Financial Daily from THE HINDU group of publications
Wednesday, May 31, 2006
Agri-Biz & Commodities
Spices & Condiments
Industry & Economy - Exports & Imports
Vanilla growers face bleak prospects
Kochi , May 30
A good vanilla crop in Madagascar this year, coupled with increased output in new producing countries, on one hand, and poor demand position, on the other, is likely to put the vanilla growers in a worse situation in the days to come.
Production in Madagascar, the world's largest grower of vanilla, is said to be around 2,000 tonnes against estimated output of 1,600 tonnes last year.
Besides, there would be carry-forward stocks. The global demand last year was estimated at around 1,100 tonnes.
Acreage in countries that began vanilla cultivation in a big way after the prices shot up to around $500 a kg has also increased, pushing up global output.
As such the production in India is also expected to be above 200 tonnes this year against an estimated 180 tonnes last year, market sources told Business Line.
Overproduction at a time when the demand is almost stagnant, without showing any signs of improvement - contrary to expectations - would have negative impact on prices.
REVERTING TO SYNTHETICS
Certain industries that had started using natural vanillin had reverted to the synthetic substitute following the sharp rise in the natural product.
The expectation during the past two years was that the industry would return to the use of natural vanillin and demand would consequently pick up. But that has not happened yet, the sources said.
According to Spices Board sources, the country exported some 75 tonnes of vanilla last fiscal, of which 50 tonnes were accounted for by a Mysore-based NGO.
The international price ruled at $25-45 a kg, depending on the grades. But sales are said to have taken place even at $17 recently, they added.
NO FOCUS ON EXPORTS
An expert in the vanilla cultivation and export trade has suggested that India, with a huge domestic market, does not have to focus on export markets.
The Government should come out with a nationwide campaign to promote natural vanillin in place of its synthetic substitute.
Currently, the use of synthetic vanillin in the country is estimated at over 500 tonnes a year; if a portion of it is substituted, it would create a huge market for the natural product, he added.
According to a recent market study, natural vanilla experiences strong competition at two levels.
Within the vanilla flavour category, there is competition from synthetic vanilla, or vanillin. Vanilla flavour is also in competition with other flavours.
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