Swiss Cooperation Office Mongolia
Camel milk value chain development initiative Small Action Pilot Project (7F-04319.01.02) August 2005-August 2006
Ts. Enkh-Amgalan, Program Officer
Executive Summary This short report intends to give you an overview on a small action project SDC has implemented on camel milk value chain development and its reflection on a streamline approach to value chain development pursued by development projects. The experience of barley cookie “Ashvai” value chain development project of SDC is also very much similar to the case of camel milk. This approach and methodology was discussed at the course “Value Chain Concept” held between 21-26 January, 2008 in Ede, Netherlands. There are various definitions of value chain. It generally described as “the full range of activities which are required to bring a product or service from conception, through the different stages of production, delivery to final consumers, and the final disposal after use”. Development practitioners define value chain development as “deliberate initiative to promote potential value chain development by striving for “target groups” inclusion, improving their participation and benefits, and incorporating other developmental concerns in a sustainable manner”. Value chain development approach in general consists of following steps: 1) 2) 3) 4)
Economic Mapping: identifying and scanning all sub sectors Sub sector analysis: analyzing promising a sub sector Value chain analysis: analyzing value chains within a sub sector Value chain development: developing the most potential value chain.
In real life experience, the development of camel milk value chain has been carried out as follows: 1a) Economic Mapping: Identification and scanning of potential economic sub sectors to develop in the Gobi region has been carried out among camel husbandry, goat husbandry, barley production, tourism sub sectors. Two main criteria have been used in the selection of a sub sector with highest potential were potential market demand for produced goods and contribution to SDC outcome to create better income and employment opportunities for herders and ex herders in the region. High demand of camel products in the market such as milk and wool and the number of herders in the Gobi region whose livelihood is dependent on camel herd, and being the most adapted and friendly animal to pasture land in the region has made the camel husbandry to gain the highest score thus be selected. 2a)
Sub sector analysis: Data have been collected followed by analysis within the sub sectors of camel husbandry: wool, milk, meat and tourism. It included production volume, market demand/potential growth in terms of absorption capacity and price, trends, potentials for value addition as well as stakeholders, their capacity and relationships. The exercise of weighing the data through constraints and opportunities scale has resulted in the selection of camel milk value chain.
3a)
Value chain analysis: At this stage, we have focused on finding answers to the questions when there is demand in the market and products are available at the level of producers-herders, why products are not flowing to the market, where the bottlenecks are. Assessments have been carried out as to finding out black holes within, whether it is product quality, processing technology, marketing, logistics as to packaging and transportation, lack of awareness of the potentials or combination of any of these.
4a)
Value chain development: Two main interventions have been designed based on the above analysis: to improve marketability of fresh and sour camel milk, products which are in high demand in the market and to develop new value added products based on lab tested technological information available to produce skin moisturizing beauty cream out of camel milk. It has started with conceptualization of the product until production and marketing it to final consumers.
1
1. Economic mapping. Following three criteria have been considered in the selection of the most potential sub sectors among camel husbandry, goat husbandry, barley production, tourism in the region of Gobi. Camel husbandry has been chosen for support on the basis of following information and assessments. Potential market demand for the products: Market demand for camel wool and milk is high in both local and international markets. According to textile researchers, camel wool comes second to goat cashmere in terms of its quality and softness. Gobi camel wool has been characterized as being a flexible fiber that does not stretch out of form and has high heat retention capacity. In addition, Gobi camel wool (in knitted clothes) is known as being pilling-resistant in the course of wear. All these features make the Gobi camel wool easily gaining consumer satisfactions. Camel wool is sold at the local market 4000 MNT per kg. Camel milk is all year around in high demand and it is sold at twice the price of cow milk in the local market. Camel milk products and the milk itself is used for purposes other than simply nutrition. It is widely used for health related purposes. Camel milk is rich in vitamin C. As lactation progresses, the vitamin C content increases and its levels are three times that of cow milk and one-and-a-half that of human milk. Camel milk compares very favourably with human milk. This again stresses the importance of camel milk for human nutrition. Camel milk is given to the sick, the elderly and the very young because of the belief that it is not only healthier, but works especially well in bone formation. In the recent years, with an expanding urban population, the demand for processed meat products such as sausage is increasing. Camel meat is known as the bes meat for sausage making for it has higher output and no special taste and smell. Contribution to improved income and employment opportunities for herders and ex herders in