Vanilla Shortage Not as Bad as Expected

Nearly a year after a cyclone hit Madagascar, the vanilla supply is up and prices are slowly coming down.

By Lauren R. Hartman, Product Development Editor

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Last March, when a vicious cyclone hit Madagascar, experts feared one-third of the country's vanilla crop was destroyed. With the island nation off the coast of southeast Africa producing 80-85 percent of the world's vanilla, speculation shot up prices and tightened supplies.

Ten months later, it's apparent Cyclone Enawo, which hit with fury equivalent to a category 4 hurricane, did not have the disastrous impact that many predicted, according to Aust & Hachmann (www.austhachcanada.com), a Quebec vanilla bean broker. Price and supply of the precious ingredient were stabilizing as the new year began. But this is a market that has been notoriously unstable.

"There is a significant quantity of very immature cyclone vanilla (these are green beans that were blown of the vines 3-4 months before full maturity and immediately cured)," the trading company reports, but it represents a small portion of the tonnage. "We had suggested 2017 could produce one of the worst quality vanilla crops ever.

However, against all expectations, even those of the most seasoned vanilla exporters in Madagascar," both the quantity and quality of the 2017 crop is coming in above expectations.

Vanilla is the only fruit-bearing orchid out of hundreds in the orchid species, and takes about three years for a new plant to begin flowering. Each flower produces just one vanilla pod, which is full of seeds in an oily liquid.

As vanilla prices skyrocketed, some growers took shortcuts, harvesting beans early or skimping on the labor-intensive, three-to-six-month-long curing process, not to mention the manual harvesting. Both practices contribute to the difficulty of sourcing high-quality beans.

All of this dealt a major blow to suppliers and ultimately to food and beverage processors – especially bakers and confectioners – for whom pure vanilla extract is a key product component with a complicated chemistry, one with several precarious flavor compounds. Not only is it a favorite flavor, it's a flavor enhancer, can minimize the needed quantity of other flavors, adds dimension and a hint of sweetness without sugar. It's also a much-used scent.

Nielsen Masseylineup"Vanilla is a unique flavor that simply cannot be replicated with imitation products," says Craig Nielsen, vice president of sustainability at Nielsen-Massey Vanillas (www.nielsenmassey.com). "The good news is that a small amount of vanilla can deliver a huge flavor punch."

On one hand, food companies face growing pressure to replace artificial ingredients (like synthetic vanillin) with real, more "natural" ones to achieve clean labels. On the other hand, the price jumps are causing many vanilla users to look at replacements or to carefully optimize (reduce) the vanilla used in their products.

"The trend in recent years among food manufacturers has been to source natural vanilla produced from vanilla beans, which is partly what precipitated such an increase in global demand and helped drive up prices," Nielsen says.

Unpredictable prices

Even with improving supply, vanilla prices remain stubbornly high. In the summer of 2017, market prices reportedly hit $600/kg, then fell slightly. The 2002 market crash left premium pods selling for $20 a kilo. Vanilla at $100 a kilo used to be a fair to average price.

Immature harvesting is becoming rampant, as is poaching of vanilla vines. And when a kilo of vanilla beans represents a year or more of wages for the average Malagasy, theft becomes a nightmare, according to flavor supplier Cook's Vanilla (www.cooksvanilla.com).

NM Madagascarvanilla pod fields

"Loathe to risk leaving their vanilla beans on the vine one day longer than they absolutely must, farmers are picking them way early," Cook's says. "We are not buying 'cuts,' 'quick-cured' or immature vanilla beans. For those who cannot stomach current prices, we recommend our natural vanilla blends."

Aust & Hachmann in December predicted 1,300-1,600 tons for the 2017 Madagascar crop, actually an improvement over 2016's estimated 1,200 tons. In some years, the country's crop surpassed 2,000 tons. Poor crops, including low vanillin contents and aroma profiles, the past three years have been instrumental in escalating prices.

The high prices forced one high-end London gelato chain, Oddono’s, to pull its vanilla ice cream off the menu, reported Financial Times.

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