the
level of the bagh Nutag Pasture Council. This would suggest that a single sub-agreement would
consist of five PUGs. If PUGs from more than one Nutag Pasture Council could be lumped with
another, this would be acceptable. Preferably, PUGs from different baghs would not be included
into the same sub-agreement proposal. The proposal should be co-signed by Nutag Pasture
Council, the Soum Pasture Council, and the Soum Pasture Management Working Group
(SMPWG), the soum land manager and SAU.
137. The proposal should include a business plan for each of the individual PUGs/RUAs. It
should describe the civil works, equipment and supplies and services required to support
implementation. If the PUGs/RUAs wish to put in place a system of grazing fee collection and
use, this should be included in the business plan. The business plan will be based on the RUA.
138. 1. Targets: The sub-agreement proposal should include baselines and targets for key
indicators. These indicators will form the core of reporting and feed into the reporting of against
the targets in the aimag subprojects (Table 15).
Table 15: Framework for Targets for PUG/RUA Implementation

PUG/ RUA ID:…………………….
Indicator Baseline Year 1 Year 2 Year 3 Year 4 Year 5
Livestock Units in PUG/RUA
% carrying capacity
No. herders in PUG/RUA
Grazing fees collected (TG)
No. productivity-monitoring
herders
Herder-livestock gradient
% sheep units as goats
% ewes in sheep flocks
Degradation level of PUG area
(1-5)
No. wells in PUG area
No. wells with O&M functioning
No. new wells
No. livestock houses improved
No. rodent control actions
36
139. Activities: The sub-agreement activities include:

(i) Herders sell livestock to reduce stocking rates according to the provisions of the
RUA.
(ii) Herders change herd structures to reach agreed targets in the RUA
(iii) The soum land manager monitors the environmental status of the RUA grazing
areas, incorporating into local and national database systems, and feeding back
to herders.
(iv) Soum technical team conduct extension activities (meetings, workshops,
extension materials) to herders on the factors affecting productivity and
profitability, with the objective of herders moving to higher levels of productivity
through improved herd structures, feeding, breeding and health, and better
livestock and livestock product turnoff. The team collects and analyses data from
the livestock weighing and assists in livestock weighing.
(v) Herders reporting on livestock numbers (species, age and sex) according to
reporting schedule in the RUA.
(vi) design and implementation of a water access improvement plan including
operation, maintenance and use of existing wells, rehabilitation of wells, and
construction, operation, maintenance and use of new wells.
(vii) design and implementation of a livestock housing improvement activity including
upgrade of existing housing and construction of new housing; including housing
design to make animal identification and weighing and condition scoring easier.
(viii) herders in PUGs pay grazing fees if decided as an internal issue for the PUGs.
(ix) Meetings of the Nutag Pasture Council (bagh/PUG), and Soum Pasture /PUG
Society.
(x) Defining and managing soum reserve pasture areas
140. Services. Consultants provide technical support to sub-agreement development and

implementation.
141. Equipment and supplies: The sub-agreement can include:

(i) For Land Manager: Cameras for expanding photographing of sites for
environmental monitoring; computers and IT systems
(ii) For PUG herders: Digital hanging scales for weighing lambs, kids and feeds for all
PUG herders
(iii) For PUG herders: Herd productivity technical information and record books
(iv) For a group of PUG herders: Ear-tags for all goats and sheep in three flocks which
are representative of the flocks (i.e. large, medium, small flocks) within the PUG at
the start of the RUA; ear-tags for all new born lambs and kids in these same flocks;
weighing scales for these flocks
(v) For all PUG herders: Digital hanging scales for weighing lambs, kids and feeds for
all PUG herders
(vi) For all PUG herders: materials for improving winter housing; hayfield fences
37
(vii) For herders and SAU: Well operation and maintenance technical information and
record books
(viii) For herders: Well repair parts, hay/fodder making equipment
(ix) For SAU and herders: Livestock housing technical information booklets
(x) For SAU and herders: Rodent control technical information book
(xi) For soum reserve areas: deep wells, animal shelters, signboards
142. Civil Works: The sub-agreement can include:

(i) an office and for a soum PUG association. The office is owned by the soum, but a
rental agreement can be organized with the PUG.
(ii) New wells for PUGs
143. Period: The sub-agreement proposal should cover the whole period estimated to complete
the activities.
144. Investment analysis: The sub-agreement investment analysis should include all costs one
side, and return measured in an estimate of increased productivity due to stocking rate reduction.
This calculation will be automatically generated based on models developed by the PMU.
145. Approval process: The sub-agreement proposal should be submitted to the Soum Steering
Committee with a copy to the PMU. Once cleared by the SSC, the proposal should be sent PMU
with SSC in copy.
146. Potential scope of the sub-agreements: Ideally, if there were one PUG/RUA
implementation sub-agreement per bag, this would make about 120 sub-agreements. While this
may sound high, it will be up to the PMU to make the templates and standardized procedures to
make it work.
5. Second Generation Sub-agreements
a. Private Veterinary Unit (PVU) Sub-agreement
147. Objective: The objective is to strengthen the organizational structures, relationships and
agreements that can lead to improved animal health in the soum and strengthen one health
linkages and processes. These are shown in Figure 12.
38
Figure 12: Structures and Relationships in Animal Health
148. Structures: At the heart of these arrangements is the PVU which has a tripartite agreement
with the soum and herder representatives to provide services. The PVU also has contracts with
the government to deliver vaccines.
149. Justification: Animal health services are critical for improving productivity and detecting
any disease that could be harmful for animals and humans. Project investment is justified to
improve quality and quantity of services. Linkages between local level
150. Proposal: The sub-agreement proposal pertains to a whole soum and should be submitted
by the soum, co-signed by the SVU, the AVD, the existing PVUs and bagh governors representing
herders. The proposal should have a supporting letter from the GAVS confirming that the proposal
is consistent with provisions of the Animal Health Law and related guidelines.
151. There are four business units involved in the provision of animal health services that can
be included in a sub-agreement:
(i) The soum authority which enters into contracts for PVU to supply veterinary
services in the soum and is responsible for operational funding of the SVU.
(ii) Soum Veterinary Unit.
(iii) Private Veterinary Units (PVUs) in the soums who provide vaccination and
treatment services to herders.
(iv) Herders. Herders are responsible for managing their livestock. They receive
mandated services such as vaccination from the PVU, and request user-pays
39
treatment services from the PVUs. Herders keep animal health records in a
standardized booklet.
152. The proposal should include business plans for the four business units for an eight-year
period. The proposal should strengthen each business unit linkages between them. The proposal
should show the with- and without- project analysis for each business unit.
153. Targets: The sub-agreement proposal should include baselines and targets for key
indicators (Table 16). These indicators will form the core of reporting and feed into the reporting
of against the targets in the aimag subprojects.
Table 16: Targets for Animal Health

PUG/ RUA ID:…………………….
Indicator Baseline Year 1 Year 2 Year 3
No. PVUs functioning
No. herders per PVU
No. livestock per PVU
No. herders with Animal Health cards
completed with good quality
No. PVUs assessed as reaching GAVS
standards
MAHIS functionality as assessed by
GAVS (1-5)
154. Activities: The activities in the sub-agreement include:

(i) The SVU conducts activities and collects data to enter into the MAHIS.
(ii) The PVUs provide services including vaccinations and treatments. The PVUs keep
accurate vaccination records with updated technology and submit to AVD to trigger
payment of vaccination contracts.
(iii) Herders complete accurate Animal Health Records of updated design. The records
are of vaccinations and preventive parasite treatments and treatments carried out
by the PVU.
(iv) Workshops and meetings between PVUs, SVU and soum level health services on
one health issues

implementation.
156. Equipment and supplies: The sub-agreement can include:

(i) For SVU: Computer systems and IT systems for data management meetings via
internet; Computers and IT systems;
(ii) For PVU: equipment and supplies for vaccination, parasite medicine delivery, and
sample collection; marketing materials; and
(iii) For herders: technical booklets on animal health; updated Animal Health Record
books.
(iv) For aimag veterinary department: computers to support data management
40
157. Civil Works: The sub-agreement can include:

(i) For PVUs: upgraded buildings, office space, storage facilities and computers and
IT.
(ii) For SVU: Building for vaccine storage, including vaccine storage units.
158. Period: The sub-agreement proposal should cover the whole period estimated to complete
the activities. It is expected that the period should be at least three years.
side, and return measured in an estimate of increased productivity due to improved animal health.
This calculation will be automatically generated based on models developed by the PMU. The
analysis should also take into account the business plan of PVUs.
Committee with a copy to the PMU. Once cleared by the SSC, the proposal should be sent to
PMU with SSC in copy.
161. Potential scope of the sub-agreements: There is scope for one sub-agreement in each
soum. It is assumed that all PVUs in each soum will enter into the sub-agreement proposal. It is
critical that there is good coordination between the project and the World Bank-funded Livestock
Competitiveness Project (LCP), which is investing heavily in animal health and veterinary
services. The LCP is working in three of the four aimags: it is not working in Bayankhongor aimag.
b. Private Livestock Marketing Unit (PLMU) Sub-Agreement
relationships, agreements and processes that can lead to an improved sheep and goat marketing
system.
163. Structure: At the heart of the structure is a Private Livestock Marketing Unit (PLMU), which
operates a livestock exchange facility owned by the soum and constructed with the support of the
project. The PLMU has an agreement with the soum to operate the facility. In the project, the only
eligible entities to submit a proposal to develop such a facility is a herder cooperative made up
solely of members who have entered in to PUGs/RUAS, or a PVU registered in the soum, or
Private Feeds Unit registered in the soum (see sub-agreement on Feeds).
164. Other structures relate to vertical and horizontal linkages at soum, aimag and national
level allowing for information exchange and raising and solving issues on technology,
governance, policy and so on (Figure 13).
41
Figure 13: Structures and Relationships on Livestock and Meat Marketing
165. Justification: There is an opportunity to reduce livestock trading transaction costs and
establish downstream linkages to processors if there is a central location for livestock for pre-
processing before transport to markets. The pre-processing will depend on processor
specifications, but could include weighing, ear-tagging, health checks and health certification. This
process will be useful for herders who have joined into PUGs/RUAs who will need to sell livestock
to reach targets for livestock population and stocking rate reductions, as well as other herders in
the soum. This is a potential business opportunity for a herder cooperative to market their own
livestock through this channel, and potentially charge fees (on cash or livestock-barter basis) for
other herders if it can be shown to be advantageous. If successful, a regulatory framework could
be established to support livestock marketing through such a channel. This policy and regulatory
work will be addressed in the capacity building part of the project.
166. Proposal: The proposal should be submitted by five entities: the entity wishing to establish
and manage the PLMU (e.g. herder cooperative or who have agreed PUGs /RUAs, and formed
cooperatives), the soum, suppliers (e.g. herder cooperatives or PUG/RUAs herders), livestock
processors who will process the livestock marketed through the PLMU for at least one selling
season, and SVU. The proposal should include a business plan for the business units involved.
The period of the business plan should cover at least five years, and include provision for
replacement of capital items.
167. Targets: The targets for Marketing are shown in Table 17.
42
Table 17: Framework for Targets for Livestock Marketing

PUG/ RUA ID:…………………….
# PLMU functioning
# herder cooperatives functioning
# sheep to be marketed through facility
# sheep not to be marketed through facility
168. Activities: The activities include (for one cycle of livestock trade after the civil works) are:
(i) Soum constructs a livestock trade facility at the soum with fencing, feed and water
troughs for sheep, and yards with facilities for identification, weighing, and loading
onto trucks. An office for storing equipment and supplies and meeting room and
office with computer and IT systems. Herder cooperatives can rent the facility
according to an agreement with the soum.
(ii) Herders enter into a cooperative agreement to market their livestock in a planned
fashion, to meet the specifications of processors in terms of quality, timing and
condition, and to agree on a price structure, and carcass quality feedback.
(iii) Agreements made with registered processors on logistics and price indicators
through facilitation of the project, in form of tripartite agreement with herders,
PLMU and soum
(iv) SVU provides technical support to compliance with processor specifications on
livestock health inspection and certification and animal identification
(v) Herders bring livestock to exchange facility, the sheep are weighed, ear-tagged
and checked for health by SVU, health certificates. Livestock are fed for a short
period, if necessary, until the processor brings trucks to collect the livestock.
Livestock data is managed by the PLMU and the SVU as per regulations. The
LPMU sends livestock data to the processor.
(vi) The transporter checks the eartags and manages the data according to regulations
and sends data to the processor as per agreements made.
(vii) Processor reads the eartags, manages data according to regulations, slaughters
livestock and grades carcass according to standard procedures. Sale money is
paid into the account of the cooperative, with a portion to SVU and/or soum
account and PLMU according to guidelines and agreements. Cooperative and
soum meet to sign off on completion of the agreement.
(viii) Processor provides feedback on carcass weights and quality as specified in the
agreement with herders, and according to standards
(ix) Herder cooperate meets to decide on income-sharing
(x) Operation and maintenance of the facility according to the agreement of the soum.
169. The expected number of livestock trades per year, the timing and volume of sales should
be specified in the proposal. The proposal should also include provision for maintenance and
repair of the facility. The facility will be used primarily for sheep and goat trading but can include
facilities for cattle by mutual agreement.

43
implementation.
171. Equipment and Supplies: The project will supply:

(i) eartags, eartag applicators, weighing scales, according to the needs of suppliers
and existing regulations
(ii) Manuals on livestock facility maintenance and on technical issues related to
livestock trade and slaughter
(iii) Computers and IT set up for the PLMU office
172. Civil Works: The project will support construction of the livestock trade facility. The size of
the facility will depend on soum estimation of the demand for the facility, which will be specified
in the proposal.
173. Period: The period of the sub-agreement should be five years.
174. Investment Analysis: The investment analysis will depend on the business plans of the
herder cooperatives (suppliers), the soum, the PLMU managing the facility, and the SVU.
PMU with SSC in copy. The sub-agreement will be a tripartite agreement between the herder
cooperative, the soum and the processors.
176. Governance: A number of regulations are currently being developed for the meat value
chain from production through to transport, slaughter and consumption. The sub-agreement
details will naturally have to follow these regulations as they come into force.
c. Private Feeds Unit, Herder Feeding and Private Feedlot Unit Sub-
agreement
177. Objective: This sub-agreement aims to establish the organizational structures,

relationships, agreements and processes at the soum and aimag levels that can lead to a
functioning value-chain with five main components: (i) Private Feeds Unit (PFU) based in the
soum that can supply feeds to meet the demands of herders in the soum; (ii) a sufficient demand
for the feeds from herders and herder cooperatives; (iii) a Private Feedlot Unit (PFLU); and (iv)
processors who will buy fattened lambs (v) the soum that rents facilities to the PFU. It is important
to note that the Private Feedlot Unit (PFLU) can in practice be integrated into the Private Livestock
Marketing Unit (PLMU). The two functions could be merged into one facility. This will need to be
worked out during implementation and could vary from soum to soum.
178. Structures: The most important structure in the supplementary feeds supply chain is the
Private Feeds Unit (PFU). The PFU has an agreement with the soum. The structures are shown
in Figure 14. The sub-agreement will support the establish and function of structures at the soum
and aimag level. These include a Soum Feeds Working Group, and Feeds Associations at Aimag
level. These bodies serve to act as information sharing bodies on technical, governance and other
issues as they arise.
44
Figure 14: Structures and Relationships for Feed-Livestock-Markets
179. A second important structure is the Private Feedlot Unit (PFLU). The PFLU has a tripartite
agreement with the soum and herder representatives (e.g. bagh authorities). The agreement
includes the user-rights for a feedlot facility owned by the soum and constructed through project
support. The PFLU can join the structures outlined in the Livestock Marketing Sub-Agreement
description, as can the processors.
180. Other structures include those that promote horizontal and vertical information-sharing - a
soum feeds working group, an aimag and national feeds association. A link to policy makers is
through a national consultative committee on animal feeds.
181. Downstream processors of fattened lambs are also important structures.
182. Justification: There is potential for demand for feeds for livestock for winter survival, late-
pregnancy feeding of ewes and does, and lamb fattening but there is generally lack of an enabling
environment for investments to meet this demand. The demand for lamb fattening by herders
assumes there is a demand for fattened lambs by processors. The work, to be conducted in
parallel, aims to establish a PFU, to create the demand from herders; and to create the link to
downstream processors of fattened lambs.
183. Proposal: The proposal should include business plans for all the business units in the
value-chain a five-year period, or at least until the replacement of major capital items – for
example a tractor and related equipment. The proposal should also show business plans for
business units that will buy items or services from the PFU – the herders, herders cooperative,
and male flock managers. If in any soum, the demand for fodder cannot be met by local production
by herders or the PFU, then fodder suppliers outside the soum can be included as a business
unit. If this business unit is at the aimag, then coordination with sub-agreements in four project
soums will be needed.
184. Business Units: The business units in the proposal, as shown in Figure 15, can include:
45
(i) PFU: Private feed producers or traders in the soum. These may produce fodder
(e.g hay/silage), process fodder into feeds such as pellets, or procure other feeds
such as bran, mineral and vitamin supplements for on-selling to herders.
(ii) Herders: Herders acting largely as individuals who procure the various types of
feeds, and may have fodder-growing plots themselves. As individual herders they
can feed their livestock over winter to improve survival, or specifically to late
pregnant ewes and/or does to improve birthweights, mothering ability and milk
production. There are also some other minor options such as feeding horses, or
cattle and yaks. Herders who have fodder plots, and fodder storage facilities (these
could be the same as the herders who do feeding). Herders who have joined into
a cooperative for fattening lambs (autumn). It is unlikely that individual herders will
engage lamb fattening due to economies of scale issues with management and
marketing.
(iii) A Private Feedlot Unit (PFLU) that uses the soum-owned feedlot facility under a
tripartite agreement with the soum. The linkage between the PFLU and herder
cooperatives who wish to fatten lambs will be an important one that has a number
of potential business relationship options.
(iv) The soum who owns the feedlot facility and has an agreement with the PFLU.
(v) Processors who would buy fattened lambs. Winter feeding or feeding pregnant
ewes does not have a direct connection to the market.
Figure 15: Fodder-Livestock- Market Value Chain
185. The feed supplier outside the soum is also a business unit engaged in the value chain. If
there is a high level of interest in the soum for feeds, and the local supply falls far short of demand,
these feed suppliers could be involved in the sub-agreement.
186. Activities:
(i) SAU and SVU: to provide technical support including data management and
performance recording; establish a lamb fattening facility for rental by the herder
cooperative; establish a fodder storage facility for rental by the PFU.
46
(ii) The soum should also confirm its role on fodder supply; as to whether it will act as
a competitor to the PFU at any point in fodder supply.
(iii) PVU: To provide veterinary services to the herders
(iv) PFU: To establish fodder plot to produce fodder, process feeds (e.g. pellets, silage)
or procure feeds to meet herder demand
(v) Herders cooperative to fatten lambs. Collect lambs from members to fatten at
feedlot site in October under arrangements made with the PFLU; procure feeds;
arrange market for fattened lambs; keep technical and financial data and provide
feedback to the PFU. Market lambs in mid-November.
(vi) Herder feeding: Individual herders to feed late-pregnant ewes or does. Buy feeds
and manage feeding; identify sheep and keep records for performance recording.
(vii) Male flock managers to feed breeding males before mating. Buy feeds and
manage feeding; identify sheep and keep records for performance recording. The
purpose of this feeding is that males are in good condition before mating, with good
quality and quantity of semen production.
(viii) Individual herders to feed livestock over winter; buy feeds, goats and sheep should
be condition scored to assess those most at risk and given more feed.
(ix) Individual herders produce and store fodder. Herders identify a 1 ha area to
produce fodder; or identify an area for pasture hay, and receive support to grow
fodder. A representative spread of herders over quintiles should be used for
feeding.
(x) Processor – lamb buyer: Enter into agreement with lamb fattening cooperative;
provide feedback on carcass after slaughter
187. The system of fees paid to the PFLU by the lamb fattening cooperative and by the PFLU
to the soum will be an important part of the business plans in the proposal. The system should
allow for a lower fee scale for cooperatives of herders in PUGs/RUAs compared to other herders.
This acts as part of the incentive system for herders to enter into PUGs/RUAs.

implementation.
189. Equipment and supplies: These include:

(i) For PFU the project will support fodder plot fencing and water supply (e.g. deep
well), a tractor and related attachments, equipment for feed processing and hay
making, a water tank, and sprinklers for irrigation.
(ii) For PLFU the project will support eartags and weighing scales.
(iii) The project will supply record books for PLFU.
190. Civil Works: The project will support:

(i) construction of a lamb feedlot facility, the capacity of which will depend on the
proposal, including well, feeders, water troughs, feed and equipment storage and
office, fence and water supply for a fodder plot. The feedlot is a soum asset that
can be rented by the PFLU.
47
(ii) For PFU: office and feeds processing and storage building. The fodder storage
facility is a soum asset that can be rented by the PFU. The PFU office including a
meeting room, and a building for feed processing will be an asset of the soum for
rent by the PFU. A deep well for water supply.
191. Period: The sub-agreement proposal should cover at least five years.
192. Investment analysis: The sub-agreement investment analysis should include business
plans for all the business units in the sub-agreement.
PMU with SSC in copy. The sub-agreement is a tripartite agreement between the soum, the
project and the business units who submitted the proposal.
194. Scope: About 800,000 lambs are born each year in the project soums, at an average of
40,000 per soum. At current herd structures, it can be estimated that 100,000 of these lambs are
sold each year, at an average of 5,000 per soum. If 50% of herders are interested in joining a
lamb fattening cooperative, then 2,500 lambs could be fattened per year on average from the
project soums. While the initial sub-agreement is to establish a 500-lamb feedlot, there is potential
to expand if successful. Assuming lambs grow at 150 grams per day for 40 days, the weight gain
is 6 kg, which require about 42 kg of dry matter feed – a combination of roughage, grain and
minerals - at a conversion ratio of 7:1. For 500 lambs, a total of 21 tons of feed would be required,
as well as good supply of drinking water. The planning and implementation process will show
what will be the limiting component of the value-chain.
195. The potential market for late-pregnancy supplementary feeding remains to be determined.
The most likely market is for ewes in relatively poor condition. Of the 1.1 million ewes and 760,000
does mated each year, 70-80% become pregnant. Assuming 20% of ewes are in poor condition,
this makes a potential demand for about 200,000 ewes to supplementary feed, or 10,000 ewes
per soum on average. Whether livestock herders in different herd-size quintiles are interested in
feeding is yet to be determined. Whether herders will simply use whatever fodder they have
access to from their own production, or whether they will be interested in buying feed, is also an
open question.
196. Feeding ewes at 1% of bodyweight per day in dry matter for 40 days, will require about 18
kg of feed per ewe, or 1.8 tons per 100 ewes; about 1.2 tons will be needed for 100 does. Herder
interest in feeding ewes or does will depend on their attitudes and prices during implementation.
Without an ultrasound pregnancy test, it is not possible to accurately differentiate pregnant and
non-pregnant ewes and does as they enter the last six weeks of pregnancy, so there will be some
losses due to feeding non-pregnant ewes.
197. The best response to feeding will be shown by ewes in poor condition, or maiden ewes
which may be poor mothers if they are in poor condition; feeding these ewes has an element of
survival feeding for both ewes and unborn and newly-born lambs as well as a production
response. Amongst herders, it is more likely that herders with above average size flocks will be
more interested in feeding than those with smaller flocks who are less interested in productivity
gains, and who have less to spend on feed.
198. The demand for winter feeding would be expected to be very high in dzud years, with
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expected high prices for feed, and access problems. This will also need to be estimated during
sub-agreement proposal development.
d. Private Animal Breeding Unit (PABU) Sub-agreement
199. Soums can submit one sub-agreement proposal for a Private Animal Breeding Unit
(PABU), from which they can one of three options, namely
(i) Sheep Nucleus Flock PABU
(ii) Goat Nucleus Flock PABU
(iii) Sheep Terminal Sire Flock PABU
200. Sheep Nucleus Flock PABU: Objective: The objective of the sub-agreement is to
establish the organizational structure, relationship, agreement and process at the soum and
aimag levels that can lead to sustainable sheep or goat breeding improvement in the soum. At
the heart of these arrangements is the Private Animal Breeding Unit (PABU) and the agreement
that the PABU has with the soum government. The relevant structure is shown in Figure 16.
Structures above the level of aimag will be addressed in capacity building.
Figure 16: Sheep and Goat Breed Improvement Structures and Relationships
201. Structure: The key organizational unit is the PABU which makes a tripartite Sheep/Goat
Breeding Improvement Agreement with the soum and herder representative (e.g. bagh authority).
By this agreement, the PABU gets access to public sector support. This unit manages a nucleus
flock that produces improved breed males (rams or bucks) for use by herders, and for use by their
own nucleus flock. The nucleus flock should be large enough (e.g. 1,000 ewes/does) to be able
to supply a significant number of males. In practice, it is likely that such a flock will actually be
49
made up of several physically separated individual flocks. The PABU also manages a male flock
which comprises young males before they are distributed to herders and some of the males from
the herders during the non-mating season. The template for the Sheep/Goat Breeding
Improvement Agreement should be developed by the Livestock Genetic Resources Centre to
ensure consistency with national standards and processes.
202. For sheep breeding one PABU with 1,000 ewes can provide improved rams for about
20,000 ewes There is an average of about 700 herders and 64,000 breeding ewes per soum in
the project area. Therefore, there is scope for more than on sheep PABU per soum. For goat
breeding one PABU with 1,000 does can provide improved rams for about 15,000 does assuming
the nucleus flock will produce 300 ram lambs each year of which about 12 will be retained for the
nucleus flock, 120 available for mating to herders and 168 culled. Under these assumptions, there
is a potential scope for 55 goat PABUs in the project area. However, given the current level of
experience it is considered prudent to start with establishing a single PABU for sheep or goats in
each soum in order to get experience in understanding the market for rams.
203. The Soum Breed Improvement Working Group is a structure that brings together the Bagh
and Soum Khurals, the soum government and the PABUs in the soum (including those involved
with sheep and goats, but also cattle if there is any breed improvement activity). This is an
opportunity for information sharing on breed improvement.
204. Aimag and national PABU associations aim to strengthen the PABUs. The aimag can also
have a Working Group structure. There are four project aimags, and under the project a “regional”
or four-aimag structure can be established. At the national level, the National Consultative
Committee on Animal Genetic Resources, established under the Animal Genetics Law, is the
forum for exchange between the Livestock Genetic Resources Centre, meat and wool sector
companies and PABU associations. This structure is important in discussing breeding objectives
and overall structures of breeds and genetic improvement strategies.
205. The Terms of Reference and by-laws, and other functions of these bodies will be
developed in the capacity building component of the project in order to be standard across the
country.
206. Justification: The establishment and operation of sheep and goat breed improvement
programs based on PABUs requires public sector support because the system requires a high
degree of technical input, as well as significant start-up costs. Project support for such a system
embodies some of the incentives that provide motivation for herders to form into PUGs and
develop RUAs.
207. Proposal: The sub-agreement proposal should be submitted by the members of the PUGs
who are interested in establishing the system, co-signed by relevant bagh authorities, and the
SAU and SVU. The proposal should have a supporting letter from the Livestock Genetic
Resources Centre confirming that the proposal is consistent with provisions of the Genetics Law
and related guidelines. The proposal describes the activities of the sub-agreement. The proposal
should describe the civil works, equipment and supplies and services required from the project to
support implementation.
208. There are five business units in this value chain in the soum. These are:
(i) Private Animal Breeding Unit (PABU), a cooperative of herders.
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(ii) Herders who buy (or rent) the improved males. They mate the males to the females
in the breeding season, then return the males to the PABU male flock for the non-
mating period.
(iii) Male flocks (not belonging to PABU) where some herders may put the males into
other bagh-level male flocks if they prefer.
(iv) SAU and SVU provide technical and operational support to the activities of the
PABU, especially for animal identification and performance recording, and non-
PABU male flocks,
(v) PVU provides animal health services
209. There are a range of business models that can be used for the PABU. The PABU can
manage the nucleus flock as a private business, with rams being sold or rented out on the open
market. There can be alternative business models, such as herders who wish to plan ahead to
buy or rent improved males can join a cooperative to “book” males in advance. Such herders are
termed “base flock herders”.
210. In a “closed nucleus flock” model, the sub-agreement proposal should name from 1-5
herders who between them should have 1,000 breeding ewes/does to register in the nucleus
flock, with a minimum of 150/does ewes from any individual herder. At a mating ratio of 40:1 this
means there will be about 25 rams in the nucleus flock. Selection of the initial rams for the nucleus
flock is an important activity. The proposal should nominate one herder as the nucleus flock
coordinator, the other herders are termed nucleus flock managers. The coordinator and managers
together make up the PABU. In technical terms, this is called a dispersed nucleus flock because
several physically separate flocks make up the nucleus flock. The reason for this is that there are
very few, if any, herders that have 1,000 breeding ewes/does. Decisions on the number of
ewes/does and number of physical flocks in a nucleus flock can be made on a case-by-case basis
depending on local conditions.
211. It is important that the performance of sheep/goats in the nucleus flock is able to be
compared with individuals in other flocks. For example, introducing rams from other nucleus flock
in similar environments may add a degree of hybrid vigor. As time goes on, a “three-tier” breed
improvement system can be established by the selection of elite animals for establishment in an
Elite Nucleus Flock. While steps can be made in this direction, it is unlikely such a flock will be
established during the life of the project.
212. An “open nucleus flock” model is the same as the closed nucleus except that the nucleus
flock is managed in a cooperative structure, as a so-called “Group Breeding Scheme”. In the
scheme, cooperative member herders who have the ”base flock”, contribute their best performing
ewes/does to create a nucleus flock, a proportion of second-grade culls from the nucleus flock
can be returned to members, and members receive rams from the nucleus flock at a discount
rate. To reach a worthwhile selection pressure on females, the ratio between the base flock
ewes/does and nucleus flock should be about 20:1. An open nucleus flock results in more rapid
genetic gain than a closed flock, and there can be advantages in the social and technical linkages
between the base-flock and nucleus herders. There would be more pressure on the base flock to
have good health since they contribute ewes/does. The disadvantages are the high transaction
costs and time in developing the group breeding scheme, and health risks from contributing
livestock.
213. The proposal should include a business plan including with- and without-project analysis
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over a ten-year period for the three business units. A key part of the analysis for the PABU will be
the value-added income of selling (or renting out) a portion of young entire males for breeding as
opposed to castrating them and selling them for meat. This requires a market description of the
quantity and price demand for improved rams. The business plan for herders should include a
with- and without-project analysis of herder productivity and incomes who use or do not use the
improved ram or have access to an improved male flock.
214. The essential component of a breed improvement program based on selection is accurate
performance recording data to identify superior-performing males, and to lesser extent females.
215. It is important that the various flocks that make up the nucleus flock are managed under
as similar conditions as possible, especially in relation health, grazing and feeding, so that lambs
from each flock can be fairly compared when they are ranked. This will be an important job for
the coordinator and flock managers. Each flock manager should have a flock management record
book to keep records of feeding and health, and flock dynamics (e.g. mortality and sickness). The
coordinator will play an important role in harmonizing performance recording and decisions on
ranking across the several separate physical flocks that make up the nucleus flock.
216. There would not be expected to be any specific changes to marketing of livestock
processors as a result of the breed improvement program, so processors are not included as a
business unit. However meat and fiber, and to a lesser extent skin processors will have an
important role in the National Consultative Committee on Animal Genetic Resources as they
engage with the LGNRC on breeding objectives for sheep, most importantly the balance in the
breeding objectives between meat and wool, and engagement on objectives in relation to carcass
and meat quality.
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Figure 17: Detailed Structures of Sheep/Goat Breed Improvement
217. Targets: The sub-agreement proposal should include baselines and targets for key
indicators (Table 18). These indicators will form the core of reporting and feed into the reporting
of against the targets in the aimag subprojects.
Table 18: Targets for Sheep Breed Improvement

