Why is vanilla extract so expensive?

In this brief guide, we will answer the query, “Why is vanilla extract so expensive?” and will discuss the reasons why vanilla extract is expensive.

Why is vanilla extract so expensive?

Vanilla extract is expensive because plants that produce vanilla extract are notoriously difficult to cultivate. Additionally, Madagascar has lately been battered by extreme weather, which has impacted the world’s supply of vanilla. Vanilla beans have soared in price by a factor of ten due to poor crop yields, which have pushed the price up to about $600 per kilogram.

Reasons: why vanilla extract is expensive?

Cultivated in a single nation

The vanilla supply chain is characterized by high risk crop management and unstable supply (1). Madagascar is the world’s largest producer of vanilla, accounting for more than 80% of the world’s supply. For vanilla to be the country’s principal export, it must have the correct climate, technology, and investments in the commodity. However, this also means that it’s a lot more expensive. Madagascar is a long way from the United States. As a result, vanilla extract is prohibitively costly to export. It must be sent in a certain manner to ensure its safety and sanitation.

The leading production countries Madagascar and Indonesia are not situated within the native region of fragrant Vanilla species (Neotropics), they depend on the limited genetic material from clonal descendants of these once introduced vanilla cuttings. This, and the fact that vanilla is propagated in a vegetative way, has caused a genetic bottleneck that leads to increased susceptibility towards pathogen infestation and lower bean quality. Besides cultivation problems, the vanilla supply chain faces challenges. In Madagascar for example, a complex history of unsustainable practices, price volatility, low farm-gate prices, and collusion among traders characterizes the vanilla supply chain (1).

If it doesn’t meet FDA requirements, it won’t be allowed to be used. Vanilla’s hygienic costs are significant. Due to the additional time and personnel required, vanilla’s price rises. To lower the price, you may buy from a nation closer to the United States or from a local farmer.

 It might be tough to locate alternatives to Madagascar’s vanilla, particularly if you’re searching for a lower price.

Market value

Madagascar, which provides 80% of the world’s vanilla, has the power to decide the price of vanilla. Vanilla is virtually a national commodity in the country. Vanilla may be undervalued by competitors, but they do so at a financial disadvantage. The reason for this is that they don’t manufacture enough vanilla to justify lowering the price.

However, while international prices for cured vanilla beans reached record highs (>USD 600/kg) during the past couple of years, Malagasy farmers continue to sell their cured vanilla beans at low prices (USD 8 to 34/kg) and are living far below the international poverty line. Child labour and early harvest due to theft problems are common, leading to lower quality vanilla beans (1).

Products that customers can depend on are always going to be purchased. They know they can always get their hands on Madagascar’s vanilla since it’s typically in supply.

For a firm that only produces a little quantity of vanilla each year, this may not be the case. A company’s vanilla is more attractive when offered at a lower cost. They can set the price of Vanilla since they have a monopoly on it. Furthermore, importing countries, such as the USA, Japan and European countries, re-export to other countries, but information about revenues and price margins along the vanilla supply chain is absent. The lack of quality control and transparency causes a situation of unstable vanilla supply, which is harmful to both producers and buyers (1).

If they want to stay in business, competitors can do no other but follow the market. It’s Madagascar’s decision whether or not vanilla is pricey.

Storms

To maintain worldwide supply, a large portion of the world’s vanilla must come from a single nation.

It’s not unusual for Madagascar to be battered by strong cyclones. Several severe storms have ravaged the nation in the last several years, wiping off crops and destroying infrastructure. That reduces the world’s vanilla supply by a ton. There is less vanilla in the globe as a result of the decrease in exports.

A lack of vanilla causes the price per unit to rise because of this. Vanilla extract is constantly in high demand. Due to storms, the supply is decreasing, and the price is soaring. As a result, storms are very damaging.

The roots of the plants might be torn apart by strong winds and severe rains, or they can be completely submerged. Flooding may trigger mudslides, and mudslides can destroy crops as well. In addition, damage to the structures slows down the process.

Drying is the most difficult stage in the curing process of vanilla beans. Uneven drying may result from varying bean size, differences in bean moisture content, and from variable environmental conditions, when outdoor drying methods are practiced. The latter may include weather conditions during sun drying or from variations in the relative humidity during sun or air drying. The drying stage is apparently critical to the development of the full rich vanilla flavor, but prolonged drying may lead to loss of flavor and in vanillin content. Forced drying using artificial heat is also not a good option for the aroma development. Therefore, optimal weather is crucial for vanilla production (2).

