MOUNTAIN HAZELNUTS: SOCIAL ENTREPRENEURSHIP IN BHUTAN
In early 2011, Daniel Spitzer was in the midst of an ambitious program. His company, Mountain Hazelnut Venture Limited (“Mountain Hazelnuts”) planned to double the cash income of a substantial part of the population of Bhutan, improve the environment, and generate a financial return for its investors.
Mountain Hazelnuts was the first 100 percent foreign direct investment company in the Kingdom of Bhutan. The plan was to provide hazelnut trees to rural farmers under a system of mutual obligations. The farmers would plant them in fallow or degraded areas, and Mountain Hazelnuts would purchase all the hazelnuts at a guaranteed minimum price, providing the farmers with a significant source of cash income. Mountain Hazelnuts would process the nuts in Bhutan and ship them through India to customers in China and Europe.
Providing a source of cash income to farmers would help reduce rural-to-urban migration, which threatened traditional Bhutanese culture. Planting hazelnuts on degraded or fallow land would provide environmental benefits, securing the soil from erosion, decreasing river siltation, and sequestering carbon. The company would also contribute to a fund to alleviate poverty.
Starting an agricultural venture in a landlocked, developing country with poor infrastructure and little experience with foreign private enterprise was a highly risky proposition. There were still major challenges ahead, but Spitzer was optimistic about the prospects.
THE KINGDOM OF BHUTAN
The Kingdom of Bhutan is located in the eastern Himalayas, between China and India. The country is about the size of Switzerland, with a population similar to the city of San Francisco.
Bhutan recently became a constitutional monarchy. In 2008 it issued its constitution and held its first parliamentary elections. (See Exhibit 1 for facts about Bhutan.)
Bhutan is a predominately Buddhist country, and religion is an important part...