PUG/ RUA ID:…………………….
# nucleus flock established
# ewes in nucleus flock
# flocks in nucleus flock
# male flocks with improved rams
# rams distributed from nucleus flock
% of ewes mated to rams from nucleus flocks
218. Activities: The activities of the PABU include:

(i) Registration of the PABU by the Livestock Genetic Resource National Centre and
Sheep Breeding Improvement Agreement with the Soum
(ii) Construction of an office building and equipping with computers and IT system,
printers, desks, chairs, meeting table and whiteboards.
(iii) Identification. All livestock in the nucleus flock will have an electronic ear-tag based
on a national standard system for breed improvement.
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(iv) Performance Recording. The managers will carry out animal performance
recording. Animal weight is the main piece of data to collect on lambs. The
managers will weigh and ear-tag all male and female lambs at birth, record the
birth date and weight and identify mothers, and record whether they are twins. It
will usually not be possible to identify the individual ram parent due to mating in
multiple ram flocks, but the ram parents in the flock can be recorded. The lambs
will be weighed in summer and again in October. It can be assumed that with an
80% reproductive rate there will be 400 female and 400 male lambs/kids. In
summer, only those males identified as especially inferior – maybe 10% or 40
lambs will be castrated. The performance data will be entered into a database
consistent with national standards. It is assumed that meat is the major market for
sheep, and that wool weight or quality is not included in the selection index.
(v) Male flock management. A separate male flock is needed to manage the young
rams as they mature, as they need to be separated from the ewes to avoid them
mating. The male flock is also needed to manage the improved rams during the
non-mating season. If the improved rams are rented out, and not sold, then the
PABU should operate the male flock as one of the flocks with the PABU. If the
PABU sells rams, then the herders who bought the rams can apply for a separate
sub-agreement on Male Flock Management.
(vi) First-stage ranking of lambs. The male and female lambs will be weighed in
November. Females and males based on objective data from the weighing as
entered into the breeding index, and some visual assessment. Males are ranked
into first, second or third categories. Some rams or ewes may be culled at this
stage.
(vii) Young rams for mating and distribution. It may be possible for some of the older
and larger rams to be used in the NF or distributed for mating after the ranking in
November. This practice allows for more rapid genetic improvement. To reduce
the risk of poor mating performance, testicles should be checked and mating ratios
reduced.
(viii) Second-stage ranking of lambs. Lambs will be weighed again the following
summer and October. Their wool will be weighed and assessed when shorn. They
will be ranked and distributed accordingly to the nucleus flock or for distribution.
(ix) Rams for mating and distribution. After the second-stage raking, all males should
be categorized for mating in the NF, distribution (sale or rent) or culling.
(x) Ewe management: Ewes should be assessed annually for condition of teeth, feet
and general visual assessment for decisions on culling. If wool weight, color or
quality is included in the selection index, then data needs to be collected on these
characteristics.
(xi) Doe management: For does cashmere weight, and quality are the key data
required to input into indexes for selection. Cashmere samples of all young goats
need to be sent to a laboratory for testing. The first cashmere sample will be when
the goats are about 15 months old, but bodyweight data can be collected at the
same time as occurs with sheep. Special bags and identifiers will be needed for
individual packaging of cashmere samples for visual assessment (color) and fiber
testing for strength and micron.
(xii) Ram management. Ideally, rams should only be used in the nucleus flock for two
years to make genetic improvement as rapid as possible. During the non-breeding
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season, rams are managed male flock along with rams being used in other flocks.
It will be essential that rams are in good condition at mating and have good testicle
and semen quality. Male Flock management is covered under a separate sub-
agreement.
(xiii) Veterinary service delivery for preventive measures such as vaccination and
parasite control and treatment
(xiv) Supplementary feeding plan and implementation, including forage production if
requested and feasible.
(xv) Marketing. Marketing of the young males for sale or rent will be an important
activity. Marketing includes the analysis of the potential market (price and quantity)
for rams and explain to potential herder-customers the advantages of using rams
from the nucleus flock. Marketing materials including pricing of rams can include
leaflets, signboards at the nucleus flock camps. The coordinator and nucleus flock
should try to get feedback from herders who use the rams.
(xvi) After-sales service. Operating an “after sales” service with herders who have used
the improved rams is an important activity to provide feedback to the PABU.
Herders who buy the rams should be trained to condition score the rams at the
start of mating and again at the end of mating, and again at the end of mating to
indicate how hard they have worked. These herders should also collect data on
lambing and survival rates. These herders are an ideal group with which to conduct
219. The activities of the SAU include:

(i) Registration of all non-PABU male flocks
(ii) Identification of all males in the male flocks
(iii) Ensuring that herders do not use home-bred males in their own flocks
(iv) Inspection of male flocks two months before mating and at point of mating to
ensure they meet standards on condition for mating and advising on management
(v) Ensuring standard quality contracts for male flock managers

implementation. The services of a number of specialized entities will be required some of the
activities. The sub-agreement proposal should include provision for
(i) Market study of the potential market for PABU improved males; including baseline
of breeding in the soum, including baseline of male flocks, and knowledge
practices of herders with respect to breed improvement and reproduction.
(ii) Genetic Services: Development of breeding objectives and indexes based on
value of sheep/goats (meat and wool). Ongoing management of data generated
from the performance recording and recommendations on ranking of males and
females. Development of visual assessment guidelines and manuals for
sheep/goat selection.
(iii) Livestock Genetic Resource National Centre assessment of PABU standards
221. Equipment and supplies: The sub-agreement proposal should include:

(i) For PABU: ear-tags for individual identification of all sheep in the NF and
applicators for each of the NFMs; animal weighing scales for adult animals, small
55
digital scales for lamb weighing; livestock housing improvements to improve

overall design for good animal health and survival, and to facilitate animal ear-
tagging, technical guideline booklets; a signboard for each of the camps of each
of the NFs; items to assist in marketing, including information leaflets about the
nucleus flock and ram availability and price; and results of ram and flock
performance details for distribution within the soum, or beyond; computer and IT
system for PABU office
(ii) For SAU; recording books and pens,
(iii) For male flocks: ear-tags, tagging applicators, housing improvements, record
books, technical manuals
222. The PABU marketing material should include technical details of the performance of
individual rams; and an estimate of the benefit that a herder will get if they purchase (or rent) an
improved-breed ram for a higher cost than the traditional system of using a home-bred ram that
leads to a degree of in-breeding and lack of genetic progress. As a guide, the ram will produce
100 lambs over three years assuming it is mated with 40 ewes per year at a reproductive rate of
80%. Of the 100 lambs, 70 would expect to have been sold, with the other 30 being retained
females. Each lamb sold would be expected to be 1-2% heavier than the home-bred lamb,
equivalent to 0.3-0.6 kg per head. This would need to be monetized by expected value to establish
pricing. In addition to this is the advantage of improved genes that will be spread into the breeding
ewes and provide long-term benefits. In practice, it may take some time for the sale price of
improved rams to be established and a full economic analysis of a NF as opposed to a normal
self-replacing flock can be conducted.
223. Civil Works: The project will support:

(i) upgrade of the livestock housing for PABU flocks (NFs and MFs) to be suitable for
good livestock management and for easy performance recording (ear-tagging and
weighing).
(ii) Construction of a building in the soum adequate for PABUs to work to manage
data, hold local meetings, connect to meetings by internet and store equipment
and supplies such as eartags, applicators, stocks of record books and extension
materials. The office should be sufficient to allow for expansion in the number of
PABUs or be adaptable for organizational development such as soum PABU
associations or soum association of Group Breeding Schemes.
224. Period: The sub-agreement proposal should be five years.
side, and return measured in an estimate of increased productivity due to improved animal health.
This calculation will be automatically generated based on models developed by the PMU. The
analysis should also consider the business plan of PVUs.
Committee with a copy to the Grants Secretariat of PMU. Once cleared by the SSC, the proposal
should be sent to GS of PMU with SSC in copy.
227. Potential scope: One sheep PABU with 1,000 ewes can provide improved rams for about
20,000 ewes. This assumes the nucleus flock will produce 400 ram lambs each year of which
about 12 will be kept for the nucleus flock, 160 available for mating to herders and 228 culled.
56
The 160 rams can be mated to 6,400 ewes (assuming mating ratio of 40:1) and be used for three
years. Under these assumptions, there is scope for 64 PABUs in the 20 project soums, and
average of over 3 per soum, with a range of 1-5 PABUs per soum. Whether individual PABUs in
the larger soums will expand to reach the market over the whole soum will depend on the local
situation. In any case, the project will budget for one sheep PABU per soum.
228. Goats Nucleus Flock PABU: For goats, one PABU with 1,000 does can provide
improved bucks for about 15,000 does. This assumes the NF will produce 300 buck kids each
year of which about 12 will be kept for the NF, 120 available for mating to herders and 168 culled.
The 120 bucks can be mated to 6,400 does (assuming mating ratio of 40:1) and be used for three
years. Under these assumptions, there is scope for 55 PABUs in the 20 project soums, and
average of nearly 3 per soum, with a range of 2-4 PABUs per soum. Whether individual PABUs
in the larger soums will expand to reach the market over the whole soum will depend on the local
situation.
229. It is important that the breeding objectives and index for objective assessment and ranking
of young sheep and goats be fully informed by the demands of the market for meat and wool. The
engagement with the private sector meat and wool industry, as described in the Animal Genetic
Law will be critical in this regard, will be important in establishing breeding objectives and selection
indices. This is described more fully in the capacity building component.
230. Sheep Terminal Sire Flock: Objective: The objective of the sub-agreement is to
establish the organizational structures, relationships, agreements and processes at the soum and
aimag levels that can lead to sustainable system of terminal sire sheep breeding (Figure 18).
231. Structures: The most important structure in the terminal sire sheep breeding is the
Terminal Sire Flock (TSF), and the flocks that contribute ewes to the TSF. The TSF is a flock of
local-breed ewes that is mated to a specialist meat breed ram to produce lambs of high meat
content and high growth potential. The aim is to sell all lambs both female and male before the
winter. The TSF is not a self-replacing flock. It is established through TSF-cooperative herders
contributing ewes at the time of establishment, and then annual contributions of ewes as
replacements for ewes culled from the TSF.
232. The TSF-cooperative members can join the same breed improvement associations and
working groups as do the sheep and goat PABUs. The TSF is a special kind of PABU.
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Figure 18: Structures and Relationships for Terminal Sire Flocks
233. The TSF should have a minimum of 300 ewes as the sole sheep enterprise (no other
sheep). The herder members are those who contribute the ewes – “TSF contributors” - and the
herder who manages the flock – the “TSF Manager”. The arrangements for management of the
TSF – cost- sharing, income sharing, and so on, is up to the members. As this is a relatively new
process, experience will build up over time, and guidelines from lessons learnt can be developed.
234. The TSF flock will provide first-cross (“F1”) lambs with a 50/50 breed mix that are mostly
intended for sale. However, it is an option to experiment with mating F1 males back to local ewes
to get an F2, 75/25 mix to see if such lambs perform better that the F1 lambs. Management of the
meat-breed rams needs to be carefully monitored as they are not as adapted to the local
conditions as are local sheep. It is important also to avoid unwanted mating with local ewes.
235. Justification: The TSF should be considered at the experimental stage but could yield
quality lambs that suit some markets. Therefore, government and project support are justified.
236. Proposal: Herders who have agreed on PUGs/RUAS are eligible to submit a proposal for
a sub-agreement to establish a terminal sire flock program. Either a group of herders can form a
cooperative or an individual herder can change from a self-replacing flock to a terminal sire flock.
237. The relevant business units related to the TSF are shown in Figure 19. These are:
(i) The TSF flock, managed by the TSF manager, and the contributing herders
(ii) The male flock where meat-breed males are kept when no mating
(iii) The processors with whom the TSF flock have developed a linkage to market the
lambs
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(iv) The SAU and SVU who provide technical and operational support
(v) The PVU that provides animal health services.
Figure 19: Detailed structures and relationships of the Terminal Sire Flock
238. Activities: The main activities for the cooperative system are:
(i) A group of herders will form a cooperative and supply a portion of their cull ewes,
either older ewes, young ewes or a combination, to a “terminal sire flock (TSF)”.
(ii) Terminal sire rams need to be introduced for a period 3-4 months before mating to
allow acclimatization. The rams should have individual electronic ear-tags. Rams
should be at a ratio of 1:40 ewes, meaning seven rams for 300 ewes. Rams can
be used for 3-4 years, so 1-2 replacements per year should be planned. The
introduction of rams to existing male flocks needs be monitored carefully to watch
for fighting, so they may need to be yarded separately at night. Rams should have
supplementary feeding if required to reach target condition score at mating, and
have all recommended veterinary procedures. Their testicles, teeth and feet should
be checked both two months before and immediately before mating.
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(iii) Ewes are mated to the rams at the normal mating time for a six-week period. The
lamb progeny should have higher growth rates due to the high level of hybrid vigor
due to being crossbreeds, and high meat quality due to the genetic qualities of the
ram. However, if the ewes are culled from other flocks, their lactation may be less
due to lower lactation potential, which may decrease lamb growth potential.
(iv) Ewes should be supplementary fed during late pregnancy (last 6-8 weeks) to
increase mammary gland development, which will improve mothering ability,
lactation and lead to better lamb growth.
(v) All lambs will be ear-tagged electronically at birth, and have date, sex, mother, twin
or single recorded.
(vi) Rams are managed in a male flock during the non-mating period
(vii) Male lambs should be castrated using cauterize-cut method.
(viii) All lambs will be sold for meat before winter. These lambs will be good candidates
for fattening with supplementary feed. Data on bodyweights, eye muscle score,
and feeding regime should be collected.
(ix) Any ewes that do not produce a lamb will be culled, as well as a portion of the older
ewes who had lambs.
(x) Before the next mating time, the culled ewes will be replaced by further
contributions from the herder group members each year. During non-mating
periods, the rams will be managed in a Male Flock as is done with other rams in
the soums and bags. Since the rams are not well adapted locally, they may need
special attention especially during the winter.
(xi) Housing improvements will be constructed at the animal camps to facilitate
management of the identification and performance recording.
(xii) Lambs marketed by contract and feedback from the processor on carcass quality
and consumer interest
(xiii) The SAU and SVU provide technical support for animal identification and
performance recording including data management
(xiv) The PVU provides animal health services
239. The performance recording system should be consistent with national guidelines as
recommended by the Livestock Genetic Resource National Centre. Data should be included in
national systems so that the effectiveness of the TSF system can be compared in different
environments and management systems. The TSF will have access to the PABU building in the
soum.
240. The improved meat breed ram will be supplied by the TSF manager or the Livestock
Genetic Resource National Centre. Over time, the data collected on lamb growth will be used to
modify the TSF program. For example, while a 50/50 mix of local and meat breed ram will be the
first attempt at establishing a TSF system, it may be modified in time to a 75/25 local/meat breed
mix. In such a case, some of the male lambs from the first cross 50/50 mix may be left entire (not
castrated) so they can be used to create a 75/25 mix. This process will need to be closely
monitored locally and by the Livestock Genetic Resource National Centre.
241. Services: The project sub-agreement can include:

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(i) Market study of the potential market for TSF lambs, including discussions with
meat processors and skin buyers; and visits to other areas of Mongolia with
specialist meat breed rams
(ii) Performance Review: Review of flock performance and lamb growth and carcass
data to make recommendations on future structure of TSF breeding programs;
(iii) Livestock Genetic Resource National Centre data management and assessment
of TSF standards
(iv) PABU local assistant (labor) to assist with NF management, as sub-contract with
Consulting Firm
(v) PVU under contract to Consulting Firm to provide services
242. Equipment and supplies: The sub-agreement proposal should include

(i) For TSF: electronic ear-tags for individual identification of all lambs in the TSF and
applicators and readers; weighing scales for grown lambs, and small digital scales
for lamb birthweight weighing; livestock housing improvements to improve overall
design for good animal health and survival, and to facilitate animal ear-tagging and
weighing; tablets for data entry; recording books and pens, and technical guideline
booklets; a signboard for each of the camps of the TSF; TSF promotion including
information leaflets about the TSF flock and terminal sire ram availability and price;
and results of lamb and flock performance details for distribution within the soum,
or beyond.
(ii) Improved meat-breed rams at a rate 1:40 ewes, or eight per 300-ewe TSF, with
annual replacements of 3 head.
243. Civil Works: The project will support upgrade of the livestock housing at TSFs to be
suitable for good livestock management and for easy performance recording (ear-tagging and
weighing).
e. Private Cashmere Processing Unit Sub-agreement
relationships, agreements and processes that can lead to a cashmere processing and value-
adding in the soum (Figure 20).
245. Structures: At the heart of the structures is a Private Cashmere Processing Unit (PCPU),
which operates a cashmere sorting facility owned by the soum and constructed with the support
of the project. The PCPU has an agreement with the soum to operate the facility. The PCPU has
a tripartite agreement with the soum and herder representatives.
246. Herder cooperatives for cashmere marketing are also important structures.
247. Other structures relate to vertical and horizontal linkages at soum, aimag and national
level allowing for information exchange and raising and solving issues on technology,
governance, policy and so on.
248. Justification: There are a number of examples in the country of cashmere sorting at soum
level, which adds value and provides employment, and such opportunities exist in the project
soums.
61
Figure 20: Structures and Relationships on Cashmere Marketing
249. Proposal: The proposal should be submitted by herders who have agreed PUGs /RUAs,
livestock processors, and SVU. The proposal should include a business plan for the three
business units involved: the herder cooperative, the SVU and the processors. The period of the
business plan should cover at least five years, and include provision for replacement of capital
items.
250. Targets: The targets with- and without-project are shown in Table 19.
Table 19: Cashmere Marketing Targets

PUG/ RUA ID:…………………….
# PCPU functioning
# herder cooperatives functioning
# tons of cashmere processed through PCPU
through facility
# tons of cashmere marketed through facility
251. Activities: The activities include

(i) Herder cooperative agreeing to add-value to cashmere in the soum
(ii) Soum constructs facility for cashmere sorting
(iii) Private Cashmere Processing Unit (PCPU) rents the facility and uses for sorting
and storing, labelling
(iv) PCPU or cooperative has contract with processor
62
(v) Processor procures and provides feedback to PCPU and herders
252. Services: The project supports services for cooperative and PCPU business development.
253. Equipment and Supplies: Start-up sets of bags, labels for first year.
254. Civil Works: The project supports construction of cashmere sorting facility.
255. Period: Three years.
256. Investment Analysis: Measured against project investment and return to project outputs,
and individual business plans.
Committee with a copy to the Grants Secretariat of PMU. Once cleared by the SSC, the proposal
should be sent to GS of PMU with SSC in copy. The sub-agreement will be a tripartite agreement
between the herder cooperative, the PCPU, the soum and the processors.
258. Scope: There is scope for one or more PCPU per soum, but the project will start with one
per soum.
F. Inter-Aimag Pasture Use Administration
259. The government established the Inter-Aimag Pasture Use Administration by resolution No.
187 in 2007. To date, the government has taken 783,3 ha of land in 15 aimags for special needs
and established nine inter-aimag otor areas to protect livestock from natural and unforeseen risks.
These include:
(i) Kherlenbayan-Ulaan in Khentii Aimag, 192,800 ha;
(ii) Argalant in Bayankhongor and Gobi-Altai aimags, 118,600 ha;
(iii) Bagakhairkhan in Zavkhan Aimag, 68,300 ha;
(iv) Malakh steppe in Gobi-Sumber Aimag, 73,100 ha;
(v) Choibalsan in Dornod Aimag, 124,400 ha;
(vi) Chilen in Tuv and Bulgan aimag, 34,100 ha;
(vii) Khukh Del in Uvurkhangai and Tuv aimag, 37,900 ha;
(viii) Achit Nuur in Uvs Aimag, 28,900 ha; and
(ix) Bayannuruu i Khovd Aimag, 105,200 ha;
260. On average about 600,000 head of livestock from more than 700 households in 45 soums
and districts of 19 aimags and the capital city spend the winter in these inter-aimag otor areas but
the number and pasture capacity varies considerably based on seasonal conditions.
261. The main activities of the Inter-aimag Pasture Use Administration include: 16
16 MOFALI. undated. Cooperation Proposal on Improving Inter-aimag Otor Pastureland Management and Protection.
Powerpoint presentation.
63
(i) Improving management, conservation and proper use of the inter-aimag otor
pastureland;
(ii) Locate new otor pastureland resource and take under its protection;
(iii) Manage water supply for otor area;
(iv) Increase the herd capability for overcoming natural disaster through building
forage stock; and
(v) Provide favorable conditions and social services for otor users.
262. Issues with these areas identified by MOFALI include:
(i) Increasing demand for otor pastureland due to increase in animal numbers; and
(ii) Pastureland degradation is increasing rapidly due to the absence of a pastureland
use plan based on studies using advanced methods and resolution.
263. While not mentioned as an issue, it is clear that the administration has limited staff to carry
out the extensive program, including:
(i) Three administrative staff in Ulaan Baatar;
(ii) Four technical staff in Ulaan Baatar, including,
• A pastureland management and conservation officer,
• An otor movement and coordination officer,
• An animal health officer, and
• A water point, forage reserve officer; and
(iii) 15 otor area officers, one in each area.
264. Measures proposed to improve the use of inter-aimag otor pastureland include:
(i) Legal reform, including,
• Approve and submit the law on inter-aimag otor pasture,
• Establish a legal basis for fees for use of pastureland, and
• Upgrade pasture carrying capacity;
(ii) Strengthening of policy coordination, including,
• Detailed assessment pastureland in the inter-aimag otor,
• Develop and implement a grazing management plan for seasonal regions,
based on pastoral investigation,
• Improve registration and information system for otor pasture use and
simplify state services to herders,
• Strengthen the control checks for use and coordination of inter-aimag otor
pastureland, and
• Improve responsibilities by improving pastureland use and protection
through agreements to cooperate on inter-aimag pastureland use and
protection between aimags and soums; and
(iii) Administration and optimization, including
64
• Develop and coordinate action plans with local self-governing

