The Monitor (Kampala)
Scola Kamau
20 October 2009
Stiff international competition and the entry of synthetic vanilla onto the market is suffocating trade in the crop in Uganda.
Once referred to as Uganda's gold between 2003- 2004, vanilla exporters are pessimistic that the crop is dying out. Save for the good days when a kilogramme of vanilla was selling at Shs11,000, the gate price of a kilogramme of the crop is currently at Shs3,000.
Although farmers can still break even, the drastic slump in the price of the crop is associated with stiff competition from other leading exporters and the entry of synthetic vanilla into the market, which sells at a lower price than organic vanilla. "The brokers moved into synthetic vanilla when the demand was high therefore trading before the natural vanilla matured.. When the price crashed, the supply was already high and people were already going for artificial vanilla which is cheaper," Mr Othieno Odoi, a senior trade promotion officer at Uganda Export Promotions Board, said.
Statistics from the Uganda Export Promotion Board (UEPB) indicate that in 2007 Uganda exported 422,000 kilogrammes of vanilla but registered a 54.6per cent fall last year to 191,524 kilogrammes. As a result, there was a 51.6 per cent revenue loss from Shs11.8 billion ($6,262) million to Shs5.7 billion ($3,039) million.
In an interview with Business Power last week, Mr Augustine Chaiga, the export manager at Esco Uganda Limited - a cocoa and vanilla bean exporting company - said Madagascar, which was experiencing bad weather when Uganda's vanilla industry was booming, has since regained production thus narrowing the market. Farmers have, however, ceased producing as the returns have dropped hence the decline in exports.
The Vanilla Exporters of Uganda (Vanex) and Esco are the leading exporters of vanilla in Uganda. Despite the fluctuation in prices, the trading culture has also contributed to the collapse of the crop that once boosted the economy and earned income for many households especially in Mukono District and parts of Budibugyo District. Then, USA was the leading market for Uganda's vanilla.
According to Chemiphar Laboratory Kampala (2006), Uganda's organic vanilla (the chemical that flavours vanilla) has 2.5 per cent vanillin compared to the two per cent of Madagascar. Despite this, Uganda had to bow to the lower prices set by the leading exporter - Madagascar hence fluctuation that saw some farmers cutting down the vanilla trees. Madagascar occupies 85 per cent of the vanilla market.
Vanilla farmers are, however, optimistic that value addition to vanilla will revive its glory. Mr Othieno said although value addition is an expensive venture, it would put Uganda's vanilla in a better competing position and hence boost its prices higher. "It can help us regulate demand and supply as the final consumer will be ready to pay for the value added," Mr Othieno said. Meanwhile, the association that once united vanilla farmers has ceased full time operations.
A member of the Vanilla Farmers Association who preferred anonymity told Business Power that the association collapsed because donors had pulled out and were no longer realizing any profits from trading in the crop.
"There are only three members now," the source said. However, Mr Othieno said that the collapse of such associations does not explain the inability to form a stronger organisation. "Members will always subscribe as long as the organisation yields results. It can be revitalised," he said.
Unlike other products, vanilla is a speciality product. It has its highest demand in USA, which consumes about 60-70 per cent.
This shows that the market is monopolised and in such a case, the seller has no choice but to succumb to the set price. "The monopolist plays around with the buyer," Mr Othieno said. Vanilla farmers have also attributed the slump in prices to the low local consumption of vanilla in the country. They said that when the international market failed, there was no one to sustain them.
Vanilla farmers have called upon the government to help create a local market and create regulatory systems to ensure that the right people are involved in the export of this commodity. "We call upon the government to help us add value to our vanilla," Mr Hassan Kyesswa, a vanilla farmer in the Central region, told Business Power last week.
Information from UEPB, however, shows that the government has already helped farmers to add value to their products through organisations like Naads that provides advisory services. "We tell them to cultivate properly, avoid buying immature beans and label their products to show specifications that add value to the final consumer," said Mr Othieno.
There is, however, a flicker of hope as there are anticipations that the demand for Uganda's vanilla will rise once more. Mr Othieno said the fact that vanilla is a flavour makes its demand on-going as people keep spicing up.
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