The picking season of the green pods on the orchids in Madagascar has started. Always exciting and interesting, because an estimate can be made of how many tons will be harvested this season. The volume is above average this year and the quality will be good.
Farmers have become accustomed to high prices for their green beans in recent years but are now under enormous pressure. The collectors/exporters are not prepared to have to buy expensive again and do not even offer half of the kilo price that the farmers ask. Sooner or later, they will find common ground, but it is already clear that the price will drop this autumn and that is earlier than expected. In addition to that, the government is increasingly interfering with a fixed minimum export price.
What’s new this year are the relatively large harvests from Uganda and Indonesia; Indonesia and Uganda 400 tons each, Papua New Guinea 100 tons and Madagascar 2,000 tons; in total almost 3,000 tons, while the demand for vanilla in the world is around 2,000 tons. A significant overcapacity, which, as mentioned, will lead to price pressure.
The big question is what answer Madagascar will give to the increasing international competition. Newly built production companies to western standards? A shift to organic? 100% traceability? Or price? And such a price reduction, as in 2008, that other countries will be discouraged by prices that are too low? But farmers and producers will revolt against this. Winning by price has been successful several times. Only time will tell whether the use of this cheap instrument will succeed again this time. There may be nobler solutions.
Incidentally, it is an excellent development that vanilla is getting a reasonable price, that accessibility is increasing, and that more users are getting started with this fantastic flavor aroma. More promotion of the product is a partial solution to balancing supply and demand. This is where the task lies for Madagascar. After all, farmers must be able to continue to receive a profitable price for their product.
The new export season in Madagascar will start on October 15 and we will know more then.
To be continued.
Breda, july 2020
Henk de Kroon