organizations on inter-aimag otor pastureland management and protection,
• Provide veterinary control and services in inter-aimag otor pastureland and
cooperate with soum veterinary officers, and
• Improve the capacity building and investment of administration of inter-
aimag otor pastureland.
IV. LIVESTOCK SUBPROJECT DESIGN
A. Bulgan Aimag Subproject
1. Current Situation
a. Subproject Overview
265. Bulgan Aimag is located in the central part of the Orkhon and Selenge river basins with
an area of 48,733 km2 and borders Arkhangai, Khuvsgul, Selenge and Tuv aimags (Figure 21).
The highest mountains in the aimag are Bulgankhan, Buregkhangai, Dulaankhaan, Buteel and
Khantai Darkhan khaan. The main rivers flowing through the aimag are the Selenge, Orkhon and
Khanui, while the main lakes are the Khargal, Khunt and Airkhan lakes and the spars include
Khulij, Khunt, Khanui and Asgat.
Figure 21: Project Area in Bulgan Aimag
266. Population. Bulgan Aimag has a population of 61,794 people in 19,072 households of
which 8,514 are herder households. There are 16 soums in the aimag of which four—Mogod,
Saikhan, Khishig-Undur, and Gurvanbulag—are in the subproject area.
267. Gurvanbulag Soum. Gurvanbulag Soum is located 140 km from Bulgan aimag center
and 280 km from Ulaanbaatar City. This soum represents the khangai type. Gurvanbulag soum
borders with Khashaat Soum in Arkhangai Aimag, and Dashinchilen, Khishig-Undur and Mogod
soums in Bulgan Aimag. The area of the soum is 2,627 km2, of which 213,963 ha is pastureland,
66
446 ha arable land and 7,232 ha abandoned cropland. The Khugnu Khan special protected area
covers an area of 37,190 ha of the soum. There are 59 rivers, lakes and ponds, which provide
surface water resources. It has a harsh continental climate with average annual precipitation of
216.7 mm. Rocky permafrost dominates the mountains with coarse humus in the mountain
meadows and brown soils in the river valleys. The dominant vegetation of the mountain steppe
pastures is Kobresia, Carex, Forb, Grass, and Festuca. The average annual pasture yield is 37
kg/ha. The annual carrying capacity of pasture is 191,300 live sheep units, which was exceeded
by 152% in 2019. According to the pastureland inspection conducted in 2008-2012, 39% of soum
pastures were degraded. Pastures is used traditionally in all four seasons. The ratio of sheep to
goats is 1.6:1. In 2019, the soum prepared 1,088 tons of fodder, comprising 863 tons of hay, 61
tons of feed grain, and 164 tons of hand-made fodder, equivalent to 2.7kg of grass per live sheep
unit.
268. Khishig-Undur Soum. Khishig-Undur Soum is located 72 km from Bulgan aimag center
and 287 km from Ulaanbaatar City. The soum has a combination of khangai and steppe types.
Khishig-Undur Soum borders with Dashinchilen, Mogod, Buregkhangai and Orkhon soums all in
Bulgan Aimag. The area of the soum is 2,820 km2, of which 241,684 ha is pastureland, 32,300
ha forest, 3,514 ha arable cropland and 1,876 ha abandoned cropland. There are 85 rivers and
good surface water resources. Average annual precipitation is 250 mm. Mountain steppes and
steppe pastures are widespread. The average annual pasture yield 37 kg/ ha. The annual carrying
capacity of the soum pasture is 184,200 live sheep units, which was exceeded by 110% in 2019.
The ratio of sheep to goats is 1.6:1. In 2019, the soum prepared 2,395 tons of fodder, comprising
2,000 tons of hay, 188 tons of grain feed, and 207 tons of hand-made fodder, equivalent to 7.0
kg of grass per live sheep unit.
269. Mogod Soum. Mogod Soum is located 120 km from Bulgan aimag center and 330 km
from Ulaanbaatar City. The soum represents the khangai type. Mogod Soum borders with
Khishig-Undur, Saikhan, Orkhon and Gurvanbulag soums all in Bulgan Aimag. The area of the
soum is 2,455 km2, of which 206,400 ha is pastureland, 2,813 ha hayfields, 33,086 ha forest, 715
ha arable cropland, and 1,561 ha abandoned cropland. The soum has 102 lakes and 72 rivers
with good surface water resources. Average annual precipitation is 250 mm. Mountain steppe is
the dominant pasture type. Average annual pasture yield of the soum is 40 kg/ha. The annual
carrying capacity of the soum pasture is 233,200 live sheep units, which was exceeded by 140%
in 2019. The ratio of sheep to goats is at the level of the traditional herd structure, and 32.8% of
the pastures are overgrazed. In 2019, the soum prepared 2,207 tons of fodder, comprising 2,000
tons of hay and 207 tons of hand-made fodder, equivalent to 4.3 kg of grass per live sheep
equivalent.
270. Saikhan Soum. Saikhan Soum is located 101 km from Bulgan aimag center and 419 km
from Ulaanbaatar city. The soum represents the khangai type. Saikhan Soum borders with Ulziit
and Khairkhan soums in Arkhangai Aimag, and Mogod, Bayan-Agt, Khishig-Undur, Bugat and
Orkhon soums in Bulgan Aimag. The area of the soum is 2,821 km2, of which 246,069 ha is
pastureland, 1,840 ha hayfields, 24,327 ha forest, 12 ha arable cropland, and 6,599 ha
abandoned cropland. There are 1,219 lakes and 366 rivers and soum is rich with surface water
resources. Average annual precipitation is 223-250 mm. Mountain steppes, meadows and
hayfields are the dominant pasture types. Average annual pasture yield of the soum is 33 kg/ha.
The annual carrying capacity of the pasture is 195,800 live sheep units and was exceeded by
262% in 2019. About 60% of the pasture was overgrazed. In the case of small livestock, the
traditional herd structure is preserved. Pastures is used traditionally in all four seasons. In 2019,
2,880 tons of hay was harvested, of which 100 tons were reserved for the reserve fund. The
fodder prepared by soum was equivalent to 4.0 kg of grass per live sheep unit, sufficient to feed
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livestock for 8 days.
b. Natural Resources
271. The Bulgan subproject area comprises 10,734 km2 (22% of the aimag territory), of which
913,228 ha is pastureland, 90,897 ha forest land and 1,917 ha water sources (Table 20).
Table 20: Land Classes in Bulgan Subproject Area

Soum Territory Pasture Forest Water bodies Cropland
(ha) (ha) (ha) (ha) (ha)
Gurvanbulag 262,706 213,963 - 59 446
Khishig-Undur 282,047 241,684 32,300 181 3,514
Mogod 245,500 206,400 33,086 92 715
Saikhan 282,091 246,069 24,327 1,585 12
Subproject total 1,072,345 908,117 90,897 1,917 4,687
% of aimag area 22 37 5 9 6
Aimag total 4,873,300 2,485,150 1,905,000 22,149 81,765
Source: Project Aimag Food and Agriculture Departments and the target soum governments
272. Land degradation conditions in the subproject soums in Bulgan Aimag vary from level II
to level IV. Level II shows slight degradation, meaning that key species are still dominant, some
sensitive grazing forbs are in decline and grazing resistant species are increasing. Level IV
indicates heavy degradation, meaning remnants of key species are thinning, and abundance of
degradation indicator species is increasing. Land recovery category varies from class II to IV.
Class II indicates that the plant community is altered but may be rapidly recovered in 3-5 growing
seasons with favorable climatic conditions or a change in management. Class IV indicates that
the plant community is altered due to the local loss of key plant species, invasion of noxious plant
species, or alteration of hydrology that is unlikely to be recovered for over a decade to many
decades without intensive interventions such as species removal, seeding, or manipulations to
recover the historical hydrological function.
273. Pasture degradation is a problematic issue in the subproject area. The degradation level
is already between II and IV in subproject soums in Bulgan Aimag, which indicates that the pasture
conditions of Bulgan subproject area could be recovered to their initial conditions in 3-10 (or more)
years. This is a key concern for the livestock sector in view of climate change induced frequency
increase of severe weather events.
c. Livestock Management
274. The subproject area has a population of 12,816 persons (21% of the aimag population) in
3,975 households of which 2,759 are herder households (Table 21). Poverty incidence averages
21.6% in the subproject area and ranges between 13.6% in Khishig-Undur Soum and 30.0% in
Saikhan Soum.
Table 21: Population and Households in Bulgan Subproject Area

Poverty
Population Households Herder households Herders (% of
Soum
(no.) (no.) (no.) (no.) households
)
Gurvanbulag 3,335 984 571 935 22.8
Khishig-Undur 3,198 1,046 640 821 13.6
Mogod 2,711 851 618 1,030 18.6
68
Poverty
Population Households Herder households Herders (% of
Soum
(no.) (no.) (no.) (no.) households
)
Saikhan 3,572 1,094 930 1,391 30
Total 12,816 3,975 2,759 4,177 21.5
Sources: Aimag Food and Agriculture Department and soum governments and Ministry of Labour and Social Protection
2020 for poverty
275. Herder groups. There are 48 herder groups in the subproject area who have a total of
577 members and use 14% of the pasture area (Table 22). Twenty four percent of the herder
households are members of herder groups, ranging between 13% in Mogod Soum and 60% in
Khishig-Undur Soum.
Table 22: Herder Groups in Bulgan Subproject Area

Khishig-
Indicators Unit Gurvanbulag Mogod Saikhan Overall
Undur
Total households no. 984 1,046 851 1,094 3,975
Herder households no. 571 640 618 930 2,759
Herder groups no. 6 18 16 8 48
Members no. 78 327 87 85 577
Members as % of herder
% 14% 51% 14% 9% 21%
households
Pasture used by herder groups % 28 - 13 15 14
Source: Aimag Food and Agriculture Department and soum governments, Feb-May 2020
276. Pasture User Groups. There are four pasture use groups (PUGs) with 28 members in
the subproject area all of which are in Khishig-Undur Soum (Table 23). There are two Soum
Pasture Associations in the subproject area, one in each of Khishig-Undur and Saikhan soums.
Table 23: Pasture User Groups and Soum Pasture Associations in Bulgan Subproject
Area
Pasture User Groups Soum Herder Membership of
Soum Pasture househol Pasture User
Number Members
Associations ds Groups
Khishig-Undur 4 28 1 640 4%
Saikhan - - 1 930 0%
Total 4 28 2 2,759 1%
277. Cooperatives. There are 15 cooperatives in the subproject area with a total of 209
members (Table 24). On average, 7% of herder households are members of the cooperatives. Of
these 15 cooperatives, 10 are herder cooperatives with four in Gurvanbulag, three in Khishig-
Undur and three in Mogod. Membership information is only reported for Gurvanbulag, which has
200 members, representing 31% of herder families. Cooperatives do not undertake any pasture
protection activities, but herders mainly joined to benefit from the government wool premiums
through the cooperatives, so it more suitable to cooperate with them linking herders with
processing factories.
69
Table 24: Cooperatives in Bulgan Subproject Area

Cooperatives Herder cooperatives Herder Enrollment in
Soum
Number Members Number Members households cooperatives
Gurvanbulag 7 200 4 200 640 31%
Khishig-Undur 4 9 3 618 0%
Mogod 3 - 3 930 0%
Saikhan 1 - - 571 0%
Total 15 209 10 200 2,759 7%
278. Forest User Groups. There are 11 forest user groups in the subproject area located in
areas where there are project forest resources (Table 25). There are groups in all subproject
soums except Mogod. These groups have 866 members, which amounts to 31% of the total
herder households. Excluding Mogod Soum average membership is 40% of herder households
and is a maximum in Saikhan Soum where it is 77%. The purpose of the forest user groups is to
protect forest resources, not pasture.
Table 25 Forest User Groups in Bulgan Subproject Area

Forest User Groups Enrollment in
Soum Herder families
Number Members Forest User Groups
Gurvanbulag 4 120 571 21%
Khishig-Undur 3 30 640 5%
Mogod - - 618 0%
Saikhan 4 716 930 77%
Total 11 866 2,759 31%
d. Pasture Infrastructure
279. There are 163 engineering designed deep wells in the pasturelands, 124 springs, 28 lakes
and ponds, 43 rivers, and there is indicated to be a need for an additional 76 deep wells in the
subproject area (Table 26). These additional deep wells are required to ensure sufficient drinking
water for livestock numbers within the carrying capacity and to relieve grazing pressure on
pastures near to existing wells. Pasture degradation will be reduced because currently underused
pasture will be developed thus expanding the pasture area for livestock. Water supply for
pastureland is in serious disrepair and urgently needs to be improved, not only as drinking water
for livestock but also to reverse pasture degradation. Traditionally, individual water points are
constructed for livestock watering including both high yielding engineering (deep) wells and
shallow/hand-made wells. Due to a lack of maintenance, the engineering wells in particular have
degraded since the transition period and the number of operational wells has sharply declined.
This has forced herders to move their stock to areas around the operational wells and close to
rivers. The carrying capacity of the pastures in these areas is far exceeded, causing serious land
degradation.
Table 26: Water Points in Bulgan Subproject Area

Lakes and Additional
Soum Deep wells Springs Rivers
ponds wells required
Gurvanbulag 35 41 16 10 12
Khishig-Undur 22 24 5 15 20
Mogod 46 27 5 17 20
Saikhan 60 32 2 1 24
Total 163 124 28 43 76
70
280. There are 1,504 livestock open enclosures without roof, 1,902 livestock semi-roofed
enclosures, 65 livestock sheds, 2,483 winter and spring camps with certificates17 and 6 fodder
storages in the subproject area (Table 27). Achievement of sustainable pasture management
through reduction of livestock numbers and rehabilitation of degraded pasture requires both
pasture improvement and improved livestock enclosures and sheds, and fodder storage.
Table 27: Animal Shelters and Storages in Bulgan Subproject Area

Open Semi-roofed Animal Camps with Fodder
Soum
enclosure enclosure shed certificate storage
Gurvanbulag 615 422 60 541 -
Khishig-Undur 200 301 2 453 -
Mogod 241 367 2 453 5
Saikhan 448 812 1 1,036 1
Total 1,504 1,902 65 2,483 6
e. Livestock Numbers, Breeds and Output
281. Between 1990 and 2019 the livestock number in the subproject area increased by 233%,
of which Gurvanbulag Soum increased by 188%, Khishig-Undur Soum by 254%, Mogod Soum
by 256%, and Saikhan Soum by 248% (Table 28 and Figure 22).
Table 28: Total Livestock Number in Bulgan Subproject Area for Selected Years
Year Increase between
Soum 1990 2000 2010 2019 1990 and 2019
Gurvanbulag 113.3 166.6 263. 326.6 188%
Mogod 92.7 148.8 192.4 329.6 256%
Saikhan 107.4 182.3 225.3 373.7 248%
Khishig-Undur 69.3 105.9 149. 245.5 254%
Bulgan subproject area 382.6 603.6 829.6 1,275.4 233%
Source: National Statistics Office of Mongolia
17 According to the Law on Land clause 52.7, land under winter and spring camps can be possessed by khot ail. As
per this legal ground, the certificate has been issued for such camps by soum government.
71
Figure 22: Livestock Number Trend in Bulgan Subproject Area

1,400,000
1,200,000
1,000,000
Number of livestock
800,000
600,000
400,000
200,000
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Years of 1990-2019
Gurvanbulag Khishigundur Mogod Saikhan
Source: National Statistics Office of Mongolia, Feb-May 2020
282. There were 1.28 million livestock in the Bulgan subproject area in 2019, equivalent to 2.14
million live sheep units. Details by type of livestock and by soum are in Table 29. Overall, the ratio
of sheep to goats was 2.09:1 with individual soums varying between 1.56:1 in Gurvanbulag and
2.73:1 in Saikhan.
Table 29: Livestock Numbers by Soum in 2019

Soum Horses Cattle Camels Sheep Goats Total Live Sheep Ratio
Units sheep:goats
Gurvanbulag 18,909 10,773 184 180,874 115,898 326,638 483,103 1.56:1
Khishig-Undur 16,970 9,856 - 136,332 82,999 245,457 388,327 1.64:1
Mogod 26,602 15,677 71 208,366 78,880 329,596 559,989 2.64:1
Saikhan 41,202 19,297 73 229,108 84,022 373,702 709,289 2.73:1
Total 103,683 55,603 328 754,680 361,799 1,275,393 2,140,708 2.09:1
283. Each of the soums has a history of dzuds. Gurvanbulag Soum experienced dzuds in 2002-
03, 2010-11 and 2017-18, losing 17-40% of the livestock each time. Since the most recent dzud,
livestock numbers have increased by 17.5% in one year. Khishig-Undur Soum experienced dzuds
in 1999-2003, 2009-10, and 2017-18. Since the most recent dzud, livestock numbers have
increased by 12.3% in one year. Mogod Soum experienced dzuds in 1999-2003, 2009-10 and
2016-2018, after which livestock numbers have increased by 2.3%. Saikhan Soum experienced
dzuds in 1999-2003, 2009-2011 and 2016-2018, losing more than 30% of the livestock each time.
After the 2009-11 dzud, livestock numbers increased by 65.9% in 8 years.
284. Despite of the predominance of local livestock breeds, there are a small number of
Uzemchin, Sartuul, and Bayad sheep, Zalaa Jinst goat, and Selenge and Alatau cattle in Mogod
72
soum. Despite of predominant local breeds, there are the Uzemchin, Sartuul and Bayad sheep
(15,340 heads), Erchmiin Khar breed goats (3,503 heads), and Darkhad and Galshar horses
(1,441 heads) in Saikhan soum.
285. Output. The situation is similar in each of the soums in Bulgan subproject area. Meat is
the major source of the income for herder households. Herders supply more than 290,000 head
of livestock annually, of which one herder household sells an average of 100 heads and the
wealthy ones 400 heads. Each herder household sells between 3.0 tons and 30 tons of meat per
year. Cashmere is the other main sources of income for herder households. The project area
produces about 90 tons of cashmere per year. Cooperatives, factories and the private traders
compete against each other in collection and supply of livestock and related products such as
meat, cashmere and wools, and hides and skins to markets.
f. Inputs and Services
286. There are 16 private veterinary units (PVU) in the subproject area (Table 30). Legally,
PVUs must provide general or specialized professional care and services in the field of
prevention, diagnosis, treatment of all or certain types of animal diseases, combating infectious
diseases and ensuring safety of animal originated raw materials.18 It must be a legal entity with a
standard requirements. There are no private animal breeding units (PABUs) in the subproject
area.
Table 30: Private Veterinary Service Units in Bulgan Subproject Area

Soum Number Names Remarks
GME, Require all the equipment.
Gandgait,
Gurvanbulag 5 Dariin Ulaan,
Shuult,
Uyanga Yaruu
Dushkhangai Uul, Require all the equipment.
Khishig-Undur 3 Amid alt,
Jargalant Ovogt
Ajnai khaltar, Require all the equipment.
Otsonkhairkhan Uul,
Mogod 4
Rashaant Mogod,
Buyant-Orkhon
Ugalj Saikhan, Require all the equipment.
Undrakh Nuur,
Saikhan 4
Ugalj Khuremt,
Tsovoodoi
Total 16
287. There are 14 trading entities and one citizen trades in livestock originated products in
subproject area (Table 31).
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Table 31: Traders of Livestock Products Bulgan Subproject Area

Soum Traders of meat, by-products, wool and Individuals and legal entities
cashmere for primary processing
Gurvanbulag Bayanberkh Coop 1
Khishig-Undur MMAO, Tersen Nutgiin Khishig Coop, 8 Milk processing: 1
Darkhankhaan Maanit Coop, Khavtgain Gimikhishig undur LLC
Bel Coop, Altan Khuleg Od,
Gimikhishig, Tersen Nutag, and Khishig
Ender Naran coops
Mogod Ch. Munkhtur, B.Davaasuren, 3
M.Amartuvshin
Saikhan Ikh Buteel Undrakh coop, Ukhaa Ereg 2
coop
Total 14 1
Source: TRTA Consultant, Feb-May 2020
g. Downstream Supply Chain
288. There are no abattoir, meat and dairy processing factories or workshops, or livestock
feeding units in the Bulgan subproject area. Livestock and meat are prepared by herders in the
traditional way and sold to middlemen or transported to settlements for sale. There is one
household which runs a fodder production business in Gurvanbulag Soum.
289. The major marketing problems in Bulgan subproject area include: (i) the lack of local
facilities such as no local abattoir, no standard lorries and no local buyers; (ii) a lower price than
in the market, (iii) major buyers differ depending on location of the soums to the settlements, but
typically Ulaanbaatar is also a marketplace; and (iv) live animals are transported in warm seasons
and carcasses are in cold seasons. The cost of transportation to Ulaanbaatar and other issues
are summarized in Table 32.
Table 32: Major Problem and Buyers in Bulgan Subproject Area

Soum Major problems Major buyers Transportation
Gurvanbulag No local abattoir, Sells to middleman at central Transports: Small lorries.
price lower than markets, Emeelt and Khuchit Transport costs: 4,000 MNT per small,
market one Shonkhor, of Ulaanbaatar. and 30,000 MNT per big animals.
Khishig-Undur No local abattoir, Sells to middleman on the way Transports: any lorry.
no standard to Ulaanbaatar. Transport: 15,000 MNT/head for small,
lorry, no local 20,000 MNT/head for big animals.
buyers
Mogod Low price, and Sells to local buyers, Erkht Transports: Mighty, Porter.
no local buyers Tushig LLC, Tansag Mogod Transport cost: 8,000-10,000 MNT per
LLC, Elbeg Orshikh LLC in small, 50,000-70,000 MNT per big
autumn and markets in animals. 5,000 MNT per a carcass of
Ulaanbaatar in summer and small, and 20,000MNT per a carcass of
autumn. big animals.
Saikhan No local buyer. Sells to any middleman who Transports: Мighty, Kanter, Porter.
come to rural areas. Transport cost: 200,000-300,000 MNT.
Source: TRTA Consultant, Apr 2020
h. Local Legislation
290. In support of national legislation, the soums have approved and follow local legislation
(Table 33).
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Table 33: Local Legislation in Bulgan Subproject Area

Soum Document Approved
Gurvanbulag Soum citizen's khural resolutions Citizens' Representative Meeting, Resolution
on pasture use. No.XX, 2015
Khishig-Undur Land law Parliament of Mongolia, 2002.06.07
Soum livestock program Citizens' Representative Meeting, Resolution
No.XX, 2019
Pasture responsibility procedure Citizens' Representative Meeting, Resolution
No.XX, 2019.12
Mogod Bagh citizen's khural resolutions
on pasture release.
Soum livestock policy Citizens' Representative Meeting, Resolution
No.XX, 2012
Saikhan Bagh citizen's khural resolutions
on pasture release.
2. Subproject Targets
291. The Bulgan Aimag subproject will have annual and end-of-project targets that relate to
each of the soum sub-agreements. The end-of-project targets related to grazing management are
shown in Table 34. These will be updated during implementation and annual targets will also be
developed during the aimag subproject planning meetings as per the aimag subproject template.
Table 34: Bulgan: Targets Related to Grazing Management Sub-agreements

Livestock Sheep Units (000s) No. Pasture User Groups Degradation Level (1-5) a
Soum Baseline Target Baseline Target Baseline Target
2019 2027 2019 2027 2019 2027
Without Project
Gurvanbulag 483.1 483.1 8 8 2 3
Khishig-Undur 388.3 388.3 5 5 3 4
Mogod 560.0 560.0 5 5 3 4
Saikhan 709.3 709.3 0 0 4 5
Total 2,140.7 2,140.7 18 18 3 4
With Project
Gurvanbulag 483.1 426.3 8 23 2 1
Khishig-Undur 388.3 342.6 5 26 3 2
Mogod 560.0 494.1 5 25 3 2
Saikhan 709.3 625.8 0 37 4 3
Total 2,140.7 1,888.9 18 111 3 2
a Aimag degradation levels are the averages of the project soums.
292. The targets second-generation sub-agreements (Table 35) assume that each soum will
implement one of each.
Table 35: Bulgan: Second-Generation Sub-agreements Targets

No. No. PABU No. No.
No. PFU
Soum PLMU (Sheep/Goats/TSF) PLFU PCPU
B T B T B T B T B T
With Project
Gurvanbulag 0 1 0 1 1 2 0 1 0 1
Khishig-Undur 0 1 0 1 0 1 0 1 0 1
Mogod 0 1 0 1 0 1 0 1 0 1
Saikhan 0 1 0 1 0 1 0 1 0 1
Total 0 4 0 4 1 5 0 4 0 4
75
PLMU = Private Livestock Marketing Unit: PABU = Private Animal Breeding Units; TSF = Terminal Sire Flock;
PVU=Private Veterinary Units; PFU = Private Forage Units; PFLU = Private Feedlot Units; PCPU = Private Cashmere
Processing Units; B = Baseline 2019; T = Targets at end of project period
3. Subproject Activities
293. Forty-eight sub-agreements are expected to be implemented in Bulgan subproject area

(Table 36).
Table 36: Number of and Type of Sub-Agreements in Bulgan Subproject Area

No. Sub-Agreement Type Sub-agreement number
1 Pasture User Group/Rangeland User Agreement Development 4 (1 per soum)
2 Pasture User Group/Rangeland User Agreement Implementation 24 (1 per bagh)
3 Private Veterinary Unit 4 (1 per soum)
4 Private Livestock Marketing Unit 4 (1 per soum)
5 Private Forage Unit and Private Feedlot Unit 4 (1 per soum)
6 Private Animal Breeding Unit 4 (1 per soum)
8 Private Cashmere Processing Unit 4 (1 per soum)
Total 48
294. The implementation schedule is shown in Table 37.
Table 37: Bulgan Subproject Implementation Schedule

Activities 2021 2022 2023 2024 2025 2026 2027
3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
PMU operational
Consulting Firm Operational
Appoint Soum Steering Committee
Appoint Soum Technical Team
Aimag subproject workshops
Soum Information campaign
PUG/RUA Development
Develop Proposal
Approve Sub-Agreement
Contract Services
Procure Eqpt. Supplies
Implement Activities
PUG/RUA Implementation
Develop Proposal
Contract Services
Construct Civil Works
PVUs
Develop Proposal
Contract Services
PLMU
76
Activities 2021 2022 2023 2024 2025 2026 2027

