Fairtrade International Releases Report on Vanilla Living Income Reference Price

Today Fairtrade International shared their report on a Living Income Reference Price for Vanilla, based on research conducted in 2019 with vanilla farmers and stakeholders in both Uganda and Madagascar.  Anything but Plain: Exploring sustainable vanilla prices to achieve a living income for farmers  sheds light on several vital issues around farmer livelihoods, including current income for typical growers in both countries, the cost of a decent standard of living for households in vanilla growing communities, and an estimate of the minimum price needed for vanilla farmers—who have invested in good productivity on the largest reasonable vanilla plot they can support with mostly family labor —to afford that decent standard of living.

Sustainable Vanilla Initiative[1] (SVI) members welcome the Fairtrade Report, which will help SVI—as a whole as well as individual member companies—to better understand farmers’ needs.  This is particularly relevant as SVI is a voluntary industry initiative started in 2016 to contribute to growing the supply of sustainable vanilla, improving the livelihoods of vanilla farmers, and to addressing the crisis in the quality of vanilla.

The challenge for smallholder farmers to consistently earn a decent standard of living is not faced by vanilla farmers alone.  There are an estimated 500 million smallholder farms worldwide, many of which are connected to agricultural supply chains, with many of those farmers struggling with poverty.  Globally, 65% of poor working adults make a living through agriculture[2]. While price volatility is particularly extreme in vanilla, volatility, rural poverty, access to viable land size, and low productivity are common challenges in many smallholder agricultural sectors including cocoa, coffee, and tea.

The Living Income Reference Price study is a first for the sector and helps all vanilla stakeholders – farmers, government, NGOs, and companies such as the members of SVI – to better understand what is needed for farmers to reach a decent standard of living.  The research suggests a decent standard of living (after accounting for food grown for home consumption) costs around € 5,300 per year in Madagascar and € 6,500 in Uganda.  The study looks at the vanilla price needed for a family—who is fully employed growing vanilla, achieving good productivity by implementing recommended good practices, and growing other food and cash crops as allowed by the vanilla labor cycle—to reach that level of household earnings.  The findings show that average village market prices are currently well above the reference price.   This methodology also highlights that a decent standard of living cannot be achieved through high prices alone.  The requirements necessary for sustainable livelihoods for smallholder farmers include access to viable land size, good productivity, diversified income sources (including on-farm production of sustenance crops), and access to basic services such as education and healthcare that foster resilience.

Given the extreme boom and bust pattern in the vanilla market, today’s high prices are not likely to last and many farmers struggled to earn a decent standard of living in the market conditions that followed 2004 market peak.   Farmers are particularly vulnerable to a market downturn because yields are well below what they could be in Uganda and Madagascar and farmers in Madagascar, in particular, are increasingly reliant only on vanilla for their livelihoods because of the high prices.

The Fairtrade living income reference price report highlights the need for companies, farmers, and other stakeholders to continue investing in better farming practices and a more stable trading environment.  For more information about SVI and member company work to support farmer livelihoods, visit our website: www.sustainablevanilla.org.  For the full Fairtrade International Report, visit: https://files.fairtrade.net/publications/Fairtrade_Vanilla_LivingIncomeReferencePrice_explanatorynote.pdf.

[1] The SVI is a voluntary sustainability initiative uniting consumer goods manufacturer, global flavor/ fragrance companies, international vanilla bean traders and cooperatives. SVI members represent over 70% of worldwide vanilla bean purchases and have focused so-far on Madagascar, whereas Uganda is being developed as a second origin.

[2] World Bank, 2016