Mongolia produces 30% of world cashmere but captures under 5% of retail value, while 45 million goats drive pasture degradation.
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Mongolia is the world's second-largest producer of raw cashmere, supplying approximately 30% to 35% of the global market with an annual harvest of 10,000 to 11,000 metric tonnes of raw fiber. Cashmere represents Mongolia's most significant non-mining export sector, generating over $400 million to $500 million in export revenue and supporting the livelihoods of more than 200,000 pastoral herder families across the country's vast steppe and desert regions. The exceptionally soft hair undercoat of Mongolian cashmere goats, adapted to endure extreme sub-zero winter temperatures, is highly prized by global luxury fashion houses.
Despite its dominant market share in raw fiber production, Mongolia faces a severe value-chain bottleneck that limits domestic revenue capture. Historically, up to 80% to 90% of Mongolian raw cashmere is exported in raw or semi-processed (scoured) form directly to neighboring China, primarily through cross-border trade into Inner Mongolia. Raw cashmere trades at farm-gate prices between $15 and $30 per kilogram. In stark contrast, luxury Italian and French apparel brands—such as Loro Piana, Brunello Cucinelli, and Falconeri—process this raw material into finished garments that retail for $300 to $1,500+ per item. As a result, Mongolia captures less than 10% of the total retail value created along the global cashmere supply chain. Efforts by domestic textile firms, such as Gobi Cashmere and Goyol Cashmere, to expand local de-hairing, spinning, and garment manufacturing are constrained by high industrial energy costs, limited access to long-term working capital, technological deficits, and international supply chain hurdles.
The rapid expansion of the cashmere sector has triggered severe ecological degradation across the fragile Mongolian steppe. Following the collapse of the Soviet-backed socialist economy in 1990 and the subsequent privatization of livestock herds, pastoralists rapidly expanded their goat herds to capitalize on immediate cashmere cash returns. Mongolia's total goat population surged from roughly 5 million in 1990 to over 27 million to 30 million today, out of a total national livestock population exceeding 65 million animals. Unlike sheep, which graze on the upper blades of grass, goats pull plants up by their root systems, and their sharp hooves break up fragile topsoil. Consequently, over 70% of Mongolia's total rangelands suffer from moderate to severe pasture degradation, accelerating desertification as the Gobi Desert encroaches northward into former grazing pastures.
Environmental vulnerability is intensified by climate change and extreme winter weather events known as dzud. During severe dzud conditions—characterized by summer droughts followed by extreme winter cold and heavy snowfall that freezes grazing grounds—millions of livestock perish. The catastrophic dzud of 2009–2010 killed over 10 million animals (20% of the national herd), while the 2023–2024 severe dzud resulted in the death of more than 7 million livestock, decimating rural herder incomes and forcing many families to migrate to informal settlements around Ulaanbaatar.
To mitigate environmental risks, the Parliament of Mongolia re-introduced livestock tax legislation in 2021 to incentivize herd reduction. International organizations and herder cooperatives (arkhad) are promoting the Sustainable Fibre Alliance (SFA) certification standards, rotational grazing practices, selective breeding programs, and satellite remote-sensing rangeland tracking. Achieving long-term economic sustainability requires expanding domestic value-addition facilities, enforcing grazing management rules, providing credit incentives for high-yield fiber goats, and establishing direct trade links with international ethical luxury markets.