3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
Develop Proposal
Contract Services
PFU and PLFU
Develop Proposal
Contract Services
Nucleus & Terminal Sire Flocks
Develop Proposal
Contract Services
PCPU
Develop Proposal
Contract Services
5. Subproject Benefits
295. Subproject benefits arise from (i) increased livestock output, and (ii) reduced greenhouse
gas emissions and increased carbon sequestration due to natural resource recovery. Increased
carcass weight and fiber weight is estimated in Table 39. The with-project scenario is expected
to take 15 years to reach full development.
Table 38: Livestock Outputs Without- and With-Project in Bulgan Subproject Area
Year Livestock Turnoff (no.) Meat Production (tons) Fiber Production (tons)
Sheep Goats Cattle Sheep Goats Cattle Wool Cashmere
Without Project
143,805 67,059 7,399 2,572 941 821 327 58
With Project
2021 143,805 67,059 7,399 2,572 941 821 327 58
2022 143,805 67,059 7,399 2,572 941 821 327 58
2023 143,805 67,059 7,399 2,572 941 821 327 58
2024 165,190 77,302 9,003 3,022 1,110 1,024 334 57
2025 164,378 76,924 8,971 3,060 1,124 1,037 341 57
2026 162,946 76,210 8,908 3,103 1,139 1,054 347 56
2027 161,515 75,497 8,845 3,128 1,148 1,064 353 55
2028 159,510 74,467 8,751 3,160 1,158 1,078 359 55
2029 157,505 73,438 8,658 3,174 1,162 1,085 364 54
2030 154,973 72,215 8,522 3,193 1,169 1,094 368 53
2031 152,441 70,993 8,386 3,194 1,168 1,094 373 52
2032 149,425 69,517 8,239 3,201 1,170 1,101 376 52
2033 146,410 68,040 8,091 3,190 1,165 1,099 379 51
2034 142,951 66,372 7,903 3,184 1,163 1,100 381 50
77
2035 139,492 64,704 7,715 3,159 1,153 1,092 383 49
296. A major benefit of the project will be the protection of the natural resources for future
generations, which is expressed as reduction in greenhouse gas emissions and increased carbon
sequestration. It is expected that degradation levels will increase by one level in the without-
project scenario, and decrease by one level in the with-project scenario (Table 39).
Table 39: Pasture Degradation Targets in Bulgan Subproject Area

Degradation Level (1-5)
Soum Baseline Without Project With Project
(2019) (2026) (2026)
Gurvanbulag 2 3 1
Khishig-Undur 3 4 2
Mogod 3 4 2
Saikhan 4 5 3
Average 2 3 1
6. Subproject Cost
297. The Bulgan subproject base cost is estimated as $3,451,674. Base costs for each sub-
agreement are shown in Table 40 and detailed costs are set out in Table 41.
Table 40: Costs of Sub-agreements for Bulgan Subproject

Unit Value Units Value
Sub-Agreement Unit
($) (no.) ($)
PUG RUA Development soum 10,000 4 40,000
PUG RUA Implementation a bag 87,348 24 2,096,340
PVU soum 43,738 4 174,954
PLMU soum 80,115 4 320,460
PFU and PFLU and herder feeding soum 158,605 4 634,420
PABU soum 35,375 4 141,500
PCPU soum 11,000 4 44,000
Total 3,451,674
a Excludes in-kind beneficiary contributions.
PUG = pasture user group, RUA = rangeland user agreement, PVU = private veterinary unit, PLMU = private livestock
marketing unit, PFU = private feeds unit, PFLU = private feedlot unit, PABU = private animal breeding unit, PCPU =
private cashmere processing unit
Table 41: Detailed Costs by Year for Bulgan Subproject

Unit Cost by Year ($)
Cost Total
Sub-Agreement/Item Unit ($) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 ($)
PUG RUA Development - 20,000 10,000 10,000 - - 40,000
Information Materials herder 5 - 20,000 10,000 10,000 - - 40,000
PUG RUA Implementation a - 734,744 719,439 524,085 467,980 - 2,096,340
Basic Eartags (PUG) unit 1 - 6,000 12,000 6,000 - - 24,000
Basic Eartags Applicators (PUG) unit 50 - 900 1,800 900 - - 3,600
Record book set (PUG) unit 500 - 1,000 2,000 1,000 - - 4,000
Weighing Scales (PUG) unit 1,000 - 2,000 4,000 2,000 - - 8,000
78

Cost Total
Small hanging digital Scales (PUG) unit 15 - 10,500 21,000 10,500 - - 42,000
Cameras for Land Manager (Env set 5,000 - 5,000 5,000 5,000 5,000 - 20,000
Monitoring)
Herder technical info and record books unit 12 - 8,400 8,400 8,400 8,400 - 33,600
Deep well rehabilitation wells 2,500 - 12,500 12,500 12,500 12,500 - 50,000
Winter Camp upgrade house 140 - 98,000 98,000 98,000 98,000 - 392,000
Beneficiary in-kind contribution: Winter house 60 - 42,000 42,000 42,000 42,000 - 168,000
Camp upgrade
Hay fields materials herder 200 - 140,000 140,000 140,000 140,000 - 560,000
Technical Support Group office upgrade unit 10,000 - 10,000 10,000 10,000 10,000 - 40,000
Soum PUG office unit 10,000 - 10,000 10,000 10,000 10,000 - 40,000
Water/ wells unit 9,500 - 152,000 152,000 152,000 152,000 - 608,000
Geophysical Surveys well 505 - 8,080 8,080 8,080 8,080 - 32,320
Land Manager computers IT set 2,000 - 4,000 2,000 2,000 - - 8,000
Information Materials soum 4.00 - 16,000 8,000 8,000 - - 32,000
Soum Reserve area deep wells herder 10,000 - 20,000 10,000 10,000 - - 40,000
Geophysical Surveys well 505 - 1,010 505 505 - - 2,020
Soum Reserve area animal shelters shelters 2,500 - 30,000 15,000 15,000 - - 60,000
Soum Reserve area signboards unit 100 - 400 200 200 - - 800
Environmental Baseline Assessments ls 30,000 - 24,000 24,000 24,000 24,000 - 96,000
PVU 19,010 - 87,477 87,477 - - - 174,954
SAU computers IT set 2,000 - 4,000 4,000 - - - 8,000
SVU computers IT set 2,000 - 4,000 4,000 - - - 8,000
PVU marketing materials herder 2 - 3,477 3,477 - - - 6,954
PVU equipment and supplies unit 5,000 - 27,000 27,000 - - - 54,000
Animal Health Books herder 5 - 7,500 7,500 - - - 15,000
Technical booklet herder 3 - 4,500 4,500 - - - 9,000
PVU upgrade unit 5,000 - 27,000 27,000 - - - 54,000
Soum vaccine storage unit 5,000 - 10,000 10,000 - - - 20,000
PLMU - 82,115 82,115 78,130 78,100 - 320,460
Basic Eartags (PLMU) unit 1 - 10,000 10,000 10,000 10,000 - 40,000
Basic Eartags Applicators (PLMU) unit 50 - 1,000 1,000 1,000 1,000 - 4,000
Record book set (PLMU) unit 100 - 600 600 600 600 - 2,400
PLMU technical info manual unit 15 - 15 15 30 - - 60
Weighing Scales (PLMU) unit 900 - 3,600 3,600 3,600 3,600 - 14,400
Marketing materials (PLMU) unit 5 - 2,500 2,500 2,500 2,500 - 10,000
PLMU computers IT unit 2,000 - 4,000 4,000 - - - 8,000
Livestock Marketing Facility unit 20,000 - 20,000 20,000 20,000 20,000 - 80,000
PLMU Fodder Storage Facility unit 20,000 - 20,000 20,000 20,000 20,000 - 80,000
PLMU office unit 10,000 - 10,000 10,000 10,000 10,000 - 40,000
PLMU : Geophysical survey well 400 - 400 400 400 400 - 1,600
Deep wells unit 10,000 - 10,000 10,000 10,000 10,000 - 40,000
PABU - 37,575 37,575 33,175 33,175 - 141,500
PABU Basic Eartags unit 1 - 5,000 5,000 5,000 5,000 - 20,000
PABU Basic Eartags Applicators unit 50 - 100 100 100 100 - 400
PABU Weighing Scales unit 1,000 - 1,000 1,000 1,000 1,000 - 4,000
PABU Marketing materials set 200 - 200 200 200 200 - 800
PABU Small hanging digital Scales unit 15 - 150 150 150 150 - 600
SAU eqpt unit 1,000 - 1,000 1,000 1,000 1,000 - 4,000
Male Flock Basic Eartags unit 1 - 3,400 3,400 3,400 3,400 - 13,600
Male Flock Basic Eartags Applicators unit 50 - 900 900 900 900 - 3,600
Male Flock Weighing Scales unit 1,000 - 1,000 1,000 1,000 1,000 - 4,000
Male flock Technical manuals unit 10 - 200 200 - - - 400
PABU Technical manuals set 10 - 300 300 300 300 - 1,200
79

Cost Total
Basic Eartags (Term Sire Flock) unit 1 - 500 500 500 500 - 2,000
Basic Eartags Applicators (Term Sire unit 50 - 100 100 100 100 - 400
Flock)
Record book set (TSF) unit 500 - 1,000 1,000 1,000 1,000 - 4,000
Weighing Scales (Term Sire Flock) unit 900 - 900 900 900 900 - 3,600
TSF Technical manuals unit 10 - 200 200 - - - 400
PABU signboard unit 125 - 125 125 125 125 - 500
PABU computers IT set 2,000 - 4,000 4,000 - - - 8,000
PABU livestock housing upgrade unit 5,000 - 5,000 5,000 5,000 5,000 - 20,000
PABU building/ office unit 10,000 - 10,000 10,000 10,000 10,000 - 40,000
Housing upgrade for TSF flock (Term unit 2,000 - 2,000 2,000 2,000 2,000 - 8,000
Sire Flock)
Housing upgrade for Male Flock flock 500 - 500 500 500 500 - 2,000
PFU and PFLU - 158,605 317,210 158,605 - - 634,420
PLFU Basic Eartags unit 1 - 3,000 6,000 3,000 - - 12,000
PLFU Basic Eartags Applicators unit 50 - 500 1,000 500 - - 2,000
PLFU Record book set unit 500 - 1,000 2,000 1,000 - - 4,000
PLFU Weighing Scales unit 1,000 - 2,000 4,000 2,000 - - 8,000
PLFU Marketing materials unit 200 - 200 400 200 - - 800
PFU Fodder plot (fence, well) unit 10,000 - 10,000 20,000 10,000 - - 40,000
PFU Tractor unit 20,000 - 20,000 40,000 20,000 - - 80,000
PFU Tractor Equipment unit 5,000 - 5,000 10,000 5,000 - - 20,000
PFU Feed processing equipment unit 2,000 - 2,000 4,000 2,000 - - 8,000
PFU Hay making equipment unit 5,000 - 5,000 10,000 5,000 - - 20,000
PFU Truck unit 10,000 - 10,000 20,000 10,000 - - 40,000
PFU Sprinkler irrigation unit 5,000 - 5,000 10,000 5,000 - - 20,000
PFU Water tank unit 1,000 - 1,000 2,000 1,000 - - 4,000
PFU Fodder plot establishment unit 5,000 - 5,000 10,000 5,000 - - 20,000
PFU Fodder Storage Facility unit 20,000 - 20,000 40,000 20,000 - - 80,000
PFU & PFLU deep well unit 10,000 - 10,000 20,000 10,000 - - 40,000
Geophysical Surveys well 505 - 505 1,010 505 - - 2,020
PFU office unit 5,000 - 5,000 10,000 5,000 - - 20,000
PFLU Livestock Feedlot unit 23,400 - 23,400 46,800 23,400 - - 93,600
PFLU Fodder Storage Facility unit 25,000 - 25,000 50,000 25,000 - - 100,000
PFLU office unit 5,000 - 5,000 10,000 5,000 - - 20,000
PCPU - 11,000 12,000 21,000 - - 44,000
PCPU: Bags and labels unit 1,000 - 1,000 2,000 1,000 - - 4,000
PCPU: PCPU sorting facility unit 10,000 - 10,000 10,000 20,000 - - 40,000
Total Base Cost - 2,088,077 2,356,677 1,649,990 1,158,510 - 3,451,674
a Excludes in-kind beneficiary contributions.
B. Arkhangai Aimag Subproject
a. Overview
298. Arkhangai Aimag is located in the central economic region with an area of 55,314 km2 and
borders with Zavkhan, Khuvsgul, Bulgan, Uvurkhangai and Bayankhongor Aimags. The highest
80
mountain in the aimag is Tarvagatai Mountain. The Orkhon, Khanui, Tamir and Chuluut rivers
flow through the aimag territory and there are several the lakes including Ugii and Terkhiin
Tsagaan.
Figure 23: Project Area in Arkhangai Aimag
299. Population. Arkhangai Aimag has a population of 95,994 people in 27,912 households,
of which 14,978 are herder households. There are 19 soums in the aimag of which six—
Khairkhan, Ulziit, Erdenemandal, Battsengel, Ugiinuur and Khashaat—are in the project area.
300. Erdenemandal Soum. Erdenemandal Soum is located 160 km from Arkhangai aimag
center and 547 km from Ulaanbaatar City. The soum is located in the khangai region. The area
of the soum is 3,363 km2, of which 255,391 ha is pastureland, 72,387 ha forest, 3,209 ha arable
cropland and 1,372 ha abandoned cropland. There are 421 rivers and 1,415 lakes and ponds in
the soum. Average annual precipitation is 277.9 mm. The soum is predominantly mountain steppe
pastures. The average annual pasture yield is 46 kg/ha. About 31.5% of the pastureland is
degraded to various extents. The annual carrying capacity of the soum pasture is 516,100 live
sheep units, which was exceeded by 279% in 2019. The ratio of sheep to goats in 2019 was 3.1:1,
which is similar to historical levels. In 2019, the soum prepared 6,000 tons of hay, 20 tons of grain
feed, and 90 tons of hand-made fodder, equivalent to 6.7 kg of grass per live sheep unit, which
would feed soum livestock for 13 days.
301. Khairkhan Soum. Khairkhan Soum is located 176 km from Arkhangai aimag center and
607 km from Ulaanbaatar City. The soum is located in the khangai region. The area of the soum
is 2,544 km2, of which 195,486 ha is pastureland, 42,688 ha forest, 3,209 ha arable cropland and
18 ha abandoned cropland. There are 248 rivers, and 740 lakes and ponds ponds in the soum.
81
Average annual precipitation is 300 mm. The soum is predominantly mountain steppe pastures.
The average annual pasture yield of the soum is 46 kg/ha. The annual carrying capacity of the
soum pasture is 185,800 live sheep units, which was exceeded by 323% in 2019. About 10.6%
of the pastureland is degraded to various extents. The ratio of sheep to goats is 2.5:1. In 2019,
the soum prepared 4,638 tons of hay and 104.5 tons of hand-made fodder, equivalent to 4.6 kg
of grass per live sheep unit, which would feed soum livestock for 9-10 days.
302. Battsengel Soum. Battsengel Soum is located 68 km from Arkhangai aimag center and
is 3,536 km2, of which 315,145 ha is pastureland, 32,162 ha forest, 1,569 ha arable cropland and
1,750 ha abandoned cropland. The Bukhun Shar Mountain is a locally protected area. There are
348 rivers, 244 lakes and ponds and 244 springs in the soum. Average annual precipitation is
207.8 mm. The soum is predominantly mountain steppe pastures. The average annual pasture
yield of the soum is 47 kg/ha. The annual carrying capacity of the soum pasture is 299,400 live
sheep units, which was exceeded by 165% in 2019. About 28.9% of the pastureland has been
degraded to various extents. The ratio of sheep to goats is 2.1:1. In 2019, the soum prepared
5,202 tons of forage, comprising 5,100 tons of hay, 10 tons of silage, 72 tons of feed grain and
104.5 tons of hand-made fodder. This would be sufficient to feed the total livestock 7.1 kg of grass
per live sheep unit, which would feed the livestock for 14 days.
303. Ulziit Soum. Ulziit soum is located 68 km from Arkhangai aimag center and 550 km from
Ulaanbaatar City. The soum is located in the khangai region. The area of the soum is 1,720 mm2,
of which 161,683 ha is pastureland, 4,465 ha forest, 2,037 ha arable cropland and 1,414 ha
abandoned cropland. There are 702 rivers, 188 lakes and ponds in the soum. Average annual
precipitation is 250-280 mm. The soum is predominantly mountain steppe and meadow steppe.
The average annual pasture yield of the soum is 45 kg/ha. The annual carrying capacity of the
soum pasture is 158,000 live sheep units, which was exceeded by 251% in 2019. About 31.5%
of the pastureland has been degraded to various extents. The ratio of sheep to goats is 1.9:1.
304. Ugiinuur Soum. Ugiinuur soum is located 100 km from Arkhangai aimag center and 360
km from Ulaanbaatar City. The soum is located in the khangai region. The area of the soum is
1,686 km2, of which 158,767 ha is pastureland, 998 ha arable cropland and 2,202 ha abandoned
cropland. There are 300 rivers, and 3,249 lakes and ponds in the soum. Average annual
precipitation is 280-300 mm. The soum is predominantly steppe small bunch grass. The average
annual pasture yield of the soum is 49 kg/ha. The annual carrying capacity of the soum pasture
is 179,300 live sheep units, which was exceeded by 172% in 2019. About 37.4% of the
pastureland has been degraded to various extents. The ratio of sheep to goats is 1.8:1. In 2019,
the soum prepared 2,975 tons of forage, comprising 2,895 tons of hay, 30 tons of green fodder
and 70.2 tons of hand-made fodder. This was equivalent to 7.2 kg of grass per live sheep unit,
which would feed the soum livestock for 15 days.
305. Khashaat Soum. Khashaat soum is located 190 km from Arkhangai aimag center and
is 2,585 km2, of which 250,922 ha is pasture, 198 ha arable cropland and 2,854 ha abandoned
cropland. Khushuu Tsaidam special protected area occupies and area of 31,000 ha. There are
54 rivers and springs and 60 lakes and ponds in the soum. Average annual precipitation is 280-
300 mm. The soum is predominantly steppe small bunch grass. The average annual pasture yield
of the soum is 26 kg/ha. The annual carrying capacity of the soum pasture is 238,400, which was
exceeded by 131% in 2019. Mice have spread to become a major pest in the pasturelands and
about 37% of the pastureland has been degraded to various extents. The ratio of sheep to goats
is 1.8:1. In 2019, the soum prepared 3,100 tons of forage, of which 3,000 tons was hay and 100
82
tons was hand-made fodder, equivalent to 5.9 kg of grass per live sheep unit, which would feed
soum livestock for 10 days.
306. The Arkhangai subproject area comprises 15,435 km2 (27% of the aimag territory), of
which 1,337,394 ha is pastureland, 151,702 forest land and 7,968 ha water sources (Table 42).
Table 42: Land Classes in Arkhangai Subproject Area

Erdenemandal 336,330 255,391 72,387 1,836 152
Khairkhan 254,430 195,486 42,688 988 3,209
Battsengel 353,553 315,145 32,162 572 1,569
Ulziit 172,037 161,683 4,465 890 2,037
Ugiinuur 168,648 158,767 - 3,568 998
Khashaat 258,454 250,922 - 114 198
Subproject total 1,543,452 1,337,394 151,702 7,968 8,162
% of aimag area 27 36 14 32 28
Aimag total 5,785,382 3,742,707 1,082,621 25,246 28,899
307. Land degradation conditions in the subproject soums in Arkhangai Aimag vary from level
II to level III. Level II shows slight degradation, which means key dominants are still dominating,
some grazing sensitive forbs are in decline and grazing resistant species are in increase. Level
III indicates moderate degradation, which means the dominants are in decline and replaced by
other subdominants, and the number of species is declining. The land recovery condition of the
subproject area is class II, which indicates that the plant community is altered but may rapidly
recovered in 3-5 growing seasons with favorable climatic conditions or a change in management.
is already between II and III in the Arkhangai subproject area, which indicates that the pasture
conditions of Arkhanghai subproject area could be recovered into their initial conditions in 3-5
years. This is a key concern for the livestock sector in view of climate change induced frequency
increase of severe weather events.
28.9% in the subproject area and ranges between 18.7% in Khashaat and 38.2% in Khairkhan.
Table 43: Population and Households in Arkhangai Subproject Area

Population Households Herder households Herders Poverty
Soum
(no.) (no.) (no.) (no.) (%)
Battsengel 3,765 1,163 872 1,412 27.5
Erdenemandal 5,652 1,693 1097 1,770 29.8
Khairkhan 3,753 1,143 774 1,256 38.2
Khashaat 3,188 940 641 1,079 18.7
Ugiinuur 3,113 969 697 1,162 26.7
Ulziit 3,403 1,094 813 891 30.4
Total 22,874 7,002 4,894 7,570 29.0
83
Source: Project Aimag Food and Agriculture Departments and the target soum governments and Ministry of Labour
and Social Protection 2020 for poverty
310. Herder groups. There are three herder groups with a total of 90 members and using 39%
of the pasture area in the subproject area. On average, 39% of overall households enrolled to the
herder groups(Table 44). About 1.7% of the herder households are members of herder groups,
ranging between 0.4%% in Erdenemandal Soum and 6.7% in Ulziit Soum.
Table 44: Herder Groups in Arkhangai Subproject Area

Erdene-
Indicator Unit Khairkhan Battsengel Ulziit Ugiinuur Khashaat Overall
mandal
Total households no. 1,693 1,143 1,163 813 969 940 6,725
Herder households no. 1,484 774 944 813 697 824 5,332
Herder groups no. 1 1 1 0 0 0 3
Members no. 6 8 11 41 9 15 90
Coverage of herder
% 0.4 1 1.2 6.7 1.3 1.8 1.7
groups
Pasture used by
% 15 80 20 11 6 100 39
herder groups
311. Pasture User Groups. There are 43 PUGs with 2,522 members in the subproject area,
of which 8 are in Khairkhan soum, 9 in Battsengel soum, 3 in Ulziit soum, 9 in Ugiinuur soum and
14 in Khashaat soum (Table 45). About 52% of herder households are members of the PUGs.
There are no Soum Pasture Associations in the subproject area.
Table 45: Pasture User Groups and Soum Pasture Associations in Arkhangai Subproject
Area
Pasture User Groups Membership of
Soum Pasture Herder
Soum Pasture User
Number Members Associations families
Groups
Khairkhan 8 728 - 774 94%
Battsengel 9 348 - 872 40%
Ulziit 3 118 - 813 15%
Ugiinuur 9 641 - 697 92%
Khashaat 14 687 - 641 107%
Total 43 2,522 - 4,894 52%
312. Cooperatives. There are 36 cooperatives in the subproject area with a total of 2,280
members (Table 46). On average, 40% of herder households are members of the cooperatives.
Of these cooperatives, 25 are herder cooperatives with eight in Erdenemandal, three in
Khairkhan, three in Battsengel, eight in Ugiinuur and three Khashaat soums. Herder cooperatives
have 1,968 members, and average of 79 members per cooperative. Cooperatives do not
undertake any pasture protection activities, but herders mainly joined to benefit from the
government wool premiums through the cooperatives, so it more suitable to cooperate with them
linking herders with processing factories.
Table 46: Cooperatives in Arkhangai Subproject Area

Soum
Erdenemandal 8 700 8 700 1,097 64%
84

Soum
Khairkhan 6 176 3 150 774 19%
Battsengel 3 359 3 359 872 41%
Ulziit 3 24 - - 813 0%
Ugiinuur 9 700 8 130 697 19%
Khashaat 7 321 3 629 641 98%
Total 36 2,280 25 1,968 4,894 40%
313. Forest User Groups. There are 3 forest user groups in the subproject area located in
areas where there are project forest resources (Table 47). There is one group in Khairkhan Soum
and two in Battsengel Soum. The purpose of the forest user groups is to protect the forest
resources and not the pasture.
Table 47 Forest User Groups in Arkhangai Subproject Area

Forest User Groups Herder Enrollment in
Soum
Number Members households Forest User Groups
Khairkhan 1 15 774 2%
Battsengel 2 - 872 0%
Total 3 15 4,894 0%
314. There are 353 engineering designed deep wells in the pasturelands, 120 springs, 123
lakes and ponds, 17 rivers, and there is indicated to be a need for an additional 172 deep wells
in the subproject area (Table 48). These additional deep wells are required to ensure sufficient
drinking water for livestock numbers within the carrying capacity and to relieve grazing pressure
on pastures near existing wells. Pasture degradation will be reduced because currently underused
pastureland is in serious disrepair and urgently needs to be improved, not only as drinking water
for livestock but also to reverse pasture degradation. Traditionally, individual water points are
shallow/hand-made wells. Due to a lack of maintenance, the engineering wells in particular have
degraded since the transition period and the number of operational wells has sharply declined.
This has forced herders to move their stock to areas around the operational wells and close to
rivers. The carrying capacity of the pastures in these areas is far exceeded, causing serious land
degradation.
Table 48: Water Points in Arkhangai Subproject Area

Erdenemandal 54 28 4 3 18
Khairkhan 78 4 78 5 30
Battsengel 54 45 1 2 63
Ulziit 21 16 7 4 15
Ugiinuur 45 27 34 3 31
Khashaat 101 17 3 5 15
Total 353 137 127 22 172
85
enclosures, 1,549 livestock sheds, 1,326 camps with certificates of use, and 5 fodder storages in
the subproject area (Table 49). Achievement to sustainable pasture management through
reduction of livestock numbers and rehabilitation of degraded pasture requires both pasture
improvement and improved livestock enclosures and sheds, and fodder storage.
Table 49: Animal Shelters and Storages in Arkhangai Subproject Area

Soum
Erdenemandal 580 620 15 1
Khairkhan 1,070 300 3 452 1
Battsengel 165 926 1 611 1
Ulziit 27 850 - - 1
Ugiinuur 43 610 610 263 1
Khashaat - 920 920 - -
Total 1,885 4,226 1,549 1,326 5
of which Erdenemandal Soum increased by 406%, Khairkhan Soum by 580%, Battsengel Soum
by 299%, Ulziit Soum by 370%, Ugiinuur Soum by 277%, and Khashaat Soum by 205% (Table
50 and Figure 24).
Table 50: Total Livestock Number in Arkhangai Subproject Area for Selected Years
Soum 1990 2000 2010 2019 1990 and 2019
Battsengel 108.8 197.6 194.8 433.7 299%
Ugiinuur 86.1 135.7 152.7 324.5 277%
Ulzii 75.2 107.5 149.6 353.2 370%
Khairkhan 66.7 114. 188.5 453.5 580%
Khashaat 122.1 153.5 225.1 372.3 205%
Erdenemandal 110.4 192.4 263.5 558.5 406%
Arkhangai subproject area 569.3 900.7 1,174.2 2,495.8 338%
86
Figure 24: Livestock Number Trend in Arkhangai Subproject Area

3,000,000
2,500,000
Number of livestock
2,000,000
Khashaat
Ugiinuur
1,500,000
Ulziit
Battsengel
1,000,000
Khairkhan
Erdenemandal
500,000
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Years of 1990-2019
317. There were 2.50 million livestock in the Arkhangai subproject area in 2019, equivalent to
4.03 million live sheep units. Details by type of livestock and by soum are in Table 51. Overall,
the ratio of sheep to goats was 2.23:1 with individual soums varying between 1.80:1 in Khashaat
and 3.12:1 in Erdenemandal.

