Storm damages Madagascar vanilla crop

The worst tropical cyclone in 13 years to strike Madagascar, in addition to killing at least 78 people last week, damaged as much as 30 percent of the vanilla crop, according to David van der Walde, director at Aust & Hachmann Canada Ltd., the world’s oldest vanilla company.

The vanilla market, worth about $1.3 billion a year at current prices, already was tight after output slipped and quality suffered over the past two years in Madagascar, which accounts for more than three-quarters of global supply. Prices have doubled in a little over a year to more than about $226 a pound.

“It’s most likely going to increase prices,” said Craig Nielsen, chief executive officer at Waukegan, Ill.-based Nielsen-Massey Vanillas Inc., a top-five U.S. supplier. “How much they increase and for how long is still yet to be determined.”

Demand for pure, natural vanilla has been growing after food manufacturers including Nestle SA and Hershey Co. shifted from artificial flavoring. Farmers haven’t been able to keep up with increasing consumption, as it takes three to four years for plants to start producing vanilla beans, Nielsen said.

Producing the flavor isn’t easy. Vanilla comes from a bean pod that grows on a vinelike orchid that’s originally from Mexico and was introduced to Madagascar in the 1800s. Because the island doesn’t have a certain kind of pollinating bee, this is done by hand. The flowers that produce the pods open for less than a day each year and, if they’re not pollinated during that time, that means no vanilla.