August 9, 2018 / 2:04 PM / 8 days ago

Madagascar's vanilla producers expect prices to remain high

ANTANANARIVO, Aug 9 (Reuters) - Madagascar’s vanilla producers expect prices to remain high during the 2018-2019 season but they will not match the record levels that the luxury spice reached last year.

Nearly half way through the harvest of green vanilla beans that runs from July to September, prices have reached $56 per kilo, 20 percent higher than prices at the start of the season on July 15.

Once the vanilla is ready for export its price is eight to ten times higher than for green vanilla, meaning the export price is expected to be between $376 and $560 per kilo.

The forests of the northeast tip of the Indian Ocean island are the world’s vanilla capital due to the perfect climate. Vanilla from Magadagascar is known for its rich and creamy taste.

Last year, the price of black non-split Madagascar vanilla VAN-MG-BNS, the benchmark price, rose to a record $635 per kilo from must $100 two years earlier.

The surge in prices, sparked by growing luxury market demand for natural - as opposed to synthetic - vanilla, caused a wave of thefts of vanilla pods by illicit vanilla hunters. Police and vigilante groups have taken to guarding the valuable beans to ward off thieves.

This year, even though prices remain high and there has been a lack of pre-financing from international buyers, green vanilla has attracted demand.

“Many local buyers have earned enough money in recent years and could buy green vanilla at these prices without waiting for funding,” Ialy Raharijaona, secretary-general of buyers group in the Sava region, said.

Many exporters said at the beginning of the green vanilla buying season that they had not yet received pre-financing from their international buyers.

Last year, when the thieves were active, farmers harvested the green vanilla pods early rather than risk having them stolen. This meant immature vanilla came on to the market which reduced the quality of Madagascar vanilla, buyers said.

The quantity exported also decreased.

Some containers were returned by international buyers during the 2017-2018 season because of the poor quality, a senior industry source in Madagascar told Reuters on condition of anonymity.

Farmers waited until July 15, the official opening date of the marketing season, to harvest and sell their pods.

“Most of the products that arrived on the market were mature green vanilla,” Ialy Raharijaona, whose group has mobilised to ensure the safety of the vanilla fields, said.

Last year, Madagascar exported 1,600 tons of prepared vanilla, for a total value of over $680 million, more than triple the export value of 2015 for more than 2,700 exported tons of prepared vanilla.

For 2018, the export is estimated at the same quantity as in 2017, according to Josielle Rafidy, secretary-general at the Ministry of Trade and Consumption. (Reporting by Lovasoa Rabary Writing by Maggie Fick. Editing by Jane Merriman)

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