Crop revival erases vanilla price controversy

Kochi, March 27 | Updated: Mar 28 2005, 06:01am hrs
The raging controversy over the fall in vanilla prices, with even former Prime Minister HD Deva Gowda joining the bandwagon, appears to have fizzled out as the revival of the Madagascar crop has pulled down prices internationally.

Mr Gowda had over a month back written to the agriculture minister Sharad Pawar that vanilla farmers were facing marketing problems artificially created by unscrupulous traders/multinational companies with the help of the Spices Board.

The statement by the Spices Board that Rs 150 per kg was viable to farmers, had helped traders procure vanilla beans at very low prices, irrespective of the international price, he had said.

When asked about the matter, the board chairman CJ Jose told FE that the cyclones in Madagascar during 2003, which destroyed crops, had led to a windfall with prices zooming to as high as Rs 4,000 a kg for green beans.

However, the situation was different now with price corrections occurring at the international level and it was tending to go to realistic levels.

He contended that the whole argument was baseless as Mr Gowda had been cleverly misled by a section of the growers, based on which he dashed off the letter.

The basis of the letter was a study by Karnataka-based Natural Vanilla India chairman C Gopinath, that was contrary to facts. The figures were highly distorted and exaggerated.

Also, the study had claimed that in Madagascar, green beans were being sold at $70 a kg during the current year when it was less than $2, Mr Jose said.

The board had, after the high prices in 2003 and 2004, made it clear that these prices were artificial and not likely to last. Incidentally, Mr Gopinath had advised farmers otherwise and green beans, which then could have been sold at nearly Rs 4,000 a kg in 2003, were held back for the next season.

This was when most expected a bumper crop in other origins, particularly in Madagascar, and a consequent sharp decline in international prices, Mr Jose said.

The curing and conditioning of green beans took between four and six months. The beans harvested in November-January in India were not ready for export till the following June or July. The Madagascar crop reached the market earlier.

The highest price realisation during 2004 was $502.11 in April 2004 and there was a steady decline to $60 in September and $40 in November. Also, all Indian exporters, who paid the prevailing prices of 2003 for green vanilla beans, would have suffered heavy losses while exporting processed beans, owing to falling prices of vanilla in the international market.

This was one of the reasons why many of them kept away from the market in 2004 or till the Madagascar crop position and prices prevailing there were known.

According to official figures available from the US, there has been a consistent decline in prices since May 2004 much before the harvesting season in India.

Mr Jose said it must be noted that abnormal international prices in 2003-04 had driven demand for vanilla beans downwards. While the US imported 1,404.8 tonnes of cured beans during January-November 2003, this declined to 613.9 tonnes during the corresponding period in 2004.