Assistance from the United States Agency for International Development (USAID) is enabling small-scale spice farmers in Indonesia to create sustainable futures for themselves, ending long-standing reliance on aid.
In collaboration with international procurement, processing, and export company, Cooperative Business International (CBI), supportive partnerships have been established with international vendors such as Maryland, USA-based McCormick & Company, and more than 5,000 Indonesian spice farmers growing highly sought after produce such as pepper, cloves, nutmeg, and vanilla.
The partnerships provide enormous scope for farmers to rehabilitate abandoned plantations, establish new ones, and improve yields, at the same time ensuring a resilient and sustainable supply chain for the global market.
In the mountainous highlands of Papua the individually tailored international deals are providing new hope for many vanilla bean farmers — the world’s second most expensive spice after saffron — attempting to bounce back after years of labouring under burdens of food security and unfair trade arrangements.
Agustinus Daka is one such farmer benefiting from the new arrangements. Now aged 61 he leads a small group of farmers growing vanilla bean in a small community in the remote Indonesia province, which despite being Indonesia’s most resource-rich, has the archipelago’s highest rate of poverty. Such inequality only helping sustain an active secessionist movement who identify as Melanesian, not Indonesian, angry at the vast majority of resource revenue being diverted to Jakarta.
Pollination with a toothpick
While most farmers in the community live a subsistence life growing only the crops they eat, Mr Daka is now earning a stable income from his vanilla farm. “I want my village to move beyond subsistence”, Mr Daka said.
With a wealth of experience and knowledge of the spice at his fingertips, Mr Daka’s vanilla is now mainly supplied to US companies. The quality of his product and consistent demand seeing his income double in the past two years, enabling him to afford better healthcare for his family.
Mr Daka describes the process of growing vanilla as “delicate”. With no pollinating insects, he pollinates the flowers manually with a toothpick soon after they sprout. After nine months he harvests the vanilla beans and sells them to a cooperative which dries them, before they are sent to a spice factory in Klaten city, Central Java province, providing work for some 700 people.
Sam Filiaci, CBI’s senior vice president for Southeast Asia who monitors operations at the facility, said vanilla beans purchased by the co-op are are distributed globally, multiplying the benefits provided by the project.
“Even though we talk about the 700 people working in this facility, the employment that it creates in the United States or the destination markets is even greater.
“Vanilla and these other high-value crops that we grow and produce are a tool to improving people’s lives … helping farmers educate their children, build their houses, get health care. I think it’s extremely important and strategic for the US government to invest in opportunities like this”, he added.
Vanilla more expensive than silver
Vanilla bean is currently trading at an all-time high of $600/kilogram (about $273/lb), according to Craig Nielsen of US vanilla and flavourings group Nielsen Massey. Much of the global surge in prices is due to the impact of cyclone Enawo, which struck Madagascar in March 2017, and resulted in reduced supply.
As with any commodity price is determined by supply and demand, and the same is true with vanilla. Supply is limited due to the spice being incredibly difficult to grow. Vines take two to four years to mature, and then only flower on one day of the year. The vines are not native to most places where it is farmed, so there no native insects or birds to pollinate the flowers, making the process labour-intensive. The crop is also highly susceptible to weather events, and also — being more expensive by weight than silver — to theft.
The second-most traded spice in the world, vanilla is used in products as diverse as ice cream and perfume, and is mainly grown for export.
In 2016, Indonesia accounted for 29 per cent of the global vanilla output of 7,940 tons, producing 2,304 tons of the highly sought spice. Twenty-four per cent of the harvest was exported, earning the country some $113 million, or 10 per cent of the country’s total annual exports, and the title of the second largest exporter of vanilla globally.
Fraud to the fore as prices rise
However, Douglas Daugherty, president of the Vanilla Corporation of America, told IEG Vu that the extremely high cost of vanilla beans had seen global demand decrease over the past couple of years. It has also resulted in some producers using alternative ingredients and mislabelling their products.
“Adulteration and mislabelling of ‘natural vanilla’ products decreases the demand of vanilla beans needed to make these products”, Mr Daugherty said.
“Products containing vanillin ex eugenol from China, derived from clove oil and clove leaf oil, should not be labelled ‘natural vanilla’ he said, noting that there is increasing demand for the vanillin product, some of which is adulterated with synthetic additives, despite prices for vanilla bean beginning to ease.
“The current selling prices for the 2018 crop and carry-over 2017 crop are 15 to 20 per cent lower than their peak selling prices in 2017”, he said.
Papua New Guinea bans vanilla trade
The high prices the spice attracts has also seen a flourishing black market develop, with more than a few Indonesian exporters allegedly buying high-quality vanilla beans from across the border in Papua New Guinea (PNG), and relabelling it for export as Indonesian-grown. The deception not only damages the PNG vanilla ‘brand’, but costs the country millions of dollars in export revenue.
In March last year the PNG Spice Industry Board banned the trading of vanilla along the PNG-Indonesia border, ordering PNG Customs, PNG Defence Force, the national police, and the National Agriculture Quarantine Inspection Authority (NAQIA), to freeze cross-border trade.
Papua New Guinea National Spice Programme (NSP) manager Nanda Siri said in March this year that 50 tons of vanilla valued at K50 million ($15 million) was sold at the Wutung border post in West Sepik to Indonesian spice buyers, with most of the product originating from the Maprik district of East Sepik.
“I’m now working on a policy to properly regulate our vanilla industry”, he said at the time, adding that the ban will help PNG vanilla farmers in the long term.
“The illegal cross-border trading of vanilla to Indonesia buyers from Jayapura in West Papua province has contributed in making Indonesia the world’s second largest vanilla exporter after Madagascar.
“Rather than selling to Indonesia the current market conditions were a great opportunity to package and label the PNG product for direct export to overseas markets and build the PNG brand”, he said.
(source: AEC News Today)