THE MADAGASCAR VANILLA MARKET

A History of Boom, Bust, and Policy: 2013–2026

A synthesis of thirteen years of industry market reporting, focused on Madagascar

Compiled from market reports by Aust & Hachmann (Canada) Ltd

Executive Summary

Between 2013 and 2026, Madagascar’s vanilla market lived through a complete boom-and-bust supercycle, the largest since the 2001 – 2004 crisis. Beginning in a fragile recovery from the ruinously low prices of 2006 – 2011, Malagasy vanilla prices rose roughly fifteenfold over three years from under USD 30/kg for first-grade extraction beans in early 2013 to over USD 500–600/kg by 2016 – 2017. Driven by a combination of genuinely tight supply, the depletion of long-held speculative inventories, and, in the view of Aust & Hachmann (Canada) Ltd., an acceleration of the crisis by major flavor houses pursuing quick-cured and green-extracted vanilla. That peak proved unsustainable. A wave of replanting triggered by high prices began reaching maturity around 2020, just as COVID-19 produced a temporary demand spike that delayed the reckoning. Madagascar’s government then attempted to defend prices artificially through a fixed minimum export price from 2020 to 2023, which collapsed under its own weight, before giving way to a structural oversupply crisis and a near-total policy reversal (full market liberalization) by 2025–2026, leaving prices at multi-decade lows in real terms.

This report traces that history in Madagascar specifically, drawing on Aust & Hachmann market reports issued from October 2013 through May 2026.

1. Recovery From Crisis, and the First Signs of a New Boom (2013–2014)

As of October 2013, Madagascar was still climbing out of the shadow of the previous vanilla crisis, when prices had collapsed to USD 20/kg or below between 2007 and 2011. Prices had by then more than tripled off the bottom and were regarded by Aust & Hachmann as finally reaching “sustainable” levels, with Madagascar producing an estimated 1,300–1,500 metric tons in 2013, essentially flat versus 2012. Quality, however, remained a persistent problem: vacuum-packing of partially cured, often immature vanilla was widespread, a practice that degraded vanillin content and produced unstable beans. An estimated 500–1,500 metric tons of older speculative inventory, some held since the 2006 – 2008 price trough, continued to circulate and cushion the market.

Presidential elections in Madagascar at the end of 2013 ended five years of political paralysis and the associated freeze on foreign aid. Aust & Hachmann expressed hope that a stable government would finally act against two practices it viewed as deeply damaging to the vanilla-growing communities of the Sava. The “quick curing” of green vanilla in artificial ovens, and outright extraction of vanilla directly from green (uncured) beans. Both practices, promoted by certain well-capitalized foreign flavor companies to cut costs and bypass traditional curing labor, were already understood as a long-term threat to Malagasy vanilla’s reputation and to the thousands of jobs traditional curing supported. At the time, the export of green vanilla itself was illegal under Malagasy law, though extraction of green vanilla domestically was not.

By April 2014, a large and mature 2014 crop ultimately estimated at 1,800–2,500 metric tons, roughly double the poor 2013 harvest was expected to bring meaningfully improved quality, with a much higher proportion of properly matured, split beans. Prices had stabilized and, in the Aust & Hachmann’s assessment, remained below long-run historical averages even after tripling over the prior two years.

2. Demand Outpaces a Record Crop, and Quality Deteriorates Sharply (2014–2015)

In October 2014, Aust & Hachmann had described the vanilla coming out of the 2013 crop as the worst it had seen in at least 25 years: badly cured, overly humid or overly dry, vanillin-deficient, and in some cases rancid or phenolic. This represented a quality collapse considered more severe even than during the 2001–2004 crisis. A separate contamination issue also surfaced in the organic segment: trace levels of the insecticide Permethrin, above the 0.02 ppm organic tolerance, were found in cured beans, ultimately traced to anti-malaria mosquito netting (distributed under global public-health programs) that Malagasy farmers had repurposed for soaking green vanilla during curing.