Units sheep:goats
Erdenemandal 32,473 35,513 30 371,382 119,095 558,493 919,107 3.12:1
Khairkhan 33,732 28,415 - 278,842 112,559 453,548 786,759 2.48:1
Battsengel 31,131 29,849 36 234,100 106,849 433,728 727,455 2.19:1
Ulzii 21,323 16,535 215 206,563 108,604 353,240 553,853 1.90:1
Khashaat 19,111 14,661 512 217,418 120,589 372,291 550,251 1.80:1
Ugiinuur 15,620 15,690 473 189,984 102,696 324,463 488,255 1.85:1
Total 153,390 140,663 1,266 1,498,289 670,392 2,495,763 4,025,680 2.23:1
318. Each of the soums has a history of dzuds. Erdenemandal Soum lost livestock in 2000-
2001 and 2009-2010 dzud, but it is one of the leading soums in the aimag in terms of the number
of livestock, which is five times higher than in 1990. In Khairkhan Soum, the natural conditions
are relatively favorable, the number of livestock has increased 6.8 times in the last 30 years, in
spite of dzuds in 2000-2001 and 2009-2010. In Battsengel soum, after the severe weather in
2000-2003, Battsengel soum had 143,393 head of livestock, but increased by 302% in the
following16 years. Between 2000 and 2002, Uginuur Soum experienced temporary weather
difficulties, resulting in a 50% loss of livestock in 1999 due to malnutrition
319. Breeds. While livestock in all of the soums are predominantly local breeds Battsengel
soum has 416 sheep of Bayad breed and 650 sheep of Khotont breed.
87
320. Output. Herder households in Arkhangai subproject area sell an average of 170,000 head
of livestock per year, of which one herder household sells an average of 100 head and the wealthy
ones 450 head. Herder households supply an average of 2.5 tons of meat to the market annually.
The subproject area produces a total of 190 tons of cashmere annually with each soum producing
between 26 tons and 46 tons.
321. There are 15 private veterinary units (PVUs), and two private animal breeding units
(PABUs) in the Arkhangai subproject area (Table 52). Legally, PVUs must provide general or
specialized professional care and services in the field of prevention, diagnosis, treatment of all or
certain types of animal diseases, combating infectious diseases, ensuring safety of animal
originated raw materials19. They must be a legal entity with a veterinarian accredited to provide
professional services, premises and equipment that meet the standard requirements. But these
PVUs provide services comprising 32 baghs of the subproject soums with lower capacity than
required in terms of equipment and premises. In accordance with the Law on Livestock Genetic
Resources, PABUs should provide professional services such as identification and registration of
livestock, inspection and classification of livestock, determination of pedigree, yield and quality,
assessment of offspring characteristics, genetic assessments, verification of breeding results,
development of breeding programs, selection of suitable breeder, and provide technical guidance
and advice for herders, livestock owners and legal entities. The PABUs must have an accredited
livestock specialist to provide professional services, and premises and equipment meet with
standards.
Table 52: Private Veterinary and Animal Breeding Units in Arkhangai Subproject Area
Soum No. Names Remarks PABU Remarks
Tugs khand, Equipment for Tom Small animal AI tool
Erdenemandal 3 Ar Bayan Erdene, primary examination selection (incomplete)
Mandraa and sampling
Equipment for Each has 1
Kheremtei,
Khairkhan 2 primary examination veterinarian and 1
Avral Khairkhan
and sampling technician
Tahilgat nuuriin Ih buyan 3 veterinarian and 3
Battsengel 1
ovoo erdene technicians
Sterilization
Burdni shim Mal, disinfection automax,
Ulziit 2
Mungun Bosgo bucks, portable
refrigerators
Ugii Tavan Each has 1
Erdene, veterinarian and 1
Ugiinuur 3 Ugiin Erdenet technician
Sureg,
Saruul ugii
Tavan san,
Bayan Tavan
Refrigerator, surgery,
Khashaat 4 Sakhia,
syringe, vehicle
Undur Tsaidam,
Bagd
Total 15
Source: Project Aimag Food and Agriculture Departments and the target soum governments, Feb-May 2020
88
322. There are 17 trading entities in the subproject area but no individual carrying out trade in
livestock products (Table 53).
Table 53 Traders of Livestock Products in Arkhangai Subproject Area

Soum Traders of meat, by-products, wool and cashmere
Erdenemandal Togskhand, Dersttsuur, Bomboozaisan, Tsegtstuuchee, Tugs 10
Ulziit Oron, and Shand Kharaat coops, Darkhan Tsokhio,
Javkhlant Alltan Nar, Khangain Tavan Erdene, Khanui Khangai
Buyan Khishig
Khairkhan Bayan Mogoi, Khögjliin Tüüchee Khairkhan, and Duulga 3
Chandman coops
Battsengel Bum Ravjikh, Chi Bod, Enkh Taivny Evseg Khüchtenüüd 3
Ulziit None -
Ugiinuur None -
Khashaat Erdene-Bayan Uguuj 1
Total 17
323. There are no abattoir, meat and dairy processing factories or workshops, or livestock
feeding units in Arkhangai subproject area. However, there are eight fodder production
businesses, one in Ulziit Soum and seven in Ugiinuur Soum.
324. The main problems identified in Arkhangai subproject area include: (i) lack of refrigerated
storage and transport; (ii) no local buyers; (iii) no laboratory for testing meat; (iv) low price and
unstable market situations; (v) remoteness from Ulaanbaatar; and (vi) lack of information on
factory prices due to absence of representatives. Major buyers differ depending on location of the
soums to the settlements, but typically Ulaanbaatar City is also a marketplace. Live animals are
transported in warm seasons and carcasses in cold seasons. The cost of transportation to
Ulaanbaatar and other issues are summarized in Table 54.
Table 54: Major Problem and Buyers in Arkhangai Subproject Area

Erdenemandal No refrigerated Sells to middleman at central markets Transport costs are 7,000-
transports, no of Ulaanbaatar, Arkhangai aimag, 10,000 MNT per small, and
laboratory for Darkhan and Erdenet at negotiated 50,000-60,000 MNT per big
testing meat, prices. animals.
remoteness from Sells to local businesses in small
Ulaanbaatar volume.
Khairkhan Lack of information Sells to Darkhan, Erdenet, Transports: Мighty-3.5 tons,
on factory prices Ulaanbaatar. FUSSO, Hino, Frontier, ISUZU,
due to non- Sells to middleman who come to rural Daewoo, Kanter, Porter.
existence of areas. Transport: 10,000 MNT per
representatives. small, 50,000 MNT per big
No local buyers. animals.
Battsengel Low price, and no Sells to Emeelt and Khuchit Shonkhor Transports: Frontier, Porter etc.
local buyers. markets in Ulaanbaatar. Transport cost: 5,000-10,000
MNT per for small, 50,000 MNT
per big animals.
Ulziit No regular buyer. Sells to middleman or deliver Transports: Мighty, Kanter,
There are no local themselves to markets in Porter.
buyers. Ulaanbaatar. Transport cost: 10,000 - 30,000
MNT per animals.
89

Ugiinuur No refrigerated Sells to middleman at markets in Transports: Porter, Bongo,
storage and aimag center, Kharkhorin, and other microbus.
transportation, no markets in Ulaanbaatar. Transport cost: 5,000-7,000
laboratory for Sells to local buyers, БО-SО and MNT per small, 25,000-30,000
testing meat Bayantsagaan shops, and MNT per big animals.
G.Myagmar, in small volume.
Khashaat Unstable market Sells to middleman at Emeelt and Transports: Porter, Bongo,
situations Khuchit Shonkhor markets in Istana, microbus.
Ulaanbaatar and local buyers. Transport cost: 200,000
MNT/ton
325. In support of national legislation, the soums have approved and follow local local
legislation (Table 55).
Table 55 Local Legislation in Arkhangai Subproject Area

Erdenemandal Soum territorial development plan Citizens' Representative Meeting,
(clause 4.2.1, 4.2.2, 4.2.3, 6.4, 6.4.1, Resolution No.04, 2019.12.13
6.4.2, 6.4.3, 6.4.4, 6.4.5)
Five-year plan developed through IFAD
project. Pasture release between Jun 1
and Oct 15.
Khairkhan Seven-year soum development plan
prepared through IFAD project. Bagh
citizen's khural resolution on hayfield and
reserve pasture.
Battsengel Procedure on responsible pasture Citizens' Representative Meeting,
Resolution No.XX, 2018.12.20
Bagh citizen's khural resolutions on
pasture release.
Ulziit Bagh citizen's khural resolutions on
pasture reserve.
Ugiinuur
Khashaat Bagh citizen's khural resolutions on
pasture reserve restrictions.
326. The Arkhangai Aimag subproject will have annual and end-of-project targets that relate to
each of the soum sub-agreements. The end-of-project targets related to grazing management are
shown in Table 56. These data will be updated during implementation and annual targets will also
be developed during the aimag subproject planning meetings as per the aimag subproject
template.
90
Table 56: Arkhangai: Targets Related to Grazing Management Sub-agreements

2019 2027 2019 2027 2019 2027
Without Project
Battsengel 792.0 792.0 12 12 2 3
Erdenemandal 919.1 919.1 12 12 2 3
Khairkhan 786.8 786.8 9 9 3 4
Khashaat 550.3 550.3 29 29 2 3
Ugiinuur 488.3 488.3 9 9 2 3
Ulzii 553.9 553.9 9 9 2 3
Total 4,090.2 4,090.2 80 80 2.2 3.2
With Project
Battsengel 792.0 698.8 12 35 2 1
Erdenemandal 919.1 811.0 12 44 2 1
Khairkhan 786.8 694.2 9 31 3 2
Khashaat 550.3 485.5 29 26 2 1
Ugiinuur 488.3 430.8 9 28 2 1
Ulzii 553.9 488.7 9 33 2 1
Total 4,090.2 3,609.0 80 197 2.2 1.2
327. The targets for second-generation sub-agreements (Table 57) assume that each soum
will implement one of each.
Table 57: Arkhangai: Second-Generation Sub-agreements Targets

No. PFU
Soum PLMU (Sheep/Goats/TSF) PFLU PCPU
B T B T B T B T B T
With Project
Battsengel 0 1 1 1 0 1 0 1 0 1
Erdenemandal 0 1 1 1 0 1 0 1 0 1
Khairkhan 0 1 0 1 0 1 0 1 0 1
Khashaat 0 1 0 1 0 1 0 1 0 1
Ugiinuur 0 1 0 1 7 7 0 1 0 1
Ulzii 0 1 0 1 1 1 0 1 0 1
Total 0 4 2 6 0 4 0 4 0 4
328. Seventy-two sub-agreements are expected to be implemented in Arkhangai subproject

area (Table 58).
91
Table 58: Number and Type of Sub-Agreements in Arkhangai Aimag

No. Sub-Agreement Type No. of Sub-agreements
Total 72
Table 59:Arkhangai Subproject Implementation Schedule

Activities 2021 2022 2023 2024 2025 2026 2027
3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
PMU operational
PUG/RUA Development
Develop Proposal
Contract Services
Develop Proposal
Contract Services
PVUs
Develop Proposal
Contract Services
PLMU
Develop Proposal
Contract Services
PFU and PLFU
Develop Proposal
Contract Services
92
Activities 2021 2022 2023 2024 2025 2026 2027

3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
Develop Proposal
Contract Services
PCPU
Develop Proposal
Contract Services
5. Subproject benefits
carcass weight and fiber weight is estimated in Table 60.
Table 60: Livestock Outputs Without- and With-Project in Arkhangai Subproject Area
Without Project
286,174 126,499 19,143 5,131 1,774 2,125 674 109
With Project
2021 286,174 126,350 19,143 5,131 1,774 2,125 674 109
2022 286,174 126,350 19,143 5,131 1,774 2,125 674 109
2023 286,174 126,350 19,143 5,131 1,774 2,125 674 109
2024 329,268 145,649 23,292 6,040 2,092 2,648 688 108
2025 327,836 144,937 23,210 6,118 2,117 2,683 702 107
2026 325,920 143,592 23,047 6,213 2,146 2,728 705 106
2027 324,005 142,247 22,884 6,276 2,162 2,753 708 104
2028 319,983 140,307 22,642 6,338 2,182 2,790 719 103
2029 315,962 138,367 22,400 6,366 2,190 2,806 730 102
2030 310,883 136,065 22,049 6,405 2,202 2,830 739 101
2031 305,803 133,762 21,697 6,408 2,201 2,831 748 99
2032 299,753 130,980 21,316 6,421 2,205 2,849 754 97
2033 293,703 128,198 20,934 6,398 2,196 2,844 761 96
2034 286,764 125,055 20,447 6,386 2,191 2,846 764 94
2035 279,825 121,912 19,961 6,336 2,172 2,825 768 92
93
Table 61: Pasture Degradation Targets in Arkhangai Subproject Area

(2019) (2026) (2026)
Battsengel 2 3 1
Erdenemandal 2 3 1
Khairkhan 3 4 2
Khashaat 2 3 1
Ugiinuur 2 3 1
Ulzii 2 3 1
Average 2.1 3.1 1.1
6. Subproject Cost
The Arkhangai subproject cost is estimated as $5,177,510. Base costs for each sub-agreement
are shown in Table 62 and detailed costs are set out in Table 63.
Table 62: Costs of sub-agreements for Arkhangai Subproject

Sub-Agreement Unit
($) (no.) ($)
PVU soum 43,738 6 262,430
PLMU soum 80,115 6 480,690
PABU soum 35,375 6 212,250
PCPU soum 11,000 6 66,000
Total 5,177,510
a Excludes in-kind beneficiary contributions
Table 63: Detailed Costs by Year for Arkhangai Subproject

Cost Total
PUG RUA Implementation a - 1,102,115 1,079,158 786,128 701,970 - 3,144,510
Basic Eartags Applicators (PUG) unit 50 - 1,350 2,700 1,350 - - 5,400
Cameras for Land Manager (Env
Monitoring) set 5,000 - 7,500 7,500 7,500 7,500 - 30,000
94

Cost Total
Water/ wells unit 9,500 - 228,000 228,000 228,000 228,000 - 912,000
Soum Reserve area signboards unit 100 - 600 300 300 - - 1,200
PVU 19,010 - 131,215 131,215 - - - 262,430
PVU upgrade unit 5,000 - 40,500 40,500 - - - 81,000
PLMU - 123,173 123,173 117,195 117,150 - 480,690
PLMU office unit 10,000 - 15,000 15,000 15,000 15,000 - 60,000
Deep wells unit 10,000 - 15,000 15,000 15,000 15,000 - 60,000
PABU - 56,363 56,363 49,763 49,763 - 212,250
PABU Marketing materials set 200 - 300 300 300 300 - 1,200
SAU eqpt unit 1,000 - 1,500 1,500 1,500 1,500 - 6,000
Male Flock Basic Eartags Applicators unit 50 - 1,350 1,350 1,350 1,350 - 5,400
Basic Eartags Applicators (Term Sire
Flock) unit 50 - 150 150 150 150 - 600
Weighing Scales (Term Sire Flock) unit 900 - 1,350 1,350 1,350 1,350 - 5,400
Housing upgrade for TSF flock (Term
Sire Flock) unit 2,000 - 3,000 3,000 3,000 3,000 - 12,000
PFU and PFLU - 237,908 475,815 237,908 - - 951,630
95

Cost Total
PLFU Marketing materials unit 200 - 300 600 300 - - 1,200
PFU Tractor unit 20,000 - 30,000 60,000 30,000 - - 120,000
PFU Truck unit 10,000 - 15,000 30,000 15,000 - - 60,000
PFU office unit 5,000 - 7,500 15,000 7,500 - - 30,000
PFLU office unit 5,000 - 7,500 15,000 7,500 - - 30,000
PCPU - 16,500 18,000 31,500 - - 66,000
Total Base Cost - 3,132,116 3,535,016 2,474,985 1,737,765 - 5,177,510
C. Uverkhangai Aimag Subproject
332. Uvurkhangai Aimag is located in the central part of the country with an area of 62,895 km2
and borders with Bayankhongor, Arkhangai, Bulgan, Tuv Dundgovi and Umnugovi aimags. The
highest mountains in the aimag are Khitruun, Bituug, Bagabogd and Myangan Yamaat. The Ongi,
Taats and Ar Aguit rivers flow through the aimag, while the main lakes are Naiman Nuur and
Taatsiin Tsagaan Nuur and the spars include Khujirt, Mogoit, Khitruun, Khuremt, Taats, Must,
Khuren Khad, Khorkhoin Turuu and Takhiin (Figure 25).
96
Figure 25: Project Target Area in Uvurkhangai Subproject Area
333. Population. Uvurkhangai Aimag has a population of 116,645 people in 34,652

households, of which 16,395 are herder households. There are 19 soums in the aimag of which
five—Baruunbayanulaan, Guchin-Us, Nariinteel, Taragt and Khairkhandulaan—are in the
subproject area.
334. Baruunbayanulaan Soum. Baruunbayanulaan Soum is located 195 km from

Uvurkhangai aimag center and 625 km from Ulaanbaatar City. The soum has in the govi region.
The area of the soum is 3,939 km2, of which 387,209 ha is pastureland, 3,100 ha forest, 28 ha
arable cropland and 26 ha abandoned cropland. The soum borders with Bogd, Guchin-Us,
Khairkhandulaan, and Nariinteel soums. There are 177 rivers and springs, 1,512 lakes and ponds
in the soum but most are seasonal. The average annual precipitation is 50.3 mm. The soum is
predominantly grass- semi-shrub-semi shrub, desert rangeland shrub types. The average annual
pasture yield of the soum is 17 kg/ha. The average annual carrying capacity of the soum pasture
is 167,300 live sheep units, which exceeded by 59% in 2019. The inter-soum pasture of 32,000
ha is located in this soum. About 26.5 % of the pastureland has been degraded to various extents.
The ratio of sheep to goats is 0.68:1. In 2019, the soum prepared 570 tons of forage, of which
385 tons was of hay and 185 tons of hand-made fodder. They also purchased 610 tons of hay
and 120 tons of feed grain from outside the soum. The fodder prepared by the soum is equivalent
to 3 kg of grass per live sheep unit (5.9 kg including purchased fodder), sufficient to feed the soum
livestock for 10 days.
335. Guchin-Us Soum. Guchin-Us Soum is located 105 km from Uvurkhangai aimag center
and 530 km from Ulaanbaatar City. The soum is located in both the gov and steppe regions with
steppe light brown and govi brown and saline soils. The area of the soum is 4,751 km2, of which
463,604 ha is pastureland, 8,800 ha forest and 143 ha abandoned cropland. The soum borders
with Bogd, Tugrug, Baruunbayanulaan, and Khairkhandulaan soums. There are 66 rivers and
springs, 260 registered lakes and ponds but they are mostly seasonal. The average annual
97
precipitation is 150-200 mm. The average annual pasture yield of the soum is 17 kg/ha. The
average annual carrying capacity of the soum pasture is 255,700 live sheep units, which was
exceeded by 24% in 2019. About 26.5 % of the pastureland has been degraded to various extents.
The ratio of sheep to goats is 0.94:1. In 2019, the soum prepared 70 tons of hand-made fodder
and purchased 1,620 tons of hay and 40 tons of feed grain from outside the soum. The fodder
prepared by the soum when converted to hay is equivalent to 5.4 kg of grass per live sheep unit,
which would feed soum livestock for a few days.
336. Nariinteel Soum. Nariinteel Soum is located 135 km from Uvurkhangai aimag center and
555 km from Ulaanbaatar City. About 60% of the soum area is in the steppe region and 30% in
the khangai region. The main soil types are light brown, mountain brown, meadow steppe, and
some alpine soils, as well as desert steppe brown soils in limited areas. The area of the soum is
2,703 km2, of which 264,082 ha is pastureland, 34 ha arable cropland and 10 ha abandoned
cropland. The soum borders with Baruunbayanulaan, Khairkhandulaan, Uyanga, and Ulziit
soums. There are 68 rivers and springs, and 231 lakes and ponds in the soum. The average
annual precipitation is 200-300 mm. The soum has a continental climate. Vegetation is
predominantly small bunch grass, forb-grass- kobrisia rangeland and forest of Larix and Pinus.
The average annual pasture yield of the soum is 10-28 kg/ha. The average annual carrying
capacity of the soum pastureland is 211,500 live sheep units and was exceeded by 59% in 2019.
About 40.3% of the pasture has been degraded to various extents. The ratio of sheep to goats is
0.71:1. In 2019, the soum prepared 257 tons of forage, of which 223 tons was hay and 34 tons
hand-made fodder. The fodder prepared by the soum when converted to hay is equivalent to 0.9
kg of grass per live sheep unit.
337. Taragt Soum. Taragt Soum is located 35 km from Uvurkhangai aimag center and 420 km
from Ulaanbaatar City. The soum borders with Uyanga, Khairkhandulaan, Zuunbayanulaan,
Arvaikheer soums. About 67% of the soum is in the khangai region and about 33% is in the govi
region. The area of the soum is 3,392 km2, of which 306,925 ha is pastureland, 1 ha forest, 312
ha arable cropland and 2,086 ha abandoned cropland. There are 62 rivers and springs, and 377
lakes and ponds in the soum. The average annual precipitation is 216 mm. The soum has a
continental climate. The pasture types include mountain steppe Festuca and forb- small bunch
grass. The average annual pasture yield of the soum is 41 kg/ha. The average annual carrying
capacity of the soum pastureland is 309,700 live sheep units and was exceeded by 24% in 2019.
About 22% of the pasture has been degraded to various extents. The ratio of sheep to goats is
1.36:1. In 2019, the soum prepared 577 tons of hay and 275 tons hand-made fodder. The fodder
prepared by the soum when converted to hay is equivalent to 1.5 kg of grass per live sheep unit.
338. Khairkhandulaan Soum. Khairkhandulaan Soum is located 73 km from Uvurkhangai

aimag center and 510 km from Ulaanbaatar City. The soum borders with Uyanga,
Baruunbayanulaan, Taragt, Tugrug, Guchin-Us, and Nariinteel soums. The soum is located about
40% in the khangai region and 60% is the steppe region. Soils are carbonate light brown in the
north, and thin black and light brown in the center and south, together with meadow along the
rivers. The area of the soum is 4,138 km2, of which 408,315 ha is pastureland, 766 ha forest and
124 ha arable cropland. There are 166 rivers and springs, and 333 lakes and ponds in the soum.
The average annual precipitation is 150-200 mm and the soum has a continental climate. The
pasture includes caragana-grass, and in central and northern parts bunch steppe-forb-grass. The
average annual pasture yield of the soum is 22 kg/ha. The average annual carrying capacity of
the soum pastureland is 218,800 live sheep units and was exceeded by 103% in 2019. About
27.4% of the pasture has been degraded to various extents. The ratio of sheep to goats is 0.91:1.
In 2019, the soum prepared 3,200 tons of forage, of which 2,150 tons was hay and 1,050 tons
hand-made fodder. The fodder prepared by the soum when converted to hay is equivalent to 7.8
98
kg of grass per live sheep unit, which is enough for feeding soum livestock for 10 days.
339. The Uvurkhangai subproject area comprises 18,925 km2 (30% of the aimag territory), of
which 1,830,136 ha is pastureland, 12,667 ha forest land and 3,255 ha of water sources (Table
64).
Table 64: Land Classes in Uvurkhangai Subproject Area

Baruunbayanulaan 393,890 387,209 3,100 1,689 28
Guchin-Us 475,096 463,604 8,800 326 -
Nariinteel 270,341 264,082 - 299 34
Taragt 339,221 306,925 1 440 2,086
Khairkhandulaan 413,768 408,315 766 500 124
Subproject total 1,892,471 1,830,135 12,667 3,255 2,272
% of aimag area 30 32 8 39 9
Aimag total 6,289,533 5,641,463 150,794 8,248 25,468
340. Land degradation conditions in the subproject soums in Uvurkhangai Aimag varies from
level I to level III. Level I means no degradation with all dominants are in place. Level III means
moderate degradation where the dominants are in decline and replaced by subdominants: the
number of species is declining. The land recovery category of subproject soums varies from class
I to class IV. Class I indicates that the plant community is at or near reference conditions (non-
degraded) or requires 1-3 growing seasons for recovery from minor changes (slightly degraded)
and matching stocking rates to forage supply and use with temporary seasonal deferment as
needed. Class IV indicates that the plant community is altered due to the local loss of key plant
species, invasion of noxious plant species, or alteration of hydrology that is unlikely to be
recovered for over a decade to many decades without intensive interventions such as species
removal, seeding, or manipulations to recover historical hydrological functions.
341. Pasture degradation is a problematic issue in the subproject soums. The degradation level
is already between I and III in subproject soums of Uvurkhangai Aimag, which indicates that the
pasture conditions of the subproject area could be recovered to their initial conditions in 10 or
more years. This is a key concern for the livestock sector in view of climate change induced
frequency increase of severe weather events.
35.0% in the Uvurkhangai subproject area and ranges between 27.6% in Nariinteel and 38.7% in
Baruunbayanulaan soums.
Table 65: Population and Households in Uvurkhangai Subproject Area

Soum
(no.) (no.) (no.) (no.) (%)
Baruunbayanulaan 2,832 710 519 908 38.7
Guchin-Us 2,209 640 524 711 35.4
Nariinteel 3,598 1,042 626 1,241 27.6
99

Soum
(no.) (no.) (no.) (no.) (%)
Taragt 3,155 955 817 1,363 39.5
Khairkhandulaan 3,502 1,121 800 1,428 35.0
Total 15,296 4,468 3,286 5,651 35.0
343. Herder Groups. There are 36 herder groups in the subproject area with a total of 423
members who use 14% of the pasture area (Table 66). Overall, 13% of herder households are
members of the herder groups with membership ranging from 5% in Khairkhandulaan to 34% in
Nariinteel.
Table 66: Herder Groups in Uvurkhangai Subproject Area

Khairkhan Guchin- Baruun
Indicators Unit Taragt Nariinteel Overall
dulaan Us bayanulaan
Total households no. 955 1,121 988 614 711 4,389
Herder households no. 817 812 623 447 503 3,202
Herder groups no. 8 6 9 6 7 36
Members no. 52 40 209 54 68 423
Coverage of herder groups % 6 5 34 12 14 13
Pasture used by herder groups % 9 5 51 9 12 17
344. Pasture User Groups. There are no pasture user groups or Soum Pasture Associations
in the subproject area.
members (Table 67). On average, 41% of herder households are members of the cooperatives.
Of these cooperatives, 14 are herder cooperatives, one in Baruunbayanulaan, five in Guchin-Us,
seven in Nariinteel and one in Taragt soums. Cooperatives do not undertake any pasture
protection activities, but herders mainly joined to benefit from the government wool premiums
through the cooperatives, so it more suitable to cooperate with them linking herders with
processing factories.
Table 67: Cooperatives in Uvurkhangai Subproject Area