the Gobi region: The Gobi dessert constitutes Âź of the total territory of Mongolia. There live about 30 000 herder families. Camel rearing is one of the ancient and traditional ways of livelihood of Gobi people. Camels are the most adapted animal in the Gobi dessert. They are able to eat and digest thorny and salty plants and also can survive traveling days and weeks of long distances to reach scarce water points and drink salty water. These are often not suitable for other types of livestock. Camels are the most enduring animal as well to withstand extremely harsh climate of the Gobi, hot summer and long cold winter. Camels are the main type of livestock in the five provinces located across the plains of Gobi dessert and dessert steppe zone of Mongolia. Herders have rich experience of processing and using camel products mainly, milk, wool and meat and approximately 35-40% of their livelihood income originates from camel driven products. Camel milk and its products constitute for more than 50% of total food consumption and nutrition intake of Gobi herders. There is also wealth of knowledge and experience as to tending on the camel herd, breeding, herd composition, pasture and etc., The recent two decades, however, has seen a crisis in the camel husbandry of Mongolia. Due to poverty and lack of income, herders are getting tempted for a short gain decision to slaughter camels and sell the meat. This has gradually been causing a serious threat into the herd structure which is soon to reach a threshold level of gene pool, required for animal reproduction. Competitive advantage of the Gobi region: There inhabit about 240 000 camels which makes 2% of total camel population and 30% of total two humped camel population of the world respectively. Mongolia ranks first in the world by its number of two humped camel population. The Gobi landscape, nomadic herders, camels are the image of the Mongolian Gobi. The combination of the three has inspired production of wealth of cultural heritages over the years, traditional music, songs, sports, clothing and etc., In the recent years, the Gobi region
2
has become the most attractive tourist destination and camel based tourism products such as camel trekking, camel race and camel polo are the among the most liked. The Government of Mongolia has issued a policy to support camel husbandry and there are a handful of opportunities for stakeholders to benefit from public marketing, awareness raising and access to financial and production services.
High
Attractive: Camel husbandry
Barley production
Medium Low
Contribution to improved income of herders and ex herders in the Gobi
Table 1. Reflection in sub sector attractiveness matrix
Not attractive:
Tourism
Low
Medium
Goat husbandry
High
Potential demand for the products in the market
2. Sub sector analysis. Sub sector analysis have been carried out based on following criteria: production volume, market demand/potential growth in terms of absorption capacity, price and trends, potentials for value addition as well as stakeholders, their capacity and relationships. Camel milk value chain has been selected on the ground of following justifications. Production volume: Annually, Mongolia produces 2 000 000 liters of camel milk. She camels give a birth in every two years and their gestation period continues for 13.3-18.0 months. Daily milk yield ranges between 0.5-1.7 liters. With improved feed, husbandry and veterinary care daily yields could rise to 5 litres. Market demand/potential growth. There is an increasing demand for camel milk especially because of its health related properties in the local market. The United Nations Food and Agriculture Organization (FAO) sees bright prospects for camel milk stating half way round the globe people consider it a powerful tonic against many diseases. Camel milk is rich in vitamin C and its levels are three times that of cow milk and one-and-ahalf that of human milk. Besides, it is known to be rich in iron, unsaturated fatty acids and B vitamins. Researchers claim that it has high concentrations of volatile acids and, especially, linoleic and the polyunsaturated acids which are essential for human nutrition. Camel milk compares very favourably with human milk. According to Mongolian researchers, milk of camels that eat salsola passerina and oxitropus plants which grow abundantly in the Gobi region of Mongolia is of superior therapeutic value. Camel milk is used therapeutically against dropsy, jaundice, problems of the spleen, tuberculosis, asthma, anaemia, and piles. The milk also apparently has slimming properties. Traditionally, camel milk is given to the sick, the elderly and the very young because of the belief that it is not only healthier, but works especially well in bone formation.
3
Price and trends: Camel milk is currently sold at 800-1000 MNT per liter. According to preliminary market research carried out at the Nomin supermarket in Ulaanbaatar, consumers expressed a willingness to pay even higher price up to 1500-2000 MNT/l for fresh and good quality camel milk and sour milk. This would mean serious money for camel herders who now have few other sources of revenue. If herders process cream out of milk and sell it to the food processing company in the province centre or directly to cosmetics company they are also able to earn 1500 MNT/l.
An inspirational story from Africa: A young engineering graduate from Mauritania in Africa, Nancy Abeiderahmanne has been operating a successful camel dairy in for more than 15 years. Ms Abeiderahmanne currently has some 800 camel herders supplying her on a daily basis. She collects fresh milk from up to 80 kilometres from her base and hauls it back to her dairy for pasteurization in a refrigerated truck. The herders, while still nomads have learned it makes business sense to leave their nursing camels behind when they move to long distance pastures.