The large 2014 crop did not bring the price relief many had expected. By April 2015, Aust & Hachmann reported that industrial-grade prices had risen a further 50% and gourmet grades 15–20% over the preceding six to eight months, in spite of the bumper harvest. Two forces were identified as responsible:

• A very weak flowering for the following (2015) crop, which became evident as early as September 2014 and triggered aggressive pre-emptive buying by major industrial users trying to build inventory ahead of an expected shortfall.
• The near-total depletion of older speculative stockpiles that had quietly buffered the market for years. With those buffers gone and alternative origins still failing to scale up meaningfully, buyers found themselves once again almost entirely dependent on Madagascar.

Flowering for the 2015 crop recovered only partially, and Aust & Hachmann projected another comparatively small harvest of 1,300–1,500 metric tons, with quality once again at risk because on-the-ground pressure to pick green vanilla before full maturity showed no sign of easing.

3. The Crisis Escalates: Extraction, Quick-Curing, and a Market “Spinning Out of Control” (2015–2016)

By October 2015, prices had risen to a point where Aust & Hachmann calculated that a mid-sized flavor house using 50 metric tons of Madagascar vanilla annually would need to find an additional USD 5 million in procurement budget for what it characterized as a materially inferior product. Advice to buyers at this stage was blunt and defensive: buy the absolute minimum, as late as possible; substitute lower qualities and alternative origins; extend formulations; and avoid long-term contractual commitments. In an unusual step for a company that described itself as philosophically opposed to market intervention, Aust & Hachmann stated it would appeal directly to Madagascar’s Ministry of Trade & Consumption to press for minimal government controls over green-bean picking dates, curing methods, and enforced quality standards, arguing that without such intervention the long-term survival of the Madagascar vanilla industry itself was at risk.

The crisis reached its most acute phase by August 2016. Green vanilla prices had surged past USD 80/kg, and with curing ratios running as poor as 6–7 kg of green vanilla per kilogram of cured product (versus a normal ratio closer to 5:1) due to widespread immaturity, Aust & Hachmann warned that cured extraction-grade prices could match or exceed the USD 500/kg peak of the 2001 – 2004 crisis.

In less than three years, first-grade extraction bean prices had risen by close to 1,500% from under USD 30/kg.

Crop-size estimates for 2016 were being revised sharply downward in real time, from an initial 2,000–2,400 metric tons to as little as 1,300–1,500 metric tons. Some market commentary assumed flat global demand of roughly 3,000 metric tons, an assumption Aust & Hachmann explicitly rejected, arguing that demand destruction at the retail, institutional, and eventually industrial level was already underway and would accelerate as buyers faced continued price shocks.

Critically, Aust & Hachmann laid much of the blame for the 2016 spike not on a natural catalyst (as with Cyclone Hudah, which had triggered the 2001 – 2004 crisis) but on the deliberate practices of major flavor companies based in Germany, Switzerland, and the United States. These companies, in Aust & Hachmann’s assessment, had aggressively pre-financed Malagasy exporters and pushed the installation of industrial ovens for quick-curing green vanilla, along with outright green-vanilla extraction. These practices produced a cheaper, faster, but markedly inferior product while eliminating much of the traditional curing labor that sustained vanilla-growing families in the Sava. Aust & Hachmann was pointed in noting the irony that several of the companies driving this shift simultaneously marketed themselves as leaders in sustainability, fair trade, and Rainforest Alliance-certified sourcing, even as those certified volumes represented only a small fraction of their total purchases. In Aust & Hachmann’s view, the 2016 crisis was substantially “man-made”; a product of corporate anxiety and short-term profit-seeking rather than a genuine, unavoidable supply shortfall. It was argued that a market correction, however painful, was both inevitable and ultimately healthy for the long-term integrity of the Madagascar vanilla market.

4. The Peak and the Turn (2016–2019)

Prices ultimately peaked around USD 600/kg for Grade 1 Madagascar vanilla in 2017, compounded by cyclone-related supply disruption (Cyclone Enawo) and a government-imposed export ban through October 15 of that year. The extraordinary prices of 2016 – 2017 triggered the wave of new planting across Madagascar that would define the market a decade later; most of these new vines were expected to begin bearing meaningfully by around 2020.

