In nomadic Mongolia, poultry farms have seen a boom over the past years. Industry players anticipate more growth in the near future, with Government support.
Mongolia is home to the pastoral livestock industry, having 58 million head of livestock, mostly sheep and goats. However, over the last decade, the country has increasingly shifted to the poultry industry. The root causes are its growing economy based on mineral resources and food choices diversification.
Its first poultry farm was established in 1963 with the support of the former Soviet Union. When socialism collapsed in 1990, Mongolia was producing 20 million eggs annually. Today, the nation consumes over 500 million eggs annually and local producers provide 300 million eggs of them. Currently, over 20 poultry companies are operating in the country.
How did national big poultry farms emerge? The Government’s support was invaluable. It provided VAT exemptions for poultry farming and feed mill equipment, as well as low-interest loans under the National Movement for “Food Supply and Security”, initiated by the Mongolian President in 2022. Over MNT40 billion (US$12 million) of low-interest loans were provided to 7 poultry companies. As a result, according to the National Statistics Committee, the total number of egg-laying hens increased from 822,500 in 2022 to 1,554,000 in 2024, an increase of 90%.
Leading players
Tumen Shuvuut JSC started its operation in 2004. At present, they produce 150 million eggs per year, having 800,000 layers and using Western technologies such as Sanovo. In 2019, the company became a pioneer in the agricultural industry by launching an IPO at the Mongolian Stock Exchange. As a result, they raised US$3.8 million for farm expansions.
Last year, the company earned US$24.5 million, with a net profit of US$4.4 million and a profit margin of 18%. The company operates with an ROA of 15% and ROE of 25%.
In early 2024, construction work began on the new Tumen Shuvuut-3 farm (Phase-3). The farm will have 8 laying houses for 400,000 hens and 2 houses for 100,000 chicks. With this new extension, Tumen Shuvuut will increase its laying hen population to 1 million and its chick population to 300,000, producing 230-250 million eggs annually and supplying 50% of the domestic egg consumption alone. This will enable them to meet 90% of Mongolia’s domestic consumption, together with other domestic producers.
For the Tumen Shuvuut-3 project, the company received an investment loan of US$4.4 million from Golomt Bank for 60 months, with an annual interest rate of 6%, under the preferential loan terms provided by the Ministry of Agriculture.
In addition, Tumen Shuvuut is developing an ECO production complex including a livestock and poultry feed mill, an internal testing laboratory meeting high standards, a liquid egg factory (mainly for bakery products), and a compost fertiliser factory for recycling eggshells and excrement.
The second market player is NVTS LLC, established in 1998. They are recognised by their Bayan Egg brand and currently operate with 1 million layers. They installed the German-made Big Dutchman system and received The Golden Egg Award from the World Egg Commission. Homegrown wheat accounts for 60-70% of the feed and it serves as a tastemaker. In the near future, NVTS plans to increase the number of its layers to 1.5 million.
The third company is Neon Shell LLC. It works with 130,000 chickens and fully automated equipment, supplying 11% of the domestic egg market. In 2008, they purchased the latest advanced equipment from Tecno and Salmet and brought Italian and German experts to Mongolia to install and test equipment. Other international brands such as the Nuovo egg stamping system are also being used. The farm feeds chickens by TMS in accordance with Dutch standards.
The company is currently doing a feasibility study for a mixing plant project to prepare complete chicken feed to further increase the quality and efficiency of egg production. They plan to increase the number of chickens to 200,000. According to Mrs. Dalantai Tudev, Executive Director of Neon Shell: European poultry equipment has the best quality. It can last for up to 25 years while Chinese-made equipment may last for 15 years. We tried to import poultry equipment from Europe for our latest farm expansion during COVID-19. However, the transport cost was too high and we were forced to import equipment from China built to American standards.
The latest industry player is Ueg Undug LLC. It owns 60,000 layers along with its own feed plant and has the ambition to reach 1 million layers within 5 years. The company is constructing a new farm for 200,000 layers. Given that Mongolia is the 17th largest country in the world in terms of territory, several small-sized poultry farms have been established in remote provinces, which are based near rural customers and deliver fresh eggs.
Broilers
Mongolia imports more than 22,000 tonnes of chicken meat from abroad annually for US$50-60 million, and statistics show consumption is growing by 20% every year. The leading Mongolian broiler breeder is Ajigana LLC which produces more than 1,000 tonnes per year, covering 5% of domestic chicken consumption.
