Increasing domestic demand may prop-up vanilla prices

Written by Rajesh Ravi | Kochi, Jul 30 | Updated: Jul 31 2008, 05:55am hrs
With supply down by a half and domestic demand on the increase, vanilla prices are likely to firm up in the coming days, traders said. Procurement efforts by the State Trading Corporation (STCL) and farmers co-operatives have helped in the recovery of the depressed vanilla market.

Traders estimate a decent increase in the price of green beans from the present Rs 60-70 per kg.

Paul Jose of Vanilco, a farmers' collective, says that efforts of the company in promoting domestic consumption is bearing fruits. Vanilco is all set to resume procurement in October after a gap one year, Paul Jose added.

The major factor in the trade dynamics has been the drop in supply, with farmers neglecting the crop with prices staying low. Production in the last harvest season slumped to 600 tonne, a decrease of 40% on year-to-year basis.

The area under vanilla farming has already come down from 4,000 hectare to less than 1,000 hectare, after prices slumped to less than Rs 600 per 1 kg of processed beans from a high of over Rs 20,000 per kg in 2003-04 (Apr-Mar).

Vanilla prices soared in 2003-04 mainly due to a hurricane-damaging crop in Madagascar, the world's leading producer of the commodity.