Global price drop hits vanilla exports

Vanilla growers here are a worried lot as a global decline in price and demand is taking the fizz out of the harvest season which is currently on in full swing.

Although Vanilla India Producer Company (Vanilco), the only company procuring vanilla at present, buys green beans at Rs 250 a kg, the global market is stagnant, making exports difficult.

Experts are of the opinion that the present average price of processed beans at $25-30 is not reasonable. However, according to Paul Jose, managing director, Vanilco, the company is receiving trade enquiries from the US, Germany and Mexico.

As and when the market looks up, the price should settle at $40, which could be the floor price in the present market situation, he said.

The average price fetched last year was $60-70.

The company has already procured 60 tonne of fresh beans and the average daily flow 5 tonne.

The main reason for the demand decline globally was an increased in supply of synthetic vanilla, vanillin. Vanillin cheaper as it is just half the price of natural vanilla.

Vanilco aims to procure 250 tonne of beans from its 2,500 member farmers.

It is to be noted that the company had procured 60 tonne of beans in the whole of last season. This year, it has already bought the same quantity within four weeks. The production season will continue till the end of March 2006.

Jose said marketing of vanilla-based products, such as vanilla extracts, vanilla powder and vanilla tea, would not be a problem as the domestic market was capable of absorbing the total production.

Companies from Germany, Japan and the US have taken samples of super critical fluid extract from India and will be placing orders shortly. "Marketing will not be a problem for us although the global situation is not favourable. We hope to sell a major part of our products in domestically," Jose said.

The major hindrance in marketing natural vanilla products was the lower prices of vanillin. The average price of 10 ml synthetic vanilla extract is Rs 20 and that of natural vanilla is Rs 30.

However, to counter vanillin, Vanilco is trying to reduce the prices to Rs 25. They expect the new price will woo consumers as the difference was only Rs 5. He added as far as the quantity used, natural vanilla has an advantage as users will have to use double the quantity of vanillin to match natural vanilla's effect.

Another advantage is the stagnant global production. Total production in Madagascar - the world's largest producer of vanilla - is estimated at 1,400-1,500 tonne and that of Indonesia is 300-400 tonne.