Madagascar Vanilla market report n°04 - March 2026

The golden age of vanilla in Madagascar now feels like a distant memory, as the expected market correction remains brutal, poorly understood, and still unfinished.

An analysis of the past twenty years highlights three major cycles, closely interconnected through cause-and-effect mechanisms. Understanding these cycles is essential to grasp the current market balance and to optimize low-risk hedging strategies for the coming seasons.

Cycle 1 : 10 years – 2005–2014 – Liberalized bearish market – Average export price: $25/kg

For 10 years, the market operated freely, without export licenses, price floors, or export closing dates, with an average price of around $25/kg.

From 2005 to 2012, supply largely exceeded demand, leading to historically low prices, down to $13/kg for cuts.

These low prices stimulated demand but discouraged some producers, gradually reducing supply. Only 9 years later, starting in 2013, the market began to rebalance. Some importers, anticipating this end-of-cycle reversal with remarkable foresight, accumulated significant stocks around $50/kg, which were later successfully valorized.

Cycle 2 : 8 years – 2015–2022 – The miracle of liberalization – Average export price: $300/kg

Vanilla became scarce and demand exceeded supply, leading to a steady increase in prices from 2015 until the peak reached in 2017 at $500/kg.   At the local level, the glass ceiling was broken and the price paid to producers reached an unprecedented record, up to 1,400,000 Ariary/kg ($450). The decline in prices began as early as 2018, but prices remained sufficiently high during these eight years, benefiting producers. A unique golden age.

The term “wild liberalization”, in a market that had been free for 25 years (1995–2020), never truly resonated, even though it allowed two price peaks in 2004 and 2017.

However, this eight-year vanilla boom led to:

• Massive plantations and an explosion in the number of producers
• Expansion from 3 producing regions to 8 regions in Madagascar
• A culture of permanent speculation deeply rooted in local mindsets
  
  

At the same time, high prices once again slowed demand, while new plantations began producing from 2020 onward, gradually reversing the market balance. Supply then became greater than demand, initiating a natural price correction.

This correction could have been gradual, but it became brutal because it was disrupted by decisions taken between 2020 and 2023, artificially preventing prices from declining naturally. Price floors ($250), unofficial minimum prices, restrictions on export licenses, random export closing dates, and the $4/kg CNV tax complicated exports and altered buyers’ hedging strategies, pushing them toward other origins. Meanwhile, Malagasy production continued to increase, leading to an accumulation of stocks and a deep imbalance — the prelude to Cycle 3, during which the sector will have to pay for the four years of market distortion.

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Cycle 3 : 2023 to today – Structural overproduction – Average export price: $40/kg (ongoing)

The duration of the current Cycle 3, as well as the level of the average export price, remains uncertain. However, considering the duration of the two previous cycles (10 and 8 years), the unprecedented accumulation of stocks in Madagascar and internationally, two consecutive strong productions, and the repayment of the “debt” created by market distortion, we estimate—based on a rational trend analysis—that Cycle 3 could last longer, with prices potentially lower than those of Cycle 1.

By projection, a duration of 15 years for this new bearish cycle would bring a return to equilibrium around 2038 at the earliest.

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Production : a durable imbalance

The 2025/2026 campaign confirms a historic production level for Madagascar, estimated at a minimum of 4,500 tons, likely a national record. 

The average weight of prepared vanilla per producer reached 30 to 35 kg compared to 15 to 20 kg usually, reflecting a near-doubling of yields. With approximately 160,000 active producers (conservative estimate), this dynamic mechanically explains the scale of the volumes observed.

Production 2026/2027: Supply exceeding absorption capacity

Four months before the new harvest, less than 1,500 tons "would have" been exported, which means more than half of the 2025 harvest "would remain" in the country. These volumes will be added to old stocks (2022 to 2024) and will precede the arrival of the 2026 harvest. 

Flowering observed in late 2025 also confirms an abundant production for 2026/2027, also estimated around 4,500 tons. We are therefore facing a cumulative effect of surplus offers. 

