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HOLIDAY TIME ! VANILLA PRICES REDUCED !

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VANILLA MARKET UPDATE 2018

Things are improving but the end of high vanilla prices is still not predicted. Even if vanilla prices fell by half, unlikely in the short term, they would still be at historically high levels. The market has probably plateaued as production now supplies global demand which has been falling for several years. This is evidenced by the relatively large quantity of unsold, mostly poor-quality vanilla still on the ground in Madagascar. When prices are high, farmers have an incentive to pick the beans before they reach maturity. Immature beans lack flavour. When price reaches are high, some companies also opt for synthetic vanillin.

Madagascar

The 2017 crop in Madagascar produced about 1500mt. Although the quality was better than 2016, as the season progressed quality degraded due mainly to immature beans combined with the vacuum packing of semi cured beans. Madagascar vanilla will not return to its former quality as long as the practice of vacuum packing semi cured beans is allowed. There still remains several hundred mt of unsold vanilla on the ground. Much of this is being held for speculative purposes by companies who are not regular traders and are now faced with a potentially declining market. Some of these companies are now discounting their inventories in an attempt to liquidate prior to the commencement of the 2018 green vanilla campaign.

The 2018 crop looks to be in the same range as 2017 on quantity. Due to climactic conditions, flowering in the last part of 2017 was nowhere near as robust as originally expected. Demand for pure, natural vanilla has been growing after food manufacturers shift from artificial flavoring. Farmers haven’t been able to keep up with increasing consumption, as it takes three to four years for plants to start producing vanilla beans.

Indonesia: Unfortunately, much of the Indonesian crop was picked too early, resulting in an abundance of poor quality vanilla beans with very low vanillin content. Farmers were fearful of a falling market and harvested a good part of the crop early in order to sell as quickly as possible.

Papua New Guinea: PNG vanilla production has expanded impressively throughout the most recent vanilla crisis and the government has realised the value the crop brings to the economy. Like other growing regions, early picking and immature vanilla have caused their share of poor quality. However, local farmers and exporters have become increasingly aware of this and there is some improvement on the ground in this regard. Currently there is significant tonnage of PNG vanilla coming to the market and 2018 could see up to 250mt of cured vanilla beans produced.

India: Vanilla is labour intensive compared with other spices and the sustained period of lower prices, has led to less interest in growing vanilla. Many people prefer working in towns to farms in the country. The good news is vanilla replanting has started in India.

NOTE: India has been producing high quality vanilla for many years but it is events in Madagascar that affect the global supply. More than 80% of the world’s vanilla comes from Madagascar.

July 2018