In Bhutan, the land of Gross National Happiness, agriculture is the main source of livelihood for more than half the population but accounts for less than one-fifth of GDP. Along the vertiginous Himalayan slopes of this land-locked country, over 90% of Bhutan’s poor live in rural areas, where they lack accessible, good-quality land and other resources. Opportunities to produce food along these mountain top farms and narrow valleys are limited, with little potential to expand irrigation facilities. In addition, external inputs like fertilizers are inadequate, while farm technology is at a low level. An underdeveloped private sector and high youth unemployment rate further impacts poverty levels.
In 2010, Daniel Spitzer established Mountain Hazelnuts, a smallholder farmer-based company designed to take advantage of the growing demand for hazelnuts from European confectionary and snack producers in Asia. At about the same time, the Kingdom of Bhutan announced it was interested in consider foreign investment. Spitzer concluded that Bhutan, cradled by the Himalayas and wedged between India and China, had climate and soil characteristics perfect for growing commercial crops of hazelnuts.
Mountain Hazelnuts established a business model to distribute hazelnut saplings to Bhutanese farmers to plant in their fallow land that has no commercial use. Mountain Hazelnuts then provides agricultural inputs and training to ensure that farmers know best how to care for their young shrubs. Once the trees flourish and bear nuts, the farmers sell the crops back to Mountain Hazelnuts at a guaranteed minimum price. Each full-grown tree can yield 4 to 6 kilos of nuts to be sold to Mountain Hazelnuts. With the typical rural household in Bhutan earning a cash income of less than $500 a year, these incremental earning based solely on the sale of the hazelnuts grown in fallow land will help farmers drastically boost their incomes.
In 2015, the Private Sector Window of GAFSP made a quasi-equity investment of $6 million in Mountain Hazelnuts. This investment—GAFSP’s first in Bhutan—was made alongside equity investments of $3 million each by IFC and the Asian Development Bank (ADB). These combined investments will support the expansion of Mountain Hazelnuts and to reach over 15,000 farmer households, mostly located in Bhutan’s poorer eastern regions.
- Climate Change
- Inclusive Business
15% of Bhutan’s population will benefit from this project
Mountain Hazelnuts is expected to involve 15,000 farmer households, mostly located in Bhutan’s poorer eastern regions. Farmers will grow hazelnuts to generate income on degraded, unused land, which would otherwise be left barren. Farmers cannot replace existing crops with hazelnuts which makes the income derived from the hazelnut harvest entirely incremental. These additional hazelnut earnings are projected to eventually double the household incomes of a large portion of participating farmer households, translating into a project impact for approximately 15% of Bhutan’s population.
1.5 million metric tons of CO2 will be sequestered
Up to 1.5 million metric tons of carbon dioxide (CO2) will be sequestered over the productive lifetime of the targeted 10.8 million hazelnut trees. Annual pruning of the trees will provide a sustainable source of fuel wood which will prevent the logging of natural forests (the equivalent of approximately 21,000 mature pine trees each year). In addition, the hazelnut trees will be planted on degraded land that was either deforested and became vulnerable, or was subjected to ‘slash and burn’ or ‘shifting cultivation’. The hazelnut trees will be planted along the contour, like retaining walls, which will stabilize the ground and reduce erosion by capturing the soil and spreading roots.
400 new jobs will be created
Over time, 400 additional jobs will be created at Mountain Hazelnuts, with the company planning to expand existing linkages with 1,200 entrepreneurs offering support services. Female employment is expected to triple and grow from 29% to 50% by 2020.