Why Is Vanilla So Expensive?

Yes, vanilla is expensive. It is the second most expensive spice in the world after saffron with some reported export prices reaching US$800 per kilo in 2017. The reason why I’m writing this post is because this is – understandably – one the most frequent questions I get asked by vanilla bean aficionados. I’m hoping this article offers practical information on the situation and what is being done to reverse the trend.

It’s one thing that natural vanilla be hard enough to find in stores these days, the second thing is that when you finally find some, the price tag for just a couple of beans makes you wonder if its quality is worth the price. What’s going on? Why is it so expensive?

If you’ve ever found yourself at a dinner party feeling annoyed by (and let’s be honest, secretly jealous of) the know-it-all guy (usually French, let’s call him “Francois”*) who has answers to everything because he read the Mongolian-English translation dictionary twice, read on because I have some specialised knowledge nuggets you can use at your next dinner with friends.

Truth be told, I’m cheap! But I have a soft spot for authentic raw products where I don’t mind reaching out to my wallet as long as I know the product is the real deal and I know my purchase helps local people somehow. Think of black pepper from Kampot, Cambodia, the finest sushi from Chef Jiro Ono in Tokyo, Japan, homemade lemonade from freshly squeezed lemons in Sicily, Italy, or tailormade leather shoes and bags from Hoi An, Vietnam where I am writing this post from, taking a break from the city. The list goes on, but the point is: I don’t mind paying the price for something as long as I’m getting top notch quality. So, if you’re like me, when anywhere you look for vanilla in stores today and see that you can’t get away with less than $22 for 2 beans (in Singapore at least), you have to wonder: Is it really worth it? How do I know it’s going to be a good quality bean? Is there a better alternative? It’s a fair point because the impact of the vanilla crisis that is going on at the moment tends to result in customers paying for a higher price for a lower bean quality. Why is that? I’m glad you asked, Francois. Please sit down and listen up, I’ll tell you. 

conditioning vanilla

The Main Story

It’s basically down to two things: Shortage of supply vs the global demand and a very labour-intensive process from growing the vanilla plants to your favourite ice cream.

Like everything, when commodities are scarce,  it leads to a snowfall of issues which in the case of vanilla includes crime, speculation and drop in quality. Do I have your attention now, François?

Shortage Of Vanilla Supply

It’s basic supply and demand economics. Between 2005 and 2014, there was a surplus of vanilla. As a result, the prices for both green and cured vanilla were too low for the farmers to survive so many burned their vanilla vines and turned to more lucrative crops such as coffee, cocoa, or sugar that trade in much larger quantities. The impact - you see it coming, François - is that since 2015, vanilla prices have surged to unprecedented heights. Madagascar being by far the largest producer of vanilla bean (over 80% of the world’s total production comes from the Sava region), suffered from the Enawo cyclone that devastated a third of the vanilla crops earlier in 2017. This worsened the global shortage in supply to cater the global demand of around 1,800 tons per year driven by consumers demanding natural products in ice creams, chocolate and other products. Food companies like Nestle, Hershey’s and McDonald’s have already pledged to use natural vanilla in their products.

background-vanilla

Slow drying vanilla

The Dark Side Of Vanilla

Trading the “Black Gold Of Madagascar” can be lucrative for growers but unfortunately it is not necessarily the case. The precious spice is the object of crime, robbery and even murders in the rural fields. Criminals take advantage of the farmers lack of resources to secure the crops, to steal green beans at a premature stage and sell them once the market officially opens. Some use a method of ‘quick-curing’ where the premature green beans are cured and then placed in vacuum bags. This practice reduces the quality of the vanilla as there is less vanillin content developed in the beans and placing them in vacuum bags when they’re not properly dried are likely to cause mold and fermentation. That’s why some customers may end up paying higher prices for a lower quality.

So Where Does The Money Go?

