DOI: 10.36347/sjebm.2016.v03i03.008

Pages: 140-145

Milk is of the traditional food in Mongolia with hundreds years of custom. Current domestic liquid milk production has not met with the consumption of Ulaanbaatar (UB-capital city) and other big cities in Mongolia. The total milk production of farmers in surrounding area of UB is 10-12 million liters; however 100 million liters of milk is required for the consumption of inhabitants of UB. According to existing studies and official statistics, average consumption of milk and dairy products urban person is 2 times less than rural person, and only 20 percent of procured milk is processed. The objective of this study is to analyze market equilibrium of liquid milk market of UB. Market theory, including demand and supply analyses, was applied using regression analyses to estimate functional forms and other required statistical – econometrical indicators. The functions and elasticity(s)of demand and supply for liquid milk show clearly that the share of dried milk higher in the market. More advanced development of intensified dairy farms and supports of their activities are essential in order to meet the demands.