Madagascar Vanilla

Vanilla is produced from the Vanilla planifolia plant, requiring a labor-intensive process to cultivate and harvest. The vanilla flower blooms only once a year and must be manually pollinated within six hours of blooming to produce a vanilla bean. After nine months, the beans are harvested and undergo a lengthy curing process to develop their distinctive flavor. Farmers, who often live in significant poverty, face numerous challenges, including rampant theft due to the high value of vanilla and the impacts of climate change, such as cyclones that can devastate crops (Sukamto and Pirard, 2019; Fairtrade Foundation, 2019).

The vanilla supply chain begins with small-scale farmers in Madagascar who hand-cultivate and harvest the vanilla beans. These beans are sold to local middlemen or cooperatives, who then process and cure them. The cured beans are sold to exporters who prepare them for the international market. International buyers, including major food and flavoring corporations like Nielsen-Massey and McCormick, purchase the beans. Vanilla is then processed and incorporated into various products, such as ice cream, baked goods, beverages, perfumes, cosmetics, and pharmaceuticals, before reaching retail shelves in Canada (Vanilla Exporters Association of Madagascar, 2020).

The power balance is heavily skewed in favor of multinational corporations that hold extensive purchasing power and market influence. Despite high global prices, farmers receive only a small fraction of the value, with most profits captured by intermediaries and corporations. Factors such as market access limitations, lack of bargaining power, and multiple intermediaries contribute to this disparity. Multinational companies, like Nestle and Unilever, can dictate terms and prices, often to the disadvantage of farmers, who remain vulnerable to exploitation and market volatility (Fairtrade Foundation, 2019; World Bank, 2019).

In order to mitigate the exploitation and market volatility, it is important to recognize the need for policy reforms. Here are some recommendations: encouraging and supporting the formation of cooperatives among vanilla farmers can significantly enhance their bargaining power. Cooperatives allow farmers to pool resources, share knowledge, and collectively negotiate better prices with buyers, bypassing some intermediaries that typically take a large share of the profits.Multinational corporations involved in the vanilla supply chain should adopt ethical sourcing practices that prioritize the well-being of farmers. This includes establishing long-term contracts with fair prices, providing support for sustainable farming practices, and ensuring transparency in pricing and sourcing. When corporations commit to ethical sourcing, they can help stabilize the vanilla market and provide a more predictable income for farmers. Long-term contracts with fair pricing can protect farmers from the sharp fluctuations in vanilla prices, reducing their vulnerability to market volatility. Additionally, by supporting sustainable farming practices, corporations can help mitigate the environmental impacts of vanilla production, promoting biodiversity and reducing deforestation. Ethical sourcing also enhances a company’s brand reputation, as consumers increasingly demand products that are sourced responsibly and contribute to social and environmental sustainability.

Economist. (2018, March 28). Why there is a worldwide shortage of vanilla. The Economist. https://www.economist.com/the-economist-explains/2018/03/28/why-there-is-a-worldwide-shortage-of-vanilla

Fairtrade Foundation. (2019). The challenges facing vanilla farmers. Fairtrade Foundation. https://vanillaqueen.com/fair-trade-vanilla/

Mordor Intelligence. (2023). Vanilla bean market – Growth, trends, COVID-19 impact, and forecasts (2023-2028). https://www.mordorintelligence.com/industry-reports/vanilla-bean-market/market-trends

Sukamto, P., & Pirard, R. (2019). Challenges in the vanilla value chain: A critical review. CIFOR. https://vanillafair.com/challenges-and-opportunities-in-the-vanilla-trade-from-madagascar/

Vanilla Exporters Association of Madagascar. (2020). Vanilla production and export in Madagascar. https://vanillaqueen.com/fair-trade-vanilla/

Vanilla Fair. (2021). Challenges and opportunities in the vanilla trade from Madagascar. https://vanillafair.com/challenges-and-opportunities-in-the-vanilla-trade-from-madagascar/

World Bank. (2019). Madagascar economic update: Addressing the high cost of vanilla. World Bank. https://news.mongabay.com/2021/12/new-flavor-of-vanilla-farming-aims-to-stop-deforestation-in-madagascar/