Vanilla production in the country has fallen in the last few years because of dwindling domestic and export demand. Domestic consumption of natural vanilla has failed to take off even after promotional campaigns and concerted efforts by the Centre.

With ice cream manufactures like Amul and Mother Dairy stopping procurement of natural vanilla from Vanilco, the domestic market has eased a lot.

Vanilco, the company promoted by the farmers to process and market the product, is saddled with 12 tonne of vanillin extracts and facing huge debt problems.

Farmers in the south Indian states, especially Kerala, took to vanilla farming after 2000 when prices climbed to record levels mainly due to damage to the crop in Madagascar, the world’s largest producer of the commodity, because of hurricanes. 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 prices dropping to less than Rs 600 per kg for processed beans.

After the initial euphoria over huge returns from vanilla farming, farmers who invested heavily in vanilla had to encounter a market where they could not sell their products. ?Domestic demand has not increased despite safety and goodness of consuming a natural product. Our efforts to sell packaged vanillin extracts have failed. Ice cream manufacturers are also wary of the cost factor,? MC Saju of the All Kerala Vanilla Growers Association told FE.

Amul had a contract with Vanilco in 2008 to procure 20 tonne of vanillin for its ice cream division, which they stopped in 2009, he said.

Kerala State Milk Marketing Federation, which manufactures ice cream under Milma brand name, consumes small volumes of vanillin and the rest of the manufactures didn’t show any interest in the natural extract.

India imports around 1,000 tonne of synthetic vanilla every year and Saju feels that even a small shift of 10% of synthetic vanilla users to natural vanilla will go a long way in addressing the problems faced by growers.

Exports are very price sensitive and largely dependent on Madagascar and crude oil price. India exported 200 tonne of vanilla during 2009-10 as against 305 tonne in 2008-09.

A spike in price of crude oil increased the production cost of synthetic vanilla and relative demand for the natural vanilla in the global market.