Arguments over cashmere pricing and production heated this week as herders pressed politicians, who in return challenged factories and middlemen.
Cashmere factories complained that the government's coronavirus relief measure manipulated cashmere prices and they might go bankrupt since herders have stopped selling during the cashmere season of March-May waiting on government promise. One factory accused the government was buying votes from rural voters at the cost of destroying the textile industry.
Agriculture minister defended his cashmere protection program that covered only 30% (3,000 tones) of this year's production and hoped that Chinese buyers (middlemen) would buy the rest at competitive prices later this year once coronavirus ban is lifted - a too optimistic scenario for many. Rural MPs also grilled the agriculture minister for slow distribution of government funds and some criticized that eastern provinces (where PM and cabinet ministers are running) receiving funds faster.
Today's market price of raw cashmere is around MNT 70k per kilo compared to MNT 130k last year. Agriculture Minister promised to help herders to sell their cashmere at MNT 100k as part of coronavirus relief measure. But local factories don't have the capacity to buy and process all the raw material into finished items. And herders, often indebted to intermediaries for cash advances, rely much on Chinese middlemen, who decide cashmere market. But due to coronavirus border closures, Chinese buyers have been absent and even if they arrive they would have to go on a 21-day quarantine.
As Mongolia prepares 1/5 of the world's raw cashmere politicians preoccupied with their re-elections are precipitating a collapse in a vulnerable market of cashmere already impacted by COVID.
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