Spices Board maintains that vanilla farming is done in less than 5,000ha, while sources at Vanilco, a farmers' organisation, say that the area under farming has come down to less than 1,000 ha with farmers abandoning or neglecting the vines.
Vanilla is used extensively in baking and dairy products such as milk yoghurts, ice creams, deserts, chocolate, cookies, pancake and soft cheeses. Vanilla flavored liquors and beverages are available in the market. In 2006, Madagascar produced 6,200 metric tonne of vanilla, which was around 59% of the globe production. Other top producers are Indonesia, China (1,000 tonne) and Mexico (306 tonne). According to board figures, India produces nearly 300 tonne of processed beans.
Vanilla prices tend to follow a boom-and-bust cycle, closely linked to crop production in Madagascar. Cyclones, which periodically affect vanilla-producing regions of Madagascar, and other disruptions drive prices higher.
Farmers in the south Indian states, especially Kerala, took to vanilla farming after 2000 when prices climbed to record levels mainly due to hurricanes damaging crop in Madagascar. Vanilla prices soared in 2003-04 to touch Rs 20,000 per kg for cured or processed beans. Later, a bumper crop in Madagascar saw Indian processed beans prices dropping to less than Rs 600 per kg. Vanilla prices were languishing below Rs 35 per kg for green beans before various farmers organizations took the initiative to procure, process and market beans domestically.
Vanilco, a company promoted by farmers to process and market the product, took a brave step and procured beans from hassled farmers. The company then took the initiative to market processed vanillin extract in the domestic market. With Amul, Mother Dairy and Kerala-based Milma inking deals with Vanilco to use natural vanilla instead of artificial vanilla in their ice creams, domestic demand slowly revived. The government, too, did its best with procurement efforts and promises to insist on labeling the usage of artificial vanilla in food products. Spike in prices of crude also helped increase the consumption of natural vanilla, as the substitute is made from distillation of crude.
The global supply of vanilla also dwarfs the total demand by more than 700 tones leading to a free fall in prices. With the price of artificial vanilla coming down due to lesser price of crude, demand for the natural products is likely to come under pressure. Prices recovered from the low to touch Rs 135-150 per kg during 2008 but failed to sustain the rally and exports are seen decreasing in the current fiscal. During the first four months of the current fiscal, exports have come down by 62% to touch 45 tonne from 145 tonne during April-July of 2008.
Farmers will find vanilla farming viable once the price touches Rs 250 per kg for green beans, MC Saju of Vanilco said. Some feel that vanilla is on its way to recovery in India after a dismal phase with global demand growing due to increasing affluence of China and India. Increasing consumer awareness on the benefits of natural vanilla could also help stabilise the demand.