Media Release
December 25-26, 2019
Fiji plantings address vanilla bean scarcity
A new, large vanilla growing operation in Fiji aims at addressing the critical world vanilla bean shortage.
The CEO of the Suva based management company, Vanilla Plantations Fiji Pte Limited, Mr Frederick Gulson has met with the Fijian Minister for Agriculture and Rural Development, Dr Mahendra Reddy, who said the Fijian Government was equally excited about the project and convinced of the positive economic impact on the country arising out of vanilla exports.
Dr Reddy said the vanilla project could be the rebirth of Fiji‘s involvement in the world-wide commodity trade for this important spice that dates back to 1887.
“It is likely to generate major overseas export income for my country while contributing to significant employment opportunities for Fijians,” Dr Reddy said.
Mr Gulson said world vanilla stocks had fallen due to a perfect storm of events including increased consumer demand for natural flavourings, the support for this trend by major international food companies, climatic conditions, regulators replacing artificial vanilla with natural vanilla in regulations, speculative hoarding of vanilla beans, theft of vanilla beans and premature harvesting to prevent further theft which has cut production levels and standards.
“It will also help to address worldwide vanilla bean scarcity issues,” he said.
Mr Gulson said the plantation offered better agronomy and production practices and was closer to skilled employees.
Vanilla shortage
Mr Gulson said the world vanilla market is experiencing significant and enduring supply shortages, with annual global demand exceeding 3500 tons; far outstripping global production of around 2400 tons.
Mr Gulson said the vanilla industry in Fiji is based on small family run farms, as it is in Madagascar which produces 80-per cent of world supply.
“With the world price at near record levels due to vanilla bean scarcity, room exists for major expansion of Fijian production without impacting world prices.”
“The supply of vanilla bean is so below demand levels that Madagascan vanilla farmers, now called ‘vanilliaires’, guard their crops at night against theft.”
Prices for vanilla beans, which are traded by individual contract and not on any public commodity exchange, have already surged over the past four years due to the perfect storm of events. The price climbed from about US$400 (Fiji $869/ AUS $579) to the current price of US$575 (Fiji $1249/ AUS $832).
Mr Gulson said that under the Vanilla Plantations project, investors will participate in this rising market while enjoying sound returns.
“In addition, the Government of Fiji will provide a number of investment, tax and revenue incentives for this agricultural project which will encourage expansion of the vanilla bean industry. A tax holiday is available for the life of the vanilla project coupled with an export income exemption,” Mr Gulson said.
“Due to shortages, Madagascar has introduced a vanilla bean licensing system, so only licensed growers and traders can legally possess vanilla beans. Theft of both vanilla beans and cuttings from farms are reported in all growing regions.”
Mr George Hazelman, a vanilla grower and President of the Vanilla and Spice Committee of the Fijian Ministry of Agriculture, said that in the early 1900s Fiji was a large vanilla bean producer. Now, Fiji’s existing growers are seeking to boost production.
“Fiji’s vanilla bean industry warmly welcomes the participation of Vanilla Plantations Fiji Pte Ltd, with all its horticultural and marketing expertise. Not only will it generate jobs, but importantly for other growers, it will be an encouragement to adopt new techniques in vanilla bean cultivation at this time of opportunity,” Mr Hazelman said.
Market situation
The United States is the world’s largest consumer of vanilla, followed by Europe, notably France.
“When the largest user of vanilla, Nestle, in 2012 announced a move from artificial vanilla flavouring to the real thing, industry competitors had to follow that lead,” Mr Gulson said.
“Consumers want natural vanilla, not artificial, and regulators are clamping down on substitution. This has compounded the perfect storm.”
The dairy food industry uses a large percentage of the world’s vanilla in ice creams, yoghurt and other flavoured dairy products. The largest buyers are “Big Food” companies such as Nestle, Danone, Mars, Hershey, McCormick and Unilever, which is the world’s largest ice cream maker.
Vanilla is not only used as a flavour in foods and beverages, but also in perfumes.
Global food and beverage companies now enter into long term supply contracts with the Madagascan Commerce Ministry to ensure security of their vanilla supply due to this great scarcity.
Fiji suitability
Fiji has a competitive horticultural advantage that boasts a sound supply of surface water and aquifers, whilst the soil, climate and ‘terroir’ are ideal.
Mr Gulson said the land selected by Vanilla Plantations Fiji Pte Limited is in a drier region of Fiji, thereby facilitating control of water throughout the year, promoting fruiting and minimising ‘wet feet’ problems for vines,” Mr Gulson said.
“The vines will be watered by mist, drop and spray irrigation processes that are sympathetic to the Fijian climate,” Mr Gulson said.
