Banks across Japan began filling their ATMs on Wednesday with shiny new yen notes that came from an unlikely location: bright yellow flowering paper bushes growing on Nepal’s craggy Himalayan mountains.
Before yen notes reached the wallets of Japanese consumers, they had to travel a long and complicated journey, taking months to produce and transporting thousands of kilometres by land and air.
This process has created a potential new source of income for communities in one of the world’s poorest countries, by providing money to one of the richest countries.
Although Japan has pushed for more digital payments in recent years, cash is still the norm, lagging behind other Asian countries, such as China, which have virtually eliminated cash altogether.
“I really think Nepal has contributed to the Japanese economy because cash is fundamental to the Japanese economy,” said Tadashi Matsubara, president of Kanpou, the company that produces paper for the Japanese government.
“Without Nepal, Japan would not function.”
The long journey
The bush-to-stream trail begins at the foot of the Himalayas in Nepal, near towns known not so much for their agriculture as for being gateways to Mount Everest.
Here, the slopes burst into yellow each spring – the flowers of the mitsumata plant, also known as argeli or paperbush, native to the Himalayas. The bark has long, strong fibers that are perfect for making thin but durable paper, according to Kantou’s website.
It used to be grown in Japan, but production has been slowly declining for years, Matsubara said. It’s hard work in the countryside, and people are increasingly moving from the countryside to big cities like Tokyo in search of work. As a result, villages continue to shrink and industries die.
“The current reality is that the number of farmers producing paperbush is shrinking,” Matsubara said.
The declining rural population, compounded by Japan’s demographic crisis due to falling birth rates, also means there are “no heirs, no inheritors” for the paper forest farms, he added.
That’s where the Nepalese supply chain came in.
Kanpou first went to Nepal in the 1990s through a charity program to help farmers dig wells. Once there, he discovered that paperbush grew on mountains as far as the eye could see. They began teaching farmers how to grow the crop, which was initially only produced and exported in small quantities.
But in the following years, as the shortage of Japanese paper forest became apparent, Kanpou and the Nepalese farmers increased production until they became the main source of the yen note.
It’s a lengthy process, Matsubara says: Farmers plant seedlings in early summer, harvest the branches in the fall, and then spend months steaming, peeling, washing and drying the bark.
Once the raw paper is ready in the winter, it is sent to the Nepalese capital of Kathmandu and driven to the western Indian city of Kolkata. From there it is shipped to Yokohama in Japan.
After inspection, the paper is further processed, printed and cut into money by the National Printing Bureau in the nearby city of Odawara.
And the new banknotes being distributed this week have a number of new features, the Bank of Japan said – including hologram portraits of a number of prominent historical figures to prevent counterfeiting, with the portrait heads appearing to rotate from left to right as you move the banknote.
While other countries have used holograms on currency before, this is the first use of hologram portraits, according to the central bank. Other features include parts of the note printed in mother-of-pearl and luminescent ink, and tactile markings for the visually impaired.
Benefit to communities
Now that the new notes are coming into circulation, demand for paperbush is increasing. According to Matsubara, the new notes appear to contain more raw materials than the old ones.
According to the Observatory of Economic Complexity (OEC), which visualizes and disseminates international trade data, paper products and paper scraps – which include products other than the paper bunch used as currency – accounted for more than 9% of Nepal’s exports to Japan in 2022, worth $1.2 million.
According to the national Ministry of Economy, Trade and Industry, more than 60% of transactions in Japan last year were made using cash, with the rest via digital payments and other methods.
Profits from paperbush sales have provided a new income stream for Nepalese communities, Matsubara said. He said the growing industry has helped build new facilities and infrastructure in Kanpou’s partner villages, and has brought new financial stability to vulnerable families.
Since 2016, Kanpou has also received financial support from the Japanese government’s International Cooperation Agency, which has allowed them to expand their activities, Matsubara said.
Kanpou does not have data on average incomes in their partner villages, Matsubara said, but he estimated that each household earns less than 10,000 yen (about $62), given the lack of other dominant agricultural products at that altitude.
According to the global economic database CEIC, the average monthly household income in rural Nepal was 27,511 Nepalese rupees (about $205) in 2015.
Meanwhile, the latest harvest of paperbush from Nepal’s Ilam district was sold to Japan for more than 180,000 yen (about $1,114), representing a profit of about 30,000 yen ($185) for each of the district’s six participating farmer groups, Matsubara said.
CNN was unable to independently verify Matsubara’s claims.
“Initially this activity was about Japanese aid to Nepal. Now I think it is different… Nepalese people are working hard (to) help Japan,” he said
“Without Mitsumata, Nepal’s (paperbush), we would not have been able to draft the new law.”
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