
Bracing for the Vanilla Boom - wellokthen
https://www.sapiens.org/culture/madagascar-vanilla-boom/
======
olefoo
This is a pretty fascinating article even though it is frustratingly
superficial. It seems like there are a bunch of different threads here that
would benefit from exploration; the behavioral economics thread; the
anthropology thread, the climate change thread ( notice how weather has
changed the price repeatedly in the article ), and the producer/consumer
disjunction thread. Maybe the author should do some more fieldwork and turn it
into a book.

The Malagasy vanilla farmers behavior in the face of a windfall is not that
different from many Americans actions in similar circumstances from what I've
seen. People with a sudden access of money will often splurge on bizarre
displays of wealth, sports cars and motorcycles, fancy clothing they rarely
wear; etc. Often not because they have a long-held desire for the toys they
are buying but because they have a cultural template of what wealth and
success should look like that they are trying to act out.

~~~
ravenstine
> People with a sudden access of money will often splurge on bizarre displays
> of wealth, sports cars and motorcycles, fancy clothing they rarely wear;
> etc. Often not because they have a long-held desire for the toys they are
> buying but because they have a cultural template of what wealth and success
> should look like that they are trying to act out.

It's astounding that many people still aren't self-aware enough to realize
this and take appropriate action when they gain a lot of wealth. Seems like
common and easily accessible knowledge at this point. I suspect it's a form of
evolutionary wealth redistribution that's built in to the human genome.

~~~
ceejayoz
> It's astounding that many people still aren't self-aware enough to realize
> this and take appropriate action when they gain a lot of wealth.

Who says they're not self-aware?

The article explicitly mentions it's unsafe to take the large amounts of cash
traveling, which it notes "are usually a day’s trek away". It's not uncommon
for developing-world banks to be untrustworthy, as well.

Spending it instead of having it stolen or being murdered for it might be the
right approach here.

~~~
duxup
Wouldn't lavishly spending it still be an issue as you're likely to stand out
/ be targeted?

Let alone that stealing stuff might not be as convenient as cash, but still
desirable...

------
peterwwillis
It actually makes tons of sense to invest in non-cash goods to trade later
when there's a bust. But no matter what form your profits are in, the big risk
in Madagascar (besides the cyclones) seems to be the gangs. Drivers regularly
get murdered driving across territories controlled by gangs. There's really
not much law enforcement to speak of and the country is insanely poor,
considering all this vanilla commerce.

The vanilla trade often takes advantage of the people living in vulnerable
communities and doesn't pay a living wage. If we all want ethical access to
quality vanilla, we need to start asking buyers to start sourcing certified
fair trade (or better) vanilla, and to work to improve the fair trade system.

~~~
OscarCunningham
>The vanilla trade often takes advantage of the people living in vulnerable
communities and doesn't pay a living wage. If we all want ethical access to
quality vanilla, we need to start asking buyers to start sourcing certified
fair trade (or better) vanilla, and to work to improve the fair trade system.

How will that help if the problem is gangs?

~~~
dan-robertson
If it pays better to work in the legal vanilla trade than the dangerous work
of being in a gang, people will typically not choose to be in a gang.

~~~
cremp
I'd argue that it is just like drugs; you can make a lot more working the
street than in a cubical. That's why some do it in the first place, the risk
of prison time doesn't matter, because when you get out, you'd still have more
money than if you worked in a cubical.

~~~
Retric
Most people selling drugs make around minimum wage in the US. What makes it
attractive is you don't pay taxes, a small percentage get rich, and most
people have few options.

I would assume the most gang members in Madagascar are making even less.

------
ars
To me this means vanilla prices are being manipulated.

If the farmers themself are not demanding so much money, then who is? Someone
is artificially restricting supply, or inflating prices.

Wonder how long it will go on before it crashes....

