Date:04/08/2004 URL: http://www.thehindubusinessline.com/2004/08/04/stories/2004080401221200.htm

Back Vanilla trade pauses for Madagascar arrivals

G.K. Nair

Production this year in Madagascar is estimated to be around 1,300 tonnes of cured beans as against 500 tonnes last year. Low production in that country last year pushed the prices to exorbitant levels of $560 a kg.

Kochi , Aug. 3

WORLD vanilla trade continues to remain at standstill as buyers in the major markets, especially the US, are waiting for the Madagascar crop to arrive in the market.

They expect the price, which has been exorbitantly high, to fall to acceptable levels. Expecting a price decline Mr C.J. Jose, Chairman, Spices Board, told Business Line: "According to most realistic estimates, the price will fall but not to alarming levels."

Spices Board sources said the country had exported only 200 kg of cured vanilla in June at Rs 20,400 a kg. During April-June 2004, exports stood at 8.66 tonne valued at Rs 18.30 crore with an average unit value realisation of Rs 21,135.03 a kg. It was 5.71 tonne during the same period a year ago valued at Rs 5.89 crore and the unit value was Rs 10,310.33 a kg. There were not fresh orders and the exports in April- June were against orders of last fiscal, they said.

According to them, production this year in Madagascar is estimated to be around 1,300 tonnes of cured beans as against 500 tonnes last year. The low production in that country last year pushed the prices to exorbitant levels of $560 a kg. Harvesting has begun in some areas and exports are expected to commence in August-September.

The sources said the world vanilla trade has gone up to 2,300 tonnes currently. The major buyer of cured vanilla is ice-cream industry in the US, and it is mandatory for them to use natural vanillin in a particular category of ice-cream they produce. Besides, labelling regulations are also in force there.

With the price of cured bean crossing Rs 20,000 a kg, the price of vanillin extracted from it had gone up substantially making the end product unaffordable to the consumers, a senior official of a multi-national processor exporter said. As a result, some of the "big buyers have defaulted while some have backed out", he said. Many manufacturers of ice-creams, who had resorted to using natural vanillin, have now reverted to the synthetic product.

There had been a shortage in the world market following increased use of natural vanillin by the food industry in developed countries, especially in the US, he said.

The Indian exports of cured vanilla in 2003-04 stood at 26 tonnes valued at Rs 36.06 crore as against 25 tonnes worth Rs 22.26 crore the previous year. The target set for the current fiscal is 50 tonne valued at Rs 65 crore.