Madagascar scheme assists vanilla growers become more businesslike

Madagascar is the world's leading vanilla exporter, accounting for half of global production. But it remains one of the poorest countries in the world. There are also wide disparities between small-scale growers and larger estates that sell vanilla on the international market.

The International Fund for Agricultural Development (IFAD) in 2006 successfully completed a scheme introduced in the late 1990s to tackle the issue of fairer distribution of economic benefits. It sought to help small farmers learn new skills to improve their revenues from vanilla and better manage their irregular income. A goal was the linking of the various aspects of commercial production and the market, while also promoting subsistence farming, traditionally rice growing.

Vanilla farmers were encouraged to form vanilla growers' associations to gain more selling power and negotiate better prices for their crop. They were taught to process vanilla and store it to sell strategically at a better market price. More than 400 local associations of various types were created under the project. The groups include about 10,000 members, and membership is still growing. "Small farmers had previously sold their vanilla green, just after being picked. It doesn't keep when fresh, so they had to sell it immediately at a low price to buyers who came around and collected it straight after harvest," said Fabien Randriambololona, the project manager.

Farmers were also given access to financial services through the establishment of a network of credit unions. Poor farmers were excluded from the banking system and previously had to rely on high-interest loans. "This is probably the most successful aspect of the project, linking production and sales to a system of savings and credit," said Benoît Thierry, IFAD's country programme manager for Madagascar. Previously small rural producers had no way of saving, and would spend their sudden income on disposable goods such as stereos and bicycles, which put them in a dire situation for the rest of the year, as vanilla is sold only between June and October, and they neglected subsistence farming. A total of 18 credit union branches were created, exceeding the programme's target of 14. They covered 43 communities, with savings averaging about US$10 to US$15 million and the total amount of credit granted amounting to about US$32 million.

Despite its success, the project had some drawbacks, particularly because it coincided with a period of highly volatile vanilla prices, which soared to between US$450 and US$500 per kg at their peak in 2003 before plummeting to the level of US$25 to US$70 per kg at the end of the project (which was their level when the project started in 1998-99). The price surge was partly the result of a devastating cyclone in 2000, which destroyed part of the plants and created a shortage.

With the end of the project, the situation remains difficult because vanilla prices remain low. Other tropical countries like India and Uganda began to grow vanilla after the 2003 price hike, increasing international tonnage and keeping prices down. Farmers' associations will need to continue and extend their activities, diversification away from the price volatility of vanilla is necessary, and the credit unions will need to attract more members.

The introduction of an international fair trade certificate for vanilla, which, like those for other commodities, has the aim of guaranteeing a better income for small-scale farmers, will also help improve life for small growers in Madagascar.

IFAD