A DEA-Based Sustainability and Efficiency Assessment of the Cashmere Supply Chain: From Tumurbulag Soum, Khuvsgul Province, Mongolia

Abstract

Mongolia is among the foremost producers of raw cashmere, a highly valued luxury fibre, yet its traditional supply chain is confronted with pressing issues of sustainability and efficiency. This study investigates the economic, social, and environmental dimensions of sustainability within the Mongolian cashmere supply chain, concentrating particularly on herder-level practices in Tumurbulag soum of Khuvsgul province. Data were gathered from 100 herder households through surveys, interviews, and field observations. The analysis employed Data Envelopment Analysis (DEA) using an input-oriented BCC model, with inputs comprising labour, feed, veterinary services, water and electricity, and equipment, while outputs included both the quantity of cashmere produced and the revenue generated. Findings indicate an average technical efficiency score of approximately 0.94 and a mean scale efficiency of 0.52, with 82 percent of households operating under increasing returns to scale. The greatest inefficiencies were associated with labour and feed, reflecting their frequent overuse relative to best-performing counterparts. Furthermore, many households displayed output shortfalls, particularly in terms of revenue, suggesting difficulties in capturing greater value from cashmere production. These results are examined through the lens of economic sustainability, which highlights low herder incomes and limited value capture, social sustainability, which reflects vulnerable livelihoods and demographic shifts in rural areas, and environmental sustainability, which is threatened by pasture degradation linked to expanding goat populations. The traditional Mongolian cashmere supply chain is therefore under considerable strain when assessed through the Triple Bottom Line (TBL) framework. Policy implications include the need to enhance herders’ productive efficiency through training, cooperative structures, and improved resource utilisation, the strengthening of social protection and rural community development, and the adoption of sustainable grazing systems alongside supply chain traceability mechanisms. Strengthening both efficiency and sustainability is vital for safeguarding herder livelihoods, protecting fragile ecosystems, and maintaining the long-term viability of Mongolia’s cashmere industry.