In 2013, Ajigana established Mongolia’s first broiler farming complex called Orgio Chicken with Western equipment such as Petersime. The facility can process approximately 1 million chickens per year by breeding Ross-308 meat-oriented broiler chickens. The complex consists of 6 small plants. They import flocks from South Korea on a quarterly basis, as transportation from Europe takes significantly longer.
Ajigana started the business by acquiring the Israeli poultry farm’s know-how and adopting McKinsey’s 7S Frameworks for the farm. Given that Mongolia’s winter is harsh, they operate a big steam boiler to provide heat and moisture, albeit at a high cost.
Orgio chicken farm received a loan of US$2.5 million under Food Supply and Security to build a new warehouse, modernise its parent flock, and increase its production capacity. It has also expanded its feed factory, installed a new incubator, and benefited from customs duty exemption.
In the future, the company aims to automate its slaughterhouse, introduce an automatic management and control system, increase the capacity of its parent flock by 50%, collaborate with cooperatives and chicken enterprises, and supply 20% of local chicken meat consumption. With other local producers, they may supply 50% of the local consumption in the near future.
The State Secretary of the Ministry of Agriculture Mr. Jambaltseren Tumur-Uya noted that by providing all kinds of support to enterprises under the Movement Food Supply and Security, domestic consumption of chicken meat will be supplied by local producers within 5-7 years.
Eurasian Economic Union Free Trade Agreement
The Mongolian Government is preparing a temporary trade agreement with the Eurasian Economic Union which includes Russia. The egg is one of the few commodities with an import tax of 15%. According to the draft agreement, this rate will be reduced to 7.5% with a quota. Most poultry farmers have been voicing to protect the national poultry industry from Russian low-cost egg suppliers.
Mr. Erkhembayar Lombo, Board Director of Tumen Shuvuut stated: The Government plans to reduce customs duties by 50% on 90 million eggs imported from Russia. Our association has requested not to include eggs in the 367 goods exempt from duty. If this is not possible, the import volume should at least be decreased from 90 million to 30 million. However, the Government remains adamant.
According to the National Statistics Committee, in 2023, Mongolia imported 183 million eggs (worth US$14.5 million) from Russia. Last year, it dropped significantly to 98 million eggs, down by 86%. Mr. Erkhembayar Lombo further commented on the business environment in Russia and Mongolia as of January 2025:
- Grain and feed raw materials in Russia are 30-40% cheaper than in Mongolia.
- 1kW of energy in Mongolia is 3-5 times more expensive than in Russia.
- Diesel fuel in Russia is US$0.6 per litre, in Mongolia, it is US$1.1 or 90% more expensive.
- In Russia, the corporate profit tax in the agricultural sector is “0”, while in Mongolia it ranges from 10 to 25%.
- In Russia, VAT is 5% and 100% is refunded for exports. VAT is 10% in Mongolia.
- The price of agricultural machinery, equipment, and spare parts is 45-90% more expensive in Mongolia.
- Products for increasing and protecting agricultural yields, such as fertilisers and herbicides, are 30-150% more expensive in Mongolia.
- The loan interest rate for the agricultural sector in Russia is 5-7% per year, compared to 19% in Mongolia.
- In Russia, US$88,200 are provided to citizens as non-repayable grants starting small- and medium-sized businesses in the agricultural sector (eggs, meat, and milk).
- In 2024, Russia provided US$14.9 billion as state support to the agricultural sector and plans to continue providing further support.
- The heat balance of the Russian agricultural region is 20-30% higher than that of Mongolia, and the thickness of the humus soil is 15-40% higher.
Two countries with such radically different environmental and economic conditions cannot be compared. If Russia, which produces food at such a low cost, is allowed to export eggs at reduced customs duties, the Mongolian poultry industry could face immediately collapse, with recovery possibly taking over 20 years.
In a nutshell
The current egg consumption in Mongolia is 3 times below the world average, suggesting strong potential for future growth, as more Mongolians are expected to incorporate eggs into their daily consumption. By 2030, Mongolia could supply 100% of domestic egg demand. In terms of broilers, the situation is different, with the main thing being the cost factor. China supplies chicken meat to Mongolia at a very low cost and therefore, local broiler breeders need to work to improve cost efficiency – a process that will take time before gaining a competitive advantage.
