The production of natural vanilla has come to a halt as companies are preferring to use synthetic vanilla, instead of natural vanilla due to a substantial price difference between the two. Synthetic vanilla is much cheaper and considered more useful than the natural version.
Vanilla is mainly used in ice creams and as a flavour for bakery items. Of late, companies prefer synthetic vanilla, thanks to the marked price advantage.
Vanillin, the extract of natural vanilla, costs Rs 20,000 a kg, whereas the price of synthetic vanilla hovers around Rs 1,000 a kg.
Also, the number of farmers engaged in vanilla production fell to 100 from 200,000 during the peak time. A majority of farmers shifted to production of nutmeg and natural rubber.
For eight years from 1999, vanilla cultivation attracted thousands of farmers in the country’s peninsular part, especially Kerala. The wane started from 2007, and on Friday the spice has lost its flavour among growers in the country. Reason: A heavy drop in prices owing to an absence of demand, both in India and abroad.
Strikingly, the country currently has no local market for the spice. Even the Spices Board does not have an idea about the latest production figures of vanilla in India. Officials in the Board say their office maintained no data about the production or sale of vanilla for the past couple of years. “After November 2011, there was no export. During the month, just 160 kg of processed beans were shipped,” a source told Business Standard.
Growers in Ernakulam district of central Kerala, where the cultivation was abundant a decade ago, also have little idea about the present status of their crop. The Vanilla India Producer Company Ltd (Vanilco) says upstate Kannur district has some belts like Iritty where a few farmers are currently engaged in vanilla cultivation. “The crop is also grown in some parts of Karnataka” says Vanilco Director M C Saju. “The combined area (in Karnataka and Kerala) cannot be above 200 hectares at present, as against 5,815 hectares in 2005-06,” he added.
The production of processed beans peaked at 236 tonnes in 2004-05, against a few kg at present. The export was at its peak in 2008-09 — 305 tonnes valued at Rs 26.70 crore, against 210 tonnes valued at Rs 18.25 crore in FY08, said Saju.
The heavy fall in prices of green vanilla beans, coupled with the advent of cheap synthetic vanilla, drained the lucre out of natural vanilla production. Due to a series of crop failures in Madagascar, the world’s largest producer, during the second half of the 1990s, demand for the crop from other countries, including India, increased.
This led to a steady rise in its price. During 2001-02, the global price of vanilla green beans rose to Rs 3,500 a kg. This attracted a large number of southern India’s farmers to vanilla, as happened in the case of cocoa during 1980s. Till 2007, vanilla prices were on a high, but then they began to fall sharply. Towards the end of 2007, the open market price of green beans dropped to as low as Rs 250 a kg. In subsequent years, it fell below Rs 100-a-kg. The current global price is Rs 250-300 a kg, Saju added.
But, compared to synthetic vanilla, the price of the natural variety is still high. Hence, synthetic vanilla is used widely for all applications across the world.
“This huge gap in prices of natural and synthetic vanilla has led to a collapse in the production and marketing of the natural stuff,” Saju said. Natural vanilla is not an essential item; it is only used to add flavour. On the other hand, synthetic vanilla is useful for more than one purpose.
Saju added that the 2003-founded Vanilco still has a stock of 500 kg of vanillin, lying idle for want of demand. In its good times, Vanilco had a contract with Amul, ensuring regular purchase of vanillin. Then Union commerce minister Jairam Ramesh assured that Amul would get the difference between prices of natural and synthetic vanilla as a price subsidy for promoting natural vanilla. But, the government did not keep its word, prompting Amul to back out.
This upset the working of Vanilco and has left it in a bad shape. The entity is now searching a way to clear the stock.