Vanillanomics: 80% of the world's vanilla is produced in this Madagascar region

[tacobell fan]

Since Madagascar let the free market take over, the country's share of world vanilla production has risen to 80% or more, according to industry experts. This is a close look at the global market forces at work in the far reaches of the country.

[Scada]

ok thanks

[argadorn]

5 minutes ago, tacobell fan said:

Since Madagascar let the free market take over, the country's share of world vanilla production has risen to 80% or more, according to industry experts. This is a close look at the global market forces at work in the far reaches of the country.

indi alo vanilla ki usa lo vanilla taste endhuku different ga untadhi 

[tacobell fan]

First, we needed a 4x4 of some sort, along with a driver willing to chance roads that are sometimes passable, sometimes not. The man we found struck us as the quietly skeptical sort, but after a few hundred rutted kilometers, any hesitations he'd been suppressing hardened into emphatic certainties. “The only people who drive on this road,” he told our photographer and me, via our translator, “are people who want to kill their cars.” Yet he gamely pushed ever deeper into Madagascar's tropical north, until our mud road descended a hill and was swallowed by a wide river. It was the end of the line for the driver. He seemed relieved.

Somewhere on the other side of that water, dozens of farmers would soon converge upon a regional vanilla market in the village of Tanambao Betsivakiny. Growers would negotiate with buyers working on behalf of exporters and international flavoring companies, and together everyone would hash out a collective, per-kilogram price for the crop. Most buyers would pay cash on the spot, and the farmers would hand over several tons of green, freshly harvested vanilla beans.

Those humble beans, whose essence is associated with all that's bland and unexciting, have somehow metamorphosed, butterfly-style, into the most flamboyantly mercurial commodity on the planet. In the past two decades, cured vanilla beans have been known to fetch almost $600 per kilogram one week, then $20 or so the next. Northeastern Madagascar is the world's largest producer of natural vanilla, so every boom and every bust slams this region like a tropical storm. When prices peak, cash floods the villages. When prices fall, it drains away.

Madagascar was largely integrated into global trade centuries ago. The island is bigger than France, with cultural traditions that vary by region, unique biological treasures, and a developing tourism economy. The capital, Antananarivo, is full of laborers, lawyers, bureaucrats, bankers, artists, entrepreneurs, intellectuals—everything a 21st century city of 1.5 million needs. Yet Madagascar is also one of the poorest countries on the planet. You see and feel its disparities most sharply in its more remote pockets, including in the vanilla-growing region of the northeast. The extreme isolation of those communities, their dominance over the international supply, the dramatic changes they undergo during price swings—all of it has turned this part of the country into a semicontained observation lab that exposes both the genius and the insanity of globalized commerce. Visiting one of the seasonal auctions where vanilla enters the global marketplace seems a logical first step to try to understand it all.

So we really needed to cross that river.

The water didn't look too deep; we spotted people wading out toward the other side, carrying baskets on their heads. We took off our shoes, rolled up our pants, and stepped in. The riverbed was lined with fiendishly slippery, cannonball-size boulders. We plotted a slow, wobbly course to the other side. On the far bank, someone told us the market was still a two-hour trek away.

It was mostly uphill, naturally. When the spiraling dirt road plateaued, we found ourselves on the weedy edge of a village. A couple of young men with motorbikes accepted the equivalent of a couple of dollars for rides to shave a good half-hour off the trek.

If our arrival was accompanied by a whiff of self-congratulation, it dissipated as soon as we saw the farmers. Most had been walking far longer than we had, in flip-flops, with huge sacks of beans hanging from sticks balanced across their shoulders. Some of the bags weighed more than 40 kilograms. And for the farmers, this was the easy part. They'd spent months in the fields, closely monitoring their vines for any sign of a bloom. When they found a vanilla orchid in flower, they rushed to hand-pollinate it. Each flower's fertilization period lasts only a few hours each season; if they missed that window, the plant wouldn't produce beans. Then, as the beans matured on the vine, the farmers hand-stamped the pods with a personalized, Braille-like marking (the horticultural equivalent of a cattle brand), so thieves would have difficulty passing them off as their own if they tried to sell them. The farmers slept in the fields at night, machetes by their sides, guarding their plants through rain, heat, and the buzz of malarial mosquitoes. For many of them, an entire year's income depended on this auction.

