A trip down the baking aisle can land budget shoppers in a serious quandary. Why would you pay almost $20 for 4 ounces (119 milliliters) of pure vanilla extract when you can get the same amount of fake vanilla flavor for less than $5? There are a few good reasons why real vanilla is so expensive.
Vanilla beans and vanilla extract are some of the most expensive spices and flavorings in the world In fact, vanilla is second only to saffron in terms of price per ounce So why exactly are vanilla beans so expensive, especially in recent years?
There are a few key reasons contributing to the skyrocketing costs of this popular ingredient:
Limited Growing Region
Unlike many other crops that can be grown in various climates worldwide, the vanilla orchid, the plant that produces vanilla pods, only thrives in tropical environments. The vast majority – around 80% – of the global vanilla supply comes from Madagascar, an island nation off the coast of Southeast Africa
Some vanilla is also grown in Indonesia, Tonga, Mexico, and Tahiti, but no other region comes close to Madagascar’s output. This heavy dependence on one geographical region makes the vanilla supply highly susceptible to weather events, blights, and other environmental factors. Even minor issues in Madagascar can cause global vanilla prices to spike.
Labor-Intensive Production
In addition to being limited to tropical climates, vanilla orchids require an extremely labor-intensive cultivation process. The plants must be hand-pollinated by workers within just a few hours of the flowers blooming.
The pods then take 9-10 months to mature before workers must hand-pick each one at precisely the right moment. The harvested vanilla pods go through an extensive month-long curing process where they are dried, sweat, and fermented in the sun daily.
This meticulous, time-consuming process is done almost entirely by hand. The labor-intensive nature of vanilla farming causes costs to remain high even in ideal conditions. As demand increases, so do prices.
Deforestation in Madagascar
With such an overwhelming majority of vanilla coming from Madagascar, maintaining suitable growing conditions on the island is imperative. But according to the World Bank, Madagascar has lost over 44% of its forests since the 1950s, largely due to illegal logging, fires, and land clearing by small farmers.
This rampant deforestation has destroyed many existing vanilla plantations and led to soil erosion and loss of biodiversity that makes growing vanilla difficult. As usable land declines, vanilla production drops even as demand continues rising, further inflating prices.
Damage from Natural Disasters
Madagascar’s tropical location makes it prone to destructive cyclones, especially during the rainy season from January to March. In 2015, Cyclone Enawo destroyed around 30% of Madagascar’s vanilla crops. In 2017, Cyclone Enawo again wreaked havoc, reducing vanilla output by 20-30%. These storms can wipe out entire crops of vanilla orchids that take years to cultivate and recover from. The cycles of scarcity lead to dramatic price spikes.
Volatile Market Dynamics
Vanilla is traded on global commodity markets much like oil or gold. Speculation by investors eager to profit can drive up vanilla bean prices artificially. If crop disease or a bad storm occurs, supply concerns may prompt speculative stockpiling and higher prices detached from true supply and demand.
On the flip side, prices can also plunge due to oversupply or reduced quality concerns. The complex vanilla market is prone to boom and bust cycles as well as manipulation, keeping costs unpredictable.
Surging Demand
Demand for natural vanilla flavoring has increased sharply in recent decades, especially in the U.S. food industry. Vanilla is extremely popular for ice cream, baked goods, perfumes, and other uses. As the world population grows and developing countries consume more sweet foods, demand for vanilla climbs higher.
With tight supply constraints, the surging demand results in prohibitively high prices for both large corporations and individual consumers. There is simply not enough vanilla being produced globally to keep up.
Blame the Weather
Its a classic case of supply and demand. Much of the worlds supply of vanilla beans (about 80 percent) is grown in one place, on the island of Madagascar, explains Rave Reviews nutrition coach Elliot Reimers via email. The last few years have seen the island ravaged by multiple storms (Cycle Enawo hit in 2017), wrecking thousands of plants and driving prices up to more than $600 per kilogram (around $300 per pound). “This is 10 times more than it was a few years ago,” he says.
Even though prices were more stable in 2019 than they were in 2017, FONA, a company that makes flavorings, said that production would drop by 25% in 2020, which could cause prices to go up again. But that was predicted before the COVID-19 pandemic happened, which seems to be sending prices lower.
Blame the Growing Process
The other major contribution to sky-high vanilla prices is the fact that the plant is just so difficult to grow. “Vanilla comes from an orchid plant. While there are 100+ varieties of orchids, only one, the vanilla planifolia, grows vanilla beans,” says Jessica Formicola, owner at Savory Experiments in an email interview. “Orchids are finicky plants and hard to keep alive. Orchid flowers are hand-pollinated during a short flowering period,” she adds.
The hand-pollination process is difficult and requires an experienced person to perform it successfully. Typically, its done by farmers whove been in the vanilla-growing game for generations. The process doesnt end once the beans are harvested either. The crop must be cured and dried, and so from beginning to end (growth to export) the process takes a solid year.
“Vanilla is the most labor-intensive crop in the world which is why its only second in price to saffron,” explains “Vanilla Queen” Patricia Rain, culinary historian, and owner of The Vanilla Company. She notes that the orchids flower just once a year and the hand pollination must take place on that day.
Ironically, many farmers had moved away from growing the labor-intensive vanilla before the 2017 Cyclone Enawo made landfall, because of low prices for the product. At the same time, consumer interest in “real vanilla” had started to increase, further exacerbating the supply problem.
Why Vanilla Is So Expensive | So Expensive
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