Potentials for value addition: Researchers of the Research Institute of Food and Biotechnology of the National Technical University of Mongolia has developed in the lab condition a technology to Source: FAO home page. lengthen shelf life of fresh and sour milk up to 7 days and also to process hard fat as a raw material for skin moisturizing beauty cream. It was clear with the improved access to markets herders would be able to sell more camel milk for good price which otherwise is mainly used at a household level or wasted. Stakeholders, their capacity and relationships: There are about 30 000 thousand camel herders. They have rich traditions and experiences to process and use camel milk. In each province center, there is a food processing company functioning with basic equipment and skilled workers. As a conservation of camel population has become a topic of hot discussion, communication and information sharing among stakeholders have intensified. Researchers of the Research Institute of Food and Biotechnology of the National Technical University, a group of herders from Dundgobi aimag, Food processing Company in the Dund gobi aimag center, and Mon Cream Company which produce cosmetic products have agreed to cooperate with the project. Table 2. Reflection in critical success factor matrix Critical success factors Camel Milk Production volume WCF Market demand/potential WCF growth Price and trends WCF Potential for value WCF addition Stakeholders, their QF capacity and relationships WCF 4 Sum Rank 1 WCF=Winning critical factors QCF= Qualifying critical factors UCF= Unimportant critical factors
Camel Wool WCF WCF
Camel Meat QCF WCF
Camel Tourism WCF QCF
QCF WCF
QCF WCF
QCF QCF
QCF
QCF
QCF
WCF 3 2
WCF 2 3
WCF 1 4
Note: The product which has the highest WCF is selected. 3. Value chain analysis. Through sub sector analysis, it was clear that there doesn’t exist camel milk value chain as such in its real meaning. It was only about herders occasionally selling milk, sour milk and dried curd when they move in closer to the aimag or soum centers. There are only three participants, herders, local sales man and consumer in the aimag or soum centers. As the main aim of the Small Action Pilot Project was to demonstrate feasibility of the idea, we decided to work with selected 10 herders from Dund Gobi aimag.
4
Figure 1. Existing camel milk value chain
Consuming Retailing
Dried curd consumers
900MNT/kg
Milk tea consumers
Health drink consumers
2 Local sales man
700 MNT/liter
Wholesaling Processing dried curd
700MNT/kg
10 Herders
Fermenting Making sour milk
Milking
10 Herders
500 MNT/liter
10 Herders
500 MNT/liter
There were many opportunities which has inspired us to start this project. Some of them are already mentioned above. So, in this part we focus on the challenges. The main challenges to build up the value chains were: - Herders- producers live in a long distance from market place (50-70 kms in average) and they are mobile and scattered. - The cost to deliver the products to the market is very high per a family. Herders don’t cooperate to share transportation cost or improve their bargaining power. This is why they are often reluctant to market milk. - Although camel milk keeps longer than cow’s, it still has a limited shelf life. So it is quite seasonal- herders sell milk mainly in colder seasons, autumn and winter. - Herders lack skills and motivation to process and handle milk hygienically as they are not paid for this extra labour. - Lack of awareness at the level of herders of market demand and requirements as well as opportunities. - No past experience and interactions between UB based processing companies with local processors and herders. - Introducing new products takes time until it is well recognised in the market. 4. Value chain development. There are four main trajectories in general in pursuing to develop or upgrade the value chain: -
Process upgrading: increasing the efficiency of internal processes such that these are significantly better than those of rivals, within individual links in the chain and between the links in the chain. Logistics: reducing the time and cost to the market and etc., Quality: standardization and consistency and etc., Costs: reducing inputs and etc., Capacities: increasing volumes and etc.,
-
Product upgrading: introducing new products, improving old products or creating marketing and design capacity,
5
-
Functional upgrading: increasing value added by changing the mix of activities conducted within the firm or moving the focus of activities to different links in the value chain. Adding sorting, grading and packing functions Reducing production and adding exporting
-
Chain upgrading: moving to a new value chain. Identifying more interesting suppliers Identifying more promising market segments
Table 3. Camel milk value chain development process. Constraint 1 Irregular supply
Poor quality
Low value addition and limited market
Cause 2 High delivery cost.
Lack of skills and no motivations of herders.
Lack of technological know how and awareness of market requirements Poor marketing strategy and lack of consumer awareness
Solution
Responsible 4 Project
Service
-To establish milk collection centers in the soums
Project
Wasn’t done due to limited finance.
-To raise awareness of herders of the opportunity to sell milk and increase their income -Negotiate with buyers for higher price for better quality milk
Project
-Introduce quality standards and certification
Project
-To improve milk transportation container
Project and herders
Project and herders shared the cost 50/50.
