The Hindu Business Line : Rising demand may bring back flavour to vanilla

A POSITIVE trend has begun to emerge in the global vanilla market with an increase in demand, albeit slowly, giving an indication that the price for A-grade cured vanilla beans might move up to $35-45 a kg in 2006-07.

Given the current trend, the demand is likely to be 800-1,000 tonnes of high-quality beans this year, market sources told Business Line. Sources saidthe ice-cream industry and other users had started reverting to natural vanillin, which has activated the market. But, their first preference would be for Madagascar vanilla.

Unlike in the past, quality conscious is high this time. Not only the vanillin content is the criteria now, but buyers are also looking into high flavour profile, they said.

Madagascar, the world's largest producer of vanilla, is estimated to produce 1,400 tonnes this year, while others such as Indonesia and Papua New Guinea are also projected to have a good crop.

Domestic production is estimated at 200-220 tonnes. Since the demand is picking up slowly there is a possibility of the prices moving up, they claimed.

However, the sources said growers should not overspend on the crop.

The current prices prevalent in Madagascar is $25-30 a kg and according to the sources, the growers there are reluctant to sell below this level. However, the trend in Papua New Guinea is different, where the farmers grow vanilla as a mix-up crop, and are offering at low prices.

The buyers in the world market were inactive, as they had been waiting for the Madagascar crop to hit the market this month, industry sources said.

They also projected the demand for natural vanilla in the world market this year at less than 1,000 tonnes against the estimated production of 2,200 tonnes, as the major buyers in the US are yet to become active in the market.

The marginal increase in demand indicates that the major buyers in the world market, mainly in the US, have depleted the stock. Given this trend "the price might stabilise at remunerative levels in 2006-07," they predicted.