Assessment of Wood Product Value Chains and Recommendations for the Mongolian Wood-Processing Industry Firewood in front of a school in Erdenebulgan soum, Khuvsgul aimag, Photo: R.Glauner Consultancy Report Reinhold Glauner Delgerjargal Dugarjav Final Table of Content Executive Summary ................................................................................................................................ vii 1 Introduction and Objectives ............................................................................................................ 1 2 Methods .......................................................................................................................................... 2 2.1 Study Limitations ................................................................................................................... 2 2.2 Value-Chain Analysis .............................................................................................................. 2 2.3 Supply and Demand Analyses ................................................................................................ 4 2.4 Market Analysis ...................................................................................................................... 4 2.5 Market Constraints and Industry Recommendations ............................................................ 5 2.5.1 Private Sector Partners ...................................................................................................... 5 2.5.2 Focus Groups, Consultation, and Review Workshops ....................................................... 6 3 Background Analyses ....................................................................................................................... 7 3.1 Forest Resources in Mongolia ................................................................................................ 7 3.1.1 Forest Area ........................................................................................................................ 7 3.1.2 Growing Stock .................................................................................................................. 11 3.1.3 Increment (Mean Annual Increment – Current Increment – Periodic Increment) ......... 14 3.2 Market Size .......................................................................................................................... 17 3.3 Current Supply and Demand ................................................................................................ 18 3.4 REDD+ Strategy .................................................................................................................... 21 4 Results ........................................................................................................................................... 22 4.1 Potential Wood Supply ........................................................................................................ 22 4.2 Demand of Wood and Market Size ...................................................................................... 25 4.2.1 Financial appraisals of downstream approaches ............................................................ 29 4.3 Proposals suggested by stakeholders .................................................................................. 30 4.4 Field Study Findings ............................................................................................................. 32 4.4.1 Wood Availability for downstream Processing................................................................ 33 4.4.2 Wood Allocation / Harvesting Quota .............................................................................. 36 4.4.3 Downstream Processing .................................................................................................. 36 4.5 Survey results ....................................................................................................................... 38 4.6 Underlying Policies and Conditions...................................................................................... 39 4.7 SWOT-Analysis ..................................................................................................................... 42 5 Modernization Approach .............................................................................................................. 44 5.1 Concept ................................................................................................................................ 44 5.2 Suggested Processing Technology ....................................................................................... 45 5.2.1 Sawmills ........................................................................................................................... 45 5.2.2 Hubs ................................................................................................................................. 48 5.3 Geographical distribution .................................................................................................... 48 5.4 Implementation Approach through a Model Forest Area ................................................... 49 6 Conclusions .................................................................................................................................... 50 ii 6.1 General ................................................................................................................................. 50 6.2 Key Products ........................................................................................................................ 53 6.3 Key Partners ......................................................................................................................... 54 6.4 Forest Model Area ............................................................................................................... 54 7 Recommendations......................................................................................................................... 56 7.1 Priority Interventions ........................................................................................................... 56 7.2 Stakeholder Recommendations ........................................................................................... 57 7.2.1 Policy level ....................................................................................................................... 57 7.2.2 Research, Training & Education ....................................................................................... 57 7.2.3 Industry ............................................................................................................................ 57 7.2.4 Project / Donor levels ...................................................................................................... 58 8 Literature ....................................................................................................................................... 59 9 Annex ............................................................................................................................................. 62 Annex 1 – Selected text of the Terms of Reference .......................................................................... 62 Annex 2 – Questionnaires ................................................................................................................. 67 Questionnaire for wood processing industries and enterprises ................................................... 67 Questionnaire for Forestry officials ............................................................................................... 69 Annex 3 – 1st Assignment .................................................................................................................. 70 Annex 4 – 2nd Assignment ................................................................................................................. 71 Annex 5 – Model development of cluster industries at Zuunkharaa ................................................ 73 Annex 6 – Grading standards of Mongolia for timber ...................................................................... 74 Annex 7 – Conversion Rates .............................................................................................................. 74 Annex 8 – Legend of Erdenebulgan Soum Forest Map ..................................................................... 75 Annex 9 – Wood consumption in Erdenebulgan soum, Khuvsgul aimag .......................................... 76 Annex 10- AAC development ............................................................................................................ 77 Annex 11 - High-Tech Approaches .................................................................................................... 81 Annex 12 – Presentation: Consolidation Workshop 0n 04 June 2018 in Ulaanbaatar ..................... 83 Annex 13 - Stakeholder List ............................................................................................................. 102 Annex 14 – Market Prices of Selected Products ............................................................................. 106 Annex 15 – Major equipment and machinery currently owned and planned to be owned in near future by wood processors .............................................................................................................. 107 iii List of Figures Figure 1: Wood fluxes before product reaches the final markets .........................................................