Vanilla: a policy far from advantaging producers

The discount prices imposed for export actually had a double backlash for vanilla producers, namely the decrease of exported quantities and the plummeting prices on the local market. Denounced from scratch by some of the sector’s economic operators, the minimum export price of 27 dollars per kilogram would not have benefited the producing peasant. 

The HAT and the ministry of Trade are currently pointed at for their strategy, far more suited for propaganda than for market realities. To make matters worse, the government’s decision only seems to satisfy the economic interests of a mere handful of exporters. Indeed, the implementation of the discount prices only benefited the scarce operators who have had unsold stocks over the latest couple of campaigns and who are already well connected abroad. 

The exporting corporations which are penalized by the vanilla’s price freezing are questioning the relevance of the Trade ministry’s decision. The discount export price doesn’t leave the operators free to complete their already signed contracts. Vanilla orders prepared before July 07th, 2009 and before the ministry’s decree are actually becoming controversial, because negotiations have been completed before the freezing of prices. 

As to put its entire foot in it, the ministry of Trade froze the price of green vanilla, whereas the picking has ended, and thus it definitely gave the last straw to the market of raw products. Producers as well as exporters are denouncing an excessively restricting regulation which upsets the market instead of developing it. 

The vanilla producing regions have been encountering mixed fortunes since the implementation of the Trade Ministry’s decree. In Sambava, the biggest export societies, whose grip extends over more than three-quarter of the market, are paradoxically feeling left behind by the freezing of prices. They are accusing the regional vanilla platform of taking one-sided decisions which only benefit a minority. 

The economic reality is very different from the prices proposed by the ministry of the Trade. Following the downfall of export orders, the return for producers is plummeting. In Sambava, the kilogram of prepared vanilla is costing 10 000 Ars, less than 5 dollars. In clear words, it is all about sales at a loss because of a high exploitation cost. 

In the Analanjorofo region, the situation is merely better even though the prepared vanilla is traded for 15 000 Ars per kilogram. The concerned region’s chief, Michel Saina, is putting forth a regional re-launch plan centered on micro financing. “Money will be lent to producers so that they are not compelled to sell at a loss and to wait for the market rates to rise again within six months or so”, he said. The Analanjorofo region is standing by the fair trade and the product’s bio certification to kick-start exports again