Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Cashmere and climate change threaten nomadic life
BBC News | | March 5, 2020
Mongolia's vast grasslands cover about three-quarters of the country, where nomadic herdsmen have maintained traditions stretching back centuries. But this world is changing - fast.
About 70% of this once verdant land has now been damaged, mostly due to overgrazing. The main culprit is the country's estimated 27 million cashmere goats, which are farmed for their highly-prized wool.
Unlike the country's 31 million sheep, the goats dig out and eat the roots of the grass, making re-growth much harder.
Add climate change on top, and the United Nations warns that a quarter of Mongolia's grasslands have now turned to desert. The nation is, in fact, particularly vulnerable to rising temperatures, with a 2C increase over the past 70 years, higher than the world average.
"When I was child, I vividly remember the grasses would grow taller, and we would receive more rain," says Batmunkh, a herder in the Dornod province.
He looks after 1,000 animals, 300 of which are cashmere goats.
See: Introducing the Convergence Ecosystem
But while the country's cashmere is considered by many people to be the highest quality, much of it ends up in China where it is blended with Chinese wool. For a jumper, about four goats are needed, and last year's average price was 130,000 Mongolian tugriks ($47; £36) per kilo.
"It is very unfortunate that our own cashmere cannot be proudly sold on a global market as Mongolian cashmere," says Batmunkh. "Whatever we produce is being mixed up in China with other cashmere."
About 90% of Mongolian raw cashmere production is currently sold to Chinese brokers, who usually sell on to Chinese-owned processing companies in Mongolia, says Zara Morris-Trainor, an associate consultant at the Sustainable Fibre Alliance. The organisation works with brands such as Burberry, J Crew and M&S.
The hope of both the Mongolian government and the UN is that overgrazing can be reduced, and prices increased, by two initiatives. The first is by introducing a new system of traceability, and the second is by opening more plants in Ulaanbaatar that can do the entire processing work, so that the finished wool can be sold for a "made in Mongolia" premium.
Blockchain Technology, Enhancing Traceability
To better ensure traceability, Batmunkh is now involved in a pilot initiative that uses blockchain technology - made famous as the tech behind the cryptocurrency bitcoin - to follow cashmere from the goats to new processing facilities in the capital, Ulaanbaatar.
See: Davos 2020: Financial inclusion and fintech is key to meeting the UN SDGs
Chami Akmeemana, the firm's chief executive, hopes it will provide traceability and authenticity. "There is very little transparency at present because of the chaos of the raw materials market, which is clouded by middlemen and market aggregators," he says.
Herders use a mobile phone app to register cashmere bales and attach a tracking tag.
The app was created by Toronto-based Convergence Tech, which is working with the UN in three provinces in north-east Mongolia. The idea is to limit production from overgrazed areas.
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