Arkhangai, Dalanzadgad, and South Gobi - Money

Denominating wealth exclusively as currency is clearly inadequate in the abundant land of Mongolia. In fact, for the majority of people in the rural communities, money as currency is infrequently used and wealth and transaction potential is measured in animals or agricultural products. According to a 2008 UNDP report, 22% of Mongolians live ion less than $1.25 per day. Such statistics suggest that Mongolia is a land of poverty and hopelessness. Yet upon inspection, there is abundant wealth. Herding families with 'nothing' in terms of cash manage to keep hundreds of livestock, procure magnificent ornamental decorations, and keep entire communities well fed.

While markets exist in all urban centers in Mongolia to buy, sell and trade almost anything (agriculture, clothing, meat, dairy, and consumer goods), the Mongolian communities subscribe to a different set of value metrics. Wealth, particularly in rural areas, derives not from money, but from a strong connection to land, to livestock and to community.

Munkhbat Hasu, proprietor of the Hasu Shivert Resort, is a living example of someone with a strong understanding of how to steward wealth in community. At the Shivert Hot Spring Resort, Hasu realized the problems short term debt was causing in the surrounding agriculture community. His analysis found that many short term loans required a payback period to be transacted before harvest time. This forced farmers to pick food before it is ripe. Unripe fruit and vegetables fetch a lower price at the market. Since all area farmers had a similar debt timing structure and harvest period, all farmers had to sell their unripe food at the same time and the same market; causing a glut and further deflating the market price of the vegetables. Hasu realized that issuing longer term credit, rather than debt, allowed for greater economic benefit to all the participants in the economy. First, he realized that waiting for the highest quality fruits and vegetables to become ripe, increased price at the market. Also, he realized that cold storage would allow goods to be released and sold over time, increasing market price. Lastly, Hasu's offers credit and payment, not just in cash but, additionally, sometimes in seed and/or fully grown vegetables. This function eliminates the need for two exchanges, food/seed for money and later, money for food/seed. Eliminating two middle steps reduces friction and provides a higher yield to both counterparties.

A cultural norm involving money and community has arisen in Mongolia since automobiles have become more widely used in the countryside. In the event that an automobile driver hits and kills or injures a herder's animal, a socially agreed upon, pre-set price is in place that the driver will pay to the herder. the type and quality of animal determines price. For example, sheep and goats cost roughly $100. Cows and yaks cost roughly $400. Normal horses cost roughly $500 and prized racing horses can cost $1000 or more. This compensation to the herder equals the equivalent market price if the meat, milk, etc., were sold.

While abundant wealth exists throughout Mongolia, the lure of monetary wealth is becoming attractive. Western influence, a market economy and the increase of the mining industry all clash with local culture and value systems but also offer new global options and opportunities. The Oyu Tologoi mine in the south is rumored to be the largest gold and copper deposit in the world. Many interest, governments, corporations, and individuals all have a stake in the outcome. Currently, money and commodity are driving the process.

Date Entered: July 2010