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Guest Column: Vanilla Market Report

Posted: April 23, 2008

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And here comes the dramatic part: Farmers in Madagascar, Uganda and elsewhere are getting $1/kg or $2/kg for growing and preparing the beans (when they do so). This means roughly a dollar or so a day, the lowest revenues in the world. People are asking: what has gone wrong? Given the prices these farmers are earning, over the last two years they have stopped taking care of their plantations. The farmers did pollinate, but have not cleaned the poles and vines afterward. As a result, Phytophtera, a virosis, has spread dramatically on at least a third of Malagasy vanilla vines. This, coupled with the consequences of glut years that necessitate years during which the plants must rest a bit, means that Madagascar may offer a mere 800 tons of vanilla in 2008. This will come on top of some 350 tons from the mix of Indonesia and PNG product, under 200 tons from Uganda, 100 tons from India, and some 60 tons from Comoros—a total of less than 2,000 tons. 

These amounts will be added to the few hundred tons still awaiting customers While we may have a bullish market this year, prices are likely to rise (at least) next year. By then, the market deficit may reach between 1,000 and 2,000 tons. And with end users admitting that they would not see a difference at $60/kg, the industry may have such vanilla trading prices by the end of 2009. Let us only hope it stays within these reasonable limits and that trigger-happy traders do not start another suicidal war like a few years ago. 

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