Vanilla stink: Crop minus the cash

Vanilla has just lost its scent in south India. After touching a high of Rs 800 per kg of green beans, the price for vanilla has fallen to R...

Vanilla has just lost its scent in south India. After touching a high of Rs 800 per kg of green beans, the price for vanilla has fallen to Rs 250/kg, even as farmers refuse to part with their produce for less than Rs 1,200/kg.

For Kerala farmers, who began intercropping vanilla in the early 1990s at the Spice Boards8217; encouragement, this is the end of the roll. The collapse of the market might not lead farmers to suicide, but it certainly puts paid to the state8217;s dreams of rivalling Madagascar and Mexico as a leading vanilla exporter.

In Ramamangalam, 40 km from Kochi, the fragrance of piles of burnished beans in the godowns is a stark contrast to the depair of the farmers who own them. Ramamangalam has about 500 hectares of land devoted exclusively to vanilla, accounting for some 120 tonnes of the 200 tonnes annually exported from India.

For long-time observers, this was a disaster waiting to happen. 8216;8216;It is a classic case of the boom-and-bust pattern of any gold rush,8217;8217; says M S Kumar of AVT McCormick, a leading buyer of vanilla beans. 8216;8216;Arbitrary pricing can depress demand. It is a by-product of business shortcuts.8217;8217;

Tracing the vanilla boom, C S Jose, former Spices Board chairman, says, 8216;8216;We had outreach centres to interact with the cultivators and help them with planting material and know-how. The feedback we received from farmers was passed on to agricultural labs, which helped refine cultivation.8217;8217;

The world soon acknowledged the high vanillin8212;the essence of vanilla8212;content of the Kerala bean, says Jose, pushing up international prices to Rs 800/kg for green beans and an astronomical Rs 10,000/kg for cured ones. Vanilla is second only to the saffron in world prices.

Though native to the western hemisphere, vanilla can be easily cultivated in the tropics. Because of its high demand as food flavouring8212;and in the wake of the post-liberalisation price-collapse of traditional Kerala crops like rubber and pepper8212;the Spices Board introduced the vanilla vine as an intercrop for coconut, areca nut and banana plantations in Kerala.

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In retrospect, say experts, it is the unbridled initial enthusiasm for the crop that seems to have been the undoing for the farmers. As an intercrop, a hectare of vanilla cultivation cost Rs 1.5-2 lakh. But as the sole crop, with an entirely new infrastructure for humidity, shade, soil conditions etc. the costs per hectare of arable land went up to Rs 15 lakh. Farmers hiked the price of the produce correspondingly.

According to vanilla trading circles, the demand being huge, the markets initially absorbed the price hike. Till last year, when behemoth US buyers thought it wise to scale back demand. Right now, major buyers like AVT McCormick and Kotecha and Co. are offering upto Rs 250/kg of green beans.

But even as farmers refuse to sell for less than Rs 1,200/kg, some believe prices are not the only factor. 8216;8216;The buyers are ganging up to form a cartel, to reduce prices drastically. We vanilla growers must form cooperatives to counter this,8217;8217; says G Scaria, winner of a Spices Board 8216;Best Vanilla Cultivator8217; award.

8216;8216;We were warned about the perils of contract farming, of catering to markets controlled by MNCs. Now we are seeing it for real,8217;8217; he laments.

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As the crisis snowballs, all involved parties are looking to the International Vanilla Growers8217; Conference8212;to be held in Nice, France, from October 21 to 238212;to provide the answers.