It will be unfair if we in India are asked to pay more for vanilla ice cream this summer though wholesale vanilla prices in the world market are up from $25 a kg to $35-40 a kg in the past two months. This marks a break of a six-year price drought for the spice.
The price rise is due to a major setback in the vanilla crop here and also in Mexico, counted among the leading producers. Last year’s Indonesian crop failure has also acted as a price trigger. Vanilla is the second most fancied and expensive spice after saffron, of which India too, is a producer. Saffron sells at $5 a gramme or more.
A price revision of vanilla ice cream vended in India could be on any other account but natural vanilla. Except for the very pricey varieties sold at some exclusive outlets in major cities, what vanilla ice cream does not have in it is what is grown in pods on a particular kind of orchid. Vanilla is a long-duration, labour-intensive crop grown in warm humid conditions at a particular altitude.
The global supply of the crop being generally limited, it will command a premium price and not be mass affordable. Similarly, the vanilla-flavoured cake, pastries and other food items here are nothing but pretenders. Vanilla flavour in all such products is infused by using the chemical substitute vanillin.
In fact, at 700 to 800 tonnes of annual use by cake and food makers, India remains one of the world’s largest users of chemical vanillin, made from extracts of lignin or petro products.
The pharmaceutical industry, and to a lesser extent, perfume makers are the only users of natural vanilla in the country. Vanilla is not an indigenous spice. That will explain vanilla’s absence of traditional links with Indian food. No wonder the restricted demand here has led us to export almost the entire production. An export shortcoming that limits revenue earnings is that India's sales in the world markets are largely in the form of cured beans. The real value addition comes from extraction of vanilla from cured beans. Unfortunately, investors have had their reasons not to have created adequate vanilla extraction facilities. The US destination for two-thirds of vanilla exports, prefers buying vanilla extracts. India is a loser there. The Indian crop has suffered some major setbacks in recent years. But in a good season, the quality of the spice grown in India compares favourably with the best originating elsewhere.
The situation has turned dire for growers and trade in India, thanks to a precipitous fall in production to around 75 tonnes. What was seen a decade ago as the most promising spice, eliciting promotion by the Spices Board, does not find a mention in the Board's list of export of spices for 2010-11.
Sadly, vanilla, mainly grown in the southern states of Karnataka, Kerala and Tamil Nadu which have warm and humid conditions, no longer enjoys the status of a major spice. The Board thought of charting a road map for the development of vanilla cultivation and export of the spice in 2003. That was the time of a crop failure in Madagascar, caused by a devastating cyclone, and vanilla prices went through the roof.
Madagascar, with annual production of 2,000 tonnes and Indonesia account for the major part of global vanilla production. The major beneficiary of crop failures in India and Mexico will then be Madagascar.
It is remarkable that in a short period Indian vanilla came to be seen at par with Madagascar Bourbon in terms of vanillin content and flavour. Exim Bank says a labour-intensive crop entailing low production cost, is a highly rewarding cash crop when grown as an intercrop. Whatever that may be, government policy intervention left many holes and led to fading interest in growing vanilla.
Meantime, many other countries, including China and some African and Latin American countries, saw the rewards to be had by growing the crop. Any production shortfall in India will automatically create space in the world market for non-traditional producers and there are quite a few of these. This has already started happening. It will be unfortunate if because of policy inaction we let the reputation surrounding our vanilla fritter away. A push to the crop size can be given by meaningfully promoting cultivation in the climate positive north-eastern states, Lakshadweep and the Andaman.
Meantime, crop failures in some growing countries, including India, are leading traders in the US and Europe to stock the unblemished crop in Madagascar.
According to some reports more than 500 tonnes of the current Madagascar crop have already been mopped by the trade to be sold as the premium further rises. As supply of the much sought after crop will be tight, more cornering of vanilla by the trade for future gains is on the cards. Final users of the spice have reasons to worry. Be ready to pay at least 10 per cent extra when on your next visit to the West you buy a vanilla ice cream.