“The site is being laser levelled to optimise water use and vines will be covered by shade cloth allowing for temperature and humidity management.”
“Employee loyalty is strong in Fiji with a very low staff turnover. Ninety-four percent of the population speaks English, literacy is high and labour costs are very competitive. These factors are paramount as vanilla bean cultivation is the world’s most labour-intensive agricultural crop,” Mr Gulson said.
“Vanilla Plantations Fiji expects to employ about 100 Fijians when vanilla vines reach full production three years after planting. Furthermore, Fiji has a first world infrastructure as well as very stable political and financial environments that are ideal for addressing vanilla shortages.”
(See attached appendix of statements by financiers and industry leaders)
Contacts:
Fred Gulson (+61) 408 440 816 or Bob Lawrence (+61) 428 280 222.
Appendix:
Quotes from international financial bodies:
International rating agency Moodys, said of Fiji;
“We have raised Fiji’s rating upwards from stable to positive. Fiji is now rated B1+.” The 2016 upgrade was due to:
* political stability
* policy reforms
* improved funding conditions following the recent political transition.
The US State Department “reported in June 2019:
“The financial system is stable and Fiji is classified as an upper-middle income economy by the World Bank.
Quotes from industry leaders on the state of the world vanilla industry:
“Nestle along with other multinationals are removing artificial additives from their products. From 2012 Nestle has engaged in a seven-year research and development program which has led to more than 80 artificial ingredients being replaced with alternatives.”
Liz Castello-Mechael, Corporate Communications Director at Nestle
“Like everything else, the cost of vanilla is determined by supply and demand and for the last several years the supply of the vanilla is down —‐ way down…there is no more vanilla to buy!”
Respected Industry commentators, N. Peksa and J. Zicha, Mintec 2016
“Growing consumer expectations for pure and all-natural foods and ingredients
have spurred global food manufacturers to embrace the use of pure vanilla in
recent years, which has driven up global demand dramatically and resulted
in massive price hikes….”
Craig Nielsen, Vic President of Sustainability at the major US and European producer and supplier, Nielsen-Massey.
“The biggest issue will be quantity. That is exerting more upward pressure on prices given large food companies including Nestle and Hershey have said they will use natural flavourings. This has led to a hurried search for new sources of natural vanilla flavourings.”
Melanie Legris, Sales and Marketing Manager at Eurovanille.
“The amount of all the vanilla beans in the world is not sufficient to flavour everything that everyone wants to flavour with vanilla.”
Carol McBride, US Vanilla Category Manager at Symrise (one of the world’s suppliers of essence, flavours and ingredients).
* policy reforms
* improved funding conditions following the recent political transition.
The US State Department “reported in June 2019:
“The financial system is stable and Fiji is classified as an upper-middle income economy by the World Bank.”
Quotes from industry leaders on the state of the world vanilla industry:
“With the pressure on markets today our plan is to…expand sourcing outside Madagascar.” … Yannick Leen, Symrise (March 2019)
“Growing consumer expectations for pure and all natural foods and ingredients has spurred global food manufacturers to embrace the use of pure vanilla, this has driven up global demand dramatically and resulted in massive price hikes”
….. Lawrence Kurzius, CEO McCormick Spices.
“Like everything else, the cost of vanilla is determined by supply and demand and for the last several years the supply of the vanilla is down —‐ way down…there is no more vanilla to buy!” ….. Respected Industry commentators, N. Peksa and J. Zicha, (Mintec 2016)
“Growing consumer expectations for pure and all-natural foods and ingredients have spurred global food manufacturers to embrace the use of pure vanilla in recent years, which has driven up global demand dramatically and resulted in massive price hikes….” …. Craig Nielsen, Vice President of Sustainability at the major US and European supplier, Nielsen-Massey.
“The biggest issue will be quantity. That is exerting more upward pressure on prices given large food companies including Nestle and Hershey have said they will use natural flavourings. This has led to a hurried search for new sources of natural vanilla flavourings.”
….. Melanie Legris, Sales and Marketing Manager at Eurovanille.
“The amount of all the vanilla beans in the world is not sufficient to flavour everything that everyone wants to flavour with vanilla.”
….. Carol McBride, US vanilla category manager at Symrise
Media Clips:
Vanilla bean shortage in Madagascar drives up prices in U.S. (From 2017 when rise began and hit US$400 on its way to the current US $700)
https://www.cbsnews.com/news/vanilla-bean-shortage-madagascar-drives-up-us-prices/
The real price of Madagascar’s Vanilla boom
https://www.ft.com/content/02042190-65bc-11e8-90c2-9563a0613e56