The market
The global buckwheat market in 2010 reached approximately $400 million. Total production reached only 1.5 million tons, just half the global production of ten years prior. While climatic conditions in Russia, the world's second-largest producer after China, have significantly impacted production and driven consumer prices down from one to three dollars per kilogram, landowners are increasingly producing under contract for large companies that offer predictable income. The top five producers combined (China, Russia, Ukraine, Poland, and the United States) account for over 80% of global production, with China's production representing 39% of the total. China is not only the world's leading producer but also a pioneer in innovation, with over 100 full-time researchers from 66 institutions focused on increasing yields, which have risen by 70% over the past three decades. Buckwheat has been cultivated in the highlands of Central Asia for at least 5,000 years. The gluten-free grain was introduced to Europe around a thousand years ago and reached North America in the late 19th century. It has provided food security in the Himalayas for generations, with two main varieties: common buckwheat, which yields 750 kilograms (kg) per hectare, and bitter buckwheat, which yields 1,600 kg per hectare. Buckwheat can be grown at altitudes of up to 4,400 meters, and the period from sowing to harvest is only 30 days. In Japan, buckwheat goes from seed to ready-to-eat soba noodle in just 75 days. Buckwheat grows so quickly that it suppresses most weeds. It can be grown in poor soil, requires no pesticides or fertilizers, and is ideal for preparing land for organic farming. Buckwheat is primarily used worldwide for galettes and pancakes (Europe and North America) and soba noodles (Japan). However, in the Himalayas, 70% of the buckwheat meets local needs.
Innovation
Buckwheat is one of the most efficient producers of plant-based protein, unmatched by any other grain (even though it is classified as a fruit due to its pyramidal shape). The human body can digest 74% of buckwheat's protein content, which includes eight essential amino acids, vitamin E, and nearly the entire spectrum of B vitamins, helping the body meet insulin requirements. Buckwheat honey contains up to 20 times more antioxidants than any other honey, making it a premium by-product. The hulls are used as packaging material, as a base material for heating pads, as a raw material for mattresses, and as filling for hypoallergenic pillows that provide excellent neck support. However, advertising has altered buckwheat's image, and the local population increasingly prefers imported white rice. This shift in consumer preferences risks consigning buckwheat to obscurity, despite its ease of cultivation and its undeniable health benefits, including its ability to replenish topsoil. In Europe and North America, the crop has only increased in popularity among people with diabetes. Buckwheat, an integral part of Himalayan culture and tradition, is now at risk of disappearing. This would represent not only a loss of income for farmers who cannot compete with mass-produced, subsidized grains, but it would also imply a fundamental societal shift. Kinley Tshering studied forestry at the University of Montana in Missoula, USA. Born in Bhutan, his interest in preserving his national traditions, particularly its economy and ecosystems based on native forests, motivated him to earn a degree in forest management. However, while living in Montana, he also learned to brew beer. Initially, he was drawn to the concept of the blue economy in his role as Chief Forester of Bhutan. After attending meetings, he had the opportunity to rethink the brewing of buckwheat beer. When he learned about the business model described by Mr. Sy Chen, the Japanese branding and marketing expert, he realized that while Bhutanese buckwheat might not compete in international markets, it would be an ideal base for creating a unique, organic, non-alcoholic buckwheat beer. As Sy explains, non-alcoholic beer represents the fastest-growing beverage segment in Japan. The business model doesn't involve brewing beer in Bhutan from buckwheat and shipping it to Japan; the innovative aspect of Sy's proposed concept is licensing the brand and providing the key ingredients. The initial assessment indicates that revenue from royalties on beer sales could generate more income than buckwheat exports.
The first cash flow
Sy and his team at Creative Intelligence Associates in Japan developed the PAWO brand. The brand was registered in Japan and is owned by the Bhutanese Ministry of Agriculture and Forestry. Jim Lueders of Wildwood Brewery in Stephensville, Montana, just 20 miles from where Kinley studied, is ready to brew the first batches of buckwheat extract. If the buckwheat were exported and used for brewing beer, only the starch would be valuable. The rest would end up as cheap animal feed. However, if the Bhutanese first produce malt extract, the remaining 92% can be used as local animal feed, replacing expensive, low-quality imported feed from India, which is primarily derived from agricultural waste and fish processing byproducts. Each ton of buckwheat would then yield 900 kg of animal feed. Because buckwheat has a moisture content of only 14%, and the spent grain after malt extraction contains 50% moisture, it represents a high-quality, locally sourced food that requires little to no transportation, which is advantageous for both farmers and brewers. A typical yet competitive model of the blue economy is emerging. Kinley and his team are now committed to producing local beer, in a local brewery, with technical support from Jim Lueders, to ensure local expertise and a benchmark in the local market that projects the right image internationally, while also meeting the needs of the local market. With an investment of approximately $600,000, the brewery could be operational by 2013.
The opportunity
Initial contacts in Japan confirmed the viability of the licensing model. However, there is demand for more than just branded extract and malt from Bhutan. Brewing beer according to 16th-century German purity principles dictates that only water, barley, and hops should be used. While the original text omitted any mention of yeast, which wasn't discovered by Louis Pasteur until over three centuries later, beer can only ferment if the appropriate yeast is added or attracted. Bhutan is rich in wild yeasts, which can be harvested in the same way as for several traditional Belgian beers. This means that the exclusive license for Bhutanese beer could now generate revenue from (1) license fees calculated on beer sold, (2) the sale of malt extract, (3) the sale of spent grain from the extraction process as animal feed, (4) the sale of beer on the local market, and (5) the sale of wild yeast. Alcohol production is unavoidable during beer brewing. Non-alcoholic beer must eliminate alcohol. Thus, in this case, additional revenue could even be generated – from alcohol. In the future, Bhutan could even supply its own hops, securing half a dozen revenue streams that make Himalayan buckwheat insensitive to global market prices for this commodity. The organic farming program of Bhutan's Ministry of Agriculture will facilitate the recovery of organic buckwheat as part of an initiative to accelerate Bhutan's socio-economic development. Buckwheat, once considered uncompetitive and unable to meet global market prices, is cultivated at altitudes exceeding 3,000 meters. It possesses a wealth of traditions, culture, and nutrients that now make it a driving force for rural development. Even more importantly, it helps preserve a millennia-old Himalayan culture and rural communities, while minimizing shipping and transportation and contributing to the benefits of a global community. The blue economy is not opposed to globalization; it is in favor of meeting local needs, building social capital, and ensuring quality of life. The solution devised for Bhutan is not an exception; it is part of a broader initiative to grow the economy by shifting the focus away from blind economies of scale and the short-sighted view that only low product prices and low wages matter. This is because transportation and marketing account for a maximum of 90% of the added value generated in the process, from farm to mine to the finished product. This 90% could remain within the local community and stimulate growth in a non-inflationary way. The missing link for success lies in the entrepreneurs who see the opportunities and are ready to reap the six cash flows that characterize citrus fruits in Southern Africa, apples in Chile, or vegetables in Australia.