Because there is no facility for harvesting and processing, the plants that survive have no place to go. The vanilla firms must invest money to repair the facilities to keep processing their plants. Before they can begin planting, they’ll need to purchase fresh vanilla seeds.

Because it takes time for plants to mature to the point where they can be harvested, this merely prolongs the wait and reduces the supply even more. All of these things add up to a cost. The price of vanilla extract has risen to compensate for a decrease in revenues and to pay for repairs.

Difficult growth

Vanilla extract’s high price is mostly due to the plant’s challenging growing cycle. Among the orchids, vanilla is one of the most popular. There is, however, just one orchid that produces vanilla beans.

Vanilla extract is made from beans. Few plants need as much work as vanilla. Sprouting beans involves hand-pollination. That necessitates that a farmer physically pollinates the orchids in the fields. The pollination process might take a long time if the farm has a large number of orchids.

The orchid plant is sensitive, as well. It succumbs quickly. Farmers must take extraordinary measures to guarantee their existence. The plants require the proper climate, the right soil, the right minerals and nutrients, and the perfect quantity of hydration and sunshine to flourish. The conditions of temperature and humidity under which vanilla grows tend to favor the development of pathogens, mainly fungi. The incidence of diseases is higher in traditional culture systems, plantations in the stage of production, and in older plantations. Spreading of fungi and viruses may lead to the loss of a whole crop (2).

The orchid will perish if any one of these components is out of whack. As a result, the corporation is forced to make up for the lost resources. However, the painstaking procedure isn’t completed until the crop has bloomed. Crops must subsequently be harvested, cleaned, and preserved by farmers. A drying process follows.

For a single batch of orchids, the whole procedure takes a year. Once a year, an orchid farmer needs to pollinate his plants for them to bloom. The plant will produce no beans if it isn’t harvested. To cultivate, maintain, and harvest the plant is very time-consuming and expensive. Vanilla extract costs more because of this.

In addition, newly planted vines typically do not produce significantly until the third year and do not reach full production until the fourth year. So, a severe supply shortage can only be remedied by a reduction in demand, at least for the first 3 or 4 years (2).

 Only one plant specie

Biodiversity, at genetic, species and ecosystem level, is a key element to achieve global food security, as it contributes to the long term stability of agricultural production and to the overall resilience of agroecosystems. Moreover, agricultural lands managed in a sustainable way contribute to a higher delivery of regulating ecosystem functions such as maintenance of water quality, soil moisture retention, carbon sequestration, and pollination. However, the increasing homogeneity of crop species and varieties, agricultural specialization and intensification, and the conversion of natural habitats into monoculture landscapes are propelling habitat destruction and biodiversity loss (1).

Vanilla is derived from a single orchid species, as previously stated. Because of this, the price of vanilla extract rises as a result of several factors.  As a result, farmers are forced to cultivate just one kind of plant. Farmers may cultivate a variety of crops by planting several different varieties of the same plant. To begin with, the distinctions between species are what set them apart. Because of these disparities, farmers may utilize a wide range of techniques and procedures to boost their output.

Vanilla, on the other hand, isn’t like that. It’s all or nothing for them since they only have one plant to deal with. As a result, there are fewer opportunities for the plant to thrive elsewhere in the globe. It’s possible that other species need different circumstances to thrive.

They may prefer various climates or varying levels of sunshine. Because of this, they can flourish in locations other than Madagascar. It is not the case at all. Madagascar is the greatest place in the world to cultivate a single vanilla species.

Finally, the blossoming season of various species may vary. As a result, producers can continue harvesting them all year round. Vanilla, on the other hand, isn’t like that. It only blooms once a year since there are only one species. Vanilla beans can only be harvested once a year by farmers. Vanilla is more costly since just one plant produces it.

Other FAQs about Vanilla Extract that you may be interested in.

What can I substitute for vanilla extract?

Conclusion

In this brief guide, we answered the query, “Why is vanilla extract so expensive?” and discussed the reason why vanilla extract is expensive.

References

1. Watteyn, Charlotte, et al. Exploring farmer preferences towards innovations in the vanilla supply chain. J Clean Prod, 2022, 330, 129831.
2. Ranadive, Arvind S., D. Havkinfrenkel, and F. C. Belanger. Quality control of vanilla beans and extracts. Handbook of vanilla science and technology, 2011, 139-161.