Agriculture in Mongolia constitutes over 10% of Mongolia's annual gross domestic product and employs one-third of the labor force. However, the high altitude, extreme fluctuation in temperature, long winters, and low precipitation provides limited potential for agricultural development. The growing season is only 95 – 110 days. Because of Mongolia's harsh climate, it is unsuited to most cultivation.
The agriculture sector therefore remains heavily focused on nomadic animal husbandry with 75% of the land allocated to pasture, and cropping only employing 3% of the population. In 2002, about 30% of all households in Mongolia lived from breeding livestock. Most herders in Mongolia follow a pattern of nomadic or semi-nomadic pastoralism.
Crops produced in Mongolia include corn, wheat, barley, and potatoes. Animals raised commercially in Mongolia include sheep, goats, cattle, horses, camels, and pigs. They are raised primarily for their meat, although goats are valued for their hair which can be used to produce cashmere. Due to the severe 2009–2010 winter, Mongolia lost 9.7 million animals, or 22% of total livestock. This immediately affected meat prices, which increased twofold; the GDP dropped 1.6% in 2009.
History and growth of production
In the late 1980s, agriculture was a small but critical sector of the Mongolian economy. In 1985 agriculture accounted for only 18.3 percent of national income and 33.8 percent of the labor force. Nevertheless, agriculture remained economically important because much of Mongolia's industry processed agricultural products, foodstuffs, timber, and animal products, such as skins and hides for domestic consumption and for export. In 1986 agriculture supplied nearly 60 percent of Mongolia's exports.
Mongolian agriculture developed slowly. An abortive attempt to collectivize all arads occurred in the early 1930s; efforts to encourage voluntary cooperatives and arad producers' associations followed. In the 1930s, the government also began developing state farms, and by 1940 there were ten state farms and ninety-one agricultural cooperatives. In 1937 the Soviet Union provided ten hay-making machine stations to prepare fodder for livestock. In 1940 agriculture represented 61 percent of national income, and it employed approximately 90 percent of the labor force.
In the 1950s, agriculture began to adopt its present structure and modern techniques, based in part on material and technical assistance from the Soviet Union and East European countries. In the 1950s, the hay-making machine stations were reorganized as livestock machine stations. In 1955 negdels replaced the arad producers' associations. By 1959 the state had accomplished the collectivization of agriculture. In ten years, agricultural cooperatives had more than doubled, from 139 in 1950 to 354 by 1960. Ownership of livestock and sown areas changed dramatically as a result of collectivization. In 1950, according to Mongolian government statistics, state farms and other state organizations owned approximately 0.9 percent of livestock and 37.8 percent of sown areas; negdels had about 0.5 percent of livestock and no sown lands; and private owners some held 98.3 percent of livestock and 62.2 percent of sown areas. In 1960 state farms and other state organizations owned 2.7 percent of livestock; negdels, 73.8 percent; and individual negdel members, 23.5 percent. The state sector owned 77.5 percent of sown lands, and the cooperative sector the remainder.
By 1960 agriculture's share of national income had fallen to 22.9 percent, but agriculture still employed 60.8 percent of the work force. After 1960 the number of state farms increased, state fodder supply farms were established, the number of negdels decreased through consolidation, and interagricultural cooperative associations were organized to facilitate negdel specialization and cooperation. Mongolia also began receiving large-scale agricultural assistance from the Soviet Union and other East European countries after Mongolia's 1962 entry into Comecon. The Soviet Union, for example, assisted in establishing and equipping several new state farms, and Hungary helped with irrigation. In 1967 the Third Congress of Agricultural Association Members founded the Union of Agricultural Associations to supervise negdels and to represent their interests to the government and to other cooperative and social organizations. The union elected a central council, the chairman of which was, ex officio, the minister of agriculture; it also adopted a Model Charter to govern members' rights and obligations. In 1969 the state handed over the livestock machine stations to the negdels.