Falling vanilla prices, competition hurt Malagasy growers

Surging vanilla production in countries from Papua New Guinea to Colombia is causing the price of vanilla beans and extract to plummet in markets around the world. The drop in vanilla prices is expected to hit Madagascar, the world's largest producer of vanilla beans, especially hard. Most affected will be growers in the tropical northeastern part of the island who have relied on the valuable crop for years.

Vanilla is the only orchid that produces an edible fruit. Originally from Mexico, vanilla was introduced to Madagascar during the nineteenth century, but without the native pollinators (bees and hummingbirds) local growers must hand pollinate the plant. This makes vanilla perhaps the most labor-intensive crop in the world, taking as long as five years between first planting the vine and producing aged extract.

Due to work required to produce vanilla, beans and extract have an exceedingly high value relative to other spices and flavorings. Vanilla growers in some parts of Madagascar employ guards and brand their beans with small pin pricks on each bean -- much like cattle branding -- to prevent theft. Vanilla has created a regional income disparity on the island with the vanilla producing regions of Madagascar being among the wealthiest parts of the country, which overall, is one of the poorest in the world. Most Malagasy live on less than a dollar per day and nearly half of its children under five years of age are malnourished.

A crop that takes time to pay dividends

Traditionally, vanilla is grown in the shade of large trees found in the warm, humid forests of northeastern Madagascar. Vanilla plantations are meticulously managed by growers who often cultivate other crops including cloves, pepper, and rice on adjacent lands. However, this practice may be soon to change according to Masoala - The Eye of the Forest, a book from the Zurich Zoo. Through an EU-sponsored economic development program, a new sun-tolerant variety of vanilla was introduced to the country. This form is better suited as a plantation crop and may force small producers out of business and contribute further to deforestation which is one of the biggest environmental problems in the region. Most of Madagascar's biologically rich forests have already been cleared for agriculture -- especially rice, the staple of the Malagasy diet -- and cattle grazing. This new variety of vanilla may further depress prices by flooding the market with more supply once the vines start producing beans.

A weakening market

For the past five years, vanilla farmers have benefited from especially high prices due political problems and devastating cyclones in Madagascar. High prices spurred other countries including Papua New Guinea, Uganda, India, Costa Rica and Colombia to enter the vanilla business and this year analysts expect these countries to produce their first vanilla crops.

These production increases, combined with a drop in demand from food manufacturers who are using more and more synthetic vanilla, have sent wholesale bean prices down almost 90 percent from their peak in December 2003. This price collapse is terrible news for Malagasy vanilla farmers but a positive for bakers and consumers alike in other countries.

Vanilla, a prized ingredient in the West

Vanilla is a widely used flavoring in Europe and the United States. Best known for its use in ice cream -- the world's most expensive ice cream sundae, "The Golden Opulence Sundae" from Serendipity in New York City, is made with real vanilla beans -- vanilla is also used in many deserts and even as an ingredient in sauces for fish and chicken. Most use vanilla extract, though chefs and creative cooks find ways to integrate vanilla beans into their offerings.

A popular use for the bean itself is as a coffee stirrer to add a subtle vanilla flavor to one's morning caffeine fix. Since vanilla beans can be rinsed and re-used multiple times, aficionados don't have to worry about wasting the expensive bean each time they make coffee. Others place vanilla in their sugar jar or a clothing drawer to give a vanilla scent to their sweets or garments. In parts of China, vanilla is believed to be an aphrodisiac that stimulates both the male and female libido.

Back in Madagascar

While westerners tinker with the flavor of their coffee and deserts and some Chinese look for new ways to enhance their sexual performance, small-scale Malagasy farmers continue to carefully manage and safeguard their vanilla production. Their best hope is that culinary creations in the world's richest countries will spur a new wave of demand for natural vanilla products.