The Economics of Everyday Things: Cashmere (Replay)
Host: Zachary Crockett | Release Date: December 23, 2024

Introduction to Cashmere and Mongolia's Economy

In the "Cashmere (Replay)" episode of The Economics of Everyday Things, host Zachary Crockett delves into the intricate world of cashmere production in Mongolia and its profound impact on both the local economy and the global apparel industry. The episode opens with Crockett painting a vivid picture of Mongolia's vast Gobi Desert, highlighting the region's expansive arid landscapes and the nomadic herding lifestyle that dominates the country's socio-economic fabric.

Crockett introduces Miyagmarjav Serchew Miga, who manages the Mongolian Sustainable Cashmere platform for the United Nations. From her vantage point in Ulaanbaatar, Miga provides firsthand insights into the lives of Mongolian herders:

Miga (01:22): "Endless open space."

Miga (01:38): "You can see sunset. It's just like you watching sunset in the ocean. You can see the sand dunes and the camels. Birds."

These descriptions set the stage for understanding the symbiotic relationship between the herders and their environment.

Rise of Cashmere in Global Markets

Cashmere, derived from the soft undercoat of goats, has historically been a luxury commodity, accessible only through high-end brands like Loro Piana. However, the market dynamics have shifted dramatically over the past few decades. Direct-to-consumer brands such as Quince and Everlane have democratized cashmere, offering affordable options like $60 sweaters. This transformation has significantly benefited Mongolian herders by expanding their market reach and increasing demand for their goats.

Miga (02:45): "Kashmir is a primary income source for herders. They're also an important pillar of the country's economy."

Crockett underscores that approximately 30 to 40 million pounds of raw cashmere are harvested annually worldwide, with 90% originating from China and Mongolia. The surge in demand post-2000 has led to a dramatic increase in Mongolia's goat population—from 5 million in 1990 to 27 million today—making herding the nation's largest profession.

Cashmere Production Process

The episode provides a detailed walkthrough of the cashmere supply chain, emphasizing the meticulous process from goat herding to finished garments. Each winter, goats grow a second, softer coat beneath their coarse outer hair. This delicate wool, known as cashmere, is harvested every spring using metal combs and measured in grams for international trade. On average, a single goat yields about 250 grams of raw cashmere, equivalent to roughly $10 worth.

Carolyn Yim, a third-generation knitter from Plyknits, explains the transformation from raw fiber to luxurious garment:

Yim (03:26): "The softness is on the belly and the little areas under the arms and the chin."

Yim (03:43): "I think the reason it's so prized is because it's beyond a functional product. It is a good that is associated with luxury and an elevated sense of style."

The cashmere undergoes a series of processes, including carding and spinning, to become usable yarn. Yim describes this transformation:

Yim (12:04): "This then is taken into the spinning machine where the hair is twisted in two ways. Kind of like a DNA structure that becomes twisted and twisted until it becomes a really long yarn and that is finally then put onto the cone and becomes usable for knitting."

Despite advancements, the episode reveals that producing a single cashmere sweater typically requires the wool from five to six goats, highlighting the resource-intensive nature of the industry.

Challenges Faced: Environmental and Economic

The rapid expansion of cashmere production in Mongolia has not been without consequences. The surge in the goat population has led to severe environmental degradation. Goats consume significant amounts of vegetation daily, leading to overgrazing that has decimated around 70% of Mongolia's grasslands. This ecological strain is exacerbated by climate change, with rising temperatures and declining rainfall turning vast regions into deserts.

Crockett (14:38): "Mongolia has responded to this boom in demand by cranking up cashmere production. Since 1990, the country's goat population has exploded from 5 million to 27 million."

Economic pressures on herders are also mounting. Despite the increased demand for cashmere, inflation in Mongolia has skyrocketed over the past 30 years, making it challenging for herders to sustain their livelihoods. The median household income in Mongolia stands at $5,000, primarily derived from large herds of goats. However, rising costs in the capital city, Ulaanbaatar, strain herders who must support families with multiple children.

Miga (07:12): "Economic return is not sufficient enough to cover their financial demands. Herder families, for instance, have five children. Four of them gone to this school. And the herders have to pay all that expenses in the capital city, which is now very expensive."

Moreover, the logistical challenges posed by Mongolia's vast and rugged geography limit herders' ability to sell cashmere directly to processing mills. Middlemen from China often exploit this gap, purchasing raw cashmere at low prices and selling it to mills for double the rate, leaving Mongolian herders at an economic disadvantage.

Crockett (07:30): "Traders from China travel through the far reaches of Mongolia on motorbikes, collecting bags of cashmere from herders. These middlemen clean the cashmere and sell it to mills for around $100 per kilogram, more than twice what they paid for it."

Sustainability Efforts and Future Outlook

Addressing these multifaceted challenges requires concerted efforts toward sustainability. Miga emphasizes the importance of maintaining Mongolia's nomadic herding practices while mitigating environmental impacts:

Miga (15:38): "They know that the land is foundation for everything, their livelihood and their animals. They're not stupid. They are willing to pay that price money. And they realized the issues."

In Northern China, stricter regulations have been implemented to control herding practices, confining operations to farms and restricting the nomadic lifestyle. However, these measures have also led to significant disruptions:

Yim (16:06): "I do not have the hubris to claim I have 100% sustainability because it's completely impossible."

Environmental permits and sustainability standards imposed on factories producing cashmere garments present additional hurdles. High compliance costs have driven many small to medium-sized manufacturers out of business, further complicating the industry's landscape.

The episode concludes on a contemplative note, highlighting the delicate balance between meeting global demand and preserving Mongolia's environment and cultural heritage. Despite the challenges, individuals like Miga remain committed to fostering a sustainable future for the cashmere industry, recognizing its integral role in Mongolia's identity.

Crockett (17:06): "Together, increased demand, overgrazing and climate change mean that cashmere is getting worse."

Miga (17:51): "This nomadic way of herding practice has been in the country hundreds, hundreds of years. Financial demand is going up. The country has to control in terms of impact, environmental impact, social impact and also economic impact for that commodity. That's a lot of challenges."

Conclusion

The Economics of Everyday Things provides a comprehensive exploration of the cashmere industry's complexities, weaving together economic data, environmental concerns, and personal narratives. Through engaging discussions and expert insights, Zachary Crockett illuminates the hidden costs and potential solutions embedded in the story of a seemingly simple luxury good. This episode serves as a poignant reminder of the intricate web connecting everyday items to broader global systems.

Notable Quotes:

• Miyagmarjav Serchew Miga (01:22): "Endless open space."

• Carolyn Yim (03:43): "I think the reason it's so prized is because it's beyond a functional product. It is a good that is associated with luxury and an elevated sense of style."

• Miga (07:12): "Economic return is not sufficient enough to cover their financial demands."

• Yim (12:04): "This then is taken into the spinning machine where the hair is twisted in two ways."

• Miga (15:38): "They know that the land is foundation for everything, their livelihood and their animals."

Produced by Sarah Lilly with help from Lyric Bowditch and mixed by Jeremy Johnston.