Harbinger of Prosperity in the Gobi Region


July 5, 2001

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    Herders gather around a pressing machine at Cashmere Market Days. Photo: Layton Croft/Mercy Corps Photo:

In May-June 2001, Mercy Corps held two rural development events -"Cashmere Market Days" - in Dalanzadgad and Altai City. The events, sponsored by the USAID-funded Gobi Regional Economic Growth Initiative, were organized to bring herders and processors together to sell and buy large volumes of high quality cashmere at competitive market prices and to facilitate the establishment of long-term business relationships.

The Cashmere Market Days were an unprecedented commercial success. More than 2,000 herders and 14 cashmere processing companies attended the two events. Nearly 150 tons of cashmere was sold, generating $3.2 million in revenue for participating herders.

During the events, herders received higher than market prices as processing companies were eager to purchase large amounts of pre-evaluated cashmere. For processing companies, being able to deal directly with herders and procure vast quantities of value-added cashmere in a single location presented significant cost advantages.

Virtually all business at the Cashmere Market Days was conducted in cash, representing a positive departure from in-kind and barter trade that dominates the rural economy in Mongolia. The hard currency earned by the herders will stimulate local economies and further the development of the Gobi region.

About the size of Alaska, Mongolia is home to 2.5 million people. Cashmere is one of the country's most important exports. Mongolia provides approximately 30 percent of the world's cashmere. Since the collapse of the Soviet Union in 1991, Mongolia has slowly embraced free market reforms. For cashmere herders and processors, the transition to an open economy has created both opportunities and headaches.

To help herders and cashmere processors take full advantage of the economic opportunities being created by market-led reforms, Mercy Corps launched the USAID-funded Gobi Regional Economic Growth Initiative ("Gobi Initiative"). Mercy Corps is focusing its program in the Gobi region of Mongolia because of its cashmere, food processing and animal herding activities offer significant potential for rural economic growth.

In addition to creating an environment conducive for business activity, Mercy Corps also utilized the Cashmere Market Days to enhance the development of the cashmere sector. Mercy Corps organized contests during the events to reinforce the concept that higher quality cashmere has a premium value in the market. Four prizes were awarded at each event to the herders supplying cashmere in the following categories: highest commercial value, cleanest cashmere, finest fiber quality, and most consistent grade of fiber. In addition, Mercy Corps provided training and information outreach activities during the events. Herders were encouraged to attend clinics and workshops covering activities such as cashmere classing and pasture and water management.

The outcome from the two events strongly indicates that organized rural marketing activities are feasible and welcomed in rural Mongolia. To duplicate and expand the scope of such events in future years will be the next challenge for Mercy Corps.