The Hindu Business Line : Vanilla prices hit rock bottom on lack of overseas buyers

THE price of vanilla has continued to fall for want of overseas buyers and the green beans are currently being sold at Rs 105-130 a kg against Rs 3,500 two years ago.

Industry sources told Business Line that four major companies bought about 400 tonnes of green bean so far this season at the prevailing rates. As the international price for the cured bean is $20-25 a kg "we cannot afford to offer a price higher than this," they said.

A major producer of oleoresins having a vanillin extraction plant and buyback arrangement with an American company has procured 100 tonnes. The company sources said its 100-acre vanilla plantation, which has reached the yielding stage, would produce 20 tonnes from next year.

According to them, production in Kerala this year would cross 700 tonnes of green beans.

At the current prices, the return per acre would come to around Rs 10,000, which might not be attractive to the growers who were getting over Rs 3,000 for one kg of green beans two years ago.

However, if the prices remain between Rs 200 and 250 a kg, it would be remunerative, they said.

According to them, if the average prices remain at moderate levels it would help increase the consumption and cause a consequent increase in demand.

Meanwhile, Spices Trading Corporation Ltd (STCL), which has been entrusted with the procurement of three tonnes of cured vanilla at Rs 1,500 a kg by the centre, is yet to commence procurement.

STCL sources told Business Line that the corporation had collected details from the farmers' co-operatives about the availability of `A' grade beans, which have been sent to the Spices Board to check the quality of the produce.

The quality of the cured beans has to be ensured by the board, they said.

Sources at the Spices Board said that it was in the process and the formalities would be completed soon.

The demand for natural vanilla in the world market this year is projected at less than 1,000 tonnes against 2,500 tonnes in 1999, as the major buyers in the US are yet to enter the market.

The world output is estimated at 2,200 tonnes, with the new entrants having started production.

Indian production this year is estimated to cross 125 tonnes of cured beans from around 100 tonnes last year. Lack of demand has put the growers in difficulty and the prices offered are very low.

The major buyers in the world market, mainly in the US, have to deplete the stock held by them from the earlier purchases before entering the market, they said. "In fact nobody is sending a firm reply to the offers made by the producers and hence it is not going to be encouraging this year," said a senior official of a major vanilla plantation company. "The price might stabilise at $50-60 a kg next year."

While vanilla flavour experiences strong and growing demand, within the larger category real vanilla is increasingly being substituted with synthetic vanillin. This substitution was catalysed by the limited availability and extreme price increases in 2002 and 2003.

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