Madagascar, the world’s largest vanilla producer, was recently hit by cyclone Gamane, which significantly impacted vanilla crops. The country alone accounts for 80% of global vanilla production, followed by Indonesia, Uganda, Mexico, and others. This recent storm has likely damaged half of the crops, which can seriously impact the vanilla exports from Madagascar.
Over the last 5-8 years, Madagascar’s vanilla export price has fluctuated dramatically. Around 2015, black, non-split Madagascar vanilla was around $100/kg. By 2017, the price had risen to a record high of $635/kg, the highest in recent years. Prices then continued to fall, reaching $305.37/kg in 2020 and $244.81/kg in 2021. However, the recent storm may impact the price scenario, which was expected to fall a bit more this year.
The supply disruption has shifted the focus of the vanilla supply to other regions in order to avoid shortages. The Association of Vanilla Exporters of Uganda Limited (VANEX) plans to take advantage of this opportunity. They claim that Ugandan vanilla matches the quality of Madagascar vanilla, making it an appropriate choice for brands looking to diversify their supply sources.
However, Madagascar Vanilla Company (MVC) disagrees with VANEX’s claims, claiming that the quality of vanilla beans produced in Uganda is inferior and cannot meet consumer demand for high-quality vanilla because their agricultural practices are below industry standards. The Sustainable Vanilla Initiative (SVI) is a collaborative effort to promote sustainable practices and improve livelihoods in the vanilla industry worldwide. SVI agrees with VANEX that having Uganda as a second major vanilla producer could help stabilize global prices and address the challenge of supply disruptions.
Madagascar vanilla is primarily exported to the European Union, the United States, the United Kingdom, and Canada and accounts for approximately 5% of the country’s GDP. There was a surplus of vanilla in the country a little while ago because the government set a minimum price for vanilla exports. However, it did not work out, and the government was forced to remove the minimum export price clause.
All of these geopolitical tensions, combined with environmental setbacks, have thrown the vanilla supply chain into turmoil once again. In a few months, it will become more clear what the future holds. The current supply chain tension between Uganda and Madagascar is expected to persist. Both countries are working hard to meet global vanilla demand and continue to attract vanilla buyers from around the world. Although Uganda faces challenges in convincing the market of its vanilla quality, ongoing efforts and improvements in agricultural practices may tip the scales in its favor.