It would take place in a simple wood-slat structure about three times longer than the village's typical single-family residence. For most of the year the building was the local schoolhouse. The furnishings consisted of a table, scattered chairs, and a rectangular chalkboard. Outside, hanging under the eaves, was a portable hook scale.

 

One at a time, the farmers entered the hut and emptied their bags of beans onto the floor. Government-authorized inspectors sifted through the beans, making sure they were all suitably large and ripe. They rebagged the beans and clipped the sacks to the scale outside, then logged the weight of each farmer's harvest in a ledger.

 

 

In the dirt yard outside the hut, several dozen men stood in tight circles, watching the weigh-in. They were the buyers, or collectors, as they're called here. Most had arrived that morning, using rafts to get their motorcycles across the river we'd forded.

 

 

The regional markets follow an established protocol, the men explained. After the weigh-ins, the farmers gather together and come up with a per-kilo asking price, then write that figure on the chalkboard. The collectors stare at the number for a while, then huddle up. They rub out the farmers' price and scribble a counteroffer. This back-and-forth is repeated until the figures match. When that happens, the buyers divvy up the beans, collecting however many tons each has agreed to buy. The process can take a day or a week. If this one stretched into tomorrow, most of the farmers and collectors planned to search for a friendly villager with a little extra floor space where they might curl up and sleep.

 

 

The year before, at a market much like this, one collector had gone rogue, forgoing the chalkboard system and negotiating directly with a village chief behind closed doors. When news of the man's attempt to sidestep the protocol spread to the other collectors, he was chased through the village, apprehended, and jailed.

 

This particular sale featured no spectacular foot chases or citizen's arrests. But it had plenty of unexpected intrigue and deception. The business is cruel, humane, comic, tragic, ingenious, and flat-out insane, often at the same time. As we struggled to untangle the drama playing out, we began to suspect that our original goal—to try to understand the vanilla trade—should be secondary. It seemed more important to simply observe this whole business in a particular way: with a sustained appreciation for how incredibly wild global trade, at its most elemental level, actually is.

 

Vanilla orchids are native to Mexico, and for a few hundred years after the Spaniards first brought the flowers back to Europe, no one could get the beans to grow anywhere else. In 1836 a Belgian horticulturalist figured out why: They emerge from the flower only after it's pollinated by one of two rare species of bees native to Mesoamerica. Five years after that discovery, a young slave named Edmond Albius from the island of Réunion (then called Bourbon) realized he could hand-pollinate the orchids by carefully manipulating the male and female parts of the plant. His ingenuity transformed vanilla into a cultivatable crop, and small plantations began popping up all over the world. The orchids seemed to grow especially well in Madagascar, 500 miles due west of Réunion in the Indian Ocean.

Vanilla, in its essence, is an adventure story.

 

For the next 150 years, vanilla played it straight, drawing little attention to itself. By the 1980s, Madagascar was producing about 30% of the world's supply. Government controls kept prices tethered pretty tightly, to around $50 or $60 per kilo for cured beans. “You had some fluctuations, maybe $10 up or down, but it was pretty stable,” says Craig Nielsen, co-owner of Nielsen-Massey Vanillas Inc., a flavor company based in Illinois and the Netherlands that's dealt in the beans since 1907. “Then, under pressure from the World Bank, which they owed a lot of money to, Madagascar was forced to abandon those price controls in the mid-1990s.”

That's when vanilla started to shed its inhibitions. Prices dipped for a year or two. Then, in 2000, a powerful cyclone flattened the northeastern part of the country. It takes three years for a newly planted orchid to produce beans, so harvests waned for the next few years, causing prices to spike, then collapse. International buyers reported that local exporters were asking about $600 a kilo for cured vanilla on a Monday and roughly $20 by that Friday. Warehouses were stuck with beans they couldn't sell for anything close to what they'd paid for them, and a couple of the biggest, most well-established vanilla dealers in the country went out of business.

