The Hindu Business Line : High prices impacting world vanilla market

EXORBITANT prices of natural vanillin has driven its international market to a standstill following the backing out of big buyers in the US and Europe.

With the price of cured bean crossing Rs 13,000 a kg, it has pushed up the price of vanillin extracted from it substantially making the end-product unaffordable to the consumers, a senior official of a multi-national processor exporter told Business Line. ``As a result, some of the big buyers have defaulted while some have backed out,'' he said.

Many manufacturers of ice creams etc., who had resorted to using natural vanillin, have now reverted to the synthetic product. The big buyers are now waiting for the prices to fall once the crop from Madagascar, the major vanilla producer, starts arriving, he said.

According to the official who had visited Madagascar, vanilla production in the country is estimated at around 1,500 tonnes this year as against an estimated 400 tonnes last year.

There had been a shortage in the world market following increased use of natural vanillin by the food industry in developed countries, especially the US, another industry source said. In the US markets, it has become a statutory requirement that Category 1 ice cream should contain only natural vanillin. Labelling regulations are also in force there.

Indian exports of cured vanilla in 2003-04 stood at 26 tonnes valued at Rs 36.06 crore as against 25 tonnes worth Rs 22.26 crore the previous year. The unit value last fiscal had gone up to around Rs 13,800 a kg as against about Rs 8,600 a kg the previous year.

During February-April this year, some quantity was exported. The processor exporters including his company are still holding stock. ``Now nobody is committing a price,'' he said.

The major consumers of vanilla beans at present are the developed countries with the US, France and Germany absorbing about 80 per cent of the world imports. Among them, the US imports 50-60 per cent while the rest 10-15 per cent each. They are also main re-exporters of both vanilla beans and processed products, he said.

Indian production last year was around 75 tonnes of cured beans while it is estimated to be over 100 tonnes this year. The present market price of cured beans is on the higher side at around $250 a kg whereas the average price during the last decade had been around $40 a kg, he pointed out. The price seems to have reached the saturation point and is bound to fall, the sources said.

Among the food flavours, vanilla has a prime position. Vanilla essence is largely used in the preparation of ice creams, chocolates, bakery products, puddings, pharmaceuticals, liquors and perfumes. It is the second most expensive spice traded on the world market next only to saffron.

The total area of vanilla cultivation in the world during the year 2001 was 40,846 ha and production was 5,583 tonne. There has been no appreciable increase in area under vanilla in the growing countries, according to an FAO report.

The major vanilla producing countries are Madagascar, Comoro, Indonesia, Mexico and the Reunion. Among these countries, Madagascar holds prominent position having a cultivated area of 25,550 ha under vanilla. Of late, Indonesia has started to produce more with a production of 2,102 tonnes from 9,700 ha. Others are Mexico, China, Comoro, Reunion, Tonga, French Guiana, Malawi, Uganda, Zimbabwe, Guadeloupe, Kenya, Fiji Islands, Cook Islands and Turkey.

Vanilla flavour consumed at present in India is almost entirely from synthetic substitutes. The import of vanillin and ethyl vanillin together into India during 2000-01 was 404 tonnes.

Even if only 10 per cent of import of these synthetic substitutes were replaced with natural product, the requirement of vanilla beans would be 2,020 tonnes at the rate of 2 per cent vanillin content.

As the prices shot up following short supply from other origins, the farmers in Kerala, Karnataka and some parts of Tamil Nadu had started growing vanilla in a big way. But, his company, which had been promoting vanilla cultivation in the country, has been cautiously advising the farmers to cultivate it as a backyard crop lest there would be much investment.

Instead, many had taken it up as a pure crop involving huge investment, he pointed out.

The Government too is planning to bring some 5,000 hectares under the crop by the end of the current Plan.