With the price skyrocketing, farmers in Madagascar, the industry’s epicenter, are sleeping in their fields, hiring guards; ‘there are many vanilla thieves here’

Gérard Mandondona on his vanilla plantation in Ambodiampana, Madagascar.

Gérard Mandondona on his vanilla plantation in Ambodiampana, Madagascar. PHOTO: ALEXANDRA WEXLER/THE WALL STREET JOURNAL

By Alexandra Wexler

Dec. 14, 2017 10:18 a.m. ET

2 COMMENTS

AMBODIAMPANA, Madagascar—Just before the sun dips below the tree-covered hills around the Malagasy jungle, Gérard Mandondona treks up the near-vertical slope of his 5-acre wild garden. He’s there to inspect his most valuable crop of some 2,500 vanilla orchids.

Earlier this year, he hired a guard to keep watch over the vine-like plants, which intertwine among coffee, banana and clove trees. Some nights, Mr. Mandondona joins the guard at his post under a makeshift tent of blue tarp, with a fire going nearby to frighten off potential thieves.

Your Passion for Fancy Vanilla Ice Cream Is Creating World-Wide Havoc

The process of making vanilla has become anything but plain. Driven in part by Americans’ increasing taste for natural products, the price of vanilla has grown sixfold over the past three years. That’s wreaking havoc on Madagascar, the Indian Ocean island about 9,000 miles away that’s at the center of the approximately $1.75 billion market for the world’s most popular flavor.

Vanilla bandits are plundering pods, which at about $600 a kilogram are now more valuable than their weight in silver and come second only to saffron in the spice price rankings.

Farmers, who must hand-pollinate each orchid on the single day it flowers, are responding by harvesting early, reducing the quantity and quality of the vanilla.

Vanilla beans are sorted at Sahanala, a vanilla exporter, in Vohemar, Madagascar.

Vanilla beans are sorted at Sahanala, a vanilla exporter, in Vohemar, Madagascar. PHOTO: ALEXANDRA WEXLER/THE WALL STREET JOURNAL

Some, like 50-year-old Mr. Mandondona, who had thieves steal vanilla from his vines in April, have hired guards or spend their nights sleeping in their fields. On at least four occasions this year, farmers have killed thieves caught stealing vanilla from farms or houses, according to a local government official in Madagascar’s vanilla-growing region of Sava.

“There are many vanilla thieves here. Before, they’d steal one plastic sack, now they steal on a bike” stacked high with sacks, said Mr. Mandondona, who has spent the past three decades farming vanilla. “It is a big problem. If there’s no security, we can’t make vanilla work.”

Some communities, including Ambodiampana, whose neat wooden-slat houses materialize out of the thick, green jungle on either side of a wide tar road, have created village defense forces, which are staffed by the strongest men. They are trained by the local gendarmes to guard access to the area and bring thieves in to the authorities.

The mayhem in the Malagasy jungle, where about 80% of the world’s vanilla is grown, is spurred by some of the world’s largest packaged-foods companies, which are increasingly using natural—rather than artificial—vanilla flavor in chocolates, ice creams and baked goods. Natural vanilla flavor is now used in products including Nestlé SA’s Crunch bars, McDonald’s Corp.’s vanilla soft serve and Hershey Co.’s Hershey’s Kisses.

In 2017, the market for U.S. vanilla imports jumped to $402.4 million through October, from $232.8 million during the same period in 2016, after more than doubling in 2016 from the previous year, according to the U.S. International Trade Commission and the U.S. Department of Commerce.

This year, the increase in price for natural vanilla was compounded by a March cyclone that hit the northeastern vanilla-producing region of Madagascar, which fueled buyers’ worries about shortages.

Inside Hershey Co.’s Chocolate World visitor center in Hershey, Penn.

Inside Hershey Co.’s Chocolate World visitor center in Hershey, Penn. PHOTO: LUKE SHARRETT/BLOOMBERG NEWS

Food manufacturers “have mostly forgotten that the production of vanilla in Madagascar is a craft work that cannot withstand a high world demand,” says Jean Christophe Peyre, director general of Flor Ibis Sarl, a vanilla producer, processor and exporter based in Vohemar, Madagascar.

