The Future Of Vanilla Beans And Pure Vanilla Goods

By Author: Native Vanilla
Total Articles: 18
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Demand for vanilla beans and pure vanilla extract and powder is sky high but there is trouble on the tropical islands where the beans are grown. Despite high consumer demand for the world’s favourite spice, prices at the source are in a downward spiral. You and I may not be seeing it but the farmers and distributors are definitely feeling it.

Let’s start with the good news. McCormick, a global leader in flavour, seasonings and spices, has reported a 120% increase in the sales of all-natural vanilla extract from a year ago. No doubt, this can be attributed to people staying at home under forced lockdown and spending more time in the kitchen baking and cooking.

According to MarketWatch, the global vanilla bean market size is projected to reach USD 2 185 million by 2026. This is an increase from USD 1 876 million in 2020, at a compound annual growth rate of 2.6% during 2021 to 2026.

The bad news is that even though demand for vanilla beans and pure vanilla extract and powder is as high as ever, this hasn’t translated into higher prices for the farmers. In fact, Madagascar, the world’s largest producer ...
... of pure vanilla, has experienced temporary lowered prices. After a record-breaking high of $600 per kilogram in 2018, vanilla prices are plunging downward at source.

The problem lies with operational issues down the supply chain but more significantly, a surplus in the global market which is causing a temporary downward price trend. The surplus is attributed to an oversupply from Madagascar.

Over 80% of the world’s vanilla supply is grown in Madagascar and there are some 80 000 vanilla farmers dependent on the spice for their income. In 2017, the island was hit by tropical cyclone Enawo which was the strongest cyclone to hit Madagascar since Gafilo in 2004. It devastated the vanilla crops and left the impoverished vanilla farmers reeling.

Come 2020, Madagascar vanilla farmers have put the trauma of cyclone Enawo behind them and have enjoyed back-to-back bumper crops, albeit to their detriment. In response to price volatility from vanilla surplus, the government of Madagascar set a minimum export price of US$ 250 per kilogram (2.2 lbs) of vanilla for the 2020 crop.

The offshoot of price fixing for Madagascar vanilla is the major industrial buyers are looking elsewhere for beans and all-natural, sustainable vanilla goods. This is according to a report issued in November 2020 by Aust & Hachmann, Mount Royal, which sources and distributes vanilla globally.

The report released by Aust & Hachmann notes that there are only a handful of major vanilla buyers and they are not likely to be forced into buying vanilla at a price which is almost 50% above the actual market value. Instead, global vanilla buyers have switched their attention to major competing vanilla-growing countries such as Papua New Guinea, Indonesia and Uganda which all support free and open vanilla markets.

Aust & Hachmann said in its report that Indonesia was expected to add between 250 to 300 tons to the global vanilla market in 2020 and an estimated minimum of 250 tons would come from Papua New Guinea. Madagascar’s government may have inadvertently shot itself in the foot with its price fixing but its good news for their competitors.

Sales of vanilla beans and pure powder and extract from Papua New Guinea has been gaining traction for a few years now with increased acceptance in the industrial vanilla extract market. Now, Papua New Guinea is perfectly poised to take advantage of confusion caused by Madagascar’s minimum export price policy.

According to Aust & Hachmann, Papua New Guinea has been aggressively discounting their industrial grade beans and drying down gourmet vanilla stocks to industrial moisture levels. They say green vanilla beans in Papua New Guinea are now only harvested at full maturity and quality of PNG vanilla has improved significantly.

Aust & Hachmann expects to see less Papua New Guinea vanilla being offered from Indonesia as lower prices and abundant supply make smuggling activities far less attractive. All in all, it’s good news for Papua New Guinea’s vanilla farmers with Aust & Hachmann still expecting a minimum of 250 metric tons added to the global market in 2020 and into 2021 with Papua New Guinea carrying over stock.

Visit Native Vanilla website here - https://nativevanilla.com/collections/vanilla-beans-extract

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