Cooperatives Herder cooperatives Herder
Enrollment in
Soum househol
Number Members Number Members cooperatives
ds
Baruunbayan-Ulaan 4 197 1 749 519 144%
Guchin-Us 8 240 5 168 524 32%
Nariinteel 11 519 7 374 626 60%
Taragt 6 122 1 54 817 7%
Khairkhandulaan 11 99 800 0%
Total 40 1,177 14 1,345 3,286 41%
346. There are three forest user groups in the subproject area, all in Baruunbayanulaan soum.
and ponds, and 34 rivers, but there is indicated to be a need for an additional 79 deep wells in
100
the subproject area (Table 68). These additional deep wells are required to ensure sufficient
on pastures near to existing wells. Pasture degradation will be reduced because currently
underused pasture will be developed thus expanding the pasture area for livestock. Water supply
for pasturelands is in serious disrepair and urgently needs to be improved, not only as drinking
water for livestock but also to reverse pasture degradation. Traditionally, individual water points
are constructed for livestock watering including both high yielding engineering (deep) wells and
shallow/hand-made wells. Due to a lack of maintenance issues the engineering type wells in
particular have degraded since the transition period and the number of operational wells has
sharply declined. This has forced herders to move their stock to areas around the operational
wells and close to rivers. The carrying capacity of the pastures in these areas is far exceeded,
causing serious land degradation.
Table 68: Water Points in Uvurkhangai Subproject Area

Soum Deep wells Springs Lake & ponds Rivers Additional
wells required
Baruunbayanulaan 22 11 3 2 13
Guchin-Us 28 3 - 1 18
Nariinteel 34 10 - 3 6
Taragt - 82 4 19 9
Khairkhandulaan 114 90 3 9 10
Total 198 196 10 34 56
enclosures, 1,603 camp with certificates of use, and 8 fodder storages in the subproject area
(Table 69). Achievement of sustainable pasture management through reduction of livestock
numbers and rehabilitation of degraded pasture requires both pasture improvement and improved
livestock enclosures and sheds, and fodder storage.
Table 69: Animal Shelters and Storages in Uvurkhangai Subproject Area

Soum
Baruunbayanulaan 470 392 - 402 4
Guchin-Us 136 400 - 536 1
Nariinteel 100 380 - 665 -
Taragt 480 320 - - 1
Khairkhandulaan 584 74 - - 2
Total 1,770 1,566 - 1,603 8
of which in Baruunbayanulaan Soum increased by 138%, Guchin-Us Soum by 162%, Nariinteel
Soum by 193%, Taragt Soum by 122%, and Khairkhandulaan Soum by 217% (Table 70 and
Figure 26).
101
Table 70: Total Livestock Number in Uvurkhangai Subproject Area for Selected Years
Soum 1990 2000 2010 2019 1990 and 2019
Baruunbayanulaan 83.3 126.3 105.9 198.5 138%
Guchun-Us 89.9 108.8 86.2 235.5 162%
Nariinteel 76.1 149.2 146.6 222.8 193%
Taragt 113.1 89.7 55.3 251.6 122%
Khairkhandulaan 98.4 121.8 122.2 312.0 217%
Bulgan subproject area 460.9 595.9 516.1 1220.5 165%
Figure 26: Livestock Number Trends in Uvurkhangai Subproject Area

1,400,000
1,200,000
1,000,000
Livestock number
800,000 Khaikhandulaan
Taragt
600,000 Nariinteel
Guchin-Us
400,000
Barunbayanulaan
200,000
-
1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930
Axis Title
Source: National Statistics Office of Mongolia, Feb-May 2020
350. There were 1.21 million livestock in the Uvurkhangai subproject area in 2019, equivalent
to 1.74 million live sheep units. Details by type of livestock and by soum are in Table 71. Overall,
the ratio of sheep to goats was 0.92:1 with individual soums varying between 0.68:1 in
Baruunbayanulaan and 1.36:1 in Taragt. Baruunbayanulaan and Guchin-Us soums are in an
ecologically suitable region for goat breeding, so the proportion of goats in the total livestock is
much higher than in khangai and steppe soums. In Nariinteel Soum, the ecological conditions,
pastures with fine grasses, are ideal for sheep but goats dominate the herd, disrupting traditional
structures. In Taragt Soum ecological conditions are suitable for cattle and sheep, but goats have
become of increasing importance with an impact on herd structure.
102

Units sheep:goats
Baruunbayanulaan 6,867 4,218 4,007 74,450 109,005 198,547 265,967 0.68:1
Guchin-Us 84,847 3,458 5,886 105,192 112,459 235,479 315,971 0.94:1
Nariinteel 11,695 10,761 74 82,722 116,550 221,802 334,418 0.71:1
Taragt 16,280 8,513 105 130,498 96,237 251,633 382,674 1.36:1
Khairkhandulaan 15,630 10,523 200 135,989 141,227 303,569 436,641 0.96:1
Total 135,319 37,473 10,272 528,851 575,478 1,211,030 1,735,671 0.92:1
351. Each of the soums has a history of dzuds. In Baruunbayanulaan Soum, the 2009-10 dzud
killed nearly 30% of livestock but the number has more than recovered in the following nine years.
A similar situation is observed in Guchin-Us Soum. Nariinteel Soum lost 57.5% of livestock during
the 2003-04 dzud compared to the number at the beginning of the year. These numbers have
subsequently recovered. In Taragt Soum the dzud of 2009-10, resulted in the loss of 65.9% of
livestock but this was again followed by a rapid recovery. In Khairkhandulaan Soum, 35% of
livestock at the beginning of the year were lost during the 2009-10 dzud.
352. Breeds. Despite of the predominance of local livestock breeds, there are 6,000 Barga
sheep and more than 5,000 Gobi Gurvan Saikhan goats in Baruunbayanulaan Soum; and 11,250
heads of Barga breed sheep, 12,300 heads of Gobi Gurvan Saikhan breed goats, and 127 heads
of Shar Tarlan breed cattle in Guchin-Us Soum.
353. Output. Herder households in Uvurkhangai subproject area sell an average of 220,000
head of livestock per year. Each herder household sells an average of 110 head with the wealthy
households selling 200 head. Herder households supply 3 tons of meat to the market annually.
The subproject area produces about 220 tons of cashmere annually with each soum producing
about 40 tons.
354. There are 12 PVUs and one private animal breeding unit in the subproject area (Table
72). Legally, PVUs must provide general or specialized professional care and services in the field
of prevention, diagnosis, treatment of all or certain types of animal diseases, combating infectious
diseases, ensuring safety of animal originated raw materials20. They must be legal entities with
standard requirements. The PVUs provide services in 27 baghs of the subproject area with lower
capacity than required in terms of equipment and premises. In accordance with the Law on
Livestock Genetic Resources, the PABUs should provide professional services such as
identification and registration of livestock, inspection and classification of livestock, determination
of pedigree, yield and quality, assessment of offspring characteristics, genetic assessments,
verification of breeding results, development of breeding programs, selection of suitable breeder,
and provide technical guidance and advice for herder, livestock owners and legal entities. The
PABU must have an accredited livestock specialist to provide professional services, and premises
and equipment meeting with standards.
20 The PVUs can also provide the special specialized veterinary care and services in mobile and localized
means.
103
Table 72: Private Veterinary Service Units in Uvurkhangai Subproject Area

Soum No. Names Remarks PABU Remarks
Baruunbay 1 Bayanbudargana Vehicle, moto pump, veterinary Veterinary-1,
anulaan vase, portable cooler, portable sanatory-3
treatment fence
Guchin-Us 1 Uush Shahlag Office, vehicle, equipment 1 Tuseg
Khairkhan LLC
Nariinteel 2 Bumbat Ur, Bumbat Moto pump, veterinary vase,
Suvraga portable treatment fence, cooler
Taragt 6 Taragt Jirem, Taragt Jirem: auto max, vehicle, Veterinary 1-3,
Doviin Khundii, moto pump, office, personal sanatory-1-3
Taragt-Arvai, protective gear;
Khurdan kheer, Doviin Khundii: auto max, sprayer,
Duuren Arvin buyan, treatment vase, vehicle, office,
Jirem personal protective gear;
Taragt-Arvai: treatment vase,
vehicle, office, personal protective
gear;
Khurdan kheer: auto max, sprayer,
vehicle, office, personal protective
gear;
Duuren Arvin buyan: auto max,
vehicle, treatment vase, moto
pump, office, personal protective
gear;
Khairkhan 2 Tunkher huush, Each has
dulaan Ikh Chandmani Undur Veterinary-1,
sanatory-3
Total 11
Source: TRTA Consultant survey, Dec 2019-May 2020
355. There are 15 trading entities and one citizen trades in livestock products in the subproject
area (Table 70).
Table 73: Traders of Livestock Products in Uvurkhangai Subproject Area

Soum Traders of meat, by-products, wool and cashmere Individuals and
legal entities for
primary processing
Baruunbayanulaan Ushig khairkhani orgil, and Altannugadavaa coops, 2
Ushgug Khairkhany Orgil LLC
Guchin-Us Guchin-Erdene, Dayantyn Nuruu, Mandakh Zam 4
Uul, and Molom Tailag Khairkhan coop brokers,
Nariinteel Ar Ultiin Teel, Udgantbayan, Khadgiin Teeg, 7
Chuluut Teel, Mandukhain Shivee, Ulaitai Khajuu
Bulag, and Bilegt Taats coops
Taragt Ulziit khairkhani khishig, and Dulaan Khairkhani 2 Milk 1
Buyan coops processing
Khairkhandulaan None
Total 15 1
356. There are no abattoirs, meat processing factories, workshops or livestock feeding units in
104
the target soums of Uvurkhangai aimag. There is one dairy processing unit in Taragt, two
households who run fodder production businesses (one in Taragt and the other in
Baruunbayanulaan), and 1 fodder business entity in Baruunbayanulaan Soum.
357. The major problems in Uvurkhangai subproject area include: (i) no integrated sales
system; (ii) lack of a stable price with low prices paid by middleman and high price fluctuations;
and (iii) no local abattoir. The major buyers differ depending on the location of the soums to the
settlements, but typically Ulaanbaatar is a marketplace. Live animals are transported in warm
seasons and carcasses in cold seasons. The cost of transportation to Ulaanbaatar and other
issues is summarized in Table 74.
Table 74: Major Problem and Buyers in Uvurkhangai Subproject Area

Baruunbayan No integrated Sells to middleman at central markets Transports: different lorries.
ulaan sales system of aimag center, and Ulaanbaatar. Transport cost: 15,000-20,000
Mostly sell in winter period. MNT per animal.
Guchin Us No stable price, no Sells to middleman of central markets Transports: different lorries.
integrated sale of aimag center, and to middleman Transport cost: 15,000-20,000
system, low price who sell meat to Ulaanbaatar at the MNT per animal.
of middleman herder camps.
Sells to aimag abattoir in small
volume.
Nariinteel High changes in Sells to representatives of meat Transports: different lorries.
prices markets of Ulaanbaatar at the herder Transport cost: 500,000-
camps. 1,000,000 MNT
Sells to markets in aimag center
Emeelt in Ulaanbaatar.
Taragt No integrated Sells to aimag meat factory, and Transports: Porter, Bongo.
system of supply, aimag middleman.
lower price than
market price
Khairkhan Low price, Sells to meat factory, middleman at Transports: Big track.
dulaan middleman, no markets, and restaurant and cafeteria. Transport cost: 1,000MNT per
local abattoir small, 2,5000-30,000 MNT per
big animals.
(Table 75).
Table 75 Local Legislation in Uvurkhangai Subproject Area

Baruunbayanulaan Bagh citizen's khural resolutions on pasture Citizens' Representative
release, recovery and protection Meeting, Resolution
Guchin-Us Bagh citizen's khural resolutions on pasture Citizens' Representative

release, recovery and protection Meeting, Resolution
Nariinteel Soum Governor's Action Plan: Support herders 2016
and citizens initiatives to improve pastureland
land management based on pastureland
carrying capacity and condition assessment,
and to increase reserve pastures, rational use
and fencing for pasture protection
105

Pasture responsibility procedure
Pasture management plan
Taragt Soum territorial development plan: Article 1. Citizens' Representative
Land management planning of the Agricultural Meeting, Resolution No.13/01,
Department 2019
Pasture release, carrying capacity reserve Citizens' Representative
establishment resolution Meeting, Resolution, 2019
Soum Governor's Action Plan 2016-2020: Citizens' Representative
2.2.2. Effectively manage pastoral livestock in Meeting, Resolution No.12/01,
accordance with market demand, regional 2016
environment and pasture carrying capacity
Khairkhandulaan Soum development plan
359. The Uvurkhangai Aimag subproject will have annual and end-of-project targets that relate
to each of the soum sub-agreements. The end-of-project targets related to grazing management
are shown in Table 76. These will be updated during implementation and annual targets will also
be developed during the aimag subproject planning meetings as per the aimag subproject
template. In the table it is assumed that there will be 25 households per PUG, and that 80% of
households form PUGs.
Table 76: Uvurkhangai: Targets Related to Grazing Management Sub-agreements

Livestock Sheep Units
No. Pasture User Groups Degradation Level (1-5) a
(000s)
Soum
Baseline Target Baseline Target Baseline Target
2019 2027 2019 2027 2019 2027
Without Project
Baruunbayab-Ulaan 266.0 266.0 - - 1 2
Guchun-Us 316.0 316.0 - - 1 2
Khairkhandulaan 444.3 444.3 - - 2 3
Nariinteel 336.1 336.1 - - 2 3
Taragt 382.7 382.7 13 13 3 4
Total 1,744.9 1,744.9 13 13 1.8 2.8
With Project
Baruunbayab-Ulaan 266.0 234.7 0 21 1 1
Guchun-Us 316.0 278.8 0 21 1 1
Khairkhandulaan 444.3 392.0 0 32 2 1
Nariinteel 336.1 296.5 0 25 2 1
Taragt 382.7 337.7 13 33 3 2
Total 1,744.9 1,539.7 13 132 1.8 1.2
360. The targets for second-generation sub-agreements (Table 77) assume that each soum
106
Table 77: Uvurkhangai: Second-Generation Sub-agreement Targets

No. No. PABU No. No. No. No.
Soum PLMU (Sheep/goats/TSF) PVU PFU PFLU PCPU
B T B T B T B T B T B T
Baruunbayab-Ulaan 0 1 0 1 1 1 0 1 0 1 0 1
Guchun-Us 0 1 0 1 1 1 0 1 0 1 0 1
Khairkhandulaan 0 1 0 1 2 2 0 1 0 1 0 1
Nariinteel 0 1 0 1 2 2 0 1 0 1 0 1
Taragt 0 1 0 1 6 6 0 1 0 1 0 1
Total 0 5 0 5 12 12 0 5 0 5 0 5
361. Sixty sub-agreements are expected to be implemented in Uvurkhangai subproject area

(Table 78).
Table 78: Number and Type of Sub-Agreements in Uvurkhangai Aimag

Total 60
Table 79: Uvurkhangai Subproject Implementation Schedule

Activities 2021 2022 2023 2024 2025 2026 2027
3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
PMU operational
PUG/RUA Development
Develop Proposal
Contract Services
Develop Proposal
Contract Services
107
Activities 2021 2022 2023 2024 2025 2026 2027

3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
PVUs
Develop Proposal
Contract Services
PLMU
Develop Proposal
Contract Services
PFU and PLFU
Develop Proposal
Contract Services
Develop Proposal
Contract Services
PCPU
Develop Proposal
Contract Services
Table 80: Livestock Outputs Without- and With-Project in Uverkhangai Subproject Area
Year Livestock Turnoff (head) Meat Production (tons) Fiber Production (tons)
Without Project
100,862 108,517 4,998 1,804 1,523 555 229 94
With Project
2021 100,862 108,517 4,998 1,804 1,523 555 229 94
2022 100,862 108,517 4,998 1,804 1,523 555 229 94
2023 100,862 108,517 4,998 1,804 1,523 555 229 94
2024 115,861 125,092 6,082 2,120 1,796 692 234 93
108
Year Livestock Turnoff (head) Meat Production (tons) Fiber Production (tons)
2025 115,292 124,481 6,060 2,146 1,818 700 239 92
2026 114,288 123,326 6,018 2,176 1,843 712 243 91
2027 113,284 122,170 5,975 2,194 1,857 719 248 90
2028 111,878 120,504 5,912 2,216 1,874 729 251 89
2029 110,472 118,838 5,849 2,226 1,881 733 255 88
2030 108,696 116,861 5,757 2,239 1,891 739 258 86
2031 106,920 114,883 5,665 2,240 1,891 739 261 85
2032 104,805 112,494 5,566 2,245 1,894 744 264 83
2033 102,689 110,104 5,466 2,237 1,886 742 266 82
2034 100,263 107,405 5,339 2,233 1,882 743 267 80
2035 97,837 104,706 5,212 2,215 1,866 738 268 79
Table 81: Pasture Degradation in Uverkhangai Subproject Area

(2019) (2026) (2026)
Baruunbayab-Ulaan 1 2 1
Guchun-Us 1 2 1
Khairkhandulaan 2 3 1
Nariinteel 2 3 1
Taragt 3 4 2
Average 1.8 2.8 1.2
6. Subproject Cost
365. The Uvurkhangai subproject cost is estimated as $4,314,592. Base costs for each sub-
Table 82: Costs of Sub-agreements

Sub-Agreement Unit
($) (no.) ($)
PUG RUA Implementation a bagh 87,348 30 2,620,425
PVU soum 43,738 5 218,692
PLMU soum 80,115 5 400,575
PABU soum 35,375 5 176,875
PCPU soum 11,000 5 55,000
Total 4,314,592
109
Table 83: Detailed Costs by Year for Uvurkhangai Subproject

Cost Total
Monitoring)
Water/ wells unit 9,500 - 190,000 190,000 190,000 190,000 - 760,000
PVU 19,010 - 109,346 109,346 - - - 218,692
PVU upgrade unit 5,000 - 33,750 33,750 - - - 67,500
PLMU - 102,644 102,644 97,663 97,625 - 400,575
PLMU office unit 10,000 - 12,500 12,500 12,500 12,500 - 50,000
Deep wells unit 10,000 - 12,500 12,500 12,500 12,500 - 50,000
PABU - 46,969 46,969 41,469 41,469 - 176,875
110

Cost Total
SAU eqpt unit 1,000 - 1,250 1,250 1,250 1,250 - 5,000
Flock)
Sire Flock)
PFU and PFLU - 198,256 396,513 198,256 - - 793,025
PFU Tractor unit 20,000 - 25,000 50,000 25,000 - - 100,000
PFU Truck unit 10,000 - 12,500 25,000 12,500 - - 50,000
PFU office unit 5,000 - 6,250 12,500 6,250 - - 25,000
PFLU office unit 5,000 - 6,250 12,500 6,250 - - 25,000
PCPU - 13,750 15,000 26,250 - - 55,000
Total Base Cost - 2,610,097 2,945,847 2,062,488 1,448,138 - 4,314,592
111
D. Bayankhongor Aimag Subproject
366. Bayankhongor Aimag has an area of 115,978 km2 and borders with Gobi-Altai, Zavkhan,
Arkhangai, Uvurkhangai and Umnugovi Aimags. The highest mountains in the aimag are Altain
Nuruu and Ikh Bogd. The main river flowing through the aimag is the Tuin, the main lake is the
Buutsagaan Nuur the spars include Shargaljuut, Khuremt, Khaliut and Urguut (Figure 27).
Figure 27: Project Area in Bayankhongor Aimag
367. Population. Bayankhongor Aimag has a population of 89,253 persons in 26,617

households of which 12,011 are herder households. There are 20 soums in the aimag of which
five—Bayan-Ovoo, Erdenetsogt, Ulziit, Jinst and Bogd—are in the subproject area.
368. Bayanovoo Soum. Bayanovoo Soum is located 26 km from Bayankhongor aimag center
and 626 km from Ulaanbaatar City. The soum borders Jinst, Baatsagaan, Bumbugur, Galuut,
Erdenetsogt and Bayankhongor soums. Sixty percent of the soum is in the khangai region and
40% is the steppe. The main soils are mountain brown and steppe brown soils. The area of the
soum is 3,225 km2, of which 321,715 ha is pastureland, 32 ha forest and a small area of arable
cropland. There are 39 rivers and springs, and 194 lakes and ponds in the soum. The soum has
a continental climate with an average annual precipitation is 185.6 mm. The vegetation is
mountain steppe small bunch grass-forb-grass rangeland. The average annual pasture yield of
the soum is 24 kg/ha. Carrying capacity of the pasture is 186,700 live sheep units, which was
exceeded by 92% in 2019. About 29.7% of the pasture has been degraded to various extents.
The ratio of sheep to goats is 1.13:1. In 2019, the soum prepared 65 tons of forage, of which 35
112
tons was hay, 25 tons feed grain, and 5 tons hand-made fodder, equivalent to 0.2 kg of grass per
live sheep unit, which is not sufficient for feeding soum livestock during harsh periods.
369. Erdenetsogt Soum. Erdenetsogt Soum is located 29 km from Bayankhongor aimag

center and 689 km from Ulaanbaatar City. The soum borders Bulgan and Tsenkher soums of
Arkhangai Aimag; Uyanga Soum of Uvurkhangai Aimag; and Ulziit, Bayan-Ovoo, Galuut and
Bayankhongor in Bayankhongor Aimag. The soum is located entirely in the khangai region. There
are dark brown soils in the mountains, and meadow permafrost and mountain meadow steppe
soils. The area of the soum is 4,100 km2, of which 274,433 ha is pastureland, 3,370 ha forest and
54 ha arable cropland. There is 130,966 ha of special protected areas in the soum. There are 315
rivers and springs, and 80 lakes and ponds. The average annual precipitation is 223-380 mm.
Vegetation includes kobrisia, festuca, small bunch grass-forb rangeland. The average annual
pasture yield of the soum is 29 kg/ha. The carrying capacity of the pastureland is 192,300 live
sheep units and was exceeded by 205% in 2019. About 59.9 % of the pastureland has been
degraded to various extents. The ratio of sheep to goats is 1.14:1. In 2019, the soum prepared
2,880 tons of hay equivalent to 4 kg of grass per live sheep unit, which is sufficient for feeding
soum livestock for 10 days during harsh periods.
370. Ulziit Soum. Ulziit Soum is located 18 km from Bayankhongor aimag center and 603 km
from Ulaanbaatar City. The soum borders Jinst, Bayan-Ovoo, Erdenetsogt, and Bayankhongor
soums. Seventy percent of the soum is in the 70% khangai region and 30% in the steppe region.
Dominant soils are mountain brown, valley light brown and steppe brown. The area of the soum
is 5,313 km2, of which 382,357 ha is pastureland, 242 ha forest, 313 ha arable cropland and 9 ha
abandoned cropland. There are 39 rivers and springs, and 194 lakes and ponds in the soum. The
average annual precipitation is 200 mm. Vegetation includes kobrisia, festuca, and small bunch
grass-forb rangeland. The average annual pasture yield of the soum is 41 kg/ha. The carrying
capacity of the pastureland is 385,800 live sheep units, which was exceeded by 11% in 2019.
About 27.9 % of the pastureland has been degraded to various extents. The ratio of sheep to
goats is 0.65:1. In 2019, the soum prepared 519 tons of forage, of which 403 tons was hay, 94.9
tons was feed grain and 21.3 tons was handmade feeds, equivalent to 1.3 kg of grass per live
sheep unit, which is not sufficient to feed soum livestock during harsh periods.
371. Jinst Soum. Jinst Soum is located 90 km from Bayankhongor aimag center and 681 km
from Ulaanbaatar City. The soum borders Ulziit, Bogd, and Baatsagaan soums in its aimag, and
Baruunbayanulaan and Guchin-Us soums of Uvurkhangai Aimag. The soum is in the govi region.
Predominant soils are mountain brown, valley light brown and steppe brown. The area of the
soum is 5,313 km2, of which 522,640 ha is pastureland, 76 ha arable cropland and 21,289 ha
special protected areas. There are 42 rivers and springs, and 7,000 lakes and ponds in the soum,
most of which are seasonal. The average annual precipitation is 100 mm. Dominant vegetation is
govi grassland, some shrubs and shrub pastures. The average annual pasture yield of the soum
is 17 kg/ha. The carrying capacity of the pastureland is 207,600 live sheep units, which was
exceeded by 21% in 2019. The pastureland has been degraded to various extents. The ratio of
sheep to goats is 0.33:1. In 2019, the soum prepared 178.5 tons of forage, of which 159.5 tons
was hay, 4.5 tons feed grain, and 15 tons handmade feeds, equivalent to 0.8 kg of grass per live
sheep unit, which is not sufficient for feeding the soum livestock during harsh periods.
372. Bogd Soum. Bogd Soum is located 129 km from Bayankhongor aimag center and 651
km from Ulaanbaatar City. The soum borders Bayangovi, Jinst, Baatsagaan soums in its aimag,
and Baruunbayan Soum of Uvurkhangai Aimags. The soum is in the govi region and predominant
soil types are govi brown, mountain brown and light brown soils. The area of the soum is 3,847
km2, of which 383,352 ha is pastureland, 7 ha forest, 72 ha arable cropland, 333 ha abandoned
113
cropland, and 79,164 ha special protected areas. There are 37 rivers and springs, and 6 lakes
and ponds in the soum, most of which are seasonal. The average annual precipitation is 100-150
mm. The main vegetation is stipa-semi-shrub desert rangeland. The average annual pasture yield
of the soum is 16 kg/ha. The carrying capacity of the pastureland is 145,400 live sheep units,
which was exceeded by 104% in 2019. The pastureland has been degraded to various extents.
The ratio of sheep to goats is 0.25:1. In 2019, the soum prepared 1,699 tons of forage, of which
1,093 tons was hay, 591 tons feed grain, and 15 tons handmade feeds, which is enough to feed
soum livestock for 10 days during harsh periods.
373. The Bayankhongor subproject area comprises 20,338 km2 (18% of the aimag territory), of
which 1,884,498 ha is pastureland, 3,652 forest land and 8,108 ha water bodies (Table 84).
Table 84: Land Classes in Bayankhongor Subproject Area

Bayan-Ovoo 322,498 321,715 32 233 26
Erdenetsogt 410,023 274,433 3,370 401 54
Ulziit 531,264 382,357 242 223 313
Jinst 531,264 522,640 - 7,208 76
Bogd 384,743 383,352 7 43 72
Subproject total 2,033,811 1,884,498 3,652 8,108 540
% of aimag area 18 21 0 16 20
Aimag total 11,597,780 8,859,767 3,609,890 51,118 2,674
374. Land degradation conditions in the subproject soums in Bayankhongor Aimag varies from
level I to level III. Level I shows no degradation, meaning all dominants are in place. Level III
shows moderate degradation, meaning dominants are in decline and being replaced by
subdominants: the number of species is declining. The land recovery category of the subproject
soums varies from class I to class IV. Class I indicates that the plant community is at or near
reference conditions (non-degraded) or requires 1-3 growing seasons for recovery from minor
changes (slightly degraded). Stocking rate should be matched to forage supply with temporary
seasonal deferment as needed. Class IV indicates that the plant community is altered due to the
local loss of key plant species, invasion of noxious plant species, or alteration of hydrology, which
is unlikely to be recovered for over a decade to many decades without intensive interventions
such as species removal, seeding, or manipulations to recover historical hydrological function.
is already between I and III in the subproject soums of Bayankhongor Aimag, which indicates
says that the pasture conditions of Bayankhongor subproject area could be recovered into their
initial conditions in 1-10 or more years after taking organized appropriate actions. This is a key
concern for the livestock sector in view of climate change induced frequency increase of severe
weather events.
34.1% in the Bayankhongor subproject area and ranges between 23.6% in Jinst and 39.8% in
114
Erdenetsogt.
Table 85: Population and Households in Bayankhongor Subproject Area