The market is confronted with two supply peaks in a context of cautious international demand. Despite the price drop, sales are falling instead of increasing, reflecting that the supply-demand imbalance continues to widen today.

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How to explain two consecutive years of production peaks?

• Continued planting in the hope of a rapid return to a bullish cycle
• A strategy of compensation through volume in the face of falling prices
• Still too few producers leaving the sector
• Optimal climatic conditions at the time of floral induction.

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Quality : confirmed overproduction of cuts

In our previous report (N°3), we expressed doubts about the effects of over-pollination on the proportion of cuts. These concerns are confirmed today: 40% of the 2025/2026 production consists of cuts. 

We observe many long but thin and less fleshy pods, which explains this historically high share and justifies the currently low prices for cuts.

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Unprecedented logistical pressure on producers

The 2025/2026 campaign also revealed a new problem :

• Producers faced a doubling of green vanilla volumes to be treated, reaching 150 to 175 kg per producer.
• No correlated increase in drying or storage surfaces or equipment

This lack of synchronization between rising production and limited logistical capacities led to an estimated increase of 15% in the 2025 production of phenolated vanilla.

A nonetheless solid intrinsic quality

In the absence of pressure linked to an early harvest, the overall quality remains satisfactory. 

Exporters have reinforced their selection criteria, particularly for gourmet segments. Properly sorted lots show good vanillin levels, higher than +1.6% for long pods.

After maturity issues, new challenges are now appearing, particularly those linked to contaminants.

2026/2027 Campaign – Toward fleshier pods and fewer cuts?

The late flowering peak took place in November 2025, compared to October the previous year.

We estimate that :

• 29% of production will reach maturity in June 2026, prepared by producers before the opening of the green market
• 66% in July 2026 will wait for the official opening date of the green market

The number of flowers fertilized in 2024 and 2025 is comparable. The same questions remain regarding a high proportion of cuts and phenol.

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Prices : do not catch a falling knife

The announcement by the Ministry of Commerce of realistic reference prices aligned with the international market marks an important strategic turning point. It finally reflects a realization of the gravity of the current imbalance in the vanilla sector. The main issue is clear: restore competitiveness and sell off the available volumes.

Reference prices generally consistent with the excess supply

Official reference prices are set at $15/kg for cuts, $25/kg for longs, and $50/kg for gourmets.

First bubble: the effect of the 306 licenses

The issuance of 306 export licenses generated a first speculative bubble at the local level. Many producers and collectors saw it as a signal for the return of the bullish cycle this year, believing that  :

More licenses = more buyers = more competition = price increases.

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Instead of quickly liquidating their stocks, many chose to hold back volumes, hoping for a price rebound. This attitude reflects a deeply rooted speculative culture within the sector, summed up by the saying: “Not sold, not lost.”

This retention strategy temporarily pushed local prices upward, but it also worsened the structural problem: the accumulation of unsold stocks, while gradually draining the cash flow of local market participants.

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Second bubble: the attempt to control the market

A second, even more irrational bubble formed at the beginning of the campaign.

A group of actors attempted to free themselves from the laws of the market by seeking to buy most of an initially underestimated 2025 production while artificially pushing prices upward, counter to a cautious international trend.

These operators now find themselves with a cost price higher than current reference prices and are exerting pressure to re-establish a floor price at $50/kg. Such a measure would be disconnected from market reality and contrary to the general interest of the sector. Fortunately, this proposal was not accepted by the authorities.

Do not catch a falling knife

The expression "do not catch a falling knife" perfectly describes the current situation.

The two local bubbles are bursting, and local prices are falling again—or more precisely, are gradually returning to their equilibrium level, depending on the volumes actually available on the market.

Better protection for certified producers

Certified producers are relatively better protected today. Thanks to guaranteed minimum price mechanisms linked to certifications, they have been able to sell their lots at levels covering their production costs, currently estimated at an average of around $20/kg.

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Sustainability : a social time bomb

World demand is estimated at 3,000 tons/year, while Madagascar alone produces 4,500 tons/year.

