VANILLA OUTLOOK DECEMBER 2020
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Date

NEW HARVEST 2020

 

COVID-19 also affects the vanilla world.

The catering industry has disappeared, but home use, on the other hand, has increased considerably. Export from Madagascar and Papua New Guinea takes much more time and the price of air freight has almost doubled due to the cancellation of the usual flights.

 

The export season in Madagascar has officially been open for a few weeks and the first vanilla is here. The 2020 harvest is estimated at 1800 tons, which is the exact long-term average, and it is of better quality than the year before. Vanillin content is measured between 1.3 and 1.7%. An excellent development.

 

Prices have now decreased significally, partly under pressure from larger volumes from other countries, which is earlier than expected. The 110 designated exporters for this year in Madagascar are also in competition with each other. The government in Madagascar is following this closely and it seems that the price weapon is being used frantically. The downward price is strictly controlled and the minimum export price is laid down in a decree.

Violation by producers/exporters selling below this price will be punished by removal of the export licence. I have my doubts about the effectiveness of this government intervention. Pricing should be left to the market of supply and demand. It should be clear that an AFM is an unknown phenomenon here.

To be complete, I have to note that this is only about Madagascar. Other producing countries are just followers of the world price made in Madagascar.

 

Roughly speaking, it can be said that the price will be halved in January 2021 compared to the beginning of this year. At this point, it seems that the bottom has really been reached. For farmers and other parties in the chain, there is a situation in which everyone can operate in a financially healthy way.

 

Strangely enough, despite the much lower price, there is still little trading at the moment, as buyers of large companies expect prices to fall further. I don’t think this will happen, because as mentioned, the government has taken all the interference to itself and has set a minimum price. Besides, buyers cannot continue to put off buying, they need real products at a certain moment.

 

Fortunately, vanilla is slowly becoming an affordable spice again for delicious dishes that will return to the menu more often.

 

Well, first let’s sit out the difficult corona period and get through it.

Hopefully you will get through it without too much financial damage.

 

Vanille B.V.

 

Henk de Kroon

 

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