Many things are reported in the media, but few of these stories are really close to reality, because reality is multifactorial, on the one hand; and on the other hand, it affects differently the actors of the sector, whether you are a producer, a collector, an exporter or a trader... and whether you are in Madagascar or elsewhere.
February 23, 2020
Update on the global vanilla crisis
Indeed, if each vanilla exporting country faces its own market realities, it is undeniable that Madagascar's tribulations have an influence on international prices. It is often said here that when the United States sneezes, Canada catches a cold; it is the same with the vanilla industry: when Madagascar sneezes, all the vanilla producing countries of the world suffer the consequences.
I will be happy to share information about the various factors at play, whether it is the potsa (immature vanilla stolen from the plant) sold by the smugglers to the collectors; or the vanilla growers who choose to pick them themselves before the thieves, fed up with receiving the same prices, regardless of whether they produce quality or not; the price pressure this puts on the new producing countries who sell at high prices a product they do not know, often mediocre, and which has neither taste quality nor finishing quality... Another time I will talk about hurricanes, droughts and climate change....
But here I will address only one angle, that of the responsibility of the World Bank, France and the French oil company Elf Aquitaine in this crisis.
For 150 years, it was the French colonies that carried the torch for the development of crossbreeding, perfumes, preparation and drying techniques, which even today places them at the forefront of the quality of the finished product. Moreover, it should be noted that no other exporting country can match the producers of Madagascar, Reunion or the Polynesian Islands in terms of the quality of the finish.
And for the first 120 years of this reign, the vanilla industry remained relatively stable.
However, the vanilla world experienced its first major economic shake-up at the turn of the 1990s, under pressure from the World Bank, to which Madagascar supposedly owed a debt. supposedly to which Madagascar supposedly owed a lot of money. In reality, Madagascar was forced to give up its price controls, abandoning its vanilla farmers to the merciless grip of the big global players because of the involvement of France, and the oil company ELF Aquitaine.
"This can only really be understood in the light of the complex relations between the oil company, the political power in place and the various states concerned. "The complexity is real, but its purpose is simple as far as the African continent is concerned: Elf was and remains an essential part of the neo-colonial system put in place by Paris, a few years after independence, in order to maintain its economic and political control over the formally emancipated countries of its former pre-square.
If you doubt it, know that in 1989, the oil company Elf Aquitaine filed a European patent for the creation of vanilla extract from green vanilla. For the vanilla producers of Madagascar, the die was cast. Their main financial activity had been stabbed in the heart.
By buying the rights to this patent, Elf Aquitaine ensured that green vanilla would be bought by the manufacturers of their choice and thus controlled the sales and therefore the prices of more than 90% of the vanilla produced in the former colonies.
Moreover, they destabilized the whole industry by cutting short the ripening and finishing process and blamed it on Malagasy growers, smugglers and hurricanes....
Eventually, Madagascar introduced controls to limit the market for vanilla less than 7 months old; and a system of approval and market opening limited to specific dates was put in place. The aim was to maintain quality standards for buyers of vanilla beans, but in fact the approval system only served the European companies that hold the green vanilla extraction patent, as the holders of the export approval mainly buy and sell green vanilla in bulk. The rest of the green vanilla picked before maturity is then steamed and dried, lowering the quality of the dried and prepared vanilla to a very poor level, while subjecting it to the price pressure of extract manufacturers.
As the farmers no longer have any financial advantage in producing gourmet quality vanilla beans, they have adapted to the market by lowering their own standards and destabilizing the entire vanilla industry in Madagascar.
How to get good vanilla beans today?
Colibri Vanille bypasses the collectors with export approval by going under the control radar and buying directly from the few vanilla growers who choose to maintain high quality standards, but we are still subject to the mandatory dates of the government decreebetween March 31st and October 15th. And therefore subject to the game of speculation which starts in September and reaches a plateau between November and February. From March, the fever starts again in the thatched cottages of Madagascar, and the prices go up in arrow, so it is prudent to make its purchases before March.
What about the Malagasy collectors who are licensed?
Only 200 approvals are issued each year to collectors who soon find themselves, in turn, in the grip of a cruel market. While some made a fortune by buying vanilla from farmers at low prices and selling it at high prices, and even at very high prices in the aftermath of cyclones or raids by smugglers, many other collectors went bankrupt when prices collapsed, abandoned by their buyers of vanilla beans, but still holding poor-quality vanilla bought above the selling price and which they had to sell below their prices. Thus,many bankruptcies occurred in March 2019 among Malagasy collectors.
Between 2015 and 2019, prices rose to a high level, flirting with the 600 $ mark in 2018 and rarely falling below 400 $ since. (The going rate in the fall of 2019 was about 420 $ per kilo.) The spike is sometimes attributed to a 2015 announcement by Nestlé SA that the company would only use all-natural vanilla in its products instead of artificial flavoring, prompting a domino effect of other major companies to follow suit. The actual impact of the decision is under debate.
Regardless of the validity of such speculation, few in the industry say that demand for natural vanilla has changed enough to protect prices from further decline. Almost everyone in the vanilla sector believes that a significant price drop is not a matter of if, but rather a matter of when.
And when more than 80% of the vanilla industry comes from the island of Madagascar alone, the rest of the world takes the cake.
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Muchas gracias. ?Como puedo iniciar sesion?