-To improve cooperation between herders-middle man- processorsconsumers -To process milk into cream with higher value and longer shelf life.
Project
- To process hard fat out of milk for raw materials for cosmetics company
Project and herders
- To develop branding and attached to it quality standards.
Project and processing companies
- To develop new value added products
Project and processing companies
Project has facilitated meetings of all and participation in trade fairs. Training was provided by the project. It has also shared the cost of buying separator. Project has trained herders and facilitated a link to cosmetics company in UB. Project in cooperation with processing companies developed a new brand for camel milk products and carried out marketing campaign. Project in cooperation with a processing company introduced new product sharing cost 20/80.
3 -To organize herders to sharing transportation cost.
6
Herders
Herders
5 Training and facilitation.
Organized meetings between herders and buyers.
Project provided herders with information and training on skills. Project has initiated the process and still on going.
1
Slow process of up scaling
2
Lack of Government support and influence
3 - To do market research in the local and potential international market to explore opportunities.
4 Project and processing companies
- Lack of processing capacity and experience of local processing companies to enter international market
Project and processing companies
-To raise awareness of the Government and officials through organized and consistent interactions, meetings, study tours and demonstrations.
Project, herders, processing companies
5 Project in cooperation with processing companies has made local market research and not yet international market research. As an initial step, registration of trademark internationally was made with the Chamber of Commerce and it needs continues cooperation and support. Project has supported the processing company to develop business plan to apply for the bank loan. Project has facilitated many interactions of herders and processing companies with government agencies and officials.
Through the project camel milk value chain started to grow into a new stage and is still developing. More and more herders are joining into supply chain which has eventually made Mon Cream Company to consider an investment to increase its capacity. Figure 2. New camel milk value chain.
Consuming
Milk tea consumers
Dried curd consumers
Health drink consumers
Supermarkets
Retailing
Beauty cream consumers
Small shops
Wholesaling Mon Cream cosmetics company
Processing beauty cream
LFC
Hard fat making Pasteurized and packages camel milk and sour milk
LFC
LFC
Dried curd making
Herders
Fermenting
1000 MNT/kg
Cream/Sour milk/milk
1000 MNT/kg
Herders
LFC-aimag based local food processing company.
7
1200 MNT/l
Picture 1. New value added camel milk products
Skin moisturizing cream, hair and body shampoo.
Pasteurised and packaged camel milk and sour milk, and packaged dried curd.
5. Concluding remarks. ™ This project has only initiated the process of developing camel milk value chain. It needs further support for the benefit more and more herders. The experiences all over the world says in order to upgrade already settled value chain takes at the least 6 years, so, building a value chain definitely needs not less than this. ™ Not only one product, a comprehensive camel value chain project need to be implemented to make the camel a popular animal to breed, an animal which is such an obvious solution to improving livelihood of thousands of Gobi herders and for it which has with friendly grazing habits and the best adapted to the sensitive ecosystem of the region. ™ There are many issues need to be addressed to continue developing and upgrading the camel milk value chain. Some of these are: -
-
Breeding and selection activities for milking purposes need to be undertaken. Proper records should be kept of births, mating and possibly of production. Where the local population is incapable of doing this, outside inspection and help should be given. Lactating camels are not additionally fed. With improved feed and veterinary care daily yields could rise to 5 litres. Research into various fields of interest is imperative. It is a challenge to our society that we can combine traditional knowledge with modern know how in technical and technological development.
8
Relevant references and literatures. Websites: http://www.value-chains.org/valuechain/bdssearch,home http://www.microlinks.org http://www.value-links.de http://www.sdc-valuechains.ch http://www.seepnetwork.org
Publications: A handbook for value chain research, Kaplinski and Morris http://www.ids.ac.uk/ids/global/pdfs/VchNov01.pdf Donor approaches to supporting pro poor value chains, Tilman Altenburg http://enterprise-development.net/about/search/asp Shaping value chains for development: global value chains in agribusiness, Humphrey http://www2,gtz.de/dokumente/bib/05-0280.pdf Enterprise Development and Micro Finance Journal Quarterly with articles on recent experiences by field practitioners http://www.practicalaction.org/?id=sed_journal The blue book: business development services, guidelines for donor funded interventions; http://www.sedonors.org/groups/asp?groupid=3
Tools: Value chain for broad based development-The GTZ manual http://www.value-links.de/manual.html ILO Guide for value chain analysis and upgrading, 2006 http://www.mmw4p.org/dyn/mmw4p/docs/detail/545/6 USAID Value chain training http://www.microlinks.org
9