Cook Flavoring Company Vanilla Market Report
November 2017
Here’s the news you’ve not been waiting for: Vanilla prices remain sky-high in Madagascar, price setter for the global vanilla market.
We just spent three weeks in the Sava, driving its famously rutted mud roads into the bush for the start of vanilla pollination. During our trip, we visited villages and walked the vanilla plantings to assess the bloom. We squatted on the floors of huts, talking with farmers and inspecting their vanilla beans.
And next to us on the flight to vanilla country sat enormous piles of Ariary banknotes strapped down inside the airplane cabin, a telling metaphor for a vanilla market where jaw-dropping piles of cash are landing in one of the poorest places on earth.
In villages without plumbing or electricity, much less checking accounts, we heard widespread reports of kidnappings, theft and vigilante justice. Vanilla bean quality is all over the map but generally plummeting.
Bottom line: Prices remain upwards of $500/kilo for mid-grade vanilla beans and $580 for higher quality extract grade.
Lowest grade “cuts” sell for around $400/kilo, an astounding figure for what in normal times are throwaway vanila beans. They have scant aroma, but sell at five times the price that top-notch vanilla beans fetched six years ago.
We refuse to buy these vanilla beans. Yet exporters told us many flavor houses are snapping them up by the ton. Technically these beans are vanilla, but we are sad to report that end users paying hefty prices may wind up getting something that is pure vanilla in name only.
Immature harvesting is rampant. When a kilo of vanilla beans represents a year or more of wages for the average Malagasy, theft becomes a nightmare. Loath to risk leaving their vanilla beans on the vine one day longer than they absolutely must, farmers are picking them way early. These vanilla beans are as intoxicating as a hard green peach.
![Madagascar Vanilla Beans Quality Differences Madagascar Vanilla Beans Quality Differences](http://c22.49b.myftpupload.com/wp-content/uploads/2017/11/Beans-1024x1017.jpg)
Large exporter/curers, where most flavor houses obtain their vanilla beans, are in no hurry to sell. Many are running lean inventories. Some are buying only for existing contracts with advance payments of 50 percent and more. Everyone says prices have to fall, but few seem to expect a crash this year.
Vacuum packing is everywhere, despite a government ban. The practice destroys beans that are not fully cured, as most of these are, by creating nasty-smelling phenolic compounds. But farmers do it anyway to retain moisture content, keep their beans heavy and pad costs.
Farmers have extravagant price expectations. Many are withholding a big share of their production — how much is anyone’s guess — in hopes of cashing out their lofty dreams of $800 a kilo. They will surely be disappointed. However wonderful, vanilla is not a necessity of life. Even boutique organic ice cream makers face limits on what they can charge for an ice cream cone. There’s always chocolate, dare we say.
Such old-fashioned thievery as refusing to deliver on paid contracts or substituting low-grade vanilla beans is always a risk for buyers here, but it’s gotten worse.
We have no crystal ball, just observations. We saw weak blooming in the Antalaha and Sambava regions, and serious damage from Cyclone Enawo, arguing for a tight vanilla market. Farmers have expanded their plantings, but in their exuberance have disastrously stuck vines in full sun, with wretched results. Yet vines further inland appeared healthy and had strong flowering, arguing for higher production.
Signs of a classic bubble are popping up. Like the shoe shine men of 1928 Wall Street, or Las Vegas homebuyers of 2008, tiny players are speculating. Even big, sophisticated vanilla market players think prices aren’t coming down, often a prime indicator of an impending crash.
Production continues to increase elsewhere and will make a significant dent in Madagascar’s vanilla market dominance. High prices have made vanilla profitable again in its native Mexico, which is producing some lovely vanilla beans. Reaching maturity at four years, recent vine plantings throughout the Tropics are nearing production.
The crisis is now in its third year, about the length of the last one that ended in 2003. Current vanilla prices are unsustainable, period. The sooner they drop the better. Today’s conditions are inducing all manner of terrible practices throughout the supply chain. The longer prices stay high, the greater the risk that when they do drop, they’ll come down hard and fast, with devastating consequences for farmers.
