The prices of vanilla are higher than they have ever been. The wholesale price now runs at $850/kg for premium beans, which is 10% higher than last year (which was 30% higher than the year prior). Just 5 years ago, vanilla could be obtained at just $20/kg.
Consumers began to demand more natural ingredients in products like cakes, chocolate and yogurt, which led to big companies like Hershey converting to real vanilla for their chocolate. At the same time, the supply decreased due to plantations outside of Madagascar giving up on the labour-intensive crop that were priced low at the time. In March 2017, a cyclone hit Madagascar, the leading producer of vanilla in the world, which destroyed much of their crop.
The increase in demand was a result of the demand determinant: buyer’s preferences as they simply wanted more vanilla in their food products. The decrease in supply that occurred was a result of the supply determinant: cost of factors of production because the plantations stopped producing vanilla due to the low prices and labour-intensive nature of growing the crops. The natural disaster that occurred would also be categorized under the supply determinant of cost of factors of production.
Ultimately, the price at equilibrium increased while the quantity at equilibrium is ambiguous.