Vanilla is now as expensive as silver

About a year ago, we reported on a surge in vanilla prices due to a combination of poor weather and lack of farming capacity. Twelve months later the surge shows no sign of abating, with the price of vanilla by weight now almost equal to that of silver. The high prices are forcing suppliers to confront the situation in Madagascar, which produces about 80% of the world’s vanilla. 

Conditions on the island nation have not changed for the better since last year, and in some ways have become worse. Theft of vanilla pods – and even entire plants – is rampant. Farmers have armed guards looking over their precious harvest. Even though the price of vanilla has skyrocketed, the farmers are not experiencing an increase in their profits. Estimates show that they receive as little as 5% of the price paid by end users. 

Large companies such as Mars, Danone, and Unilever are beginning to investigate their supply chain more thoroughly. As consumers begin to demand accountability from manufacturers about the working conditions of the people producing the raw materials they use, the companies are finding ways to ensure that the bandits, as well as unnecessary middlemen, are not reaping the benefits of high prices. This process is still in its infancy with respect to vanilla, although it is more full-fledged for other commodities such as cocoa.

Meanwhile, exhorbitant prices have forced smaller producers of items like ice cream to remove vanilla from their flavor offerings. It’s rather ironic that the word vanilla is synonymous with bland and boring, since it contains both a complex flavor profile and a complicated supply chain.