Vanilla orchids first arrived on Madagascar, more than 250 miles off the coast of southeastern Africa, in the early 1800s, brought by the French from the plants’ native Mexico. But Madagascar lacked the native bee that facilitates pollination in the Americas. It took several decades until a slave boy on the neighboring island of Réunion figured out how to hand-pollinate the vanilla plants using a technique that farmers still employ to this day.

Vanilla is now the island’s top export, though Madagascar remains one of the world’s poorest nations, ranking 158 out of 188 countries on the United Nations Human Development Index.

Packaged-foods companies are increasingly using natural—rather than artificial—vanilla flavor.

Packaged-foods companies are increasingly using natural—rather than artificial—vanilla flavor. PHOTO: ISTOCK

Vanilla plants are the only fruit-bearing orchid and it takes them about three years to start producing beans—one reason why supply is lagging demand. The orchids must be watched closely, not only because of theft but also because each flower blooms for only one day. If it isn’t pollinated during that narrow window, the flower wilts and dies. About nine months after pollination, farmers pick the green pods and dry them in a complicated process that includes blanching the beans, sweating them and drying them in the sun, generally over another three to six months.

“Think about trying to keep your house orchid alive at home,” says Benjamin Neimark, a lecturer at Lancaster University in the U.K. “Now try keeping that alive in the middle of a fairly difficult rain forest.”

Plain Gains

Average price for vanilla

$600

After 1993,

open market

was enforced

by World Bank.

500

400

300

From 1970 - 1993,

official export

prices were set by

the government.

200

100

0

’90

2000

1971

’10

’17

’80

Source: Nielsen-Massey Vanillas

Vanilla farmers receive a fraction of the jump in prices for their produce, with much of the profits staying with middlemen, who buy the pods and then sell to exporters. Farmers in Ambodiampana said they get about $200 a kilogram for their beans, about one-third the market price. In the hope of shielding them from thieves, farmers have been picking their beans before they’re ripe, which drastically reduces the amount and quality of the vanilla that they yield.

“We are afraid to leave our vanilla in the field,” said Gaspard Kola, a farmer from Ambodiampana who has been growing vanilla since 1958, when he was 17 years old. Earlier this year, as the harvest was ramping up, Mr. Kola fell ill and had to go into the regional capital, Sambava, for treatment. While he was there, thieves stole dried and freshly picked green vanilla out of his house. He plans to hire guards to watch his crop next year.

It normally takes 5 to 6 pounds of green vanilla beans to make 1 pound of cured beans, says Craig Nielsen, vice president of sustainability at Nielsen-Massey Vanillas Inc., a family-owned manufacturer in Waukegan, Ill. If they are picked early, it can take 8 to 10 pounds.

Vanilla beans are dried on tables in the sun in Vohemar.

Vanilla beans are dried on tables in the sun in Vohemar. PHOTO: ALEXANDRA WEXLER/THE WALL STREET JOURNAL

The surge in prices isn’t unprecedented. In 2004, a cyclone made a direct hit on the vanilla-growing regions of Madagascar, causing extensive damage to the crop and driving the price from about $25 a kilogram to more than $500 a kilogram. Once the crisis passed, prices fell back to below $50 a kilogram.

For now, smaller retailers like artisanal bakeries and gourmet ice-cream makers are feeling the pinch more acutely than their mass-market peers—they require higher-quality vanilla and the beans make up a much higher percentage of their costs.

Katie Burford, the owner of ice-cream shop Cream Bean Berry in Durango, Colo., estimates the price she pays for vanilla has quintupled from a few years ago. To cut costs, Ms. Burford scaled down on the number of vanilla beans she puts in her ice cream. She hasn’t raised prices, because she worries they’re already at the high end of the market: A regular-size cup costs $3.78, excluding tax.

“We’re really hostage to the prices, because it’s so intrinsic to what I do,” she says. “I just don’t feel like I could not offer vanilla ice cream.”

(http://www.autoadmit.com/thread.php?thread_id=3828853&forum_id=2#34918025)