Vanilla price doom continues

Jan 11, 2007

Vanilla farmers who had turned into millionaires four years ago, cashing in on the world’s most sought after spices, are now battling a severe price crunch.<br>Cured beans that commanded a price of $400 (sh712,000) per kilogramme between 2000 and 2003 are now limping at $16 (sh28,480).

By Macrines Nyapendi

Vanilla farmers who had turned into millionaires four years ago, cashing in on the world’s most sought after spices, are now battling a severe price crunch.
Cured beans that commanded a price of $400 (sh712,000) per kilogramme between 2000 and 2003 are now limping at $16 (sh28,480).

This season’s farmgate price was left open for the processors and farmers to negotiate.

A prominent farmer said the situation had worsened so much that the ‘green oil’ has turned all stakeholders into paupers.
“Over 70% of last year’s processed vanilla is in warehouses. Most processors have quit for other businesses, leaving it for the likes of Sekalala, Nviri and a few others,” a farmer said.

Has vanilla finally lost it is Midas touch?

Farmers thought otherwise four years ago, turning every piece of land available into a vanilla garden. They fully exploited the cyclone in 2000 and flash floods in 2003 that ravaged the Malagasy Islands (Madagascar), the world’s major supplier.

Madagascar’s crisis boosted vanilla earnings by over 50%, $13.6m (sh24.3b) was earned in 2003 from $6.8m (sh12b) in 2002. The earnings dropped to $6m (sh10b) in 2005.

“If the prices don’t pick up, many of us will quit. Most of the farmers are indebted. Some have run away from their homes because they can no longer sustain their families,” Yunus Lubwama, one of the prominent farmers in Mukono district, said.

Lubwama said: “It is a global conspiracy involving local companies. They have frustrated farmers who at one time would have become their competitors.”

Last year, global prices per kilogramme stood at $71 (sh127,090). Countries like India, Madagascar, Reunion Islands and the Comoros enjoyed prices of over $116 (sh207,640), while Uganda’s fetched $16 (sh28,640).
Uganda cannot enjoy better prices because the crop does not comply with most of the European standards. Uganda’s vanilla, which is said to be the best in the world, is not certified.

“The falling prices on the international market of a crop that is mainly supplied by the developing countries may seem to be of no concern to the industrialised consuming countries,” Clive Drew, the managing director of Agricultural Productivity Enhancement Programme, said.

In 1968, Madagascar, Comoros and Reunion Islands formed a cartel, ‘Univanilla,’ which was supposed to set prices by regulating supplies of processed beans to developed countries.

The cartel was weakened by widespread acceptance of low-cost synthetic vanilla made from wood pulp extracts.

Vanilla growing in Mukono dates back to 1912, but effective rehabilitation took off in the late 1980s. Vines grown in Uganda today were obtained from Salaama and Lubowa estates formerly owned by the McCormick and Mitchell Cotts joint venture.

The export value between 1990 and 1994 was $43,000. The export volumes surged to over 5.4 metric tonnes fetching $437,000 in the late 1990s. In the early 2000s, the tonnage touched 37.8, earning $2.4m.

Unlike Uganda, farmers in Madagascar are assured of proceeds. The government buys it from processors when prices are low and hoards it in anticipation of better prices. If the prices drop further, the vanilla is burnt in Sambava, north-east of the country.

In 1993, over 1,000 tonnes of cured beans were burnt in the presence of a senior government officer. Between 2005 and 2006, 1,700 tonnes were torched.

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