History of Vanilla Prices and Vanilla Trading Markets – Madagascar and Global
The vanilla prices of Madagascar vanilla have not tracked or tagged to broader macroeconomic trends so much as to simple food and beverage trends and responses to price distortions and protectionism and political drivers within the island.
Escalation in prices is routinely incited by the Mada government or hoarding collection houses and momentum usually then snowballs in frantic buyups by end users and traders, and grow-ops by speculators and surrounding vanilla countries.
During the first decade of Malagasy independence from France there was generally a government buying monopoly and the breakdown of benefits accrued rather naturally and was negotiated vertically to give farmers a fairer share, more than a quarter to a half of real profits of the vanilla. The government and traders (“statists” and “capitalists” as they accused each other of being to poke politics) steadily convoluted and watered down the equity with licensure rent-seeking from there, and metastisized into a giant mess by the time half a century had gone by.
Farmers under communism got less, not more benefit from vanilla, which sucked the motivation out of quality control there like a vampire, and after the collapse of the Soviet Union the free market reinvigorated incentives in Madagascar while the central government tried to seize them by their neck on the way out to foreign flavorers. It is a fantasy that farmers (at least wise ones) plant in anticipation much less in response to current prices, as vanilla plants need 4 years in most cases to actualize into finished pods, and farmers may as well play the lottery than try to figure out what prices will be in that timespan in an ROI sense.
Therefore, 1 year cycles are the max horizon for most local Malagasy, even those with decades of experience, trying to play the market for vanilla. Farmers need and nestle a stoicism over an otherwise stressful life and hope for the best price, while traders and collectors travel around the countryside collecting and collaborating with the export houses to talk the prices down to their fairweather friends in the farmgates.
The 2024 trench had beans at barely $10 at the nadir while peaks could head towards $1000 again, and the timing of a buy or sell syncs with a yearly cycle. As trying to preempt over 2 years is many a fool’s death in the industry.
So when Malagasy prices are too high, you see even more planting outside of Mada, all of which will help ensure that they don’t stay up there. Virtually every actor you talk to who benefits from the crop at any angle will try to give you an excuse of why the price won’t go down, might not go down, or might go up, or will go up. The reasons will always accrue to climate, regulation, or yield as reason for rises. They won’t typically point to demand reasons, as they can’t obscure or make up too much conjecture in those arenas.
