Anatomy of a crisis:
Throughout the 1990s, worldwide consumption of vanilla beans exceeded production. The shortfall continually reduced the surplus that remained from earlier years. In the year 2000, the surplus was exhausted and there no longer were enough beans available to satisfy worldwide demand. Recognizing the shortfall, extractors began buying heavily in late 1999, and producers responded predictably to this increased demand by raising prices. World vanilla bean production (2002-2005) is presented in T-1. The ill-timed Cyclone Hudah arrived shortly after. Although its impact on the vanilla bean crop was, in actuality, relatively modest, initial reports circulated that 80 percent of the crop had been destroyed. Buyers moved quickly to protect themselves against a perceived shortage, and prices literally doubled overnight. This might have been the worst of it, if not for two underlying factors.