Mars and Danone invest in sustainable Madagascan vanilla
Mars and Dannon have helped set up a fund to improve vanilla quality and reduce poverty among Madagascan farmers, Just-Food reports.
The Livelihoods Fund for Family Farming is a project the companies founded in 2015 with flavor firm Firmenich and water management company Veolia to make agriculture more sustainable. By connecting producers more directly to the market, it aims to return about 60% of cured vanilla’s value directly to farmers during the next 10 years, up from the 5% to 20% they receive today.
About 80% of the world’s vanilla comes from a small area of Madagascar, but volatile prices and financial shortages have pushed farmers to harvest their crops early, reducing product quality. The $2.3 million fund will also invest in rice production and crop diversification to help improve the diets of vanilla farmers.
The project is a win-win for the companies behind it, which have committed to buying the resulting high-quality vanilla. Preferential access to a quality supply is likely to give Mars, Dannon and Firmenich a significant competitive advantage for what has become an increasingly challenging ingredient in recent years. As an additional incentive for farmers to produce better quality vanilla, the investment will be gradually refunded to the Livelihoods Fund for Family Funding over the next decade, through a results-based fee from the companies involved.
Vanilla is one of the world’s most popular flavors, but more than 95% of the vanilla flavoring used in foods like ice cream and confectionery is artificially derived. Natural vanilla is rare and prohibitively expensive for many products. Last year, a shortage drove prices to about $225 a kilogram, up from about $25 a kilogram just four years ago. Vanillin, the compound responsible for vanilla’s distinctive flavor and aroma, can be produced synthetically — and much less expensively — from wood resin or petroleum. However, with consumers increasingly looking for foods and drinks that are free of artificial flavors, companies including Nestlé, Hershey, Kellogg and General Mills are reverting to natural vanilla, even with all the supply challenges that it entails.
This is not the first initiative that aims to tackle vanilla sustainability in Madagascar. In 2016, members of the global vanilla industry launched the Sustainable Vanilla Initiative to address pricing and product quality concerns while improving farmers’ livelihoods. SVI members represent more than 70% of global vanilla bean purchases, and include food manufacturers, international flavor houses, vanilla bean traders and cooperatives. Mars is involved in both initiatives, while other food companies involved in the SVI include industry giants like Nestlé and Unilever.