Madagascar dismisses Uganda’s vanilla challenge as experts support supply chain diversification

25 Jun 2024 --- The Madagascar Vanilla Company (MVC) has hit back at The Association of Vanilla Exporters of Uganda’s (Vanex) claims that brands must source vanilla from multiple countries, notably Uganda, to avoid market disruptions. MVC argues that Ugandan vanilla beans cannot satisfy consumer demand because they are inferior in quality to Madagascar’s.

The Sustainable Vanilla Initiative (SVI), however, agrees with Vanex that a second major production origin would help alleviate price volatility. In 2017, SVI broadened its influence to Uganda after initially focusing only on Madagascar, which produces around 80% of the world’s total inventory.

Vanex recently told us that Uganda is positioned to offer vanilla equal in quality to Madagascar’s at the required volume and specifications. While SVC says Uganda’s vanilla flavor and quality profile is “fairly similar to Madagascar,” MVC maintains that its beans are superior.

“Ugandan vanilla has enjoyed encouragement, demand and US Agency for International Development (USAID) money, but the country still produces inferior beans,” MVC spokesperson Chris Rosenkrans tells Food Ingredients First.

“Uganda is landlocked and inferior in quality agriculture on everything from coffee (compared to Kenya and Rwanda) to vanilla and does not represent a tasty alternative for consumers — all of whom see vanilla as an indulgence and chiefly want it to be delicious.”

Vanilla expert Dr. Daphna Havkin-Frenkel, founder and CEO of Bakto Flavors, generally agrees the industry needs to diversify beyond Madagascar but sees companies “obsessed” by the country’s bean profile, meaning Uganda must compete on price.

“It is easy to distinguish Ugandan and Madagascan vanilla based on the look, profile and taste … but Uganda is constantly improving the quality of its beans. If Ugandan farmers use the same curing techniques, there will be very little difference between the two,” she tells Food Ingredients First.

“Today, vanilla extract producers buy Ugandan beans only to blend them with Madagascan ones while keeping the Madagascar profile — something they’ve been doing for a while with Indonesian beans. Uganda has a unique, sweet flavor, but, unfortunately, that’s not what the industry wants.”

Pricing problems
The vanilla market is generally oversupplied, driving down prices. Lower prices create challenges for all vanilla-producing regions, impacting farmers’ livelihoods and investment in bean quality. 

According to Seth Petchers, senior program director at The Sustainable Food Lab, Uganda has proven itself as a reliable source of vanilla: “Last year, its exports were even a bit higher than the year before, when the market was better, showing it can supply the market consistently even when times are difficult.”The Madagascar Vanilla Company insists Uganda’s vanilla remains inferior to its own.

“Uganda is the only country with two annual harvests, as it’s right on the equator. The industry exporters, association, government and a local university recently conducted a survey to help inform when harvesting should start.”

However, Havkin-Frenkel, who sees Uganda’s two crop cycles as largely insignificant, points out that USAID’s US$13 million investment in the country’s vanilla industry has produced negative consequences.

“The industry reduced the use of vanilla beans altogether due to wildly fluctuating prices … and Natural Vanilla Flavor (WONF) is now dominating the supermarket aisle. There is no room for more vanilla on the market, and Madagascar reduced the price,” she explains.

Meanwhile, Rosenkrans at MVC argues that Uganda’s only strategy has been to try to price slightly under Madagascar.

“Uganda doesn’t let vanilla with low invoice numbers fly out or allow its free export while it swamps everyone with documents and basically just follows Madagascan prices. The costs of labor, licensure and internal transport are also higher in Uganda, and there are not as many organizations monitoring fair trade and organic vanilla.”

“Uganda is landlocked, unlike every other producer of vanilla, and although vanilla flies, it still doesn’t land much more cheaply, if ever more cheaply at all, from Entebbe as it does from Antananarivo.”

Weather and war
Vanex has also suggested heavy-handed government interventions in Madagascar’s vanilla industry and weather events should encourage the industry to diversify its sourcing to multiple regions.

The Sustainable Vanilla Initiative supports Vanex’s claims that vanilla supply must diversify beyond Madagascar.Havkin-Frenke agrees that the Madagascar government is often responsible for market volatility. “If people are willing to learn to store vanilla beans properly, the extra inventory can cover a bad year. In fact, these disasters are often opportunities for the producer countries to increase the price,” she adds.

However, MVC dismisses claims that weather events endanger vanilla production in Madagascar while suggesting the country is relatively safe compared to other African nations.

“Cyclones and weather events are literally a yearly certainty in Madagascar and a lovely rationale to raise prices and transit times to gullible news organizations and new buyers, but the supply chain’s end users often believe everything they hear about this too readily,” says Rosenkrans.

“Africa (Congo also grows vanilla, as do a few other states) has governments as protectionist and distortionist (as well as extortionist) as any, and Uganda and every country in Africa has more violent civil wars than Madagascar has ever had in its history and much more strife.”

“Interference in Uganda has been more violent historically than it ever has in Madagascar, including imposition on the market.”

Race to diversification
SVI began working with Uganda after its members, representing around 70% of the world’s vanilla trade, identified the country as a potential strong number two supplier that could help prevent the rise of synthetic vanilla. The top vanilla producers by volume after Madagascar are Indonesia, Mexico, Papua New Guinea and China.

Vanilla industry expert Havkin-Frenke suggests Ugandan farmers must learn to properly cure vanilla to compete with Madagascar.Havkin-Frenke also believes Uganda can compete with Indonesia for second place in vanilla exports and eventually challenge Madagascar on equal quality and profile. However, she questions why Vanex has not been more successful.

“Vanex is a well-respected organization in Uganda and has been there for a while, but it’s not doing a good job on two fronts: it doesn't convince buyers in the US or Europe to replace Madagascar beans and fails to explain to the farmers what exactly they have to do to replicate Madagascar’s success. We need to teach the farmers in Uganda to cure it properly.”

The Ugandan organization has also dismissed the scalability of localized production solutions based on emerging technologies. Prossy Tumushabe, the association’s executive director, tells us: “Periodically, efforts pop up to de-risk the global vanilla supply chain through technology or by moving production to regions closer to end-users, but these efforts have yet to prove themselves viable at even a small scale.”

However, Havkin-Frenke suggests localized production has never been adequately explored: “These things cost money, and no one wants to pay. Small-scale vanilla closer to the end user has never been successful, but scientists are not the ones who failed to create localized production systems for vanilla — it’s the fault of the countries who aim to grow it.”

By Joshua Poole