Madagascar Vanilla Output May Fall on Prices, Low Crop Cycle

Vanilla output in Madagascar, the world’s second-biggest producer of the flavorant, may drop 29 percent this year as plummeting prices cut plantings and amid disease and a low crop cycle, an industry official said.

Output may decline to 1,000 metric tons this year and remain at that level in 2011, compared with 1,400 tons last year and 2,000 tons in 2008, said Nissi Randriamanana, a director of Vanille Mad SA. The company is a unit of Trimeta, the Antananarivo-based vanilla-trading company that handles 30 percent of shipments of the crop, according to Randriamanana.

International prices have slumped to as low as $15 per kilogram (2.2 pounds) on international markets, compared with $500 per kilogram in 2004, leading the country’s 80,000 vanilla growers to plant other crops such as rice, Randriamanana said in an interview on Dec. 1.

“Growers have been discouraged from planting vanilla due to weak prices,” he said. “The market is very uncertain.”

Madagascar produces a third of the world’s vanilla, according to the Food and Agricultural Organization’s website. The crop comes from the only edible fruit produced by the orchid family of plants. Companies including Coca-Cola Co., the world’s largest soft-drink company, and Danone, the biggest yogurt maker, use vanilla from the Indian Ocean island nation. The flavorant is also used in perfume.

Madagascar is at the end of a four-year crop cycle when production usually declines, Randriamanana said. Plantings have also been curbed by fusarium, a disease that contaminates the soil around plants and prevents cultivation of crops, he said.

Artificial Vanilla

The U.S. accounts for 70 percent of Madagascar’s vanilla shipments, while Europe imports about 20 percent and Japan 10 percent, Claude Andreas, head of the country’s Vanilla Grower’s Association, said in an interview. The group is lobbying for more regulation of the industry to stop “a phenomenal quantity of products” using artificial vanilla, while claiming they use natural ingredients, he said.

“The challenge will be to promote natural vanilla and point the trend toward quality,” Andreas said. “Everyone says they use 100 percent natural vanilla, but this is a masquerade; either they don’t use any or they use very little.”

In September, Ben & Jerry’s Homemade Inc., a unit of Unilever, agreed to phase out the use of the term “All Natural” for ice creams and frozen yogurts that use processed or artificial ingredients, the Washington Post reported in September.

Trimeta wants the authorities in Madagascar to start branding the country’s output “to protect the geographical identity of Madagascar’s vanilla so that other countries stop claiming they are using it in their products when they don’t,” Randriamanana said.

Vanilla makes up 4.2 percent of Madagascar’s exports, according to the Trade Ministry. Shipments generated 84.8 million ($40.9 million) ariary in 2009, compared with 90.8 million ariary a year earlier, according to the ministry.

Indonesia is the world’s biggest vanilla producer, according to the FAO.

To contact the reporter on this story: Hannah McNeish in Antananarivo via Johannesburg at pmrichardson@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

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