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IFAD project sets up innovative vanilla growing scheme in Madagascar
Madagascar -- 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. Most vanilla production is concentrated in the fertile
area of Sava, in the north-east, where about 70 per cent of the population
depends on the lucrative spice. The region is relatively wealthy compared to
the rest of the island, but there are wide disparities between small-scale
growers and larger estates that collect and process vanilla and sell it on
the international market.
IFAD’s recently completed North-East Agricultural Improvement and Development
Project was initiated in the late 1990s precisely to tackle the issue of fairer
distribution of economic benefits in the region, and to help small farmers learn
new skills to improve their revenues from vanilla production and better manage
their irregular income.
The project fostered a global approach linking the various aspects of production
and marketing. It included activities to develop commercial production while
promoting subsistence farming – traditionally rice farming – and implementing
a network of credit unions to provide access to financial services for poor farmers
who were excluded from the banking system and relied on high-interest loans.
It encouraged farmers to form vanilla growers’ associations to increase their
bargaining power and negotiate better prices for their crop. Farmers learned
to process vanilla (see box) and store it strategically for sale at a better
market price. Over 400 local associations of various types were created under
the project. They include about 10,000 members, and membership is still growing.
“Until now, small farmers sold their vanilla green just after it was picked.
Fresh vanilla doesn’t keep, so they had to sell it immediately at a low price,
as buyers would come around and collect it straight after harvest,” said Fabien
Randriambololona, the project manager.
At the same time, farmers were able to access financial services through the
establishment of a network of credit unions. “This is probably the most successful
aspect of the project,” said Benoit Thierry, IFAD country programme manager for
Madagascar, “linking production and sales to a system of savings and credit.”
Previously small rural producers had no way of saving and would spend their sudden
income on disposable goods such as stereos and bicycles.. This left 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 communes. The Canadian microfinance organization Développement
International Desjardins (DID) implemented them in the field.
The project earmarked a budget line of US$1.2 million for the credit union programme
alone, out of a total of about US$16 million.The rest was allocated for improving
agricultural production – mainly rice irrigation, infrastructure and local organization.
Rehabilitation of the production of rice, a staple food in Madagascar, was a
major part of the project, accounting for nearly 40 per cent of the total budget.
The project achieved noteworthy results in that sector, particularly through
an irrigation programme that restored about 4,600 hectares of small plots for
rice growing, and through introduction of intensive farming techniques and more
productive rice varieties.
“The proportion of land used for subsistence farming rose from 5 to 30 per cent.
That is definitely a success for the project,” said Paulin, former project manager
and current governor of the region.
Despite its success, the project had some drawbacks, particularly because it
coincided with a period of highly volatile vanilla prices. Prices soared to a
level between US$450 and US$500 per kilo at their peak in 2003, before plummeting
to a current level of US$25 to US$70 per kilo, which was their level at the very
start of the project in 1998. The price surge was partly the result of a devastating
cyclone in 2000, which destroyed a portion of the plants and created a shortage.
It was less attractive for farmers to focus on rice production while vanilla
prices were surging, but after the collapse of the vanilla market they found
it difficult to honour their loans with the credit union, mainly because of a
lack of savings. While credit granted since the start of the project amounted
to a total of about US$32 million, savings averaged only about US$10 to US$15
million.
Farmers used only half of the borrowed amount for investments, spending the rest
on improving their quality of life. This was a clear demonstration of the need
to educate farmers to better manage their income and use financial facilities
for long-term investment.
The project has come to a close, but the situation remains difficult. Vanilla
prices linger at the lowest levels, and because other tropical countries started
to grow vanilla after the 2003 price hike and increased international tonnage,
this has kept prices down.
But the project managed to increase the proportion of revenues small farmers
receive from vanilla and it rehabilitated rice production to make them self-sufficient,
reducing the number of poor families. It will now be necessary to follow up at
local level. Farmers’ associations will have to continue their activities and
expand to include a larger proportion of the population. Farmers will need to
diversify production further and rely less on volatile vanilla. The network of
credit unions will have to attract more members and be used more as a facility
for savings rather than for credit alone.
Introduction of an international fair trade certificate, which has the aim of
guaranteeing a better income for small-scale producers of various commodities,
will also help improve life for small-scale growers in Madagascar.
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Growing vanilla |
From the time it was discovered by
colonial Europeans, vanilla became
a highly coveted spice for its distinctive and refined
taste and for the various qualities it was believed
to have, such as medicinal and aphrodisiac properties.
Originally from Mexico, and used as flavouring by the
Aztecs, Vanilla planifolia, the only fruit-producing
orchid, was introduced to the French Indian Ocean colonies
of Reunion and Madagascar during the nineteenth century,
but without the local pollinator bee. Soon afterwards,
a local slave named Albius discovered a process of hand
pollination that is still used today. The process made
it possible to initiate vanilla production in this humid
region.
The hand pollination process makes vanilla one of the most labour-intensive crops
in the world. It takes as long as five years from planting the vine to producing
high quality essence. As a result, vanilla has a higher value than many other
spices. Because the vanilla flower lasts only about a day, growers have to inspect
their plantations every day, looking for open flowers to pollinate, which makes
production a highly labour-intensive task. Traditionally production involves
the entire family. They pollinate the vanilla flower by hand, and then collect,
cure and dry the pods. They cure the pods by boiling and drying them for three
to four months, partly in the sun and partly in cloth, until they become pliable
and deep brown. Vanillin, which gives the spice its distinctive flavour, can
then be extracted from the pod.
Synthetic vanilla is a cheaper alternative to natural vanilla and is used especially
in times of high prices. United States manufacturers are keen users of synthetic
vanilla, while European consumers still prefer natural vanilla, which accounts
for at least 50 per cent of their consumption. The current overall trend is to
promote natural vanilla. |
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