Goatherds hit hard by row over bananas

THEY DON'T eat bananas on the Mongolian grasslands. But as the traditional nomadic herders shelter in isolated ger tents against the long winter, a tit-for-tat American-European trade dispute over the sub- tropical fruit is threatening the subsistence livelihoods of those who provide one-third of the world's cashmere.

Few nomads know that a US-Brussels argument over banana imports will hit life on the steppes. "I hadn't heard about the trade dispute," said Sereeter, a 40-year-old goatsman from Tuv province who sells his cashmere at the raw materials market in Ulan Bator. "I think it may cause some effect, but I do not know whether it will be positive or negative."

In the next few weeks, as the goats start moulting their winter growth, the herders will begin cutting the raw "greasy" cashmere that is destined to end up as luxury-priced sweaters and scarves on the other side of the world. But it is not clear who will be buying their wool. While attention has so far focused on the Scottish cashmere industry, the impoverished Mongolian nomads also look like being innocent victims of the "banana wars" because of a World Trade Organisation ruling this week that gave Washington the right to impose punitive 100 per cent import tariffs on $191m (pounds 116m) of European imports. On the threatened list of goods are cashmere products, many manufactured with Mongolian wool.

"The impact on the Mongolian herder unfortunately will be most extreme," said Ronnie Lamb in Ulan Bator, the executive director of Mongol Amicale, a US-Mongolian joint venture that last year processed 300 tons of cashmere, a large proportion for export to Italian companies, which re-exported finished fashion goods to the US. "Most of the Mongolian herdsmen here live below a sustainable level. They come out of a long, cold, hard winter and they have no savings, they have no contingencies, no reserves, they need to eat, they need to survive, and send their children to school and to clothe themselves." Mr Lamb, a Scotsman, splits his time between Mongolia and his company's Bradford firm, which sells on cashmere to end-users.

Mongol Amicale buys its cashmere direct from the herders, but Mr Lamb said the company might hold off on some spring purchases until the outcome of the trade dispute was clearer. "We've no idea that contracts we have in hand are actually going to be honoured."

It is a potentially disastrous situation for nomadic herders in one of the most isolated and extreme geographical regions on earth, where winter temperatures fall to minus 40C. And it is a "double whammy", said Mr Lamb, for the industry. Last year, the world cashmere price collapsed, with herdsmen receiving just $9 a kilogram - half the level of 1994-95 - because sales of cashmere clothes plummeted in Japan and South-east Asia, hard hit by the area's economic crisis. With the "banana wars", Mongolian cashmere sales to clothing manufacturers in Scotland and Italy are also in danger of evaporating, because the punitive tariffs will make European-made sweaters and scarves unsellable across the Altantic.

"It's a disaster for Mongolia," said John Napoleoni, the chief financial officer for Forte Cashmere, a US firm that processes raw cashmere in Ulan Bator. Cashmere is the country's second biggest foreign exchange earner, and Mongolia can ill-afford another economic shock. The country, for seven decades a Soviet satellite state, was left reeling in the early Nineties when Moscow's subsidies disappeared overnight.

Sereeter, who like most Mongolians uses one name, added: "Herdsmen with many animals live quite wealthily, selling meat, skins and cashmere. But the life of herdsmen with fewer numbers of livestock is not that good ... Animal husbandry is a risky business; harsh weather can kill your animals, or you have to slaughter them to get cash and food and clothing."

The ultra-soft cashmere fibres are a precious commodity in the West, but most herders have little notion of the price of the finished products. With each animal yielding just 200g to 380g of cashmere a year, Mongolia's 11 million goats will this year produce around 2,500 tons of the raw wool. About 90 per cent of Mongolia's cashmere wool is exported.

At worst, the "banana wars" may play into the hands of aggressive Chinese traders and smugglers, who tend to outwit the herders on price. "The Chinese may be loading their wagons anticipating a great windfall because the European manufacturers are out of the ballpark," said Mr Napoleoni.

Additional reporting from Enkhamgalan in Ulan Bator.