Soum
(no.) (no.) (no.) (no.) (%)
Bayan-Ovoo 2,594 853 456 797 30.8
Bogd 3,117 901 662 1,709 39.8
Erdenetsogt 4,296 1,300 1087 1,668 38.5
Jinst 2,197 635 553 930 23.6
Ulziit 3,845 1,147 879 1,195 33
Total 16,049 4,836 3,637 6,299 34.1%
377. Herder groups. There are 2 herder groups in the subproject area, comprising of 58
members who uses 31% of the pasture area (Table 86).
Table 86: Herder Groups in Bayankhongor Subproject Area

Indicator Unit Bogd Jinst Ulziit Bayanovoo Erdenetsogt Overall
Total households no. 861 642 1,107 813 1,323 4,746
Herder households no. 662 473 865 456 992 3,448
Herder groups no. 1 1 0 0 0 2
Members no. 9 12 7 7 23 58
Coverage of herder groups % 100 60 14 15 30 44
Pasture used by herder % 37 67 15 9 29 31
groups
378. Pasture User Groups. There are 26 pasture use groups in the subproject area with 946
members (Table 87). Twelve of the groups are in Jinst Soum with a total of 284 members and the
remaining 14 are in Bogd Soum with 662 members. On average, 26% of the herder households
in the subproject area are members of the pasture user groups. There are two Soum Pasture
Associations (SPA) in the subproject area, one in each of Jinst and Bogd soums.
Table 87: Pasture User Groups and Soum Pasture Associations in Bayankhongor
Subproject Area
Pasture User Groups Membership of
Soum Pasture Herder
Soum Pasture User
Number Members Associations households
Groups
Bayan-Ovoo - - - 456 0%
Erdenetsogt - - - 1,087 0%
Ulziit - - - 879 0%
Jinst 12 284 1 553 51%
Bogd 14 662 1 662 100%
Total 26 946 2 3,637 26%
members (Table 88). On average, 39% of herder households are members to the cooperatives.
Of these 41 cooperatives, 23 are herder cooperatives with eight in Bayan-Ovoo, ten in Ulziit, one
in Jinst and four in Bogd soums. The herder cooperatives have 1,404 members, and average of
61 members per cooperative. Cooperatives do not undertake any pasture protection activities,
but herders mainly joined to benefit from the government wool premiums through the
115
cooperatives, so it more suitable to cooperate with them linking herders with processing factories.
Table 88: Cooperatives in Bayankhongor Subproject Area

Soum
Bayan-Ovoo 13 227 8 132 456 29%
Erdenetsogt 5 313 - - 1,087 0%
Ulziit 14 340 10 304 879 35%
Jinst 4 590 1 50 553 9%
Bogd 5 927 4 918 662 139%
Total 41 2,397 23 1,404 3,637 39%
380. There are three forest user groups in the subproject area, located in areas where there
are project forest resources, particularly in Bayanovoo, Jinst, and Bogd soums (Table 89). The
three groups have 48 members and their purpose is to protect the forest resources not the
pasture.
Table 89: Forest User Groups in Bayankhongor Subproject Area

Forest User Groups Herder Enrollment in Forest
Soum
Number Members households User Groups
Bayan-Ovoo 1 18 456 4%
Jinst 1 10 553 2%
Bogd 1 20 662 3%
Total 3 48 3,637 1%
and ponds and 68 rivers in the subproject area, and there is indicated to be a need for an
additional 78 deep wells (Table 90). These additional deep wells are required to ensure sufficient
on pastures near existing wells. Pasture degradation will be reduced because currently underused
pasturelands is in serious disrepair and urgently needs to be improved, not only as drinking water
for livestock but also to reverse pasture degradations. Traditionally, individual water points are
shallow/hand-made wells. Due to a lack of maintenance the engineering type wells in particular
have degraded since the transition period and the number of operational wells has sharply
declined. This has forced herders to move their stock to areas around the operational wells and
close to rivers. The carrying capacity of the pastures in these areas is far exceeded, causing
serious land degradation.
116
Table 90: Water Points in Bayankhongor Subproject Area

Bayan-Ovoo 42 39 3 3 18
Erdenetsogt 7 66 14 59 12
Ulziit 34 33 1 4 20
Jinst 34 64 3 1 16
Bogd 36 64 4 1 12
Total 153 266 25 68 78
Source: Aimag Food and Agriculture Department and soum governments
enclosures, 472 livestock sheds, 2,222 camp with certificates of use, and 21 fodder storages in
the subproject area (Table 91). Achievement of sustainable pasture management through
reduction of livestock numbers and rehabilitation of degraded pasture requires both pasture
improvement and improved livestock enclosures and sheds, and fodder storage.
Table 91: Animal Shelters and Storages in Bayankhongor Subproject Area

Soum
Bayan-Ovoo 200 109 - 228 2
Erdenetsogt 307 154 - 351 4
Ulziit 547 554 2 735 2
Jinst 450 250 70 270 8
Bogd 625 520 400 638 5
Total 2,129 1,587 472 2,222 21
of which in Bayan-Ovoo Soum increased by 261%, Erdenetsogt Soum by 154%, Ulziit Soum by
254%, Jinst Soum by 159% and Bogd Soum by 187% (Table 92 and Figure 28).
Table 92:Total Livestock Number in Bayankhongor Subproject Area for Selected Years
Soum 1990 2000 2010 2019 1990 and 2019
Bayan-Ovoo 75.4 90.5 98. 272.5 261%
Erdenetsogt 83.1 67.2 102.3 211.3 154%
Ulziit 78.3 135.2 157.5 277.5 254%
Jinst 80.2 125.2 86.6 207.6 159%
Bogd 77.9 144.2 122.9 223.7 187%
Bayankhongor subproject area 394.9 562.2 567.4 1,192.7 202%
117
Figure 28: Livestock Number Trend in Bayankhongor Subproject Area

1,400,000
1,200,000
1,000,000
Livestock numbers
Bogd
800,000
Jinst
600,000 Ulziit
400,000 Erdenetsogt
Bayanovoo
200,000
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Years of 1990-2019
384. There were 1.19 million livestock in the Bayankhongor subproject area in 2019, equivalent
to 1.92 million live sheep units. Details by type of livestock and by soum are in Table 93. Overall,
the ratio of sheep to goats was 0.65:1 with individual soums varying between 0.25:1 in Bogd and
1.14:1 in Erdenetsogt. This indicates that the number of goats has become unsustainably high in
Ulziit, Jinst and Bogt soums.

Units sheep:goats
Bayan-Ovoo 9,378 7,973 456 134,998 119,690 272,495 358,483 1.13:1
Erdenetsogt 14,210 59,336 9 73,385 64,406 211.346 586,881 1.14:1
Ulziit 14,252 15,399 351 97,169 150,287 277,458 426,340 0.65:1
Jinst 6,189 2,175 2,674 48,953 147,628 207,619 251,561 0.33:1
Bogd 6,046 6,122 5,708 41,384 164,479 223,739 297,009 0.25:1
Total 50,075 91,005 9198 395,889 646,490 1,192,657 1,920,274 0.61:1
385. Each of the soums has a history of dzuds. The severe dzud in Bayan-Ovoo Soum lasted
from 1998 to 2005 and 32,000 and 46,000 head of livestock were lost, about 60% of their livestock
at the beginning of the dzud. In Erdenetsogt Soum, after the dzud in 2007, 225,277 livestock
survived but in the subsequent years the number increased by 66%. Ulziit Soum lost 52-58% of
its livestock in the dzud of 2000-2003 and 2015-16 due to malnutrition. In Jinst Soum, dzuds
occurred in 1996-97, 2000-2003, and 2016-17. In 2000-2003, 83% of livestock were lost due to
malnutrition. In Bogd Soum, due to the dzud in 2000-2002, 70.6% of the livestock were lost due
to malnutrition.
386. In addition to the predominance of local livestock breeds, there are various other breeds
of livestock in most soums. In Bayan-Ovoo Soum there are Jargalant and Bayad breeds (27,000
head), Zalaa Jinst white and the Bumbugur Ulaan goats (29,923 head). In Erdenetsogt Soum
there are Uzemchin, Sartuul and Bayad sheep (15,340 heads), Erchmiin Khar goats (3,503
heads), Darkhad and Galshar horses (1,441 heads). There are 41 Alatau cattle in Ulziit Soum,
118
while in Jinst Soum there are Bumbugur Ulaan goats (21,350 head), Idren Tsagaan goats (34,500
head), and Lama Gegeen Ulaan camels (1,800). In Bogd Soum there 40,000 goats of the Idren
Zalaa breed and 5,708 camels of the Lama Gegeen Ulaan breed.
387. Output. Bayankhongor subproject area sells an average of 120,000 head of livestock per
year, of which one herder household sells an average of 40 head. Herder households supply 2.7
tons of meat to the market annually, and the soums can produce a total of 2,900 tons of meat.
The project area produces an average of 240 tons of cashmere per year.
388. There are 10 private veterinary units (PVUs) in the subproject area (Table 94). Legally,
PVUs must provide general or specialized professional care and services in the field of
prevention, diagnosis, treatment of all or certain types of animal diseases, combating infectious
diseases, ensuring safety of animal originated raw materials.21 They must be a legal entity with a
standard requirements. these PVUs provide services to 24 baghs in the subproject area with lower
capacity than required in terms of equipment and premises.
Table 94: Private Veterinary Service Units in Bayankhongor Subproject Area

Soum No. Names Remarks
SHMDZ, Khishig Taijiin Ovoo: Sprayer, syringe,
Bayan-Ovoo 3 Khishig Taijiin Ovoo, sample tank, microscope, meat milk test,
Duvuntiin numur surgical tools, cooler
Munkhkhan buyant sureg,
Erdenetsogt 2
Tsagaan sarlagiin khishig
Denzo LLC,
Ulziit 2 Denzo: Vehicle, surgery and obstetrics
Tuin delgereh cooperative
Veterinary equipment, vehicles, workplaces
Jinst 1 Dundarshgui bayalag
and pharmacies
Enene orgil,
Bogd 3 Tushal ovoo, Moto pump, automax
Bogd Erdene orgil
Total 11
389. There are 15 trading entities and 6 citizens trading livestock products in subproject area
(Table 95).
Table 95: Traders of Livestock Products in Bayankhongor Subproject Area

Soum Traders of meat, by-products, wool and Individuals and legal entities for
cashmere primary processing
Bayan-Ovoo Khankharin Nuruu, Asgamba 7
Khairkhani Uguj, Guchingiin Undraga
Ekh, Khövshikh Khairkhan, Bayan
Darkhai Tag, and Urtyn Golyn Olon
Ovoot coops, Janjin Tolgoi
Erdenetsogt milk processing: 2 2
21 The PVUs can also provide the special specialized veterinary care and services in mobile and localized
means.
119
Soum Traders of meat, by-products, wool and Individuals and legal entities for
cashmere primary processing
Ulziit Olonkhos, Nayan Bulag Tal, and 3 milk processing: 2, Hide & 3
Tsetslekh Khurd Coops skin: Mongol Ukhaan Ulziit
Jinst Ikh Artsat Khorshoo, and Tüin Khishig 2
coops
Bogd Ariun Bogdyn Khishig, Undrakh Bayan 3 milk processing: 1 1
Bogd, and Orog Nuuryn Khishig coops
Total 15 6
390. There are no abattoirs, meat processing factories, workshops, livestock feeding units, or
fodder production businesses in the subproject area. There are five dairy processing units in the
subproject area, two in Erdenetsogt, two inUlziit and one in Bogd soums.
391. The major marketing problems in Bayankhongor subproject area include: (i) lack of a local
sale point; (ii) no regular market point; (iii) lack of experience of herders in selling livestock; and
(iv) low prices paid by middleman. The main buyers differ depending on the location of the soums
to the settlements, but typically Ulaanbaatar is also a marketplace. Live animals are transported
in warm seasons and carcasses in cold seasons. The cost of transportation to Ulaanbaatar and
other issues are summarized in Table 96.
Table 96: Major Problem and Buyers in Bayankhongor Subproject Area

Bayanovoo No local sale point Sells to central markets of aimag Transports: different lorries.
center. Close to the aimag center. Transport cost: 150,000MNT per
In spring and summer, sells to local ton.
market, and in other periods to any
buyer.
Erdenetsogt Low price of Sells to middleman of aimag center, Transports: ISUZU, Hino, Volvo
middleman and Ulaanbaatar at the soum. Also Shalaanz.
sells at the aimag venter market. Transport cost: 35,000 MNT per
animal.
Ulziit No regular market Sells at markets of aimag center, Transports: 9-ton lorry.
point different middleman Transport cost: 500,000 MNT
Jinst No regular market Sells to aimag and city middleman. Transports: different lorries.
point Transport cost: 40,000 MNT per
big, 8,000 MNT per small animals
Bogd Middleman price, Sells mostly to local middleman in Transport cost: 100,000 MNT per
herders have not cash or hay. ton
organized for selling
(Table 97).
120
Table 97: Local Legislation in Bayankhongor Subproject Area

Soums Document Approved
Bayanovoo Soum pasture use procedure. Bagh citizen's khural
resolutions on pasture release, recovery and protection
Erdenetsogt Soum pasture use procedure. Bagh citizen's khural

resolutions on pasture release, recovery and protection
Ulziit Soum land management plan Citizens' Representative
Meeting, Resolution
Jinst Soum working group Soum governor resolution,
2018.01.29
Bagh citizen's khural resolutions on pasture release,
recovery and protection
Bogd Procedure on responsible pasture: Chapter 10 Article Citizens' Representative
135. To adjust pasture use to pasture resource Meeting, Resolution No.10,
capacity, create economic incentives for accountability, 2019.11.27, Registered with the
increase the number of livestock meet with pasture Ministry of Justice in the
carrying capacity, ensure the sustainability of livestock Administrative Norms Act No.
production, and improve pastureland ecological 4597
capacity at the soum and bagh level.
393. The Bayankhongor Aimag subproject will have annual and end-of-project targets that
relate to each of the soum sub-agreements. The end-of-project targets related to grazing
management are shown in Table 98. These will be updated during implementation and annual
targets will also be developed during the aimag subproject planning meetings as per the aimag
subproject template.
Table 98: Bayankhongor: Targets Related to Grazing Management Sub-agreements

2019 2027 2019 2027 2019 2027
Without Project
Bayan-Ovoo 358.5 358.5 0 0 2 3
Bogd 297.0 297.0 14 14 1 2
Erdnetsogt 586.9 586.9 0 0 2 3
Jinst 251.6 251.6 12 12 1 2
Ulziit 426.3 426.3 0 0 3 4
Total 1,920.3 1,920.3 26 26 1.8 2.8
With Project
Bayan-Ovoo 358.5 316.3 0 18 2 1
Bogd 297.0 262.1 14 26 1 1
Erdnetsogt 586.9 517.8 0 43 2 1
Jinst 251.6 222.0 12 22 1 1
Ulziit 426.3 376.2 0 35 3 2
Total 1,920.3 1,694.4 26 144 1.8 1.2
394. The targets for second-generation sub-agreements (Table 99), assume that each soum
121
Table 99: Bayankhongor: Second-Generation Sub-agreement Targets

No. PFU
Soum PLMU (Sheep/goats/TSF) PFLU PCPU
B T B T B T B T B T
Bayan-Ovoo 0 1 0 1 0 1 0 1 0 1
Bogd 0 1 0 1 0 1 0 1 0 1
Erdnetsogt 0 1 0 1 0 1 0 1 0 1
Jinst 0 1 0 1 0 1 0 1 0 1
Ulziit 0 1 0 1 0 1 0 1 0 1
Total 0 5 0 5 0 5 0 5 0 5
395. Sixty sub-agreements are expected to be implemented in Bayankhongor subproject area

(Table 100).
Table 100: Number and Type of Sub-Agreements in Bayankhongor Aimag

Total 60
Table 101:Bayankhongor Subproject Implementation Schedule

Activities 2021 2022 2023 2024 2025 2026 2027
3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
PMU operational
PUG/RUA Development
Develop Proposal
Contract Services
122
Activities 2021 2022 2023 2024 2025 2026 2027

3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2
Develop Proposal
Contract Services
PVUs
Develop Proposal
Contract Services
PLMU
Develop Proposal
Contract Services
PFU and PLFU
Develop Proposal
Contract Services
Develop Proposal
Contract Services
PCPU
Develop Proposal
Contract Services
123
Table 102: Livestock Outputs Without- and With-Project in Bayankhongor Subproject

Area
Without Project
75,437 120,059 12,110 1,349 1,685 1,344 171 103
With Project
2021 75,437 120,059 12,110 1,349 1,685 1,344 171 103
2022 75,437 120,059 12,110 1,349 1,685 1,344 171 103
2023 75,437 120,059 12,110 1,349 1,685 1,344 171 103
2024 86,655 138,397 14,735 1,585 1,987 1,675 175 102
2025 86,229 137,721 14,683 1,605 2,012 1,697 179 101
2026 85,478 136,443 14,579 1,628 2,039 1,726 182 100
2027 84,727 135,164 14,476 1,641 2,054 1,742 185 99
2028 83,676 133,321 14,323 1,657 2,073 1,765 188 98
2029 82,624 131,478 14,170 1,665 2,081 1,775 191 97
2030 81,296 129,290 13,948 1,675 2,092 1,790 193 96
2031 79,967 127,102 13,726 1,676 2,092 1,791 196 94
2032 78,385 124,459 13,484 1,679 2,095 1,802 197 92
2033 76,803 121,815 13,243 1,673 2,086 1,799 199 91
2034 74,989 118,829 12,935 1,670 2,082 1,800 200 89
2035 73,174 115,842 12,627 1,657 2,064 1,787 201 87
Table 103: Pasture Degradation in Bayankhongor Subproject Area

(2019) (2026) (2026)
Bayan-Ovoo 2 3 1
Bogd 1 2 1
Erdnetsogt 2 3 1
Jinst 1 2 1
Ulziit 3 4 2
Average 1.8 2.8 1.2
6. Subproject Cost
399. The Bayankhongor subproject cost is estimated as $4,314,592. Base costs for each sub-
124
Table 104: Costs of Sub-agreements

Sub-Agreement Unit
($) (no.) ($)
PVU soum 43,738 5 218,692
PLMU soum 80,115 5 400,575
PABU soum 35,375 5 176,875
PCPU soum 11,000 5 55,000
Total 4,314,592
Table 105: Detailed Costs by Year for Bayankhongor Subproject

Cost Total
Monitoring)
Water/ wells unit 9,500 - 190,000 190,000 190,000 190,000 - 760,000
PVU 19,010 - 109,346 109,346 - - - 218,692
PVU upgrade unit 5,000 - 33,750 33,750 - - - 67,500
PLMU - 102,644 102,644 97,663 97,625 - 400,575
125

Cost Total
PLMU office unit 10,000 - 12,500 12,500 12,500 12,500 - 50,000
Deep wells unit 10,000 - 12,500 12,500 12,500 12,500 - 50,000
PABU - 46,969 46,969 41,469 41,469 - 176,875
SAU eqpt unit 1,000 - 1,250 1,250 1,250 1,250 - 5,000
Flock)
Sire Flock)
PFU and PFLU - 198,256 396,513 198,256 - - 793,025
PFU Tractor unit 20,000 - 25,000 50,000 25,000 - - 100,000
PFU Truck unit 10,000 - 12,500 25,000 12,500 - - 50,000
PFU office unit 5,000 - 6,250 12,500 6,250 - - 25,000
PFLU office unit 5,000 - 6,250 12,500 6,250 - - 25,000
PCPU - 13,750 15,000 26,250 - - 55,000
126

Cost Total
Total Base Cost - 2,610,097 2,945,847 2,062,488 1,448,138 - 4,314,592
127
V. CAPACITY BUILDING
A. Overview
400. Capacity building in the project will focus on a number of key institutions, and within each
institution on two key areas: (i) strengthening value-chain governance; and (ii) support to
subproject implementation through human resource capacity building, development of knowledge
products and M&E systems. The main objective of the capacity building is to assist in creating an
enabling environment for the aimag subprojects and soum sub-agreements to achieve their
objectives. The priority areas for capacity building are related to PUG/RUA development and
pasture use.
B. MOFALI
1. Legal and Socio-Economic Environment for Pasture Management
401. The project will support to improve the legal and socio-economic environment for
enhanced pasture use. This work will be guided by Article 3.4.1 of the National Mongolian
Livestock Program (see Box 4). The project will support three steps of activities (Figure 29).
Figure 29: Steps in Supporting the Legal and Socio-economic Environment for Pasture
Management
402. In the first step, the project will begin a series of stakeholder workshops and meetings at
soum, aimag and national level to support herders in forming of PUGs/RUAs and in strengthening
associations of PUGs/RUAs.
403. In the second step, based on the experience with forming the PUG/RUAs, the project will
support the development of laws, such as the livestock tax laws and pasture laws and develop
regulations and guidelines to support the implementation of existing laws, e.g. the current Land
Law article 52.2. The project support to this process will be support to stakeholder workshops at
meetings in soums, aimags and Ulaanbaatar.
404. In the third step, the project will support the rollout of the improved environment through a
public information campaign and a training program for government staff and herders (including
PUG associations). The project support to training will focus on the target aimags and soums.
128
The project will support media programs to inform the public of the new environmental
instruments.
Box 4: Article 3.4.1 of the National Mongolian Livestock Program

3.4.1 Improving pasture management
3.4.1.1 Set a single management system for the sustainable use of pasture resources,
implement sub-programs, prepare a pasture use map and cadaster at regional, aimag
and soum level, define maximum potential stock numbers and develop an information
database.
3.4.1.2 Create a legal framework for regulating pasture and protect at least 30% of land
as state, aimag and soum level otor reserve area for use during times of hardship.
3.4.1.3 Link animal numbers and types of herd with pasture carrying capacity and limit
the number of animals in areas where pasture capacity is already exceeded and
implemented related economic incentives to maintain this provision.
3.4.1.4 Create a legal framework on pasture use fees collected from herders and people
with livestock, based on regional characteristics and type of herd and use some portion
of it for protecting rangeland or improve its condition.
3.4.1.5 Define clear borders between sites of extensive and intensive livestock
production at aimag, capital, soum and district level and enforce it.
3.4.1.6 Combat pasture rodents using technology that is not harmful to the environment
or human health.
3.4.1.7 ensure that income from the compensation fees and fees for decreasing the
pastureland caused by the mining activities spend for the pastureland improvement
activities.
Source: Mongolia National Livestock Program
405. The project will support workshops and meetings related to Steps 1 and 2, media
production and training costs related to Step 3 as well as production of information leaflets and
training material. The project will provide consultants to support the activities. The base cost of
legal and socio-economic environment for pasture management capacity building is estimated at
$568,000, and is detailed by year in Table 106
Table 106: Cost of Legal and Soci-Economic Environment for Pasture Management
Capacity Building
Item Cost ($) Total
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Cost ($)
Workshops and meetings in UB - 18,000 18,000 18,000 18,000 - 72,000
Workshops and meetings in region - 10,000 10,000 10,000 10,000 - 40,000
Workshops and meetings in aimag - 64,000 64,000 64,000 64,000 - 256,000
Information leaflets - - - 200,000 - - 200,000
Total - 92,000 92,000 192,000 92,000 - 568,000
2. Livestock Management Information System
406. Within the framework of the National Program on Mongolian Livestock, MOFALI proposes
to establish an integrated pasture use management system including: (i) implementation of
subprograms; (ii) creating pastureland use and cadastral maps by region, aimag and soum; (iii)
determining the number and types of livestock that can be supported in each area in a sustainable
manner; and (iv) creating a database to incorporate all of this information. To implement this,
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MOFALI proposes to establish a Pasture and Forage Division within the Livestock Policy
Implementation Coordination Department with five staff including pasture, forage plantation,
agriculture mechanic engineer, plant protection, and information specialists.
407. Conditional on the establishment of this division, the project will support capacity building
to develop and manage the proposed Livestock Management Information System (LMIS). The
LMIS will provide information to MOFALI to improve policy decision-making and enable MOFALI
to fulfil responsibilities for reporting and monitoring as called for in the Mongolian National
Livestock Program (Articles 9.1-9.4).
408. The LMIS database will comprise quantitative, qualitative, and spatial information related
to livestock production, pastureland use, pasture reserve land, water points, animal shelters, and
herder communities. The system will include (geographic) data on the establishment and
operation of PUGs and RUAs, other relevant herder communities, water points, pasture reserve
areas, and livestock and fiber outputs. (Figure 30). Initially data will be collected on a pilot basis
for the project area, converted and processed by the SAUs and integrated into an aimag database
by the AFAD prior to consolidation by MOFALI at the national level.
409. The system will be linked to data and information on rangeland monitoring and ecological
recovery collected at 1,550 points of the National Agency for Meteorology and Environmental
Monitoring through a line point method, and at 4,000 points of the Agency for Land Management
and Administration, Geodesy and Cartography through a photo-monitoring methodology. The
system will integrate data on livestock from the National Statistical Office. The system will enable
analysis of an integrated pasture use management system and enable implementation of
subprograms. The system will create pastureland use and cadastral maps by region, aimag and
soum. determine the number and types of livestock that can be supported in the area in a
sustainable manner and create a database to incorporate all of this information.
410. The system will generate information that can be used to develop targets, to monitor
progress and report on livestock productivity and livestock carrying capacities consistent with
sustainable systems and natural resource conservation. The system will provide information that
can contribute to the estimates of greenhouse gas emissions from livestock and estimates of soil
carbon capture.
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Figure 30: Livestock Management Information System Overview
411. The project will finance the LMIS software, GIS software, GPS, desktop and laptop
computers, external desks, color multi-function printers, digital cameras, plotters, UPS, drones,
video conference equipment, digital maps, and operational support to the project soums, aimags,
and MOFALI (Table 107).
Table 107: Equipment Required for Livestock Management Information System

Location/Item No. Unit Cost Total Cost
($) ($)
Overall 87,000
GIS Desktop software 1 22,000 22,000
Statistical analysis software 1 5,000 5,000
Video conferencing equipment 5 12,000 60,000
Central 1 37,580
GPS 2 520 1,040
Desktop computer 2 1,400 2,800
Notebook computer 2 1,100 2,200
External disks 4 225 900
Color multi-function printer 2 500 1,000
Digital camera 2 770 1,540
Plotter 2 6,700 13,400
UPS 2 615 1,230
Drone 2 5,400 10,800
Office furniture 5 556 2,780
Project aimags and soums 24 197,100
Handheld GPS 24 200 4,800
External disk 24 160 3,840
Color multi-function printer 24 500 12,000
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Location/Item No. Unit Cost Total Cost

