Vanilla prices still low on world market

Jan 16, 2008

THE weakening US dollar coupled with continued inventory of artificial vanilla has stalled the much- anticipated rise in global prices. Farmgate prices today stand between sh1,500 and sh5,000/kg compared to last year’s sh7,000/kg.

By Macrines Nyapendi

THE weakening US dollar coupled with continued inventory of artificial vanilla has stalled the much- anticipated rise in global prices. Farmgate prices today stand between sh1,500 and sh5,000/kg compared to last year’s sh7,000/kg. The price depends on the quality and quantity.

Vanilla, one of the most sought after spices also recognised as the world’s most popular flavour, has experienced five years of low prices.

“As vanilla beans trickle in from all growing parts of the world, the much-predicted recovery of prices has yet to materialise. The market for cured beans is still saturated with synthetic vanilla at all levels despite some drop in production in certain origins,” a report by Aust&Hachmann said.

Canada-based Aust&Hachmann based in is one of Uganda’s biggest buyers. The low prices are attributed to a rapidly weakening US dollar, which poses the greatest challenge to all stakeholders because the contracts and the prices are locked in one currency.

The production of high-quality organic vanilla in Uganda has not done much to bolster its competitiveness and pricing on the global market.

Ugandan vanilla farmers earn 20% less than their counterparts in Madagascar because they do not enjoy the universal acceptance in the market.

“Farmers are depressed. Even after the quality has been improved, they still earn 20% less than farmers in other origins. This has put them under tremendous pressure as it becomes more difficult for them to sell their beans at prices lower than their production costs,” one exporter said.

Ugandan farmers embraced organic vanilla growing hoping to reap big from the lucrative organic market whose premiums are double the ordinary prices. An estimated 200 tonnes of cured vanilla beans were exported last year, fetching $4.8m.

Uganda has had many tonnes of carried over stock in the past few years due to low offers by buyers.

“The buyers are taking advantage of the situation to cheat us. They know we have high-quality beans. They are aware of the rising production costs and the depreciating dollar.”

“Uganda’s vanilla has slowly been chipping away at Madagascar’s dominance in the industrial and food sectors. However, quality problems persist for not being vigilant during the curing and preparation processes. The reason Uganda’s vanilla attracts low prices is due to sudden change of quality and inconsistent volume,” David Vander Walde one of the Aust&Hachmann directors, explained.

Global prices range from $15/kg to $250/kg. Uganda’s beans cost $20/kg, while other origins like Tahiti price theirs at $250/kg. In 2003, vanilla prices rose $550/kg due to high demand amidst low supply.

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