Halima Abdallah K.
2 November 2008
Nairobi — After years of showing promise and being touted as Uganda's best export hope following a boom in the 1990s that almost saw it overtake coffee in exports, vanilla is now branded a risky venture.
At the height of the boon in 2005, vanilla went for Ush100,000 ($57) a kilogramme but this has now fallen to as low as Ush2,000 ($1.14) a kilogramme.
"Vanilla is a risky enterprise with very unstable prices. It is an opportunistic venture that collapses thereafter," said Opollot Okaasai, Commissioner for Crop Production in the Ministry of Agriculture.
Uganda enjoyed enormous returns from vanilla exports between 1995 and 2003 when the export volumes increased from 0.2 tonnes to 13,546 tonnes respectively.
Farm gate prices hit a record Ush100,000 ($57) per kilogramme of the unprocessed crop that year. The boom saw farmers employ guards to keep thieves away from the crop.
The Uganda boom at the time was due to the crop's failure in Madagascar, a major producer, after that country suffered hailstorms that destroyed the crop.
With Madagascar's recovery, the prices for Uganda's vanilla in 2005 dropped drastically to Ush5,000 per kilogramme, down from Ush100,000. Production has since gone down, with output dipping from 13,546 tonnes in 2003 to 6.3 tonnes in 2007.
The decline has seen the crop make minimal contributions to foreign exchange earnings. In 2005, for instance, vanilla contributed 2.5 per cent of the exports, but this dropped to 0.5 per cent in 2007.
Prices per kilogramme of unprocessed vanilla have gone down to Ush2,000 ($1.14) for gourmet qualities and Ush4,000 ($2.29) for extract qualities.
"Ush4,000 ($2.29) is quite low but Ush5,000 ($2.86) would be reasonable price on a regular basis," said Phillip Bretts, managing director of Esco, a leading vanilla exporting company.
Mr Bretts said that the current world prices for vanilla stand between $20 and $40 per kilogramme, with Germany, the United States and France buying most of Uganda's crop.
Due to the unpredictability of the market, the government is now advising farmers to grow vanilla alongside other cash crops.
"Vanilla should be taken as a side enterprise -- when it is a rainy day, they benefit, and when it is a sunny day, they resort to something else," said Mr Okaasai.
Several farmers have abandoned their farms as they seek more rewarding enterprises like coffee, bananas and vegetables.
The crop employed hundreds of Ugandans right from the farm level to export business. However, with preference to other crops, small-scale vanilla exporters have been pushed out of business.
But for large-scale exporters, vanilla remains a viable business, considering that demand on the world market has gone up 30 per cent, although production volumes have remained constant from supplying countries including Madagascar and India, the largest producers.
"We know that the prices are not so high, but it is possible to do business. The prices will recover in the next one or two years," said Mr Bretts.
Mr Okaasai however said that the business is only viable for exporters who can easily divert to other sectors, but not to a farmer who bears the highest risk and would not have an alternative in case of risk.
He added that the demand going up is for organic vanilla because production for artificial vanilla has picked up. Uganda produces only organic vanilla.
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