Vanilla: Covid-19 acts as a speed bump
November 26, 2020 at 1:10 PM ,
Der AUDITOR
Retail and online sales prevent black vanilla market collapse
Aust & Hachmann report that an unexpected hike in demand for industrial grade vanilla at the onset of the virus has now been partly offset by the impact of the pandemic on food service and tourism. Retail and online sales have, in fact, prevented the market for black vanilla from entire collapse. With arrivals from Indonesia, Madagascar, Uganda and the Comoros coming into the market the price decline in the vanilla market has regained in speed after been temporarily suspended by the onset of the pandemic as a “speed bump”. Supplies simplyoutstrip demand by far.
Market is highly dysfunctional
Although production has certainly grown, the demand situation is raising suspicions. Issue is that natural vanilla flavour is as popular as ever in many food products around the world, which renders it difficult to understand why general demand for vanilla beans is lower than twenty years ago. Although the high volatility on price and quality has certainly put off many buyers, there is no significant reduction in the availability of allegedly naturally flavoured products to consumers. Experts have no doubt that food fraud and labelling deception exist on a large scale. The hitherto unprecedented demand for exhausted vanilla beans and for seeds from already extracted vanilla that no longer have any flavour supports these suspicions. Aust & Hachmann highlights systemic errors on how the market defines natural vanilla flavouring. Several lawsuits filed against leading food manufacturers in the US bear credit to this.
Madagascar generates confusion
Although market prices are now much more sustainable, they are expected to decline further. Buyers are reluctant to make long term commitments and it will take years for demand to revive again. Papa New Guinea has gained in market shares over recent months and smuggling to Indonesia is becoming less attractive. Indonesia has been slow to respond to the new market situation with exporters failing to cut prices. As quality continues to improve in Uganda, the country is on the best way to become an attractive alternative to Madagascar. Much is at stake in the Comoros as the market is having difficulties adapting to the low prices, despite the quality being highly promising. In Madagascar, the government has actively invaded the market by setting a minimum export price of USD 250/kg for the 2020 crop. Market prices, however, range USD 50-100/kg lower.
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