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Jakarta, October 16, 2023 - Indonesia, located in Southeast Asia, has emerged as one of the world's largest vanilla producers, second only to Madagascar. Indonesia's high-quality vanilla with a strong and long-lasting aroma, along with the continuously growing global demand, presents significant potential for Indonesia to surpass Madagascar in the vanilla industry.
Vanilla plants produce fruit containing valuable aromatic compounds highly sought after in various industries, particularly the food and beverage sector. However, vanilla cultivation requires two to four years before the plants yield pod-shaped fruits ready for harvesting.
Vanilla prices in the global market are remarkably high, averaging EUR270.40 per kilogram for vanilla extract and EUR175.56 per kilogram for whole vanilla in 2022. The elevated prices have earned vanilla the nickname "black gold" of plants.
Data from the United Nations Food and Agriculture Organization (FAO) in 2020 indicated that Indonesia contributed approximately 30.3% of the world's vanilla production, with an output of around 2,306 tons, placing it behind Madagascar, which controlled 39.1% (2,975 tons) of global production.
Despite being a significant vanilla producer, Indonesia is still ranked seventh in terms of vanilla exports globally, contributing around 2.63% to the total global vanilla exports. There is substantial potential to increase Indonesia's vanilla exports, with data from the ITC Export Potential Map showing the potential for a USD 59 million increase in vanilla exports from Indonesia to the world.
Rini Satriani, Head of Research and Development Division at the Indonesian Export Financing Institution (LPEI), expressed, "Concerns about global vanilla supply have arisen due to various factors such as drought, hurricanes, and poor farming practices in Madagascar. This could be an opportunity for Indonesian vanilla."
In 2022, the top five main destination countries for Indonesian vanilla exports were the United States (64.93%), Germany (8.62%), the Netherlands (7.53%), Singapore (2.63%), and Canada (2.50%). Meanwhile, significant increases in vanilla demand have been observed from countries like France, the United States, Belgium, the United Kingdom, and Mauritius.
Currently, Indonesian vanilla exports are influenced by various variables, such as the price of French vanilla as the primary competitor, Indonesia's per capita GDP, the per capita GDP of the export destination countries, economic distance, and exchange rates.
"A 10% increase in vanilla prices in France results in a 0.41% increase in Indonesian vanilla exports, ceteris paribus. The rise in export prices of vanilla from competing countries, like France, leads importing nations to prefer exports from other countries, including Indonesia. This creates significant opportunities for Indonesia to expand its market share," stated Rini.
Additionally, economic distance also impacts vanilla demand in ASEAN countries. ASEAN nations like Singapore, Thailand, and Malaysia prefer to import vanilla from Indonesia over competing countries like Madagascar, France, and Germany.
While vanilla holds substantial export potential, there are challenges that need to be addressed by Indonesian vanilla producers and exporters, including unstable supplies due to fluctuating weather and climate conditions. Efforts such as improving product quality, production capacity, and expanding export markets are essential steps in opening broader export opportunities in the future.
Therefore, the development of the vanilla commodity is not limited to financial support but must also provide benefits in enhancing product quality, community welfare, and environmental sustainability. As the Special Mission Vehicle (SMV) of the Indonesian Ministry of Finance, LPEI is a strategic partner in the export ecosystem, focusing on beyond financing, developmental impact, and sustainability.
Sofyan Irianto Naibaho, Head of the Consultancy Services Division at LPEI, emphasized, "Through #KemenkeuSatu, in collaboration with DJKN and the Customs and Excise Office, LPEI is taking concrete steps to improve product quality, production capacity, and expand vanilla export markets to 200 farmers from 20 villages in Manggarai and Manggarai Barat Regency. We hope these efforts can help vanilla farmers enhance their production quality and open up broader export opportunities in the future."
Media Contact: Chesna F. Anwar Corporate Secretary – Indonesian Export Financing Institution Phone: (021) 39503600 Email: corpsec@indonesiaeximbank.go.id Web: http://www.indonesiaeximbank.go.id
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