Ice Cream Prices May Rise Due to Vanilla Shortage

Posted on March 29, 2016

You may soon be paying higher prices for ice cream and other products that use vanilla. The news of a poor quality vanilla harvest in Madagascar means supply will be low while demand remains very high. This will push prices upward.

The Guardian reports that vanilla is already the second most expensive spice in the world. The most expensive spice is saffron. Vanilla is expensive because the cultivation process is long and labor-intensive. Madagascar produces much of the world's vanilla in its Sava region. Other sources of vanilla include Tahiti and Mexico. Madagascar's poor vanilla harvest will cause price spikes.

The Guardian also reports that the high value of the crop causes additional problems that make the situation worse. It means farmers may pick the beans too early resulting in less quality vanilla. It also means the crop is at risk from thieves. 2015 production of Madagascar vanilla was about 65% to 70% of normal.

Mintec analyst Jara Zicha tells The Guardian, "There are reports that vanilla farmers in Madagascar harvested their 2015 crop prematurely, in fear of losing their production to thieves. This, coupled with inadequate drying in order to increase profits from their crop has led to lower quality vanilla."

To make matters worse Bloomberg reports that the smaller crop means there are fewer good-quality beans. The move has some dairy companies and bakeries switching away from pure-vanilla extracts to cheaper alternatives, such as synthetic substances or a mix of products that is blended with cheap low-quality vanilla beans. The result of this is going to be vanilla products that probably will not taste as good as products made with pure-vanilla extracts.

There is some early hope that the 2016 vanilla product in Madagascar will be better. A Food Business News article quotes Craig Nielsen, chief executive officer of Nielsen-Massey Vanillas, Inc., as saying the flowering for this year's crop is good. Nielsen said earlier this year, "Although this is a time of fluctuation in the vanilla market, it is expected the current situation will be short-lived. The flowering for (the 2016 crop) was good, and prices may start to drop in the fourth quarter of 2016."