The Hindu Business Line : Vanilla prices down on lack of demand

Even as the harvesting of vanilla has started, lack of demand from overseas buyers has pushed its prices to below remunerative levels putting the growers in a crisis situation.

A viable solution for growers is to increase the domestic demand for natural vanillin by substituting some percentage of imported synthetic vanillin used in certain categories of ice-creams manufactured in the country, a senior official of a corporate vanilla plantation company told Business Line. So as to promote the use of natural vanillin in place of the synthetic product, the Government could even think of subsidising the price difference between the natural and artificial vanillin, as the price of the latter is lesser than that of the former, he said.

In some of the developed countries it has been made mandatory to use natural vanillin in certain categories of ice-creams. Similar, steps should be initiated here also, the official said.

According to industry sources, presently, consumption of synthetic vanillin in the country is estimated at round 500 tonnes a year and if part of it is substituted by natural vanillin the scope for vanilla cultivation in the country, mainly in the southern States, is enormous.

Imports & consumption

The import of vanillin and ethyl vanillin together to India during 2000-01 was 404 tonnes, with an estimated annual growth of 8-9 per cent. The consumption pattern of the industries is biscuit (11.50 per cent), ice-cream 4.80 per cent, perfumery/flavours 27.90 per cent, agarbathi 52 per cent, pharmaceuticals 2.80 per cent and miscellaneous 1 per cent.

The production in India is estimated to cross 200 tonnes of cured beans this year, while in Madagascar, the world's top producer, it is reported to be over 1,600 tonnes. Meanwhile, the user industry in the major markets such the US has yet to exhaust the stock held by it, the sources here told Business Line.

The price offered for A-grade green beans is Rs 60-70 a kg, while that for B and C grades are Rs 40 and Rs 15 a kg, respectively. The farmers are reluctant to sell at this rate. In the international market also, there are no buyers now as they are waiting and watching for the Madagascar offer, which may start probably next month. At present, in Madagascar the price offered is said to be $1-1.5 a kg, they said.

The world production of vanillin is estimated at 12,000 tonnes, of which 11,880 tonnes is synthetic.

The world demand in 2004-05 was estimated at around 1,200 tonnes against an estimated production of 2,300 tonnes.

Buyers market

While the production is on the increase, there is no corresponding growth in demand from the major consuming countries

"A more sellers and few buyers situation had emerged" making it a buyers market, pushing the prices down.

At the same time, the growers need to follow the advice of the experts who are in the field for over a decade and still continue to advise them to take up its cultivation only as an inter-crop and in homesteads so as to keep its cost of production at lower levels. In fact, it would be possible to produce substantial quantity of quality vanilla by growing it in smallholdings as inter-crop in climatically suitable areas in Kerala, Tamil Nadu and Karnataka and make available at competitive prices.

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