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Will the 2016 Vanilla Crop Bring Lower Prices?


1-Bahrat 4 vines on jatrophaIn September an interim report was released by a European company that has been in the vanilla business for more than 100 years and is known for their honest and reliable industry assessments. The report was released far earlier than usual because of the current chaotic conditions on the ground in Madagascar. There will be another report released in February, 2017, with a clearer picture of what to anticipate as the crop comes to market. This is a brief synopsis of the interim report to give readers a sense of what is occurring.

The Crisis
As most of you already know, the crisis we are dealing with is largely man made and not caused by hurricanes, fire or drought. In 2015 Madagascar experienced poor flowering and a very small vanilla bean crop. Multi-national speculators laundered money gained from the sale of illegally harvested rosewood by outbidding all buyers of the just harvested green vanilla beans. As it was a short crop to begin with, by holding the beans off the market, the speculators forced the prices up. The beans were only cured (fermented) for a few days, then vacuum-packed to complete the process a few months later. This technique creates very poor quality beans with a low flavor profile. Because so few beans were available, however, they had a ready market with extract manufacturers who paid ridiculously high prices for the beans in order to fulfill their contracts with companies.

The government steps in
The Madagascar government attempted to curb the cheating and poor curing practices by banning the sale of green beans during the harvest as well as outlawing vacuum-packed beans. Unfortunately, there wasn’t the infrastructure to enforce the rules and everyone ignored them in the rush to sell the green beans. The green beans sold for as much as $80 a kilo, a huge boon for some farmers and the middlemen who normally make this much money in six months.

What it means, however, is that the cured and dried beans will reach untenable prices, similar to the last crisis (caused by storms) in 2001 – 2004, when prices of cured and dried beans to the traders were in the range of $500 a kilo at source! In fact, in less than three years market prices have increased 1500%. Three years ago, cured, dried beans of good quality cost as little as $30 a kilo at source.

Not enough vanilla?
Additionally, one of the European companies claims that instead of the anticipated end crop of 2000 – 2400 metric tons of cured, dried beans out of Madagascar as was anticipated, that more likely about 1000 metric tons of beans will come to market, creating a major shortage overall.

Authors of the interim report dispute both the report on the volume of beans and the prices. Indonesia and Papua New Guinea have large crops either already available or that will soon be available. The beans are probably better quality than the current crop of Madagascar beans. News travels quickly via the Internet, however, and vanilla prices from these countries are understandably very high as well. It is during times like this that farmers can earn a lot of money if they have decent quality beans to sell. While it may appear that the market will continue like this indefinitely, the reality is that the market will collapse sooner than later.

When prices are extremely high and the extract makers tell their clients the price for pure vanilla extract, the clients, who are primarily frozen dessert and dairy manufacturers, can choose from a variety of natural flavors not made from vanilla beans. The flavors are extremely inexpensive, enough so that when a crisis like this occurs, many companies don’t go back to using pure vanilla when the prices collapse.

Short term expectations
In the short term prices will likely remain high through 2016 and into 2017. Whether we will see a gradual easing of prices or a full on price collapse is impossible to predict at this time. What is predictable, however, is that whenever a crisis has occurred, farmers throughout the vanilla growing regions start planting vanilla with hopes of making a lot of money. As it take 2 -2-1/2 years for them to have market-ready crops, the prices will have collapsed due to a market glut and the cycle begins again.

At this time some large trading companies are encouraging quick curing/drying techniques, which produce poor quality finished beans. If these practices continue, Madagascar could lose their branding status as producers of high-quality vanilla beans and tens of thousands of family farmers would lose their livelihood. This, combined with the changing climate could prove disastrous for the legacy of pure vanilla.

Why does this happen with vanilla but not chocolate or coffee?
Because there are viable alternatives to vanilla beans such as imitations and “natural flavors,” vanilla is a far smaller industry than chocolate or coffee. Coffee and chocolate are traded in millions of containers each year; vanilla produces 2300 – 3000 metric tons in a good year. As a result, it isn’t traded on the international commodities market. There are no protections for vanilla growers and no rules or sanctions on the market.

Coffee and chocolate have a base price in place; farmers are at least guaranteed a minimum wage. Coffee and chocolate have non-profit associations that help growers. While prices and available volume for coffee and chocolate fluctuate, they are far more stable markets than vanilla. It is for these reasons that I am concerned about social justice issues for the small shareholder vanilla growers and do what I can to get them accurate market information and other assistance.

At this moment, extract grade vanilla is selling for at least $450 a kilo at source and gourmet grade at more than $500. This does not take into account the cost of shipping, port fees, customs fees and risk factors such as poor quality or mold. While the big buyers of vanilla beans make money, it is not necessarily proportionately higher. Extract manufacturers may make only $5.00 to 10.00 a gallon. There is a small margin of profit for foods, so those of us selling vanilla are not making much profit.

This report will be updated when more information is available.


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Patricia Rain
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Patricia Rain

is an author, educator, culinary historian, and owner of The Vanilla Company (, a socially conscious, product-driven information and education site dedicated to the promotion of pure, natural vanilla, and the support of vanilla farmers worldwide. She also does culinary presentations for food professionals, cooking schools, trade shows, food fairs, and private groups, and is a regular radio and TV guest.
Patricia Rain
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Comments (4)

  • Carol


    Hello Pat,
    So with this problem of high prices do you see an increase in your prices as well for your beans, pastes & extracts? Sad what greedy people do to force false increases as in the long run people uses cheaper flavorings and as you said end up never going back to the pure product, which in the long run reduces the income of these farmers.
    regards, Carol


    • Patricia Rain


      Carol, the prices go up at every level of the industry. For instance, if the traders who purchase in volume are paying $500 a kilo for vanilla beans in Madagascar, they have to pay shipping costs, airport fees, customs fees and agent’s fees. That gets added on to the costs. They mark the vanilla up accordingly and add a small profit. If the beans are to be used for extract, most companies don’t make their own extracts as equipment is expensive and alcohol has to be purchased and buy-back fees submitted to the BATF. As a result, manufacturers are making extracts for the many companies who sell it and that adds on more of a fee. We buy our beans from a fairly traded company who were Peace Corps workers and assisted a few villages in the region to create coops. So they are paying the producers market price, which has to be passed on to the buyers plus the above fees and their margin-of-profit. This is why our prices are so high. We actually make less profit during a crisis even though it appears we must be making a lot of money. I added another paragraph today to the report I wrote yesterday that explains why this happens with vanilla but not coffee or chocolate. It is a very difficult situation all around.


  • William Samson


    The United States has historically produced little amounts of vanilla bean. I am studying vanilla growth in California for California Polytechnic State University. Is there any chance that a greenhouse grower in California could produce a valuable niche market product? Thank you!


    • Patricia Rain


      William, vanilla can be grown lots of places in the industrialized world but, because it’s the most labor-intensive agricultural product in the world, the cost of growing enough vanilla to sell on the market locally is exorbitant. I have friends on the Big Island of Hawaii who sell vanilla beans to tourists for $9.00 a bean (maybe more right now while beans are so expensive). But he sells them to tourists who want to bring back gifts and specialty items. If you were to start a greenhouse project, it would take you five years to have enough to sell. You’d need to learn to cure and dry beans properly. If you have an eco-tourism business, you could make several dollars a bean, but the labor involved is so great, it wouldn’t cover your costs. That’s why it isn’t grown commercially in Florida where it can be grown outside. It’s too labor-intensive, which is why it’s really only grown commercially in the developing world. Patricia, VQ


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