Speculators and middlemen are also responsible for forcing the prices up. “Buy Low, Sell High”, right? That’s exactly what investors did in 2015 when they bought all the vanilla on the market with laundered money from illegally harvested and sold rosewood. The vanilla production was small. So they held it and waited for prices to go up to sell it at a high margin to industrials and companies desperately needing vanilla in the food, fragrance, manufacturing industries.
Unlike other commodities that are regulated and traded on global market exchanges, vanilla trade lacks regulation and price protectionism for the farmers and for the thousands of vanilla workers who rely on it to survive, which leads me to my last point.

sorting the vanilla

A very labour-intensive process: EVERYTHING needs to be done by hand.

Everything! From growing, harvesting, curing, conditioning, exporting to scooping that ice cream into your mouth. Ok granted, that last part is not much trouble. But let’s break down all the process here.
 
Vanilla beans are the fruit of an orchid – Vanilla planifolia (Did you know that, François?)– that requires specific growing conditions and a lot of care to bloom. The flower only blooms for a few hours on one particular day in the harvest cycle. This is the only time window to pollinate which is required to produce a bean. In nature, only the melipona bee which is native from and only present in Mexico can pollinate the flower. Thanks to a discovery made by Edmund Albius in the 19th century  (Thanks, Ed!)- a young slave in Reunion Island (also called Bourbon island) -, the orchid can be pollinated by hand using a toothpick or something similar. This has to be done for each orchid flower on the right day to produce beans. This orchid takes 3 to 4 years to flower. Pollination usually happens from October to January. So back to the supply and demand concept, as prices are high, farmers are now planting more vanilla but that’s why it will take 3 to 4 years for the supply to increase and for prices to drop from where they are now.

Next, around 9 months after pollination, the green beans are harvested one by one by hands in preparation for the start of the vanilla season usually in late May to Mid June. Once the season officially opens, the curing process starts to turn the green beans into fragrant dried vanilla beans we all know. The curing process is – you guessed it – entirely done by hand. The overall curing process is explained on this page. I’ll write a detailed post on the curing process later on but the quick overview is:

  1. Sorting and grading the beans by size and appearance
  2. Cleaning
  3. Killing the beans in hot water to stop it vegetative growth
  4. Sweating the beans under a blanket. The beans start to become light brown and aroma kicks in
  5. Sun drying
  6. Slow drying is racks stored in a ventilated room
  7. Conditioning and bundling the beans by size and category

 
All this manual work takes months to produce high quality beans. There is no machine that is able to automate the process and that is why thousands of workers are involved and rely on the vanilla business as their sole source of income.

Sundrying vanilla

Here's the Cheat Sheet!

So there you have it. In summary, here’s the Cheat Sheet.
 
Vanilla is expensive because of:

  • Supply and Demand Imbalance > Prices are high > Criminals steal green vanilla at a premature stage robbing profits from the farmers and lowering the vanillin content in the beans meaning a lower quality > Middlemen and speculators force prices up by stocking up the vanilla with illegally gained profit from rosewood traffic.
  • Everything is done by hand, it is very labour intensive

What can be done to mitigate the crisis?

  • Planting more vanilla (3-4 year solution) to boost supply capacity
  • Forming direct partnerships between industrial buyers, food companies and Madagascar vanilla farmers to secure supply at fair trade prices
  • Investing profits in infrastructure to secure and manage the vanilla crops properly

bundling vanilla

Why Madanilla?

The end goal is to keep supplying premium quality vanilla beans at a lower price for companies and higher profits for farmers so they can improve their living conditions, build a cement house, keep their children at school, create more jobs, solve poverty in Madagascar, save the world 😉 Everybody wins! 

 
That’s why Madanilla was created. Join the movement! If you haven’t subscribed to the newsletter yet and you like articles like these, you can do it now here: http://www.eepurl.com/cSEzyX. If you don’t, you’re probably a François*. That’s fine, I have lots of François friends too, I mean one or two, let's not get too crazy. In the meantime, do me a favour, next time you shop for vanilla, get natural beans instead of essence or synthetic one. At least you'll know you'll help Malagasy people and there's just nothing like the real thing to get your cakes, custards, cannelés noticed.

Keep It Real.
 
Gael
 
*Any resemblance to any actual François, living or dead, is purely coincidental. Opinions expressed here are my own.

 

 

Leave a Reply

Your email address will not be published.