The Hindu Business Line : Vanilla buying begins inspite of resistance from growers

DESPITE major vanilla growers showing resistance to sell their produce, some of the major companies have already started buying green vanilla beans from farmers in Kerala and Karnataka.

A Bangalore-based company has bought three tonnes of A grade green vanilla beans at Rs 250 a kg, while some players in Kerala are also buying at the same rate.

A Chennai-based major buyer, however, is waiting for the prices to fall further, which it believes would take place by the third week of October.

A Kottayam-based company has also bought two tonnes of green bean. It was offering Rs 250 for A grade (beans of 15 cm length) and Rs 175 and Rs 125 for B and C grades respectively.

However, the farmers are reluctant to sell at this price and hope for at least Rs 1,200 a kg, a company source told Business Line.

The buyers and growers are scheduled to meet in Madagascar, the major producer of vanilla, on October 10 and at this meeting a price would probably be fixed, market sources said.

According to them, at the vanilla conference held in Madagascar on September 30-October 1, the buyers expressed the view that best quality vanilla would be available at Rs 200 a kg. They also said that Uganda and Papua New Guinea were ready to sell below this price.

According to international market sources, the total production of cured beans this year is estimated at 2,500 tonnes and the demand in the world market is somewhere around 1,500 tonnes.

"The unprecedented and exorbitantly high price last year has brought down the demand from the ice-cream segment by over 70 per cent. However, if the price remained at moderate levels the demand would pick up", they said.

Meanwhile, the world vanilla growers are slated to meet during October 21-22 at Nice in France, where a final decision is expected on the launching of an International Vanilla Association aimed at protecting the interest of the grower world over, they said.

With prices expected to drop sharply, vanilla growers in Kerala have already established Vanilla India Producer Company Ltd (VIPCL) in order to ensure international prices for their produce.

A vanilla grower can take shares worth Rs 10,000 in the company, according to company sources.

The price of green beans in 1996-97 was Rs 125 a kg, and gradually went up to Rs 250 in 1999-00, said agricultural scientists who have been in this field for a decade.

"The growers in the country should actually work to build up an image for our produce in the world market as `Quality Vanilla Means Indian Vanilla'," they told said.

Disagreeing with the allegation that MNCs have formed a cartel to push prices down, they said in that case these buyers could have stopped buying when the price was shooting up and crossed acceptable levels. "We are a small producer now and when the product is available at low prices from other origins in the world, our strategy should be to establish a presence in the market with high-quality product at competitive prices."

According to them if vanilla cuttings were planted with a spacing of 6x6 ft, 1,210 plants could be grown in an acre.

From the fifth year onwards, there could be an international average yield of one kg per plant taking the total production to one tonne from 1,000 plants. The yield in the third and fourth years could be 500 g per plant.

However, from a well-looked-after plant, the yield from the fifth year would be 2-5 kg.

The experts have been advising the farmers to keep 75 per cent of the plants for beans, leaving the rest for cuttings (planting material). For the latter, cuttings could be planted at a space of 4x4 ft.

From the second year onwards, three cuttings per plant could be taken for sale; at Rs 40 per piece, a farmer could earn at least Rs 35,000 on this account from one acre.

For raising vanilla in one acre, they said, the maximum investment would be Rs 1 lakh, including the cost of planting material, pollination expenditure and other inputs. The economics would thus reveal the actual remunerative price for one kg of vanilla bean, they added.

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 on a large scale, which pushed up the price of planting material to Rs 100 and more per cutting.

But AVT McCormick, which had been promoting vanilla cultivation in the country, has been advising the farmers to cultivate it as a backyard crop lest it involves much investment. Instead, many had taken it up as a pure crop involving huge investment, an expert with the company said.