~~~
barry-cotter
If you want to manipulate a market that big you’d better have very deep
pockets or be willing to take a very large loss. It’s easy to drive up the
price of something, buy lots of it. It’s easy to drop the price of something,
sell down your stockpile. The only way to make money by buying lots of
something and then selling loads of it later is by successfully predicting
that future demand will be higher than current demand.

~~~
pbhjpbhj
Or buy most of crop that is the right size for market demand. Will people pay
5p more for a chocolate bar instead of going without, for sure. So, buy all
the chocolate. If there's no one else to buy from and you have no morals then
you've won.

I think someone did this with a large portion (several tenths) of the
[European?] cocoa bean supply.

~~~
barry-cotter
That’s really, really difficult. You’re relying on no one else figuring out
what you’re doing and exploiting that knowledge.

[https://en.m.wikipedia.org/wiki/Silver_Thursday](https://en.m.wikipedia.org/wiki/Silver_Thursday)

Silver Thursday was an event that occurred in the United States in the silver
commodity markets on Thursday, March 27, 1980, following the Hunt brothers'
attempt at cornering the silver market. A subsequent steep fall in silver
prices led to panic on commodity and futures exchanges.

Porsche makes more VW stock available to desperate short-sellers

[https://www.theguardian.com/business/2008/oct/29/vw-
volkswag...](https://www.theguardian.com/business/2008/oct/29/vw-volkswagen-
short-selling)

~~~
pbhjpbhj
It seems that the Hunts were nobbled, the changes to the rules they were
trading under, the federal reserve instructing banks not to lend them money,
etc.?

[http://web.pdx.edu/~jjackson/HuntSilver.html](http://web.pdx.edu/~jjackson/HuntSilver.html)
is a useful synopsis.

------
skybrian
It seems like a system of phone money transfer (something like M-Pesa) would
be pretty helpful there.

~~~
olliej
The problem I suspect is that the local banking system isn’t super great,
needing enough money to buy a smart phone in order to accept payment seems
risky.

~~~
unmole
M-Pesa doesn't need smartphones. Most farmers probably are already using
_dumb_ feature phones.

~~~
olliej
Neat!

But does it require a bank account (which was my main concern)? Per
[http://www.afd.fr/en/developing-mobile-banking-
madagascar](http://www.afd.fr/en/developing-mobile-banking-madagascar) only 5%
of Malagasy had access to a bank account in 2014.

~~~
cheriot
I'm not sure it requires a bank account. People can go by the same stall they
bought their sim card from and put money on their account. One of the benefits
is that it brings people into the financial system that otherwise don't have
access.

~~~
olliej
People have access to the financial system by virtue of having actual
currency.

The question is how you move physical currency out of a payment system, if you
don't have actual access to a bank. Essentially if you have "money" in any
kind of non-cashable form you can't use it to buy anything. So being paid
electronically in an environment where most people you interact with only
accept cash/goods is essentially the same as not having money.

The ability to put money into any kind of electronic payment system is, if
anything, less important than the ability to withdraw it, especially if you're
in an environment that is still dominated by cash payments.

~~~
unmole
Most cell phone connections in developing world are prepaid. There is a well
established system of vendors who accept currency and credit your phone
airtime balance. M-Pesa leverages the same system by turning them into banking
agents. You can deposit and withdraw funds by visiting your neighborhood
grocer.

------
sureaboutthis
I cook at home and, for comparison, I usually buy vanilla at Penzey's. A large
bottle of vanilla cost $28, maybe less, and it lasts me a year or so. A month
ago, I went for a new bottle and it was listed at $50.

~~~
Finnucane
I'm getting near the end of the half-pound of Mexican vanilla I bought just
before prices went totally nuts (that packet of beans cost me $55). Not sure
what I'm going to do when I run out.

One factor not mentioned in the article is the increased demand from
industrial users. Food processors having been trying to replace artificial
flavors with natural, and there isn't enough vanilla to go around. Global
production is actually quite small, compared to say coffee or chocolate. And
it seems unnecessary. Synthetic vanillin is identical to real vanillin.
Admittedly, it lacks the additional secondary flavor chemicals that make real
vanilla tastier, but does that really matter to Jell-O pudding?

~~~
frockington
Consumers enjoy patting themselves on the back by feeding their children all
natural food. As absurd as it is the "natural" label carries a lot of weight
with suburban soccer moms (and probably others as well)

------
gggggggg
Its common to see this hot money concept in a lot of farming. I cant tell you
how many farmers I know who have no money in drought seasons, but they bought
a Mercedes in the good years.

