In Romania, the agricultural community represents the poorest of the poor. Many poor farmers are leaving the fields and choosing instead to live in the subway stations in the cities, adding to urban problems. But one of the by products of their grain farming -- straw -- now offers a new opportunity for bringing addition to income to poor farmers, and it may also helping Romania meet EU environmental norms.

Romanian farmers are already constrained in the amount of straw they can burn by environmental regulations and, once Romania gains membership into the European Union, the country will no longer be permitted to burn straw, beginning in 2010. Getting rid of the straw waste product is a big problem.

Enter ABT Insulpanel Ltd. Founded by John Daniels, a Canadian entrepreneur, ABT Insulpanel is an entrepreneurial organization that makes compressed waste straw fiber panels for low-cost housing and schools. Daniels has a background in light steel-frame housing. He is working to launch this product in Romania, as well as other areas where there is an abundance of wheat farming.

ABT Insulpanel's solution not only gets rid of farmers’ waste, but the waste becomes food in a completely different sector, homebuilding. The company is willing to pay $40 per metric ton to farmers for a product that the farmers previously had to pay to have hauled away. Daniels has access to the farming community through partnerships with Romanian universities and the Romanian government, as well as the private sector, and to some extent, the farmers themselves.

The Technology

The idea is not new. In themselves, agricultural fibers have been used as building materials for a very long time. In particular, straw has been used throughout the world due to its toughness and durability. In 1935 compressed agricultural fiber (CAF) was invented in Sweden, which used a combination of high pressure and temperature in a continuous extrusion process. CAF panels were found to have a number of desirable properties such as thermal insulation and fire resistance.

ABT Insulpanel initiated the development of an improved processing mill in 2002 to produce thinner and stronger CAF. The panels included a light steel channel around the perimeter of each panel as well as around openings such as windows, doors, and skylights. In addition, connectors were developed to connect each panel together as well as to the foundation. The result was panels, which, for the first time, were capable of being used as primary load bearing structural material.

From Straw to Housing

ABT plans to sell these panels back to Romanians who have many housing needs. The panels bypass the traditional concept of using concrete in construction. The material will improve housing quality from previous mud dwelling, as they are not only fire- and earthquake-resistant, but should help reduce inhabitants’ breathing disorders and other effects of low light, such as black mold, which were unavoidable because of the reliance on mud for building. Daniels says the firm will attempt to sell to the affordable housing market, and the panels will likely be used in mud flats where new housing is needed.

Additionally, the living space will be larger since the fiber panels are thinner than concrete, yet they insulate better. Aesthetically, the new houses will look the same as the old houses from the exterior, but with western standards. Some other advantages to these panels are the shorter time frame needed to build a house using fiber panels, and the lower cost compared to concrete.

The initial manufacturing plant of these panels will be located in Turkey, and a new factory will eventually be opened in Romania. ABT's rollout plan includes building small trial villages so people can see the construction and to achieve local buy-in.

Sustainability and Environmental Implications

No significant pollution concerns exist at this time for the ABT fiber-panel initiative. For agricultural regions, such as in Romania, with grain-field coverage exceeding about 50%, straw has become a disposal problem. To retain optimal soil texture, not all straw (a byproduct after harvest) should be ploughed under. In fact, modern farming methods favor low-till or no-till, yielding even more excess straw. But burning straw, still practiced widely, creates air pollution and, through emission of carbon dioxide (CO2) gas, contributes to global warming. Clearly, use of straw as a feedstock material in panels contributes to solving both the disposal and pollution problems.

Furthermore, straw board production saves on expensive hardwood and reduces demand for another energy consuming building material – based on ceramics or cement technology. Additionally, the straw board product can be incinerated or composted after use. This product also fulfills the Romanian government objectives of increasing the energy-saving efficiencies of newly constructed and older retrofitted buildings, and will thereby reduce the high demand for electricity.

The continuous source of supply of straw is also a plus. Straw is always available, as farmers will continue to grow small-grain cereals to produce bread, rice, noodles, and to brew beer. This allows for the persistent manufacturing of panels, critically needed by a growing population.

Challenges for ABT at the BOP

As noted earlier, in Romania, the agricultural community is often the poorest of the poor. So it is true that any product targeting poor farmers would be a good product to pursue. However, many farms are still centralized and many of the bigger farms have an elite few in charge of numerous smaller farmers. This structure may create an incentive for the large farm elite to pocket savings and continue to exploit the labor.

Also, it is unclear if ABT's business model itself is truly targeting the base of the pyramid for sales of the panels, or if it is more in the middle of the pyramid (MOP). In addition, the business plan assumes that there is a demand for the final compressed agricultural fiber panel (CAF) product in the BOP market. The partnerships ABT has so far talked about involve universities, government agencies, and the private sector, rather than small farmers.

A related issue to deal with is local people’s perceptions that houses built from straw are weak and not as beneficial as houses built from concrete. ABT Insulpanel does anticipate that the houses may suffer from issues of perception because people view cement as the strongest current product available (if they can afford it) and a 'house of straw' is thought to be weak. The houses will be built to look aesthetically like local houses, but they will be a western standard of living. So far there has been minimal input from the local farmers, and the risk is that the farmers may actually prefer mud to the skinny walls made with the panels.

Feedback mechanisms may be needed to capture the thoughts of poor Romas in terms of design. It is also crucial for ABT to enhance networks that foster co-creation of ideas and support win-win strategies.

Daisuke Kambe is a class of 2006 MPA student at Cornell University. Christina Keller is a class of 2007 MBA student at Cornell’s Johnson School of Management. This article is based on a report written by Daisuke Kambe, W. Chapin Kelly, Christina Keller and Rami Sabanegh that was sponsored by Ashoka and the BoP Learning Lab.