We thus estimate that 40% of producers could generate no income from vanilla starting this campaign, which is about "65,000" producers at risk out of 160,000.

The duration of the bearish cycle, beyond our minimum estimate of 15 years, is suspended on the decisions of these producers. 

Three main scenarios are emerging :

• Leave the sector, with the risk of seeing neighboring producers benefit from the next bullish cycle
• Continue producing despite the absence of income, hoping for a market recovery
• Put plantations on standby, reducing maintenance and investments

This choice represents a real dilemma for producers: a difficult decision, but one that has become unavoidable.

For others: Collapsing income

In 2026, with an average price of approximately $30 for extractions, we have returned to the same level as the 2012/2013 campaign, where the average export price was $28.

In other words, in 14 years, at an equivalent export price, the purchasing power of the Malagasy producer has fallen by half (-45%, cf purchasing power comparison table).

The cumulative effect of the exchange rate devaluation and local inflation has considerably impoverished households. 

Today, a vanilla producer lives on $0.66/day/person, which is 5 times less than the World Bank poverty line ($3/day/person).

This situation of extreme poverty is both alarming—because vanilla, the flagship product of the SAVA region and of Madagascar, no longer provides a living—and revealing of strong resilience, as 81% of income now comes from non-vanilla activities (rice farming, livestock, other cash crops, banana and cassava plantations…).

During the bullish Cycle 2, income reached $3.80/day/person and 90% of income came from vanilla.

Direct and visible consequences

• Difficulties accessing healthcare
• Massive and accelerating deforestation (charcoal production and tavy rice fields)
• Children dropping out of school due to lack of financial means
• Growing food insecurity

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Encouraging local initiatives

In some areas, the development of VSLA (Village Savings and Loan Associations), supported by cooperatives and NGOs, provides concrete solutions alongside the sustainability programs of many companies. We encourage these initiatives to be strengthened, as it is during down cycles that supporting producers’ resilience and diversification makes the most sense.

Conclusion : a story of balance and cycles

Regaining balance before 2038 is an uphill battle. The room for maneuver is limited: the only adjustment variable remains the "unforced" reduction of supply, combined with an increase in demand. However, this will depend on the choice of producers: to exit a sector that has become poorly profitable, or to continue producing in hopes of better days. It is this individual choice, repeated on a large scale, that will determine the speed of the return to equilibrium, in addition to climatic and geopolitical risks.

Paradoxically, this long ongoing bearish cycle constitutes a factor of stability. It offers the market a favorable environment to stimulate demand and reassure industrial players. The current context presents an excellent quality-to-price ratio, creating a historic opportunity to reintegrate more natural Bourbon vanilla from Madagascar into food formulations.

We are observing a pattern similar to Cycle 1: the market invariably follows a known structural dynamic, where limited State intervention would allow the market to self-regulate more quickly. Conversely, heavy interventions—restrictive licenses, floor prices, etc.—aggravate the imbalance and risk prolonging the return to equilibrium toward a 25-year horizon.

The main remaining obstacle is the 4-month export closure period. Its urgent lifting is vital to fluidize commercial exchanges and restore the confidence of international buyers, who must be able to purchase year-round with visibility and security, as they did during the 25 years of the free market.

Can prices drop even further below current levels? To claim otherwise would be unrealistic. The market remains subject to the laws of supply and demand within an imbalanced context where producers and companies face rising fixed costs due to inflation, while hoping for the good conscience of buyers not to "kick them while they are down".

In this long Cycle 3, the winning strategy will be one of agility: operating on a "just-in-time" basis to limit price risk exposure, seizing spot purchase opportunities, gradually building a strategic reserve, and, above all, strengthening sustainable commitments to support producers and calmly prepare for the next Cycle 4, which will inevitably be bullish when vanilla becomes scarce again in X time.

Of course, this "technical" analysis is based on "our own" perceptions, projections, and market data at a given time T. As the industry is in perpetual motion, a truth today may be obsolete tomorrow.

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