($) ($)
Digital camera 24 770 18,480
Plotter (aimags only) 4 6,700 26,800
UPS 24 615 14,760
Drone (aimags only) 4 5,400 21,600
Digital maps 24 50 1,200
Total 261,770
412. A consultant team will be engaged over a period of three years to develop the system,
provide training at the central, aimag and soum levels, and to provide support for one year
following its handover. The estimated inputs and costs for the TA are shown in Table 108 and the
terms of reference for the consultants are in Appendix 1 of the Project Administration Manual.
Table 108: Technical Assistance Costs for Developing Livestock Management

Information System
Input by Year Total
Unit cost
Item Year Year Year Year Year Total cost
($)
1 2 3 4 5 ($000s)
Consultants (person-months) 26 36 4 0 0 66 145.35
Database specialist/ team 8 8 2 - - 18 2,200 39.6
leader
Junior database specialist 8 8 2 - - 18 2,000 36.00
Programmer 1 4 8 0 - - 12 2,000 24.00
Programmer 1 4 8 0 - - 12 1,800 21.60
Graphic designer 2 4 0 - - 6 2,000 12.00
Per diem (days) 108 108 27 - - 243 50 12.15
Vehicle hire and fuel (days) 25 25 25 - - 75 200 15.00
Furniture 5 5 550 2.75
Total Consulting Contract 163.1
Workshops and Training a 152.51
Training 1 1 2 20.00
Workshops (UB & aimags) 6 6 6 18 132.51
a Workshops and training will not be included in the consultant contract but will be financed by the TA.
3. Carcass Traceback System
413. The project will support a process to establish a system of carcass feedback to suppliers,
including animal identification systems, that will enable suppliers and processors to comply with
market requirements. This will be done in three steps.
414. In the first step, the project will support a series of stakeholder workshops and meetings
at soum, aimag and national to review the current governance systems of guidelines, feedback
systems, and training programs.
415. In the second step, the project will support a series of stakeholder workshops to review
and update regulations and guidelines on carcass traceback systems, including animal
identification and animal health requirements, and IT systems. The process will seek to establish
a formal structure - a National Consultative Committee on Carcass Traceback Systems – to be
an ongoing stakeholder forum. and support development of guidelines or regulations that arise
from recommendations of the workshops. The Committee will consist of stakeholders including
private sector processing firms, and suppliers, and managers of Private Livestock Marketing
Units. This area of work is important in the development of the enabling environment for PLMUs
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and PLFUs, and to a limited extent for sheep terminal sire flocks.
416. In parallel, starting in the first step, the project will support a study on how traceback
systems are operating in the field. The first part will be a baseline to capture current experiences
in the field (suppliers and processors). This will then become a longitudinal study of selected
suppliers and processor linkages. The PLMUs in the project soums should be included in this part
of the study as well as other good examples of linkages in non-project areas. The baseline and
study will contribute to the development of guidelines.
417. Training program: In Step 3, the project will support, through the RDC, development and
incorporation of carcass feedback training into the training programs overseen by the RDC. The
project will support development and implementation of a competency-based accreditation
scheme for Private Livestock Marketing Unit (LPMU) managers. Participants enrolled in the
certificate course will be contracted as consultants to collect the data on their activities.
Figure 31: Process of Work on Carcass Feedback systems
418. The project will support the cost of meetings, workshops, training, training material and
manuals and travel associated with the work on governance, human resource development and
knowledge products. The JFPR consultants will be the source of consultancy support services for
this work. The base cost is estimated at $270,500 and details are in Table 109.
Table 109: Cost of Carcass Traceback System Capacity Building

Item Cost ($) Total
Workshops and meetings in UB 16,000 16,000 16,000 - - 48,000
Workshops and meetings in region 8,170 8,170 8,170 - - 24,510
Workshops and meetings in aimag 20,000 20,000 20,000 - - 60,000
Training materials and manuals 11,500 11,500 11,500 - - 34,500
Total 55,670 55,670 55,670 - - 167,010
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C. General Administration of Veterinary Services
419. The project will strengthen the capacity of the GAVS in the traceability of livestock and
livestock products through the establishment of the Mongolian Animal Health Information System
(MAHIS) in the project area. The MAHIS will improve the quality of local veterinary services in
order to meet with food safety standard. The MAHIS integrates several subsystems, which
assures animal health, quality and hygiene products, and traceability. Establishment of the MAHIS
also involves enrolment of processors.
420. The project will supply one set of computers/IT for each of SVUs in the project area. The
project will support one training per year at the four-aimag level for on use of the MAHIs. The total
cost of capacity building is estimates at $69,000 and detailed costs are set out in Table 110.
Table 110:Cost of General Administration of Veterinary Services Capacity Building

Item Cost ($) Total
SVU Computer IT set 40,000 - - - - - 40,000
Aimag Vet Dept computers IT 8,000 - - - - - 8,000
MAHIS training in region 7,000 7,000 7,000 - - - 21,000
Total 55,000 7,000 7,000 - - - 69,000
D. Research Development Center
421. The project will support capacity building of the Research Development Center (RDC),
formerly known as the National Agricultural Extension Center as well as capacity building of the
four Aimag Agricultural Extension Centers under the Aimag Food and Agriculture Departments
(AFADs) and 20 Soum Agricultural Offices (SAUs). The center aims to introduce and promote
advanced techniques and technologies that are environmentally friendly, low-risk, high-efficiency
towards sustainable development of the food, agriculture, and light industry sector, based on the
needs of organizations, enterprises, and citizens. Due to its staff shortages, lack of budget, and
weak network in local areas, activities to date have not had the expected results.
422. A training needs assessment conducted during project preparation identified the needs
for central, aimag, and soum staff, which is proposed to be implemented at the central and aimag
levels. In particular:
(i) At the central level, RDC and aimag staff will be trained in (a) training of trainers,
and (b) professional skills improvement. Professional skills training will include
specific areas relevant to the project including improved pasture management,
increased efficiency of livestock production through animal breeding and feeding,
value addition of livestock products, good agriculture and health practices, and
food safety in processing, as well as crop production, processing and packaging,
sales and marketing.
(ii) For the aimag level, aimag and soum staff will be trained in (a) training of trainers,
(b) government policy, modern agriculture practices, (c) agriculture extension
services, (d) application of software (MAHIS, LMIS, GIS), (e) professional skills
improvement, and (e) communications. Professional skills training will include
specific areas relevant to the project including improved pasture management,
increased efficiency of livestock production through animal breeding and feeding,
value addition of livestock products, good agriculture and health practices, and
food safety in processing, as well as crop production, processing and packaging,
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sales and marketing. Staff will also be trained in the application of MAHIS, LMIS
and GIS, focusing on sustainable use of natural resources.
423. To ensure the optimum allocation of resources capacity-building training will be conducted
at either the central level—attended by central and aimag staff—and the aimag level—attended
by aimag and soum staff, depending on the specific courses conducted. For example, training of
trainers for central and aimag staff can be conducted at the central level, while technology related
training will be conducted at the aimag level. The project implementation consultant will be
responsible for training at the central level and will be assisted my center staff at the aimag level.
In either case the consultant may engage specific subject matter specialists on a short-term basis
as resource persons under their contract.22 The draft capacity building program by year, together
with the cost, is in Table 111. The total cost of the capacity building training is estimated at
$365,520 In addition, resource persons may be recruited to assist the soum and aimag staff with
training that requires specific expertise.
Table 111: Draft Capacity Building by Year and Cost

Location/ Training Type Number of Trainees by Year Unit Total
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Cost Cost
($) ($)
Central Training - 52 52 - 52 - 65,520
Trainers' training - 26 26 - 26 - 420 32,760
Professional skills improvement - 26 26 - 26 - 420 32,760
Aimag Training 600 400 1,000 - - 300,000
Government policy, modern - 100 - 100 - - 50 10,000
agriculture practices
Agriculture extension service - 100 - 100 - - 250 50,000
Application of software (LMIS, - - 400 400 - - 250 200,000
GIS)
Professional skills improvement - 300 - 300 - - 50 30,000
Communication, psychology, - 100 - 100 - - 50 10,000
stress management
424. The consultant and the center will cooperate to produce comprehensive training modules
comprising a detailed program of specific topics and duration, presentations, handouts, audio-
video records and devices; and resources of teachers, materials, and budgets for herders. This
is proposed to be repeated annually for four years in order to build up a stock of material Digital
training and teaching materials will be developed to provide online courses adapted to
broadcasting through different social media. All the knowledge products developed will be stored
in the center database. To support this, the project will provide desktop and notebook computers,
projectors, multi-function printers, and digital cameras to the center, aimags and soums.
Transportation will also be provided to support delivery of agriculture extension services. The
base investment cost for this capacity building is estimated at $290,600 and proposed list of
equipment and costs are in Table 112.
Table 112: Proposed Equipment and Support for Capacity Building Research
Development Center, Aimag Agriculture and Soum Agriculture Unit
Location/Item Units/location Unit Cost Total Cost
($) ($)
Center 125,400
Web-based training materials & database 1 91,200 91,200
22 Resource persons will be engaged under ADB’s Guidelines for the Recruitment of Consultants (2017).
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Projector 4 500 2,000
Multi-function printer 4 400 1,600
Digital camera with support leg 4 350 1,400
Pointer, etc. 4 100 400
Van 1 20,000 20,000
Aimags (4) 94,200
Pointer, etc. 1 100 400
Van 1 20,000 80,000
Soums (20) 71,000
Pointer, etc. 1 100 2,000
Total 290,600
E. Inter-Aimag Pasture Use Administration
425. The project will support a series of regional workshops related to development of three
inter-aimag reserve areas—Chilen in Tuv and Bulgan aimags covering 34,100 ha, Khukhdel in
Uvurkhangai Aimag covering 37,900 ha and Argalant in Bayankhongor and Govi-Altai aimags
covering 118,600 ha. The workshops will develop targets and indicators related to the proposed
investments and will identify governance issues relating to these areas. Three workshops will be
conducted during the project period: (i) the first in year 1 to confirm the planned investments in
the three areas; (ii) the second in year 3 to undertake a mid-term review of the development of
the areas; and (ii) a final workshop in the sixth year of the project to evaluate the investment and
agree arrangements for continuation.
426. The project will support the collection and analysis of technical data from the Inter-Aimag
Reserve area managers to feedback to herder groups and policy makers to promote the efficient
use of these resources and to improve understanding of their contribution to livestock
sustainability during adverse periods.
427. The project will support the Inter-Aimag Pasture Use Administration to collaborate with
RDC on training programs related to the reserve areas.
428. The project will support the upgrading of the three reserve pasture areas through
investment in animal shelters, rodent control, and fodder crop production. Details of the
investments in equipment and materials by reserve are in Table 113.
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Table 113: Investment in Equipment by Inter-aimag Reserve Area

Item Unit Quantity by Reserve Pasture Area Unit cost Total costa
Chilen Khukhdel Argalant ($) ($000s)
Reserve pasture area ha 34,100 37,900 118,600
Total Investment 218.07
Animal shelter no. 10 10 10 3,260 97.80
Mechanical rodent control 15.86
Bird seat (plastic) no. 50 56 174 10 2.80
Smoking tool no. 2 2 2 167 1.00
Opening tool no. 2 2 2 185 1.11
Water trailer (tank, pump) no. 1 1 1 2,889 8.67
Personnel protection clothes sets 40 40 40 19 2.28
Fodder crop cultivation 104.41
Deep wells no. 2 10,000 20.00
Geophysical surveys for no. 2 400 0.80
deep wells
Seed (fodder crop) tons 30 333 9.99
Fencing poles no. 10,000 3 30.00
Seeder no. 1 18,519 18.52
7-blade plow no. 1 3,333 3.33
Hay mower no. 1 2,666 2.67
Hay rake no. 1 2,222 2.22
Hay bailer no. 1 16,879 16.88
a Rounded to nearest hundred dollars.
429. Investment in planned capacity building by year for the Inter-aimag Pasture Use
Administration is shown in Table 114. Additional needs, particularly at the central level, may be
identified during project implementation and financed following agreement with ADB.
Table 114: Cost of Capacity Building for Inter-Aimag Pasture Use Administration by Year
($ thousands)
Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total
Animal shelters 97.80 - - - - 97.80
Mechanical rodent control 15.86
Equipment 13.58 - - - - 13.58
Materials 2.28 - - - - 2.28
Fodder crop cultivation 104.41 104.41
Civil Works a 20.0 - - - - 20.00
Equipment b 43.6 43.62
Materials c 39.99 - - - - 39.99
Surveys d 0.80 - - - - 0.80
Workshops - 35.16 18.16 18.16 35.16 - 106.64
Total - 237.37 18.16 18.16 35.16 - 324.71
a Construction of deep wells.
b Includes seeder, 7-blade plow, hay mower, hay rake and hay bailer.
c Includes fencing poles and fodder crop seed.
d Geophysical surveys for deep wells

VI. IMPLEMENTATION AND OPERATING ARRANGEMENTS
A. Implementation Arrangements
430. The executing agency for the project will be MOFALI and the implementing agency will be
the Livestock Development Policy and Coordination Department (LPDCD) of MOFALI. The
project will be implemented through a Project Management Unit (PMU) located in LPDCD and
four Project Implementation Units (PMUs) located in the Aimag Food and Agriculture Departments
(AFADs). The project will support construction of office space as required to accommodate these
units and the related consultants.
431. A multisectoral steering committee will be established with responsibility for providing
guidance during project implementation. The steering committee will be chaired by the State
Secretary of MOFALI and will include the representation shown in Table 115.
Table 115: Project Steering Committee

No. Position, Institution Role
1 State Secretary, MOFALI Chair
2 Director General, Livestock Policy Implementation Deputy chair
Coordination Department, MOFALI
3 Ministry of Finance Member
4 Director General, Policy Planning Department, Member
MOFALI
5 Director General, Monitoring, Evaluation and Member
Internal Auditing Department, MOFALI
6 Director General, Food Production Policy Member
Implementation Coordination Department, MOFALI
7 Livestock Specialist, Livestock Policy Member
Implementation Coordination Department, MOFALI
8 Four Aimag Food and Agriculture Departments (In Member
rotation)
9 General Administration on Veterinary Services Member
10 Research Institute of Animal Husbandry Member
11 Representatives of participating aimags Member
12 Representative of ADB resident mission Observer
13 Representative of JICA Observer
14 Representative of Embassy of Japan Observer
15 Research Development Center Observer
432. Project Management Unit. A Project Management Unit (PMU) will be established within
the implementing agency in MOFALI and will be responsible for overall day-to-day management
of the project. The PMU will be headed by the Project Coordinator, who will report directly to the
Project Director in the implementing agency. The PMU will be staffed by individuals directly hired
by MOFALI and financed by the loan. The positions and inputs by year are detailed in Table 116.
Table 116: Staffing of the Project Management Unit

Position Year Year Year Year Year Year Total
1 2 3 4 5 6
Project Coordinator 6 12 12 12 12 12 66
Finance Specialist 6 12 12 12 12 12 66
Procurement Specialist 6 12 12 6 6 3 45
Monitoring and Evaluation Specialist 6 12 12 12 12 12 66
Environment Safeguards Specialist - 6 6 3 3 3 21
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Social Safeguard and Gender Specialist - 6 6 3 3 3 21

Communications Specialist 6 6 6 6 6 6 36
Livestock Policy and Contract Management Specialist 6 12 12 12 12 12 66
Pasture Management Specialist 6 12 12 12 12 12 66
Fodder Development Specialist 6 12 12 12 12 12 66
Livestock Management Information System Specialist 6 12 12 12 12 12 66
Support Staff – Administrative Assistant 6 12 12 12 12 12 66
Support Staff - Drivers x 2 6 12 12 12 12 12 66
433. The terms of reference for each of the PMU staff are in Appendix 1 of the Project
Administration Manual.
434. MOFALI will establish four Project Implementation Units (PIU), one in each of the project
aimags, which will be headed by an Aimag Coordinator supported by an Administrative Assistant.
The PIUs will be located in the Aimag Agriculture Departments and will also include a focal point
nominated by the Aimag Governor who is expected to work on a part-time basis. Staffing of a PIU
is shown in
Table 117: Staffing of an Individual Project Implementation Unit

Position Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Total
Aimag Coordinator 6 12 12 12 12 12 66
Administrative Assistant 6 12 12 12 12 12 66
Focal Point a 3 6 6 6 6 6 33
a Seconded from the Aimag staff on a part-time basis. Not loan financed.
435. The PMU and PIUs will be supported for all technical aspects of project implementation
by a team of Project Implementation Support Consultants to be recruited under ADB’s QCBS
procedures as detailed in Appendix 1 of the Project Administration Manual. The Project
Implementation Support Consultants comprise a team at Ulaan Baatar that will provide overall
support to the project both in terms of capacity building at the central level and project
implementation in the aimags and soums. In the latter role they will, in particular support the four
aimag based consultant teams. Provision is also made for the recruitment of short-term subject
matter specialists to assist the project consultants in training and other special requirements. The
required specialists and their time allocations are shown in Table 118 and their terms of reference
are in the Project Administration Manual.
Table 118: Inputs of the Project Implementation Support Consultant.

Person months
Position Year Year Year Year Year Year Total
1 2 3 4 5 6
Ulaan Baatar-based Specialists 24 79 79 79 73 24 352
Project Implementation Specialist/Team Leader 6 12 12 12 12 6 60
Pasture User Group/Rangeland User Association
Specialist 6 10 10 10 8 4 48
Livestock Specialist 6 10 10 10 8 4 48
Marketing and Agribusiness Development
Specialist - 12 12 12 12 6 48
Short-term subject matter specialists - 25 25 25 25 - 100
Aimag-based Specialists (1 of each per aimag) 72 144 144 144 108 36 648
Pasture User Group/Rangeland User Association
Specialist 24 48 48 48 36 12 216
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Livestock Specialist 24 48 48 48 36 12 216

Total 96 223 223 223 181 60 1,000
436. The Ulaan Baatar-based team will have a specific responsibility for:
(i) evaluating all submitted sub-agreement profiles and proposals, ensuring they are
consistent with aimag subprojects and revising as required;
(ii) preparing the evaluation of proposals and submitting them to the project
coordinator for final approval by the Project Director;
(iii) communicating to the Project Director and submitting entities as required the
progress of the evaluation process; and
(iv) developing Tripartite Agreements approved sub-agreements in collaboration with
other PMU staff
437. Short-term Subject Matter Specialists. It is important that project activities are
consistent policy directions at the central level in MOFALI, and that project activities can feed into
policy discussions at the central level. Also, a range of technical issues are expected to arise in
the development and implementation of subprojects and sub-agreements that will benefit from
coordination and technical support by central level agencies including research institutes,
universities, nongovernment organizations and independent specialists. As the project will involve
in many technical areas, the potential list of key counterparts is broad and cannot be defined until
the demand is assessed. The project will maintain regular contact with these agencies, on an
individual meeting basis as required, and at planning and review workshops as they arise during
project implementation, in response to the demands of support for subproject development,
review, and implementation.
438. A separate consultant team will be recruited for capacity building for meat traceability and
feedback systems under the JFPR-financed technical assistance (Table 119).
Table 119: Proposed Capacity Building for Meat Traceability and Feedback Systems
Consultants
Person-Months
Position Year Year Year Year Year Year
Total
1 2 3 4 5 6
Capacity Building Specialist/Team Leader 12 12 9 - - - 33
Livestock Identification Specialist 12 12 6 - - - 30
Veterinary Specialist 4 6 4 - - - 14
Agribusiness Linkages Specialist 12 12 6 - - - 30
Food Safety and Traceability Specialist 12 12 6 - - - 30
Field Food Safety and Traceability Expert 12 12 6 - - - 30
Total 64 66 37 - - - 167
439. Aimag Focal Point. An Aimag Focal Point will be appointed by the governor in each
aimag to ensure that project activities are consistent with policy directions at the aimag level, and
that project activities can feed into policy discussions. Also, a range of technical issues are
expected to arise in the development and implementation of subprojects and sub-agreements
that will benefit from coordination and technical support provided by aimag level agencies.
440. Soum Technical Team: A soum technical team (STT) will be established by the Soum
Governor comprising the Soum Land Manager, and the staff of the Soum Agriculture Unit and the
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Soum Veterinary Unit. The members of the technical support group will take a lead role in
representing the soum government in the development and implementation of various sub-
agreements, in particular:
(i) The Land Manager will take the lead role in PUG/RUA development and
implementation;
(ii) the Soum Agriculture Unit will take a lead role in all second-generation sub-
agreements; and
(iii) the Soum Veterinary Unit will take the lead role in animal health sub-agreements.
441. The Soum Governor will appoint one member of the STT as the Soum Focal Point
responsible for:
(i) acting as a member of the SSC;
(ii) leading the coordination of the Technical Support Group and collaboration with the
ATWG and the project consultants;
(iii) completing six-monthly progress reports and submitting them to the PMU; and
(iv) maintain regular telephone and email contact with the Aimag Project Coordinator
and consultants for troubleshooting on project management issues.
442. Soum Steering Committee. Each participating soum will establish and maintain
throughout project implementation a Soum Steering Committee (SSC) in the governor’s office.
The SSC will be chaired by the Soum Governor with participation of soum officials, beneficiaries
and service providers (Table 120).
Table 120: Composition of Soum Steering Committee

Title Role Term
Soum Governor Head of SSC Permanent
Soum Citizen Khural Representative Member Annual rotating
Soum Social Welfare Officer Member Permanent
Chiefs of all Bags (One Rep.) Member(s) Annual rotating
PUGs Representative a Member Annual rotating
Head of SAU Member Permanent
Soum Focal Point Member/secretary Permanent
a It assumed that there will be more than one PUG in the soum, so one PUG leader should be on the
committee, but represent all PUGs. This member should be a rotating position similarly to a Soum
Citizen Khural representative and a chief of bag.
443. The overall responsibility of the SSC will be to:

(i) ensure integrated project implementation at the soum level and inter-agency
cooperation and coordination;
(ii) review progress and plans;
(iii) review submitted sub-agreement profiles and proposals to the aimag consulting
team.
B. Implementation Schedule
444. The overall implementation schedule is shown in the Project Administration Manual.
141
C. Operation and Maintenance of Project Investments
445. Civil works constructed through the support of the project will be operated and maintained
according to relevant government regulations.
142
VII. CRITICAL RISKS
A. Lack of Water in Proposed Wells
446.
B. Extreme Climate
447. The climate of the country is characterized as continental with four seasons in a year.
There are high fluctuations on temperature on seasons and even day and night, and low
precipitation. The annual mean air temperature varies between -8 ... 8 °C, 10 ... 26°C in summer
and -15 ...- 30° C in winter. 85% of precipitation falls during the warm season. Assessment with
the CENTURY model, the air temperature will continue to rise steadily, with an average increase
of 2.20C in 2016-2035 compared to the base period of 1986-2005.
448. Due to the climate change, the lakes, ponds, and rivers are drying up and water resources
are declining in Mongolia. A frequency of natural disasters such as droughts and dzud has
increased, adversely affecting livestock sector. For instance, due to the dzud in the spring of 2020,
the Erdenemandal soum lost 60 thousand, and the Khairkhan soum lost 40 thousand head of
livestock. By the middle of this century, the percentage of livestock losses due to the dzud is
expected to reach 5.5% of the herd at the beginning of the year, and 7.6% by the end of the
century. The proposed project addresses such natural disasters through its proposed activities,
specially the collaborative pasture management and the linkage between herders and factories.
449. The forest fire will be another risk in for those soums with forests in Khangai area, and the
windstorm is for those soums in govi areas. Capacity building training will address such natural
disasters through its capacity building program on making fire break strips surrounding khot ail
and providing the barometers.
C. Alignment with Interests and Expectations of Farmers and Other Stakeholders
450.
D. Health Emergencies
451. The project target soums are located in peaceful areas in terms of animal health, where
there is no record of “A” class animal diseases, and contagious diseases transmitted from animals
to humans, such as FMD, anthrax and brucellosis. Besides of the public service units, there
operate 54 private veterinary services in 20 soums operating in the target areas, which will be
integrated into part of the MAHIS. Also, there will be provided support for strengthening veterinary
services through investing required equipment and capacity building training.
E. Livestock Market
452.
F. Operation and Maintenance of Project-Financed Infrastructure
453.
143

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Climate-Resilient and Sustainable Livestock

Development Project (RRP MON 53038-001)

Technical Feasibility Study Report

Project Number: 53038

Mongolia: Climate-Resilient Livestock Sector

AFSD - Aimag Food and Agriculture Departments

PUG - Pasture User Group

Table 6: Forest User Groups in the Project Area .......................................................................13

Table 98: Bayankhongor: Targets Related to Grazing Management Sub-agreements ............120

Figure 20: Structures and Relationships on Cashmere Marketing .............................................61

I. PROJECT CONTEXT AND RATIONALE

A. Need for Investment

Box 1: Priorities of the Mongolian National Livestock Program

Figure 1: National Livestock Number Compared to Mongolian National Livestock

Live Sheep Units (millions) 100

Live sheep units Mongolian National Livestock Program LSU

Source: FAOstat, Mongolian National Livestock Program

Figure 2: Stocking Rate and Output

Source: TRTA Consultant

Figure 3: Goats as a Percentage of Livestock Sheep Units

B. Project Objectives and Outputs

3 Government of Mongolia. 2016. Mongolia Sustainable Development Vision 2030. Ulaanbaatar.

II. PROJECT LOCATION

Table 1: Selected Project Area

Figure 4: Project Area

Table 2: Features of Traditional Classification of Regions

31. Selection criteria for project aimags are as follows:

32. Selection criteria for project soums are as follows:

33. Selection criteria for herder communities are as follows:

III. LIVESTOCK SYSTEMS IN THE PROJECT AREA

Box 2: Definition of Land Degradation Levels

Box 3: Definition of Land Recovery Classes

Table 3: Herder Groups in the Project Area

Table 5: Cooperatives in the Project Area

Table 6: Forest User Groups in the Project Area

Table 7: Water Points in the Project Area

Table 8: Animal Shelters and Storages in the Project Area

Arkhangai 1,885 4,226 1,549 1,326 5

3. Livestock Numbers and Output

Figure 5: Meat Production in Project Aimags (2010-2018)

Arkhangai Bayankhongor Bulgan Uvurkhangai

Source: National Statistical Office, 2020

Figure 6: Cashmere Production in Project Aimags (2010-2018)

Arkhangai Bayankhongor Bulgan Uvurkhangai

Source: National Statistical Office, 2020

C. Inputs and Services

D. Downstream Supply Chain

Figure 7: Supply Chain of Livestock and Meat

Source: TRTA Consultant

E. Subproject Implementation Arrangements

1. Aimag Level Subprojects

2. Soum Level Subprojects

77. Objectives. The sub-agreements aim to establish the organizational structures,

Figure 8: Structure of Sub-Agreements

Source: TRTA Consultant

81. The first-generation sub-agreements are:

82. The second-generation sub-agreements are: