The tiny Himalayan kingdom of Bhutan might seem an unlikely place to start a business after decades of living in Hong Kong, Shanghai, Singapore, and Taiwan while working in banking for such companies as JPMorgan and Citibank. But Bhutan is exactly where Teresa Law ’81 and her husband, Daniel Spitzer, moved in 2009 to launch Mountain Hazelnuts, an ambitious social-impact venture that is now the country’s largest private employer.
Launching an entrepreneurial venture with a social focus had long been a dream of theirs, and in the late-2000s, with their children building their own careers in the US, the time seemed right. Law had spent most of her career in both commercial and private banking. Spitzer, who had owned and developed a series of businesses, had recently sold his China-based sustainable forestry company, and was searching for a new opportunity.
“I had reached the point where I had ‘been there and done that’ in my career and I’d loved it,” says Law. “But now I wanted to do this passion project and really feel that we were giving something back and doing something meaningful.”
Law and Spitzer decided to focus their efforts on working with rural communities and learned about the growing market for hazelnuts. “As incomes were growing in Asia, people were gravitating to higher value consumption, including healthy foods such as nuts. In terms of status and taste, the hazelnut is considered near the top.” explains Law.
The couple originally set their sights on China, but in 2008, the devastating Sichuan earthquake halted those plans.
Now I wanted to do this passion project and really feel that we were giving something back and doing something meaningful.
That same year, however, the Royal Government of Bhutan held its first democratic elections, marking an opening up of the country. Shortly thereafter, the couple went to Bhutan to determine if hazelnuts could grow in the country’s unique agricultural conditions.
It turns out the kingdom is the perfect place. Hazelnuts need specific conditions to thrive, which Bhutan offers, including monsoon rains, cool winters, and mid-elevation areas. The idea was to identify areas in the region where the crop could be produced on a commercial scale to meet global demand and then help traditional subsistence farmers develop the sustainable cash crop, providing an attractive long-term livelihood. After determining the viability of Mountain Hazelnuts, they set out to create the social venture they had long dreamed of.
The offices of Mountain Hazelnuts in Bhutan
© Teresa Law '81
“I’ve always had an interest in education, women’s issues, and community, and this seemed like the culmination of all those interests — and one fantastic adventure I could have with my husband,” says Law, who now serves as the company’s CFO.
The Bhutanese government supported their proposal to form Mountain Hazelnuts, viewing it as a way to boost environmental protection while tackling rural poverty and urban migration. Mountain Hazelnuts now works with thousands of small-scale farmers to produce non-GMO hazelnuts. In addition to working with about ten thousand farming households, nunneries, and monasteries, the company directly employs 800 people and generates income for about 1,200 more who provide outsourced services to the company.
Small farmers are a crucial but often under-recognized part of the global agriculture system. According to the United Nations Environment Programme, some 2.5 billion people work in smallholder agriculture and are responsible for producing the majority of food consumed in the developing world — including 80 percent of consumption in Asia and sub-Saharan Africa. At the same time, smallholders also represent the majority of people living in absolute poverty. Globalized food systems make them more vulnerable to land grabs and price fluctuations, and they frequently lack access to credit. Climate change and infrastructure challenges pose additional risks.
Mountain Hazelnuts staff identify fallow, degraded land appropriate for orchards, so that farmers can add hazelnuts to the roster of non-commercial crops they already cultivate. The company grows plantlets in China from tissue culture, then cultivates them in nurseries in Bhutan.
When they are mature enough, they are distributed at no cost to the farmers, who receive training, technical support, and crop monitoring throughout cultivation. The company then purchases the harvest at a minimum price, and packages and distributes the nuts internationally. Since the lifespan of a hazelnut tree is several decades, the orchards also offer a future for young people, large numbers of whom leave for cities in search of stable employment.
“We thought that this was a good way to mitigate rural to urban migration and make [farming] desirable to the younger generation,” says Law. “This is a cohesive, family-oriented society and you lose that when people… leave the farms.”
Mountain Hazelnuts has also made a big investment in technology and systems to gauge their impact. Local staff and farmers use cell phone apps developed by the company to collect data on everything from crop and watershed conditions to the health and well-being of its farming households. Employees — women comprise nearly half their workforce — are also encouraged to participate in a wide range of trainings to expand their skills, including such opportunities as computer training classes.
“We teach staff all kinds of things, like how to do a financial model, how to give presentations, how to manage — all these things draw on our business school experience,” says Law. (Spitzer earned a master’s at Stanford University.)
Teresa Law '81 and her husband, Daniel Spitzer, are honored by the Asian Development Bank and CNBC.
© Teresa Law '81
The pair ultimately see their mission as going far beyond agriculture. Among other things, they provide employees with a range of health benefits, bringing in medical professionals to conduct health screening and education. Law also says that since opening the Mountain Hazelnuts headquarters in Lingmethang in eastern Bhutan, she has seen cafes and shops spring up across the town.
“We want to make sure we’re doing good and that people have their lives changed and improved based on their interactions with us.”
The company will see its first harvest this year and with it, aims to capture 3 percent of the global hazelnut market. The company eventually aims to plant 10 million trees (it’s now halfway there) in orchards across Bhutan, which Law says could effectively double the income of 15 percent of Bhutan’s population. She also says their planting results in the sequestration of 1.5 million tons of carbon dioxide, about three times Bhutan’s annual emissions.
At one time, companies emphasizing social and environmental sustainability were more attractive investments for philanthropic and non-governmental organizations than for traditional investors. Today, however, impact investors, driven by client interests and their own sustainability goals, are supporting so-called triple bottom line businesses like Mountain Hazelnuts. But Law says some investors are still too narrowly focused on quick profits and haven’t grasped that lasting, replicable sustainability requires long-term capital.
Some big institutions are starting to validate this approach, however. The Asian Development Bank honored Mountain Hazelnuts as its 2015 Corporate Finance Deal of the Year — a major achievement for a relatively small company. To Law, the award represents increasing recognition that with sufficient time and resources, and a solid business model, smallholders can play an important role alongside industrial agriculture in solving the expected global food shortage.
“We feel it’s an endeavor that will have impact for generations to come,” says Law. “I think nations are seeing it’s not just what you can afford for…this economic budget, this year. You really have to develop something that can endure.”