Mongolia Rapeseed Oil Export Potentials Grows, but Soil Fertility Issues Follow
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A Mongolian producer “Mind Tech” company has started exporting rapeseed oil to South Korea with a contract signed for supplying 800 tons of oil in the first phase. In late April, an initial export contract worth USD1.4 million was made with Dansuk Industrial Co., Ltd. of Korea. The company’s factory “Selenge” operates with an annual capacity of processing 35,000 tons of Rapeseeds, 100 tons of Rapeseed per day. Its capacity can be increased to 300 tons in the future. At present, the plant employs 40% of the total capacity.
It becomes necessary to grow black Rapeseed plantation, the primary raw Vegetable Oil material for export. If the main product— black Rapeseed— can be cultivated more, it will not only satisfy the domestic needs, but it will also be possible to export vegetable oil to many other countries such as China and Japan. Mongolian vegetable oil has many advantages, such as being grown in healthy organic soil, free of trans fat, and low in saturated fat.
Currently, 40-50% of the total imported vegetable oil is Sunflower Oil, 20-30% is Palm Oil, more than 20% is Soybean Oil, and 3-5% is Rapeseed Oil. More than 90% of Sunflower Oil and 50% of Soybean Oil imports are from Russia, while more than 80% of Palm Oil is from Malaysia and more than 90% of rapeseed oil is imported from Russia and Germany combined.
Soil Issues Concerns Grow Among the Agrarians
Initial developments of Rapeseed planting started in Mongolia in mid-2000 as Chinese businesses entered this field. The majority of Mongolian Rapeseed crop is exported to China. The crop totaled 51,762 tons last year, up 130% y-o-y. Although Mongolian Statistics data shows that rapeseed is planted on 86,000 hectares, some sources claim the crop area is as high as 100,000 hectares.
If the same plant is planted repeatedly, diseases and pests will appear, and it will reduce the fertility of the soil. Local farmers comment: “Rapeseed should be cultivated once in 4 years, but they cultivate it every two years. As long as there is a field left, they are planting Rapeseed for high profit gaining and creating a mess.” Some farmers criticize that Chinese crop industry policy is being implemented on Mongolian soil and worry about soil deterioration.
Only four Chinese merchandisers purchase Mongolian Rapeseeds by setting a monopoly. They know whether to buy Rapeseeds at a high or low price. Mongolian planters also purchase the seeds at whatever price Chinese traders say. Chinese businessmen buy Rapeseed for MNT 1.8-2 million (USD600-666) per quintals in autumn. But in the spring, the seeds are sold for between MNT 4-6 million (USD1,330-2,000). And when it is exported to China, it is shipped without paying a single penny of tax and makes much revenue. Rapeseed is three times as expensive as Wheat in Mongolia.
As part of the Agricultural Ministry’s policy, 25-30% of the total cultivated area must be planted with Rapeseed. “If farmers follow the technological recommendations and plant Rapeseed in rotation, there will not be much negative impact” said Mr.Esun-Erdene, Head of Division for Soil, plant protection, and seeds and sorts at the Ministry of Agriculture. “It is dangerous if it is constantly planted with seeds that are not approved, cheap, and of unknown origin. It is time the Ministry policy sorts out the country’s illegal and unknown seeds.”
At a broader level, it is considered appropriate to increase the customs duty on imported products of the same type as Edible Vegetable Oils, exempt Rapeseed and Edible Oils from VAT, and stop the cultivation of non-standard Rapeseed.
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