By Elizabeth Lee of Cox News Service and Aleta Watson of the Mercury News

Bakers, rejoice.

Vanilla prices are plummeting after five years of increases that saw the price of an eight-ounce bottle of extract rise higher than a pound of prime beef tenderloin.

Some retailers have cut prices nearly in half; others are likely to do so in coming weeks. Wholesale prices dropped in February, when an abundant vanilla crop started coming to market.

King Arthur Flour’s spring catalog exhorts bakers to “stock up while you can” on cheaper vanilla at $10.95 for four ounces – about half the former price of $19.95. Other retailers have been slower to cut prices. At Williams-Sonoma, a six-ounce bottle of vanilla extract is still $29.

Vanilla prices are a product of both weather and politics, says Patricia Rain, A Santa Cruz vanilla seller and author of Vanilla: The Cultural History of the World’s Favorite Flavor and Fragrance.” They cycle up and down depending on how many beans get to market.

Prices, which had fallen to $10 a kilogram (2.2 pounds) in 1998 after Madagascar deregulated its vanilla market, started climbing in 2000, she says. That year a cyclone in Madagascar wiped out about 30 percent of the world’s supply. The year before, a flood had taken much of the Mexican crop.

Since vanilla plants take two to three years to mature, there was no quick recovery, and prices peaked at about $500 per kilo at point of sale in Madagascar in late 2003, Rain says.

Nielsen-Massey Vanillas, a major supplier, saw its cost for beans go from $50 a kilogram to nearly $600 over the past five years, says director of sales Dan Fox. To ease sticker shop for home bakers, Nielsen-Massey introduced a smaller, two-ounce bottle, and McCormick rolled out a blend of real and imitation vanilla.

Meanwhile, more farmers brought their beans to market, and many big ice cream makers, bakeries and confectioners switched from pure vanilla to synthetics. Prices plummeted to $80 per kilo last November and December.

Rain has cut her wholesale prices by a third to $48.50 for a quarter pound of Madagascar beans at www.vanilla.com.

“What will probably happen is the prices will stay low for a couple of years,” she says, “and then they’ll start cycling up again.”

Rain worries that manufacturers won’t switch back to pure vanilla after using synthetic flavoring. That would be bad for the farmers in Third World countries who depend on vanilla beans as a cash crop, as well as for consumers, she says.

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