With the decline in the price of vanilla early in the last decade, many Ugandan farmers abandoned their plots or replaced it with other crops. This niche market and income-generating opportunity could easily have disappeared if not for the significant outreach and promotional efforts of the Ugandan vanilla trading company, UVAN, the investments and minimum price guarantee of the flavor and fragrance company Firmenich and the technical and financial support of DANIDA.
After years in the 1990’s with high prices, and the price bubble of 2002 to 2004, demand collapsed overnight and the vanilla prices fell to historic - and unsustainable - lows. The world market prices are now stable again having risen significantly from the lows of 2004/2005, and importantly the prices paid to farmers for the fresh green beans has increased more than 3-fold over the same period. This has helped support vanilla production and vanilla exports from Uganda have risen from 195 tonnes in 2007 to 235 tonnes in 2010. The Danida Business-to-Business Partnership between UVAN and Firmenich Denmark has played a key role in building the market for Uganda vanilla, and securing and increasing Ugandan vanilla production. UVAN buys the vanilla from approximately 6,500 small vanilla farmers, cures it and sells it to Firmenich. Firmenich makes specialized vanilla extracts for the flavours (food) and fragrance industry.
The B2B partnership between UVAN and Firmenich began in 2007. With the B2B support the two companies started a comprehensive programme, integrating work on improving the quality of UVAN’s product to support higher demand and prices, developing vanilla extension services to support production, and developing a range of social programmes focused on helping farmers address critical issues affecting them - with the overall objective of supporting the vanilla farmers in improving their living conditions and protecting them against the volatilities of the global vanilla market. The triple bottom line Firmenich’s customers demand high quality sustainable vanilla, which means that the partners have to deliver consistently, pay the farmers well and further that there is a profit incentive in promoting social responsibility. The partnership is focusing on “the triple bottom line”, people, planet and profit, securing not only economic success, but also a sustainable social success. The programmes implemented under the B2B support include, for example, the purchase and distribution of mosquito nets to vulnerable families, training in high quality vanilla farming, HIV/AIDS awareness workshops, and the setting up of microfinance systems. Common to all the programmes is that the community needs to have the ownership of them, which increases the likelihood of sustainability. The Village Savings and Loans Association (VSLA) programme shows this clearly - members of the communities helped to form savings groups, and following training in methodology. The saving cycle is over 9 to 12 months, and some groups are now on their 3rd cycle of saving.
The partners’ strong social responsibility programme has a direct impact on marketing and can open new commercial opportunities. Estée Lauder chose to use the Ugandan vanilla in their fragrance ‘Pure’ by DKNY in part because of the partners’ support for the women in the vanilla growing communities, particularly through the VSLA programme. Estée Lauder provided extra funding to the establishment of Village Savings and Loans Associations (VSLAs), now including 2,500 members with 70-80 pct. being women. The VSLAs make it possible for the vanilla farmers to invest in their farms and other ventures, thus reducing their vulnerability to unexpected expenses. The partnership between UVAN and Firmenich shows that big business is not only compatible with improved living standards of the small farmers, but can benefit from being socially responsible.