 

For the past four years, prices have been riding high again, flirting with the $600 mark in 2018 and rarely falling below $400 since. (The going rate this fall was about $420 per kilo.) The spike is sometimes attributed to a 2015 announcement by Nestlé SA that the company would use only all-natural vanilla in its products instead of imitation flavoring. Other companies followed suit. The true impact of the decision is a matter of debate. In the past year, consumers have sued numerous food and beverage companies, Nestlé among them, claiming that some if not most of their vanilla flavoring still comes from sources other than beans. Spencer Sheehan, a New York attorney who's filed suits against more than 25 companies, contends that the flavor is often derived from the “other natural flavors” generically cited in the ingredients lists of various products. The plaintiffs are seeking monetary damages, but none of the suits has yet received class-action status from a judge. Regardless of the validity of those suits, few in the industry say demand for natural vanilla has changed enough to protect prices from another dip. Almost everyone thinks a significant price plunge is a matter of when, not if.

Because northeastern Madagascar is so impoverished when vanilla prices aren't high, banks and other financial institutions don't open a branch near many villages. Farmers are more likely to bury cash under their houses than to put it into an account. The market demands that drive the exaggerated price swings are wholly separate from their lives; almost no one here actually uses vanilla, which is viewed as a product only foreigners consume. The impermanence of cash flow, along with the near-complete disconnect from forces moving the market, means the farmers view international commerce from a much different angle than outsiders might. “Consequently, money in northeastern Madagascar is not perceived as a straightforward, interest-based sum accumulating over time in an orderly fashion,” according to a study published last year in American Ethnologist, the journal of the American Ethnological Society. Annah Zhu, the author of the report, wrote that money in the vanilla-growing region is instead treated as a “volatile material that comes and goes, imbuing the region with fantastical undertones of alternating abundance and dearth.”

That sporadic abundance has generated a new genre of local storytelling, almost folkloric in nature, that catalogs local examples of financial decadence. It's called vola mofana—roughly translated as “hot money” spending—and the tales that illustrate the concept are difficult to verify but easy to repeat.

 

 

It's said that one vanilla farmer was observed buying the entire supply of mangoes from a roadside stand; he paid the vendor 10 times the asking price, then joyfully smashed every piece of fruit on the road. People say chameleons have been spotted skittering wild through villages with money glued to their backs. One vanilla farmer reputedly boiled all his money in a pot and ate the soggy, globular mass. We heard about farmers who had smoked cash, rolling tobacco in it as if the bills were cigarette papers. Zhu, in her journal article, reported that at a festival, a man stepped up to a carnival booth, bought a handful of rings to toss at a cluster of bottles, turned around, and threw every ring in the opposite direction. “This is how you play with money!” he yelled.

 

I wasn't sure whether to believe these stories or not. Most were said to have happened several years ago to people who've since faded into anonymity. And most of the farmers we met seemed frugal, intent on building wealth rather than squandering it. Yet almost everyone has a story like this to tell. Zhu acknowledges some might be more legend than fact, but their pervasiveness makes them meaningful. Her point in gathering and repeating the tales wasn't to dismiss the vanilla farmers and collectors as simpletons dazed by the sudden collision of the modern and the traditional. Vola mofana stories, she says, don't describe an awkward phase of Madagascar's economic development; rather, the profligacy they recount can be considered a “tactical weapon” deployed by residents against the “erratic, nonlinear development that characterizes globalization today.” By treating money so cavalierly—either literally or figuratively—the vanilla farmers diminish the power the modern economic order can exert upon them. Actions that seem to defy logic actually “reflect and often resist the magicalities inherent in modern forms.”

A translation: Maybe it's not the farmers and collectors who've gone off the rails when confronting the modern economic system; maybe what's crazy is the modern system.

Farmers are sometimes told that if they produce better beans, the market will reward them with higher prices. But that's not how it works.

If a crop is projected to be weak and scraggly, buyers get antsy, eager to secure whatever they can get, as soon as they can. The farmers try to satisfy the demand, picking beans earlier than they otherwise might, and the auction dates tend to slide forward. Sometimes an early black market emerges, with beans trading hands under the table before the official markets commence. Prices drive upward, and the beans—picked too soon, with less flavor than mature ones—often turn out to be even worse than predicted. When the crop is expected to be healthy, all of that is turned upside down. The farmers feel less pressure to pick their beans early; they allow the vanilla to mature on the flower and develop a richer flavor, and prices generally tend to stay lower. It's what market economists call a “perverse incentive.”

“The worst vanilla, by far, that I've ever seen in my life was the stuff that sold for $650 a kilo,” says Josephine Lochhead, president of Cook Flavoring Co., a family business in California that's been dealing in vanilla for more than a century. “And the farmers think, Gee, I've worked on these beans for six months, sleeping in the fields through rain, babying them, and this year's beans are much better than last year's beans—so shouldn't I get more money for them than for the terrible beans I grew last year?”

