Kashmir chain: UN launches blockchain project in Mongolia

The Canadian start-up Convergence.tech launched a blockchain project for sustainable cashmere production in Mongolia together with the UN. Accurate tracking on the platform is intended to enable fair trading of the rare cashmere wool.

Cashmere is the second largest export good in Mongolia. A large part of the population lives from the business with the elaborately produced wool. And they live in insecurity: the demand for cashmere is increasing, forcing the herders to lower prices and increase production at the same time. They also often pay high fees to middlemen. To withstand the financial pressure, the farmers see only the possibility of increasing their herds of goats. The reason for this is that production is only possible in very limited quantities. For the cashmere wool only the belly fluff of the goat is used. However, the animals produce only 150 to 250 grams of downy hair per year – and only under certain climatic conditions. The colder and longer a winter is, the higher the quality of the wool.

 

The cashmere economy leads to a temperature increase of 2 °C in Mongolia

The larger herds lead to extreme overgrazing and desertification in the regions. According to a study, 65 percent of Mongolian pasture land has already disappeared as a result of cashmere goat farming. Climate change has led to an increase in climate of 2°C in Mongolia. This is 1.6 °C higher than the rest of the world. Just 30 years ago, cashmere goats accounted for 19 percent of Mongolian livestock farming. Today it is already 60 percent.

This is where the UN comes in with its Blockchain project. The Ethereum platform makes all production data visible at the shepherd’s, the supply chain and the processing in the capital Ulaanbaatar. In this way, customers can trace back whether their product has been produced in an ethically and climatically sustainable manner and are ultimately more willing to pay a higher price. Chami Akmeemana, CEO of Convergence.tech, says 

Mongolian nomads have an extremely volatile income. The use of block-chain technologies is changing the cashmere industry. And it benefits everyone: Shepherds, buyers and traders.

In addition, the parties involved want to help limit corruption and ensure animal welfare in this way.

 

Shepherds receive smartphones for accurate tracking

For six weeks, Convergence employees were on site in Mongolia, equipping the 70 goatherds with smartphones and training them in the technology. In the future, they will equip the wool bales with RFID (Radio Frequency Identification) chips and enter the data into the app. The production site is thus immediately visible on the map.

The project has already received initial positive feedback. Representatives from H&M Asia said: “Some major fashion labels are cutting back on the use of products that have been produced unecologically or are harmful to animal welfare. This does not mean, however, that cashmere wool must disappear completely. We are prepared to pay a high price for Mongolian cashmere wool if it is produced in an environmentally friendly way and comes from healthy livestock farming without child labour”.

 

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