Vanilla Crisis To Push Ice Cream Prices Up By 10 Percent

Ice cream prices could go up by as much as 10 percent around the world this year, said a report by the Telegraph on Monday, after two of the world’s largest producers of the vanilla spice reported much lower than expected harvests in the last two months.

Ice cream prices could go up by as much as 10 percent around the world this year, said a report by the Telegraph on Monday, after two of the world’s largest producers of the vanilla spice reported much lower than expected harvests in the last two months.

In Mexico, production of the vanilla spice has fallen by 90 percent over the last year, claimed figures from commodity intelligence firm Mintec, which also reports far lower yields than normal in India.

Though neither Mexico nor India produce as much vanilla as Madagascar or Indonesia, the poorer than expected yields in the two countries has already seen thousands of food manufacturers stockpiling vanilla crops from Madagascar, which has seen prices rise from $25 per kilo to between 35-40 dollars in just two months.

Food grade vanilla – known as black vanilla because of the colour of the dried pods harvested from orchids – is the second most expensive spice in the world behind Saffron.

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The harvesting of vanilla is known to be extremely labour-intensive, and the crop is only grown in a small handful of countries, meaning that its price is particularly susceptible to poor harvests.

Although wholesale prices of the crop has already grown by around 20 percent in the last two months, experts believe that the price is likely to climb even further, which could eventually trickle down to the consumer.

[quote]“The stocks in the world are being run down and we are getting to a point now where we are likely to see the price suddenly shoot upwards,” said Nick Peksa, business development director at Mintec.[/quote]

It is understood that around 40 per cent of the world’s supply of vanilla – around 1,000 tonnes – was recently shipped out of Madagascar following a sudden jump in orders.

International commodity traders are also said to be stocking up early on vanilla crops from Madagascar as the country now effectively has a monopoly on global sales.

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Apart from food and drink manufacturers, the perfume and medical industry are also likely to be affected by the raised cost in vanilla – with some of their products containing the spice within them.

But the ice cream industry in particular could be hit the hardest, said Peksa, as the spice remains a key ingredient in the manufacturing process.

[quote]“It is the most expensive ingredient in ice cream production per kilogram, so it is highly likely that some producers will not be able to absorb the extra cost. It could push the price of ice cream up by around 10 per cent,” Peksa said. [/quote]