Does Madagascar's Vanilla Industry Have a Sweet Future?
WHY YOU SHOULD CARE
How benevolent can business be?
By Olivia Miltner
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Nathaniel Delafield got to Madagascar in the midst of a languid vanilla market. It was 2005, and it had been two years since the cost of vanilla had plummeted in response to — and in rejection of — inflated prices peaking around $600, in 2003.
Vanilla farmers were feeling the impact. They had other crops to lean on, but vanilla was an important part of their income. And although farmers were susceptible to the whims of the global market, and despite the fact that they were growing high-quality vanilla, they had little say in the trade that linked them to the rest of the world. “It was very, very disconnected from their rural communities, and basically from their lives in rural Madagascar,” Delafield says.
So, while he was working as a Peace Corps volunteer, Delafield decided to start Lafaza, a company that focused on creating long-term, mutually beneficial partnerships between producers and traders while also promoting sustainable social and environmental farming practices.
We’ve seen the industry internationally embrace sustainability as a concept with vanilla a lot more than we ever have.
Nathaniel Delafield, sustainable vanilla producer
Delafield isn’t alone; in an effort to counteract vanilla market fluctuations, the industry has started prioritizing sustainability within their businesses and supply chains. Madagascar vanilla dominates the global market, providing about 80 percent of the world’s supply. This year the price of vanilla has reached record highs. But those involved with the vanilla trade, from farmers to exporters to buyers, recognize that this price peak is part of a pattern of intense highs and lows, which is disruptive and doesn’t create a stable foundation for buyers or farmers. That’s why the industry is emphasizing a more sustainable model, even though questions remain about how far companies are willing or able to go to meet such goals. The Sustainable Vanilla Initiative, whose members represent 70 percent of worldwide vanilla bean purchases, is one pillar of this effort. Big corporates like Unilever, Symrise and GIZ have also joined in to make vanilla production more sustainable. And initiatives like Delafield’s are trying to strengthen the links along the chain of vanilla production to reduce the vulnerability of each stakeholder.
“In the last five years or so, we’ve seen the industry internationally embrace sustainability as a concept with vanilla a lot more than we ever have,” says Delafield. “But … there’s also a lot of questioning of the long-term viability of that approach.”
Cultivating vanilla beans is an intentional and careful process. Each flower must be hand-pollinated, each bean must be hand-picked. Farmers never walk through their fields without making an adjustment, and with a hundred different kinds of trees growing on a quarter-hectare, some fields almost mimic a rainforest, except here, everything is grown on purpose.
The global vanilla market is volatile, but vanilla farming has a long memory, which is part of why many vanilla farmers also grow other crops like coffee, cloves or breadfruit, as a way to withstand market downturns they know will come. They aren’t wealthy; on average, farming vanilla alone does not provide sufficient income. When it’s selling for high prices like it is now, however, vanilla can provide valuable extra funds for families. Apart from sapphires, nothing can really touch it, says Sarah Osterhoudt, an associate professor of anthropology at Indiana University who helped co-found Lafaza with Delafield (the two are now married).
“You have this knowledge and this skill to be a vanilla farmer. It often also brings a better income, so it comes with that status as well,” says Osterhoudt. “It’s something that younger farmers aspire to be, even the younger generations.”
At the same time, the pricing system has become more opaque, says Nicolas Depetris Chauvin, a trade and development economist. This is because Madagascar’s government reduced its involvement in the vanilla market in 1995, leaving companies buying from farmers to determine the price. Additionally, since relatively few companies export Madagascar vanilla, farmers have low bargaining power.
“As a result, margins are distributed unevenly among value chain players to the detriment of farmers,” says Chauvin.
No one is sure how much longer this high price of vanilla will last. The desire for all-natural vanilla, rather than artificial flavoring, has helped demand far exceed supply. But, says Osterhoudt, “people can’t be using vanilla at $600 a kilo to make ice cream.” At some point, they’ll start looking for alternatives.
To withstand market fluctuations better, companies have started to explore how implementing more sustainable practices could help the stability of their businesses.
The Sustainable Vanilla Initiative, a collaboration between companies representing seven-tenths of the world’s vanilla bean purchases, invests in crop diversification at the farm level, “good” agricultural practices and sector professionalization to sustain the vanilla market over time, says Jan Gilhuis Senior, the initiative’s program manager. “The impact of price fluctuations on the market and on farmers’ income can be considerable, and one of our goals and that of the local vanilla sector is to find ways to build more stability,” she says.
In 2016, Unilever, Symrise and GIZ announced a partnership with Save the Children to secure a more sustainable and reliable supply of natural vanilla. The partnership aims to increase understanding of how the vanilla industry impacts children, a topic that received attention last year after multiple reports identified child labor as part of Madagascar’s vanilla production.
But despite the current embrace of sustainability in the sector, companies will eventually look for a balance between sustainable practices that could increase the cost of vanilla and their commitment to their bottom line, says Delafield. “They would like to see … improvements in farmer lifestyles and in their livelihood, but it’s not really what most of those companies do,” he says.
Till then, though, the efforts to create a more stable vanilla market — one that benefits those at all levels of the supply chain — could make vanilla seem even sweeter than it is, to those in Madagascar and around the world.
Learn more about the vanilla trade in Madagascar:
- Olivia Miltner, OZY Author Contact Olivia Miltner