In 2004, with the market crashing around them, vanilla farmers in Kerala and Tamil Nadu came together with the help of the Spices Board of India to form a cooperative called Vanilla India Producers' Company Ltd (Vanilco). Its members constitute individual farmers and farmers societies who buy beans from smaller farmers and sell it to Vanilco.

Currently, this cooperative has 1,600 members who buy beans from almost 25,000 farmers in Kerala and Tamil Nadu. In 2005, when vanilla was trading in two digits, Vanilco paid a premium price of Rs 250 per kg of green beans and bought 45 tonnes of green beans from farmers.

The organisation works on a concept of deferred payment, where they take the stock from the farmer with a promissory note of payment once the stock is sold. The company managed to sell all their stock, their main buyer being the State Trading Corporation Limited (STCL).In this purchase, done under the direction of the Union ministry of commerce, the state corporation bought three tonnes of cured beans (equivalent to 18 tonnes green bean) for Rs 45 lakh at the rate of Rs 1,500 per kg for cured beans. But by 2006 the trouble got out of hand.

Vanilco purchased close to 130 tonnes of green vanilla beans, paying farmers the 2005 price of Rs 250 per kg. But the cooperative has not been able to find any buyers. Their big buyer, STCL has also withdrawn from the market.

"We have been unable to sell most of the cured beans that was procured from Vanilco,' says an STCL official, without divulging details about the exact quantity lying with them. Vanilco is in troubled water.

On the one hand, the farmers are demanding money. On the other hand, 15 tonnes of cured beans are lying in its stores with no takers. Now the next harvesting season, starting in October, is around the corner. Vanilco has an outstanding payment of Rs 1 crore to the farmers apart from a bank loan of Rs 1.2 crore.

"The farmers want their money back before the harvesting season and then they would also want us to buy their stock for the next year, it's a hopeless situation,' says an exasperated Paul Jose, the managing director of Vanilco. "The Union ministry of commerce is responsible for the situation we are in,' he adds, pointing to the problems of the use of vanilla in the country.