Any farmer who has grown "luxury" crops (non-subsistance plants) for more than a few years, knows that supply and demand are the primary factors that drive the market. Several years ago coffee was the big luxury crop. Demand was high and wholesale prices were good. From the perspective of most seasoned coffee farmers, it made sense to produce their normal crop, maybe even increase production. Farmers new to growing luxury crops enthusiastically tore up their food plots on prime land and planted coffee bushes, certain that they would earn enough cash to get ahead.
While the seasoned farmers were careful and the new farmers took a huge risk, neither group had any way of knowing what was happening in other tropical countries. Well-meaning USAID and other government sponsored groups encouraged struggling farmers everywhere to plant coffee as it would be the ticket to their becoming self-sufficient. In fact, suddenly the market was inundated with coffee beans. Further, the cost of living in Vietnam, a country new to the coffee industry, was much lower than Central America where coffee had been grown for generations. Vietnam could afford to sell cheaply, and inadvertently undercut Central American farmers. Farmers who tore up their food crops in favor of coffee were faced with potential starvation. Who benefitted? The large companies who bought the cheap coffee and maintained a larger margin of profit than usual, well aware that people in industrialized countries weren't going to forego their coffee and were willing to pay a good price for it.
When vanilla prices skyrockted, the same pattern occurred. For some coffee farmers, this was an opportunity to recoup from their losses. And even as the prices have now collapsed, farmers contact me all the time to find out how to grow vanilla. Why? Partially because information is slow to reach people who live in the "bush" and haven't access to computers or market information. And partially because cost of living is low enough that it's worth it to take the chance. Unfortunately, it usually isn't in the grower's best interests.
So what should farmers do? First, always keep food crops on prime land so the family eats no matter what. If available land is limited, creating collectives where farmers work together to produce several crops and share in the profits makes sense. This is especially good for getting organic certification or Fair Trade status. Certification isn't cheap, but if costs are shared by several farmers, all benefit as organic crops command a higher price.
Creative planting of luxury crops is another option. An example of this can be seen in the Gulf Coast of Mexico. Central Veracruz has hundreds of hectares in citrus and, at one time, this region produced much of the US citrus crop. Then Brazil planted oranges that were cheaper than Mexican oranges, and Florida's citrus grows near the processing plants, so Mexico was largely cut out of the American citrus market. A few smart farmers started planting vanilla in their orange groves. The trees are excellent tutors, pollination and harvest times don't interfere with one another, and two crops are produced in the same space as one.
One final option is to look for low-interest government or international loans for starting value-added products from crops. In the case of vanilla, create extract for markets in nearby countries or for in-country use. Package vanilla beans and extracts for the tourist market. Start an ice cream factory or bakery in your area where vanilla can be used. Study recipes on my site or in my books and open a cafe in a tourist region featuring local foods flavored with vanilla. Resourcefulness is the key to survival. Work as a team so that everyone benefits. I realize these aren't magic solutions that will completely solve the problems farmers face when prices collapse, but hopefully it will provide "food for thought."
If you have thoughts or ideas to share on this topic, please do e-mail us; we'll be happy to post good suggestions.