Global Trade Mailing List Archive

["Vinay Chand" <<address removed>>]

Since there has been some keen interest in vanilla in this Consultation, it may 
be useful to use it as an example to see what sort of intervention could 
profitably be considered to help commodity earnings. Of course, as with any 
example, vanilla may be more typical of spices and some others but not all.

As far as I can see there are four main approaches possible:

1    Supply side management

2    Downstream processing

3    Maximising farmer revenues

4    Market development and promotion

SM is the most difficult because there are so many producers and high prices 
for whatever the reason bring home the possibility of high value 
diversification very forcibly. That should not exclude promoting a dialogue 
amongst the vanilla producing countries to discuss supply, demand and marketing 
if SM is a step too far for them. Moreover, SM may not be the best strategy for 
vanilla since it would make it even easier for synthetic vanilla to establish 
its complete dominance in the market.

Primary processing of vanilla is key to obtaining a good product and is nearly 
always undertaken in producing countries. It does involve care with technology 
and quality control which is often lacking in new producing countries and it is 
in the interests of all to ensure that there is successful transfer of 
technology. Whether the process should be taken further with essence extraction 
is more problematical but worth considering for some of the major producers.

Robin Mathew raises the problem of assuring an equitable share for farmers and 
I agree with him that this requires collective marketing on the part of the 
farmers if traders are going to be persuaded to be fair. A lot of small 
producers and a few processor/traders is a recipe for low farmer prices. The 
fact that the world market price may be $500 per kg just now instead of the 
usual $ 50 is less important because vanilla is a useful high value 
diversification at $ 50 and $ 500 is not good for natural vanilla in the long 
term because it strengthens the development and use of synthetic vanilla.

Finally, we come to market development and promotion and this I consider to be 
a key area where action can be taken. The vanilla producing countries must be 
encouraged and assisted through market development and mainly promotion. 
Natural vanilla today only accounts for a minor part of the vanilla market with 
the bulk of the market using synthetic vanilla. Natural vanilla is always going 
to be more expensive but the difference in flavour and fragrance is also 
substantial. A promotion of natural vanilla is in my opinion a necessity and 
DFID could help fund that through ITC.

Most of all, vanilla will remain a good higher value diversification crop where 
suitable conditions exist and Robin Mathews is right to argue that the 
marketing dimension must be given more emphasis in all productivity and 
diversification projects. Farmer interests have to be protected or the gains 
are frittered away. Consideration must be given to global market implications 
of new supply in the context of changing patterns of production as countries 
develop at uneven rates. Finally, wherever possible it is good to fight for 
markets since commodities too have to compete for their shares.

Best wishes,

Vinay Chand,
230, Finchley Road,
London NW3 6DJ, UK
Tel: 44-20-7794 5977
Fax: 44-20-7431 5715
<address removed><mailto:<address removed>>