08 Jul 18 Vanilla’s high cost spells trouble for Madagascar
These days, vanilla theft is a big business in Madagascar. That may seem like a distant problem, but its repercussions are likely to be felt at across the globe….
Climate change, crime and speculation mean the price of the fragrant spice has skyrocketed from $20 a kilo five years ago to $515 in June.
Ice-cream makers, for instance, are faced with the agonising choice of raising prices, pulling vanilla ice cream from the shelves, or even — to the horror of many — replacing real vanilla with a synthetic version sourced from petroleum products.
An innovative new program, spearheaded by some of the world’s biggest vanilla buyers, is tackling the problem head on by reducing theft, educating farmers, and making crops more resilient to the ravages of climate change.
The aim is to stabilise the price of vanilla so that farmers will keep growing, and companies will keep buying.
Evolutionarily speaking, vanilla should have died out long ago. Now farmed far from its native Mexico and the bees that evolved to fertilise it, vanilla orchids have to be pollinated by hand in a time-consuming process — the small white flowers bloom once a year, for one day only.
Then it takes another nine months for the fruits to mature into pods, which then have to be cured for several more weeks in alternating baths of steam, sun and shade before they can be incorporated into your favourite vanilla ice cream.
A byword for boring, vanilla tends to be taken for granted. Yet without it cookies lose their zing, milk chocolate its fragrance, crème brûlée its flare and Calvin Klein’s Obsession its sweet, earthy base.
And without vanilla, some 80,000 farmers in Madagascar, which supplies 80% of the world’s crop, would lose their livelihood.
In a stark warning of climate change to come, a pair of tropical cyclones wiped out much of 2017’s Madagascan crop, sending prices higher than $600 a kilo. But higher costs don’t necessarily benefit the small family farmers whose futures depend on the fickle fruit.
At a dollar per bean in one of the poorest countries of the world, farmers have had to contend with vanilla thieves who snatch the just-before-ripe pods straight from the vines knowing that they will fetch a decent price even if green.
To counter the theft, farmers harvest their own crops early, flooding the market with low quality beans that lack the intense flavour that only emerges just before the mid-July harvest. As a result, the quality plummets and so does the price.
Farmers tear out their vines in frustration, then scarcity pushes the price up again, creating a vicious cycle of vanilla boom and bust.
In terms of cost, vanilla is easily the most volatile spice on the planet, says Gilbert Ghostine, CEO of Firmenich, the Swiss fragrance and flavour house that buys around 300 tons of vanilla a year—more than a tenth of the global supply.
That volatility is putting vanilla’s very future at risk
“When the price is at $20, you have lots of farmers who say, ‘I’m not making money out of this. I’m walking away.’ And when it’s at $600, you have lots of companies saying, ‘I don’t want to use natural vanilla anymore because I can’t make money.’ The last time the price of vanilla spiked, to $400 a kilo in 2003, nearly 30% of buyers turned to vanilla substitutes and synthetic flavouring,” says Dominique Roques, Firmenich’s vice president for natural flavours.
The market for real vanilla eventually recovered, but continued fluctuations are making food companies wary. It’s not easy to reformulate recipes, and changing labels is expensive.
All but the most die-hard vanilla ice cream aficionados would have a hard time telling the difference between real vanilla and artificial flavouring, at least until they turn the container around and start reading the ingredients.
“Real vanilla is a luxury that needs to be preserved at the source.” Gilbert Ghostine, CEO of Firmenich
That just may be the lifeline for Madagascar’s farmers. Consumers are increasingly demanding natural products in their food, says Roques, and ‘vanillic aldehyde’ doesn’t necessarily sit well with someone about to pay eight dollars for a pint of vanilla caramel swirl.
Which is why French food purveyor Danone, French utilities company Veolia, Firmenich and Mars Inc are investing $10-million into the Livelihoods Fund for Family Farming, an impact investment fund that will, among other things, stabilise a crop that most people don’t even think about.
It’s part of an emerging trend among food companies to streamline their supply chain, knowing the importance of being able to tell consumers that the ingredients in their products are not only natural and pronounceable, but also that no humans were harmed in the process of procuring them.
“It is absolutely critical that our supply chains are sustainable,” says Victoria Mars, a member of the Board of Directors for Mars, and a fourth generation member of the Mars family.
“If we don’t have the raw materials, we can’t make our products. If our farmers are not able to make a decent living, we won’t have the raw materials we need….”