Hit by rampant speculation and a collapse in production following cyclone Enawo, the price of vanilla — Madagascar’s largest export — has surged in the past few months.
Ice cream, aromatherapy, perfume and haute cuisine: All use the spice sourced from the Indian Ocean island that accounts for about 80 percent of global production.
The sudden cash bonanza has threatened to fuel crime and slash quality.
Photo: AFP
On the single paved road in Ampanefena, a rural community in the northeast of Madagascar, youths pass the time doing wheelies on their high-powered Japanese motorbikes.
“It cost 200 million Malagasy ariary [US$14,000],” said Akman Mat-hon, 17, atop a Kawasaki too large for his frame.
His father is “in vanilla” and bought the bike as a gift, he said.
Business is booming: Since 2015 the price of the spice has soared relentlessly to “a never-before seen peak of between US$600 and US$750 per kilo,” said Georges Geeraerts, president of Madagascar’s Group of Vanilla Exporters.
Since the market was liberalized in 1989, the price has fluctuated wildly — from US$400 per kilogram in 2003 to US$30 in 2005, where it stayed for about a decade.
However, demand eventually outstripped the yearly supply of about 1,800 tonnes, spurred on by resurgent calls for organic products, speculation by financiers — and by tropical cyclone Enawo that ravaged part of the production zone.
Markets in the vanilla-producing Sava region were saturated almost overnight with motorbikes, smartphones, solar panels, generators, flat-screen TVs and gaudy home furnishings.
“The banks struggled to keep up with the pace,” a French trader speaking on condition of anonymity said.
“Money no longer has any meaning, people think it’s a free-for-all, it’s becoming anarchy,” added Vittorio John, a vanilla grower in his 40s.
The price explosion has led to increased thefts from vanilla plantations.
Some growers sleep in their fields to guard their precious crop and several thieves have been beaten, imprisoned or even killed.
“We pay two police to secure the village,” said Patrick Razafiarivo, 42, an intermediary between the farmers and the exporters who admits to hiding vanilla underneath his mattress.
“The police made us pay for their 4x4s,” a French exporter said.
The authorities admit that they were caught unprepared for the boom.
“The root of all the problems is insecurity caused by a lack of capacity, staff and force discipline,” the region’s development director Teddy Seramila said.
Fear of thefts in the plantations has also forced some growers to pick their pods prematurely, resulting in declining standards.
“People are doing all sorts. They’re vacuum-packing vanilla that can go bad. Non-experts can be misled over the quality,” an exporter from Madagascar said.
“Nothing distinguishes a good pod from a bad pod, you can’t tell the difference,” exporter Lucia Ranja Salvetat said.
The vanilla trade remains largely unregulated in Madagascar and the scant rules are seldom enforced.
Each buyer can freely tour villages and negotiate prices directly with the farmers or call intermediaries to get a quote.
“There should be a law applied to everyone, but instead people do as they please,” one of the exporters said.
“Barely any of the local authorities levy any taxes,” Seramila said — even though vanilla makes up 5 percent of the country’s GDP.
Just 21 percent of people in the region have access to drinking water and only six communities out of 86 are electrified.
“Honestly, we can’t succeed in this job. Everybody is maneuvering and it’s the big exporters that are setting the example,” Razafiarivo said.
Madagascar’s bourbon vanilla is a product of expertise handed down from generation to generation and has been considered the best in the world.
However, concerns over quality could deter buyers, handing a victory to the country’s main vanilla exporting rivals — Indonesia and Uganda.
“Everything must come to an end and it’s almost certain that there will be a price fall,” Geeraerts said.
“Vanilla enabled me to go to school, it’s a noble commodity. When the price falls, the opportunists will leave — but we will always be here,” Salvetat said. “We are the old guard who have forged our future and our children’s future with vanilla, but we are in the process of tearing ourselves apart.”
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