~~~
Serow225
Yes for sure - or 80k+ pickup trucks…

~~~
bregma
... or a downpayment on a new Deere...

------
olliej
This is a super neat article.

I do wonder if some of the big asset purchases (the motorbike example) are
also to act as a non-bank money store? Much easier to lock up a bike than a
pile of money, etc.

~~~
dmcdm
This makes a lot of sense and seems obvious, actually. I'm surprised the
author didn't make that connection, especially while pointing out that
sometimes the fancy motorbike would be owned by an old Grandpa who had no
intention of riding it, and rather spent all day polishing it (that is, trying
to mitigate depreciation).

~~~
olliej
Not as fun an article? Or at least maybe they didn't think it was?

I think the entire thing was interesting and could have stood on its own, but
maybe that conceit provided a thread to tie the article together?

Also, in response to the M-Pesa comment, I did a quick googling, and it looks
like as of 2014 only 5% of Malagasy had a bank account at all.

------
empath75
Seems to me like the farmers need to form a futures market to even out the
boom and bust cycles.

------
WheelsAtLarge
Funny to see this article. It's been years since I had to buy vanilla extract
at the store. Today I had to get some and was shocked to pay $13 for 2 oz. I
don't remember it being so expensive but now I know why.

------
angled
The NYT covered this topic in late August 2018:
[https://www.nytimes.com/interactive/2018/08/30/world/africa/...](https://www.nytimes.com/interactive/2018/08/30/world/africa/madagascar-
vanilla.html)

------
jmnicolas
I expected this to be about World Of Warcraft Vanilla ... I probably need to
get a life :-)

------
nitwit005
Unstated in all this lavish spending is that there must be some very
successful merchants taking advantage of other people's poor spending habits.
Someone is shipping all that stuff out to them.

------
RangerScience
A lot of libertarian and capitalist faith in the market relies on individuals
having the _capacity_ for "private property".

This is (in part) an example of how that thinking breaks down as that
assumption breaks down.

If enough people cannot have private property, can the market function as
desired by those who believe in it?

~~~
OscarCunningham
There's not really an alternative though. If the country lacks the ability to
implement a "small government" system like libertarianism, then it definitely
can't implement a "big government" system like communism.

------
swingline-747
Isn't most vanillin created as a byproduct of the paper industry?

Also, I hope the prices of the real stuff goes down, at least for a few
months.

~~~
Blackthorn
I'm actually surprised by how good the wood pulp version tastes. Unless I'm
buying straight up vanilla ice cream, I don't mind the wood pulp version of
vanilla at all. If it's vanilla with stuff mixed into it, I won't really be
able to tell the difference.

~~~
sk5t
It's my understanding that modern "imitation" vanilla is chemically identical
to the natural stuff. Even so, I buy the regular...

~~~
stone-monkey
I read in an article that real vanilla only matters for applications that
don't involve high heat, as the other flavors in a real vanilla bean get
cooked out. Imitation is just as good for most purposes.

Just remembered, it was a food lab article:

[https://sweets.seriouseats.com/2013/12/taste-test-is-
better-...](https://sweets.seriouseats.com/2013/12/taste-test-is-better-
vanilla-extract-worth-the-price.html)

Food lab is my go to for food related articles interesting details behind the
science and process of cooking.

~~~
Moru
Reading the article, they talk a lot about the alcohol cooking away leaving
you tasting less alcohol in the product. Now my question is, where do I buy
vanilla that comes in 35% alcohol solution? I can only ever remember seeing
dry vanilla.

~~~
mhb
Amazon or many supermarkets?

[https://www.amazon.com/McCormick-Natural-Vanilla-Extract-
Glu...](https://www.amazon.com/McCormick-Natural-Vanilla-Extract-Gluten-
Free/dp/B005MIWPGC/)

------
cuboidGoat
I love the concept behind the chameleon pasted with money.

Though I do feel a bit sorry for the chameleon. It probably wasn't too
impressed.