By May 2019, the market had visibly turned. Prices for the 2018 crop were already roughly one-third below the 2017 peak, and by November 2019 Aust & Hachmann described the market as an official buyer’s market for the first time in more than four seasons. Madagascar-specific price erosion remained more tempered than in secondary origins. Industrial buyers, wary after the 2016 – 2017 shock, deliberately minimized early coverage for the 2020 season.

5. COVID-19 and the Fixed Minimum Export Price (2020–2022)

Two developments interrupted what would otherwise have been a straightforward, supply-driven decline. First, in early 2020, before COVID-19 had fully emerged, Madagascar’s government introduced a minimum export price policy, initially set at USD 350/kg and revised down to USD 250/kg by late 2020, far above the real market price of roughly half that level. Exporters were required to repatriate foreign currency at this official rate within 90 days of export, forcing many to source offshore U.S. dollars to bridge the gap between real selling prices and the mandated price. This created a structural advantage for large, well-capitalized exporters and multinational flavor houses with joint-venture operations on the ground, at the expense of smaller Malagasy exporters.

Second, COVID-19 produced an unexpected surge in industrial vanilla demand as home cooking and grocery consumption rose worldwide, even as the food-service sector that absorbs most gourmet/black vanilla was devastated. This demand spike temporarily masked the emerging supply glut from the 2016 – 2020 planting boom and, combined with the price floor, kept nominal prices elevated well above where fundamentals alone would have taken them. Through the 2021 – 2022 season, Madagascar exported over 3,000 metric tons; a figure Aust & Hachmann later characterized not as genuine demand growth but as buyers hedging and building long positions out of fear that the fixed-price policy might succeed.

6. The Policy Unravels (2022–2024)

In early 2022, the government tightened enforcement, auditing exporters against the USD 250/kg benchmark and empowering a coalition of pro-fixed-price exporters, the Conseil National de la Vanille (CNV). In July 2022, a meeting in Paris was held at which international buyers were pressured to sign a commitment document (the “AMI”) pledging to respect the minimum price. Many expressed doubt that most signatories ever intended to honor that commitment.

The policy collapsed through 2022 – 2023 as real demand evaporated at the outset of the 2022 – 2023 season, forcing a delayed export opening and leaving Madagascar with an estimated carryover of 750–1,500 metric tons. A June 2023 report explicitly warned of a repeat of the 2003 – 2004 collapse, citing the unpopular fixed price, large carryover stock, weak demand, and macroeconomic headwinds. The government formally lifted the minimum export price by decree in May 2023, and a new regulatory body, the Comité de la Vanille Malgache (CVM), was created alongside the CNV. By 2024, Madagascar was estimated to have exported some 4,300 metric tons between January and July, nearly 50% above estimated global annual demand, while a USD 4.00/kg export tax remained in place, adding meaningful cost pressure just as FOB prices fell below USD 50/kg for conventional industrial grades.

7. Structural Oversupply Takes Hold (2024–2025)

By 2024 – 2025, the defining story had shifted decisively from policy distortion to structural oversupply. The vanilla vines planted during the 2016 – 2020 boom had reached full bearing maturity, pushing annual Malagasy production above 3,000–4,000 metric tons against estimated global demand of only 2,500–3,000 metric tons. Aust & Hachmann’s May 2025 report estimated total global supply, including unsold carryover, at over 6,000 metric tons; roughly two and a half years’ worth of demand. Green vanilla prices in Madagascar fell to as low as USD 1.50/kg, and a new U.S. tariff regime (a 47% tariff on Malagasy goods, later reduced to a 10% base rate) added further pressure on an industry that had essentially no ability to shift away from vanilla imports to the U.S. market.

