AGRICULTURE

Mountain Hazelnut Venture Private Limited ("MHV" or the "company") - Bhutan`s first and only 100% foreign direct investment - was set up in 2010 as a greenfield hazelnut planting, nursery and processing operation in Bhutan. MHV aims "to build a world-class, triple bottom-line venture and become a major player in the global hazelnut market" (http://www.mountainhazelnuts.com). The proposed IFC investment is to support MHV in developing the hazelnut supply chain and processing operations in Bhutan to produce high quality hazelnuts (the "project"). MHV`s supply chain spans from China to Bhutan, as it imports its hazelnut plantlets from a tissue culture lab in Kunming, China through a cold chain system. In Bhutan, the supply chain comprises of farmers (who are primary producers of hazelnut), MHV`s agricultural extension services and transport infrastructure. Under the project, MHV provides hazelnut plantlets to farmers at no charge, together with necessary training and agricultural extension services. Accordingly, the farmers will grow, harvest, field-dry, and deliver the in-shell hazelnuts to MHV collection centers for inspection. MHV will buy all qualifying nuts according to a guaranteed price structure agreed upon in advance between farmers and MHV, and vetted by the Ministry of Agriculture and Forests (MoAF). MHV will then further process the nuts in its processing facility and then export them. The project is being implemented all across Bhutan, with MHV`s operational headquarters and the main nursery located in Lingmethang in Mongar district. Hazelnuts are being grown in a total of 15 `dzongkhag`s (districts) from eastern and central regions of Bhutan (viz. Trashigang, Trashiyangtse, Mongar, Lhuentse, Pemagatshel, Samdrup Jongkhar, Zhemgang, Bumthang, Trongsa, Wangdue, Punakha, Gasa, Dagana, Tsirang and Chhukha). The processing facility, which will be set up in coming few months, will be located near Lingmethang in Eastern Bhutan. Under the project, MHV has developed the world`s largest hazelnut nurseries on 14-acres in Lingmethang and Ngatshang in Eastern Bhutan and a total of 2.8 million hazelnut saplings have been distributed to about 5,600 farming households which are planted over an area of 6,200 acres, and have recorded an 90% overall survival rate in these orchards. While some trees have begun bearing fruit, commercial hazelnut harvesting will start from 2016. Over the project life, MHV aims to register about 22,000 acres of land all across Bhutan and bring it under hazelnut cultivation.

Bhutan