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.
For a somewhat deeper anthropological dive into this, although in a very accessible way, you might check out the book "cows, pigs, Wars, and witches". One of the case studies is a culture with a boom-bust cycle much like this.
> 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.
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.
>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.
it’s not being manipulated, what you’re seeing as “the farmer wasn’t willing to accept that much” is probably a little bit of hyperbole with a few anecdotes.
The more interesting bit is that farmers are not directly setting the price they will be paid. There’s clearly a huge information assymetry, so the pricing is necessarily going to be dictated by the purchasers.
Given that all of the purchasers know the same thing, they will know approximately what the actual market price will be. Before they have talked to any farmers. They don’t need to talk to any other purchasers. They have all of the required information. So when the legal market period starts all of the purchasers will arrive knowing what a reasonable price will be this season.
From a farmers point of view though, what happens is this:
* You take your beans to the market
* you are offered money for the beans. Sometimes you are offered 100 times as much. You have no idea why.
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.
The farmers generally know that more money is better than less money, even if they will ultimately spend most in what we might see as a frivolous fashion.
If anyone was gaming the market on this level, they would be giving fewer proceeds to the uninformed farmer, not more.
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.
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.
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?
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.
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.
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.
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.
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.
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.
[+] [-] olefoo|7 years ago|reply
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.
[+] [-] dgacmu|7 years ago|reply
[+] [-] ravenstine|7 years ago|reply
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.
[+] [-] peterwwillis|7 years ago|reply
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|7 years ago|reply
How will that help if the problem is gangs?
[+] [-] ars|7 years ago|reply
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....
[+] [-] olliej|7 years ago|reply
The more interesting bit is that farmers are not directly setting the price they will be paid. There’s clearly a huge information assymetry, so the pricing is necessarily going to be dictated by the purchasers.
Given that all of the purchasers know the same thing, they will know approximately what the actual market price will be. Before they have talked to any farmers. They don’t need to talk to any other purchasers. They have all of the required information. So when the legal market period starts all of the purchasers will arrive knowing what a reasonable price will be this season.
From a farmers point of view though, what happens is this:
* You take your beans to the market
* you are offered money for the beans. Sometimes you are offered 100 times as much. You have no idea why.
[+] [-] barry-cotter|7 years ago|reply
[+] [-] oh_sigh|7 years ago|reply
If anyone was gaming the market on this level, they would be giving fewer proceeds to the uninformed farmer, not more.
[+] [-] unknown|7 years ago|reply
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[+] [-] skybrian|7 years ago|reply
[+] [-] olliej|7 years ago|reply
[+] [-] sureaboutthis|7 years ago|reply
[+] [-] Finnucane|7 years ago|reply
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?
[+] [-] gggggggg|7 years ago|reply
[+] [-] Serow225|7 years ago|reply
[+] [-] dbuder|7 years ago|reply
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[+] [-] olliej|7 years ago|reply
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.
[+] [-] empath75|7 years ago|reply
[+] [-] WheelsAtLarge|7 years ago|reply
[+] [-] angled|7 years ago|reply
[+] [-] jmnicolas|7 years ago|reply
[+] [-] nitwit005|7 years ago|reply
[+] [-] RangerScience|7 years ago|reply
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|7 years ago|reply
[+] [-] swingline-747|7 years ago|reply
Also, I hope the prices of the real stuff goes down, at least for a few months.
[+] [-] Blackthorn|7 years ago|reply
[+] [-] cuboidGoat|7 years ago|reply
Though I do feel a bit sorry for the chameleon. It probably wasn't too impressed.
[+] [-] unknown|7 years ago|reply
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[+] [-] nosjwshere|7 years ago|reply
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