Vanilla procurement plan now unviable

Vanilla procurement plan now unviable

Kochi: The prices of vanilla beans have risen sharply, making the government’s plans of buying beans worth Rs4 crore unviable, even as farmers in India are increasingly opting out of growingvanilla vines.

(LOSING FLAVOUR) The government’s trade promotion body, the Spices Board of India, wants to buy vanilla beans from farmers through state-run State Trading Corporation of India Ltd, or STC, and has asked them to submit details of stock, quality and expected price before mid-August. The proposal to buy dried or cured beans at Rs450 a kg was mooted late last year when prices of green vanilla beans were around Rs40 a kg and dried ones were selling at Rs200 a kg. About 5kg of green beans make 1kg of dried beans.

The prices of dried beans, however, has shot up to Rs800 a kg by the time the government approved of the proposal due to a shortage in stocks. “At this price, it will be unviable for the corporation (STC) to procure whatever limited stock of beans is available with farmers and traders," said a trader who did not want to be named.

Export of dried beans fetched an average Rs888 per kg in the fiscal year to 31 March despite a fall in prices in the second half of the fiscal year to as low as Rs200. The prices have since bounced back and in the first three months of this fiscal year exporters have earned nearly Rs830 a kg.

According to the government’s plan, STC will buy vanilla beans directly from farmers or their associations, said S. Kannan, director of the Spices Board. He admitted that when the proposal was made, the prices were low, but the situation has changed now. With most farmers giving up vanilla cultivation, there is little stock left with them or their associations.

The Spices Board had been promoting cultivation of vanilla as an inter-crop in coconut, banana and spice farms since early 2000 to ensure additional income to farmers.

Cured vanilla prices had zoomed to more than Rs20,000 a kg in 2003 after a crop failure in Madagascar. This encouraged Indian farmers to cultivate vanilla vines over other crops such as rubber and nutmeg. But the very next year the situation turned normal in Madagascar, pulling down prices. Madagascar produces more than 4,000 tonnes of cured beans a year.

The sharp fall in prices had led to heavy losses to farmers and most of them have stopped cultivating vanilla.

According to statistics available with the board, production of cured beans for the past three years has been more than 600 tonnes while exports so far have been nearly 400 tonnes. A substantial portion of the stock has already been bought by traders, extractors and Vanilla India Producer Co. Ltd, or Vanilco, a Kochi-based vanilla firm run by farmers.

Vanilco has been collecting vanilla from its 2,500-odd members, extracting the essence and selling it to an ice cream maker, said M.C. Saju, director of the company. He admitted that several of its farmers have given up vanilla cultivation.

George Valy, managing director of Vanil India Pvt. Ltd, which processes and exports the beans, said there is practically very little stock left with growers. And, since prices have been on the rise, those holding stocks may not be willing to sell at Rs450 a kg—the price proposed when the government’s buying plan was mooted.

Instead of announcing a procurement plan, the board could have offered an export subsidy, farmers say. “During the time of harvest, the price was as low as Rs40 (a kg for green beans), and in the absence of buyers, most farmers have now uprooted their vanilla vines. The government should have stepped in early and offered incentives to the farmers to continue with cultivation," Valy said.

Farmers are not very enthusiastic about vanilla cultivation now as they are not sure about the markets three-four years down the line, the time vanilla vines take to bear fruits.

John P. John, managing director of Kerala-based extracting firm Tharakan and Co., said production will not increase this year. According to him, instead of eyeing only the ice cream market, the board should tap confectionaries and beverage markets as well.