The market for gourmet vanilla beans has already crashed. Top-end restaurant chefs have abandoned their beloved shiny black pods. Chefs, accustomed to beans at $60 a pound, blanched when beans hit $160 and stopped buying after that. Raspberry souffle anyone?
As for us, we’re in the vanilla business. Having spent spent 100 years cultivating our reputation, we are not about to abandon it now. We insist on quality and are going to extraordinary lengths to maintain it. Our customers can rest assured that they are getting what they pay for. We are not buying “cuts,” “quick-cured” or immature vanilla beans. For those who cannot stomach current prices, we recommend our natural vanilla blends that can slash costs and have far superior flavor to the junk extracts that now permeate the market.
To reduce costs we are buying directly from farmers, establishing cooperatives in villages to secure high-quality vanilla beans, and insisting on fully ripened vanilla beans. We are scouring the world outside Madagascar as well.
We deeply value your loyalty. You can always get us on the phone directly. Just ask for Jo or Don. We love to talk vanilla even in the most trying times, and will help you every way we can.
Josephine Lochhead
President
Cook Flavoring Company and R. R. Lochhead Manufacturing
See our previous Vanilla Market Reports:
1. Cook’s Vanilla MARKET REPORT June 2017
2. Cook’s Vanilla MARKET REPORT March 2017
3. Cook’s Vanilla MARKET REPORT December 2016
4. August 2016 News: Vanilla Prices Reach Record-Smashing Level
in India , the season is going to finish
the main production area was south India especially Kerala and Karnataka states
Now this season the total production will be less than 10 MT of green beans and new plants are savourily affecting with fusarium. There is only some 5-10 MT of dry beans inventory in India
no farmers have interest in planting vanilla especially for contract farming
Hi,
I am TONY AIMO a Vanilla Grower from Papua New Guinea.
I am interested in doing business with your organisation. I want to sell “Processed Premium Organic Vanilla” direct from my Family Vanilla Farm to you.
Please contact me on the email Address provided.
Hello Tony, thank you for contacting us. We do manufacture all of our extract ourselves and so not buy any processed vanilla beans.
Aloha! Currently growing and just finishing my curing process. How does a small farmer know the quality of their bean? I have some that have small spots from sun. They smell amazing, just not as pretty. Are they your low grade?
Dear Cooks,
The central Sepik region of north west Papua New Guinea, especially the Maprik and Ambunti Drekikir Districts grow or can grow a lot of vanilla. But they need formal organisation of growers/farmers with long term quality beans being the focus.
At the moment, unorganised its every grower and buyer to himself. And this is where, as is current n endemic quality is compromised. The same issues you raise in your excellent successive report and blogs on the quality of vanilla at different value chains are a fact of vanilla growing/selling life in Central Sepik.
I’ve discussed with many growers and we’re in initial verbal agreement to start cooperatives along local level government lines. However we would need financial and technical assistance. Though not so much the former as we’d have grower contribution of vanilla to raise funds.
We are wondering if Cooks is interested to input into something such as that suggested. If you are I can email in a draft working paper.
I am concerned for vanilla and its quality for consumers and of course the future of this spice still be sought after from buyers and dealers if the current abuse of green bean harvest, improper curing, buying and abuse of growers, stealling etc–all which you uave highlighted for other areas such as Madagasca. And of course the disinterest as soon as price returns to normal, even if then it is up to 100% higher than other crops such as coffee and cocoa, also grown here.
Thank you.
Roland Katak
Hello Roland, we are always eager to fine the best quality vanilla beans that we can! We too are concerned about vanilla quality and indeed that vanilla market is very tricky and often unorganized. Please contact us directly to speak with our president or vice president. Thank you!
Thanks for this wounderfull and amazing report.
My names as bellow and would like to join you guys here in Uganda.
I enjoyed visiting your webiste. I rarely leave comments, but
you definately up deserve a thumbs!