The fate of 14 mega projects, once considered the hallmark of the coalition government’s development strategy, is now uncertain. Faced with severe budgetary constraints, concerns have emerged regarding whether these projects will commence on schedule, let alone be fully implemented. In an economic environment marked by financial austerity and widespread cost-cutting measures, the government has redirected significant resources toward large-scale agricultural initiatives, raising questions about its priorities.
Despite the ongoing economic crisis and the pressing need for infrastructure development, the government has continued to allocate substantial funds to agricultural programs. Under the 2024 to 2028 action plan’s vision of transforming the country into a “Healthy Food Producer and Exporter Region”, major national programs such as New Cooperatives - Prosperous Herders, White Gold, Food Supply and Security, and Food Revolution have been implemented at great expense. However, the necessity and effectiveness of these programs, in proportion to the funds spent, remain highly debatable.
Now, the government is preparing to launch yet another large-scale agricultural campaign, Atar-IV, with an estimated budget of nearly 1 trillion MNT. This initiative underscores Prime Minister L.Oyun-Erdene’s administration’s decision to invest heavily in the agricultural sector, even as it struggles to secure funding for its infrastructure and construction mega projects, which were originally designated as key drivers of national development.
While supporting agriculture is vital, this shift in priorities raises critical questions about the government’s long-term economic strategy. Can the country afford to divert resources from large-scale infrastructure development to agriculture at a time when fundamental economic growth depends on expanding and modernizing its industrial and logistical capabilities? More importantly, will these costly agricultural programs yield tangible benefits, or will they become yet another drain on limited public resources?
‘Bipolar’ decisions
The primary objective of the Atar-IV campaign is to ensure the sustainable development of Mongolia’s agricultural sector by harnessing the country’s natural resources and enhancing its competitiveness in agricultural production. However, the policies implemented by the authorities have, in fact, led the sector into its current crisis, restricting its potential for sustainable growth. Their approach remains inconsistent and contradictory.
As readers may recall, in the spring of 2024, the government exempted import duties on animal feed, feed additives and wheat flour in an effort to mitigate the economic challenges brought on by drought. However, rather than revitalizing the agricultural sector, this decision exacerbated the crisis. As a direct consequence, farming activity and harvest yields declined significantly in 2024. Domestic flour mills, unable to operate at full capacity, were forced to shut down, with several major food production enterprises ceasing operations entirely.
For a nation that relies heavily on imports and remains a consumer rather than a producer, the closure of even three or four major food production companies represents a significant loss. It is particularly concerning that government policies have not only undermined domestic industries but have also pushed them toward bankruptcy. Sustainable agricultural development requires policies that support and strengthen local production rather than weaken it.
A few days ago, the country signed a temporary free trade agreement with the Eurasian Economic Union, allowing duty-free imports of key food products from the European Union, including wheat. President of the National Union of Mongolian Farmers L.Bayartulga has warned that this agreement could lead to a nearly 50 percent reduction in domestic wheat supply and production, further exacerbating the challenges faced by the agricultural sector.
These policy decisions highlight the significant difficulties the government has imposed on farmers and domestic industries over the past year. Yet, despite these setbacks, the government now presents itself as a savior through the implementation of the Atar-IV campaign. Whether this initiative is truly intended to rescue the sector or will further undermine it remains uncertain.
Extensive budget
Last week, Minister of Food, Agriculture and Light Industry J.Enkhbayar announced that agreements had been signed with 10 commercial banks to provide working capital and investment loans to farmers under the Atar-IV campaign. He highlighted that the state budget has initially allocated 52.8 billion MNT for interest rate concessions. However, this is merely the tip of the iceberg compared to the total planned funding for the campaign.
The government intends to allocate 350 billion MNT for working capital loans and 450 billion MNT for investment loans, bringing the total to 800 billion MNT under the Atar-IV initiative. Working capital loans, which are used for daily business operations such as salaries, rent and raw materials, will have a 24-month term with an interest rate of 17 percent, of which the government will cover 10 percent, leaving borrowers responsible for the remaining seven percent. Investment loans, on the other hand, will have a 48-month term with an 18 percent interest rate, with the government again covering 10 percent.
In essence, 800 billion MNT will be distributed to enterprises under the pretext of supporting agriculture and food production. Additionally, substantial state budget funds will be allocated for soil and plant protection, the establishment of clusters and cooperatives and other related initiatives. Furthermore, a significant, though less transparent, portion of the budget will likely be spent on marketing, advertising, and information dissemination about the campaign.
Notably, certain anonymous or commercially driven media outlets, lacking professional editorial oversight, have begun aggressively promoting the campaign. It is unlikely that such platforms are genuinely invested in agricultural development, raising questions about the true intent behind their involvement. Given these factors, it is evident that at least 1 trillion MNT will ultimately be spent on the Atar-IV campaign.
No oversight, accountability or transparency
The initiators and implementers of the Atar-IV campaign claim that it will provide farmers and business owners with unique opportunities and favorable conditions that are not currently available in the country. However, many long-time industry professionals, who have witnessed both the successes and struggles of the agricultural sector, argue that a more effective approach would be the implementation of a sustainable policy that offers continuous support to farmers rather than offering large-scale loans all at once. These experts understand better than anyone how loans and assistance meant to support businesses or sectors can be misused, often failing to reach their intended recipients.
The misuse of funds in previous campaigns is a well-known concern. For instance, the Agricultural Support Fund (formerly under the Ministry of Food, Agriculture and Light Industry) saw funds being squandered by influential individuals in politics and business, causing significant damage to the sector. Recently, it was revealed that around 15,000 citizens and business entities failed to repay loans from the fund, leading to a debt of approximately 240 billion MNT - an issue that has sparked public outrage. Critics argue that similar mismanagement is occurring with current campaigns, such as the New Cooperative - Prosperous Herder and the Food Revolution, with financial support failing to reach those in need.
Under the Food Revolution initiative, about 1.2 trillion MNT were distributed in loans to more than 3,000 citizens to support livestock, agriculture and food production. Yet, there is no guarantee that the funds allocated under the Atar-IV campaign will not follow the same trajectory. The reality is that the number of agricultural sector projects and the funds allocated to them have not diminished, but what is clearly lacking is an effective accountability system and rigorous oversight.
While the initial phase of the Atar campaign did provide genuine support for the development of the agricultural sector, particularly when it first involved the public and youth, the effectiveness of subsequent campaigns remains in question. Given the current challenging social and economic conditions, it is debatable whether implementing the fourth phase of the Atar-IV campaign is the right course of action.
