How to Figure out Madagascar Vanilla pricing year to year
The goal of Madagascar vanilla planters, farmers, co-op heads, co-op collectors, regulators, and exporters (notice the order) vs and opposed to traders, in-house collectors, importers, and end users is always to try to get the world market price for vanilla pumped and held high.
For taxable influx and inflows for regulators and exporters alike, high prices are going to be the implicated message of most press from these actors in the chain. Their stance is to keep farmers and production healthy and happy enough, and optics of ESG managed to still max out the control and cash they can frack out from the layers of this along the way.
Generally, if you’re buying vanilla for resale, or repacking for e-sale, then you are also concerned about how much you can make as a margin. Whatever the case, and whatever layer you buy from, the price is the only direct experience you’ll have as a reseller and retailer. None of the vanilla e-commerce managers and brands in the shop in general have any exposure to the issues or locals on the ground, and are chiefly concerned with price value. The farthest base mechanism of the price in Madagascar is really the local market price of green vanilla.
The pricing of vanilla in the world market and what green vanilla growers ask is an amalgam of:
- World demand and median offer opener prices from buyers
- Farmgate green asking prices and friction with collectors prices
- Export tax and regulatory friction or fake fixed prices for outgoing beans.
- Quality and Ethics of curing to an anti-fungal ability and final state of beans
- Where in the 1:5 or 1:7 green:black ratio beans are dried to
- Cost of land transport or plane transport from Sava and Diana to Tana
- Cost of outbound airfreight to Paris, Turkey, Dubai, and Tokyo mainly
- Perceived gross annual harvest in tons of vanilla that year
- Actual gross annual harvest in tons of vanilla that year
- Hoarding behavior of local and foreign collection stockhouses
The price of other nations vanilla doesn’t influence the up or down trajectory of world market prices to date much. Madagascar, for better or worse, still seems to set the bar in their pricing hardball with the world flavor industry.
The best approach to gather actionable intelligence on vanilla prices is generally to take 3rd party local outsiders (Eg: girlfriends or families or boyfriends or local canned goods merchants in town, or car mechanics on the main entry-roads, etc) of vanilla industry strata. Wise vanilla collectors plant informants among calibrage and triage staff. They even recruit Sava’s local circuit’s truck drivers and collectors/exporters school friends, visit the local fokantany/functionary for notifying their sales, look into activity in rental storage contracts, and check the tribunal and town gossip for witnessing or officiating written agreements between sellers and buyers. The vanilla coast is small, and news travels fast up and down and around the great forest. Intelligence and reconnaisance from direct & agent-plant recon on the ground is reliable.
You can’t regularly if ever gain optics on what’s going on in the markets here from reporting (revising) players who make money from vanilla. If they are not in Sava physically, they do not know what they are talking about and are trying to make money from a remote jungle they don’t understand and don’t export from themselves. They don’t take the price to” pass on to you,” but make a price for profiting on you and add on average 20-40%, especially if they are importers or foreign traders.
For example, a certain company beginning with an “A” still makes a large report every spring that editorializes what they think their own customers should think about vanilla buying…which is a bizarre conflict of interest and would seem bias to say the least.
Price stability and strategy for the world food and beverage industry can’t be ameliorated or even assisted much by intervening non-profits and international monitoring organizations, nor by development cooperation and grants from Asia and the Americas. The fundamental driver for vanilla cultivation is the demand in real dollars per weight, the raw amalgamated offer (in median terms) from the world who will use this flavor. Nobody, even the best intentioned of the NGOs and buyer alliances, working in communities or schools or in ports or parliaments in Madagascar, can influence world demand and outdue prices that formulate organically outside.
Even when NGOs and international buyer and exporter alliances tinker with supply and frustrate forward sale and movement out of the island, fix price floors on paper for the people here, or make farm families better off/better able to grow and guarantee a theoretical standard of vanilla, they only create illusions of work and wage codes on vanilla, not real rates. All of the industry in the bush quickly and smartly adapts ways to dawn the marketing optics but drive profits at the expense of those who aren’t able to display these ineffective ruses.
Multiple motivations have been applied to help “stabilize” prices and protect farmers “welfare,” by somehow, the story goes, pushing prices high. All such cynical and doomed systems have not worked in history so far. Demand comes from outside the island, and if it’s there and numbers are square, the vanilla coast and all the wonderful workers here will always be merrily motivated to work, to better their own simple yields and real revenues, push hard for making profits in the global economy of the flavor, and they will always meet it without anybody “telling” them too. Vanilla will be cured if demand is secured. That’s it.
