Madagascar is facing a convergence of economic shocks in 2026 that is undermining two of its key export sectors: vanilla, the country's green gold, and nickel, mined at scale by the Ambatovy operation near Toamasina. Between crashing agricultural prices and subdued industrial output, the island is navigating a period of intense economic pressure.
Vanilla: from $600/kg gold to a structural crisis
The Madagascan vanilla sector never recovered from the 2018 peak, when prepared vanilla fetched close to $600/kg. Following the market liberalisation in May 2023 under former president Rajoelina — which scrapped floor prices — the industry has been in structural overproduction, according to Biovanilla. Prices have fallen to a range of $25–$50/kg for gourmet-grade vanilla, with some lower-quality batches clearing at $10–$16/kg.
Export revenues from vanilla collapsed by 64% through mid-2024, even as shipped volumes nearly doubled — the worst possible combination for producers. The transitional government reinstated a floor price in late June 2026 of 10,000 Ariary/kg (approximately $2.34) for pods over 13 cm, and 5,000 Ariary/kg for shorter ones. Industry players say this floor offers only weak protection for rural incomes. The 2026 harvest is estimated at between 3,000 and 4,500 tonnes, depending on the operator.
Ambatovy: a mine well below potential
At the same time, the Ambatovy nickel and cobalt mine is running at well below its nominal capacity of 60,000 tonnes per year. Output for the 2024–25 financial year fell to around 28,000 tonnes — less than half of theoretical capacity. A series of incidents has repeatedly halted operations: a slurry pipeline failure in September 2024, followed by Cyclone Gezani in February 2026, which forced a shutdown of approximately four months. The mine only resumed operations on June 11, 2026.
In May 2026, AMRI (a consortium of Essenwood Partners and Zungu Investments) took over Sumitomo's full stake alongside KOMIR (South Korea). This ownership change has not yet produced any visible improvement in production capacity.
Why it matters
Vanilla and nickel account for a significant share of Madagascar's export earnings. Their simultaneous weakness is squeezing the country's foreign exchange reserves, undermining its ability to finance imports and public investment. Against this backdrop, the transitional government must balance macroeconomic stabilisation with structural reforms — while preparing for a presidential election scheduled for July 2027. For regional trading partners and investors, Madagascar remains a high-potential market, but one that demands careful assessment of operational and climate risks.