 

The way money moves, traveling from the accounts of billion-dollar corporations and into the hands of the farmers, also follows a logic of its own. Madagascar's largest currency denomination is the 20,000-ariary note, worth a little more than $5. It went into circulation in 2017, a year after vanilla prices shot toward the lofty heights where they yet remain. The previous year, when the 10,000-ariary bill was the biggest to be had, international buyers scrambled at harvest time to get their hands on all they could find. They rushed to the big banks in Antananarivo and bounced around the branches of the northeast, only to be turned away.

Lochhead was one of those buyers. She couldn't figure out what was going on until she saw local reps from McCormick & Co. arrive. The American spice giant had anticipated a price spike and acted faster than anyone else, she recalls, withdrawing ariary by the crateful from banks in the capital, then reinforcing its stash at smaller branches. “No one else could get any,” Lochhead recalls. “We couldn't buy vanilla for three days, until the government printed more money and sent it up here. It was crazy.”

Whenever the price of vanilla spikes and international executives are confronted by Madagascar's infrastructural precariousness, they ask themselves, Why are we subjecting ourselves to this? Wouldn't it be easier to get our vanilla from someplace else?

New vanilla cultivation projects have been introduced nearly everywhere orchids naturally thrive. But vanilla is stubborn. It likes to grow among other plants, and if you try to create a huge, easily managed, monocultural plantation, certain fungal diseases tend to spread quickly. “We've started farms in Fiji, in Indonesia, and we have one in Papua New Guinea,” Lochhead says. Those farms have worked, to a certain extent. “They just don't work as well.” In the Netherlands, teams of horticulturalists embarked in 2012 on a pilot project to cultivate vanilla in greenhouses. Earlier this year they ran out of funding and concluded their crop wasn't financially sustainable.

Connoisseurs describe vanilla from Indonesia as earthy and smoky; from Uganda as chocolaty; from Tahiti as fruity and flowery; from Mexico as hinting of clover and nutmeg. But the Malagasy stuff tastes like what people expect from really good vanilla: rich, sweet, creamy. Those subtleties might help explain, to a fractional extent, why Madagascar dominates the trade.

 

A much bigger reason is cheap labor. Since Madagascar let the free market take over, the country's share of world vanilla production has risen to 80% or more, according to industry experts. The broader price swings are partly responsible for that growth. Vanilla beans are delicate and incredibly labor-intensive, and no part of the planting, pollinating, cultivating, and curing process has been mechanized. Each vanilla bean will be touched by human hands hundreds of times—perhaps thousands—before it's exported.

It's a perfect illustration of the globalized economy's heat-seeking, laser-guided ability to stretch a resource to the limit. For those arguing that globalization is unreasonable and exploitative, the vanilla farmers of Madagascar have become a problem to solve. Various nongovernmental organizations have introduced campaigns to raise wages, stamp out child labor, and direct more profits to the farmers and villages carrying the industry on their back. Many flavor companies have gotten on board, too, creating the Sustainable Vanilla Initiative.

 

[tacobell fan]

Just now, argadorn said:

indi alo vanilla ki usa lo vanilla taste endhuku different ga untadhi 

Example?

[sattipandu]

india lo true vanilla bean dorakadam nenu aythey choodaledhu

all we get in india is vanilla essence and most of the cases its artificially made 

[tacobell fan]

1 minute ago, sattipandu said:

india lo true vanilla bean dorakadam nenu aythey choodaledhu

all we get in india is vanilla essence and most of the cases its artificially made 

because retailers can't afford and customer don't want to pay for the real vanilla price. 

[Spartan]

2 minutes ago, tacobell fan said:

because retailers can't afford and customer don't want to pay for the real vanilla price. 

Costco lo 2 beans ki 29.99 teskuntunnadu.

[tacobell fan]

Just now, Spartan said:

Costco lo 2 beans ki 29.99 teskuntunnadu.

organic vanilla bean aithe just one stick (cut into two pieces) untadhi which costs $8.99 + tax

[Spartan]

3 minutes ago, tacobell fan said:

organic vanilla bean aithe just one stick (cut into two pieces) untadhi which costs $8.99 + tax

idi ripe one anukunta..