2003年-世界发展银行全球_From_Goats_to_Coats___Institutional_Reform_in_Mongolias_Cashmere_Sector_110页_1mb

Summary of Report No. 26240-MOG: "From Goats to Coats: Institutional Reform in Mongolia's Cashmere Sector"

Core Content

The report analyzes the cashmere sector in Mongolia, highlighting its economic importance and the challenges it faces during the transition from a command to a market economy. It provides a comprehensive overview of the industry's historical performance, supply and demand dynamics, institutional and policy shortcomings, and outlines reform options to enhance competitiveness and reduce poverty.

Main Points

• Economic Importance:
  Cashmere is Mongolia's third largest official export, after copper and gold. It provides income to over a third of the population and accounts for over 6.3 percent of GDP from 1993 to 2002. The sector is a vital source of livelihood for the poor, with over 43 percent of households depending on it.

• Industry Performance:
  The cashmere industry has experienced significant fluctuations, with a boom from 1991-96 and a subsequent downturn from 1997-2002. Exports increased from $33.5 million to $71.2 million during the boom but fell to $45.2 million in 2002, below 1996 levels. The share of cashmere in exports dropped from 16.8% to 8.6% over the same period.

• Production and Quality:
  The quality of Mongolian cashmere has declined over the years, with a shift toward coarser fibers. This has reduced its competitiveness in the luxury market, where quality cashmere commands a 30-40% price premium. The coarsening of fibers has cost herders about $16 million in 2001, leading to a 20% drop in income for average herder households.

• Market Distortions and Policy Issues:
  The sector suffers from several market inefficiencies and institutional shortcomings, including supply distortions, inadequate marketing systems, poor public and private institutional capacity, and unregulated production practices. Government policies, such as export taxes and ownership of processing infrastructure, have distorted the market and favored processors over herders.

• Environmental and Infrastructure Concerns:
  The unregulated use of critical resources like land and water has led to overgrazing, soil erosion, and environmental degradation. Watering facilities are often non-operational due to lack of maintenance, forcing herders to travel long distances and reducing productivity.

• Taxation and Revenue:
  The export tax on raw cashmere has been ineffective and costly to enforce. It has not increased value-added activities and has instead reduced herder incomes and increased smuggling. The tax has also led to a net resource transfer from herders to processors and traders, amounting to up to $72 million over 1996-2001.

• Future Prospects:
  Despite challenges, Mongolia has strong comparative advantages in cashmere production, with almost 10 million goats, 25% of the world stock. Its climate and terrain are ideal for goat herding, and herders have a long tradition of producing high-quality cashmere. China's restrictions on goatherd growth may provide an opportunity for Mongolia to increase its market share.

Key Recommendations

• Institutional Reform:
  Develop a strategy that addresses institutional and market design complexities to improve the supply process. This includes improving laws governing land and water use and revising the livestock head tax or replacing it with an ad-valorem tax based on unbiased methodologies.

• Public-Private Partnerships:
  Encourage public-private partnerships in the management of water wells and other infrastructure. Herders are willing to pay for exclusive use, as demonstrated by the Gobi Initiative.

• Enhancing Competitiveness:
  The government should focus on creating an enabling environment for the private sector, including improving information sharing, coordination, and collaboration among industry agents. This will help in reducing market distortions and improving trade efficiency.

• Quality Improvement:
  Prioritize quality improvement initiatives to ensure that Mongolian cashmere can compete in the luxury market. This requires investment in research and development, grading systems, and standardization.

• Policy Coordination:
  The government needs to provide clear strategic direction and support the development of market institutions. Public policies should aim to reduce market failures and promote a more competitive and sustainable industry.

Conclusion

The cashmere industry in Mongolia is a critical component of the economy, but its performance has been hindered by institutional and market failures. Institutional reform, improved legal frameworks, and enhanced coordination between herders, processors, and the government are essential for the industry to become more competitive and to reduce poverty. The report emphasizes the need for a comprehensive approach that includes policy changes, market development, and environmental sustainability.