8. Political Upheaval and Full Liberalization (Late 2025–2026)

In late 2025, Madagascar underwent significant political upheaval: youth-led “Generation Z” protests forced the departure of both the President and the country’s most influential vanilla-sector business executive; widely understood to be the figure behind the original fixed-price push. A transitional, military-led government took power. Despite the turbulence, conditions in the vanilla-growing regions themselves remained calm.

The new government moved quickly toward liberalization: the USD 4.00/kg export tax was eliminated and the CNV formally dissolved, while the U.S. simultaneously removed its tariffs on vanilla imports. Aust & Hachmann characterized the resulting environment: record-low real prices combined with the removal of both major cost barriers; as the strongest buying opportunity for industrial-grade vanilla in more than twenty years, recommending buyers secure forward coverage into 2027 and 2028.

By May 2026, however, the tone had turned considerably more cautious. The government’s new “hands-off” approach (hundreds of new export licenses issued with no enforced minimum price) flooded the market with inexperienced new entrants. Aust & Hachmann reported deteriorating curing and quality standards, including a renewed rise in premature vacuum-packing, echoing almost exactly the concerns raised a decade earlier in 2014–2016. A crop of 3,000–3,500 metric tons was projected for 2026, on top of already-saturated global inventories, with no clear mechanism in place to prevent history from repeating. It now seems that this crop will be smaller than previously thought; 2,500 metric tons.

9. Recurring Themes Across the Madagascar Cycle, 2013–2026

Quality collapses whenever prices move sharply in either direction

Rapid price increases (2014 – 2016, driven by quick-curing and extraction) and periods of oversupply and thin margins (2019 – 2020, 2024 – 2026) both produced the same symptom: premature harvesting, inadequate curing, and premature vacuum-packing of unstable beans. Reports from 2014, 2015, 2017, and 2026 all describe essentially the same failure mode, suggesting it is structural to the industry rather than tied to any single price scenario.

Government intervention has consistently overshot, in both directions

From the largely absent regulatory environment of 2013 – 2016 to the rigid 2020 – 2023 fixed minimum export price, and finally to the unregulated, hands-off licensing regime of 2025 – 2026, Malagasy policy swung between two extremes without settling on the calibrated middle ground. Aust & Hachmann’s opinion of a ‘middle ground’ since 2015 has been modest curing and picking-date enforcement.

Speculative and buyer inventories have repeatedly delayed price discovery

Large speculative stockpiles built during the 2006 – 2008 trough buffered the market through 2013 – 2014; COVID-era hedging and long-buying delayed the correction from 2020 – 2022; and accumulated carryover from 2022 – 2025 continued to weigh on prices well after the underlying oversupply was evident. In each case, the eventual unwinding of these positions accelerated, rather than smoothed, the subsequent price decline.

The market has moved through roughly a decade-long cycle, twice

The 2004 crisis and the 2016 crisis followed a strikingly similar shape and duration. Both cycles were amplified by man-made factors: quick-curing and extraction practices in the 2010s, and price-fixing policy in the 2020s. Layered on top of the underlying economic reality that vanilla vine planting decisions take three to four years to affect supply, making the market structurally prone to overshoot in both directions.

Conclusion

Madagascar’s dominance of the global vanilla trade remained essentially unchallenged across the full thirteen-year period covered by this report, even as the country’s own market structure, regulatory choices, and buyer behavior repeatedly amplified rather than dampened the natural agricultural cycle. The 2013 – 2016 run-up and the 2016 – 2026 downturn it fed into share a common arc: supply tightening, an acceleration driven by human decisions, corporate purchasing practices in one era, government price policy in the next, and a prolonged, painful unwind that left farming communities in the Sava bearing much of the cost in both directions. As of mid-2026, with the regulatory guardrails of the CNV era fully dismantled and quality standards once again reported to be eroding, the market appears to be entering the early stages of what history suggests could be a multi-year search for a new equilibrium.

Aust & Hachmann (Canada) Ltd

The market reports that we issue are based strictly on our opinions and observations. We believe we have presented a reasonably accurate portrayal of the global vanilla market in very general terms. The reports date back almost 20 years and are all available on our web site:
https://www.austhachcanada.com/reports/