Why is maple syrup controlled by a Quebec cartel anyway?

December 20, 2012

This week, authorities in Quebec arrested three men in connection with the theft of 6 million gallons of maple syrup from Canada's "strategic maple syrup reserve." As the New York Times points out, it's a little odd that this reserve exists in the first place. So where did it come from?


Mmmm, delicious cartel-dominated syrup. (Torin Halsey - AP)

The backdrop here is that about 77 percent of the world's maple syrup comes from Quebec. And the 7,300 syrup producers in the province have banded together under Canadian law to form a quasi-cartel, the Federation of Quebec Maple Syrup Producers (FPAQ), which has tightly regulated the production and marketing of syrup since 1989.

Why have a cartel and a reserve? As this paper explains, the syrup market can fluctuate wildly. The maple trees need optimal climate conditions — cold nights, temperate days — to produce the right sap. That doesn't always happen, and production varies sharply each spring. What's more, demand is often unsteady. During recessions, many families cut way back on syrup purchases, since it's not exactly essential. (Lately, the syrup industry has responded by expanding to new markets in Japan, China, and South Korea.)

So that's where the cartel comes in. Under current arrangements, most of Quebec's 7,300 syrup farmers sell to FPAQ. FPAQ turns around and negotiates prices with a handful of bulk buyers — just eight buyers snap up most of the syrup. Those buyers, in turn, sell to grocery stores and retailers. Whenever it's a banner year for maple syrup production, FPAQ siphons off some of the surplus into the reserves. When it's a lean year, FPAQ draws down from the strategic reserves.

In theory, a well-managed reserve can stabilize prices for Quebec's syrup farmers, who rely on syrup as a key source of income (even though it's a secondary activity for many of them). Currently, about 46 million pounds of delicious maple syrup are located in three massive warehouses in Saint-Antoine-de-Tilly, Plessisville, and Saint-Louis-de-Blandford.

But, of course, keeping all that syrup in one place also makes it easier for thieves to steal the stuff. Here's the New York Times:

The spring of 2011 produced so much maple syrup that the federation added a third rented warehouse, in an industrial park alongside a busy highway in Saint-Louis-de-Blandford, to accommodate the overflow. The surplus was pasteurized and packed into 16,000 drums, each holding 54 gallons, and left to rest except for inspections twice a year.

Lt. Guy Lapointe of the Sûreté du Québec, the police force that led the investigation, said that the thieves rented another portion of the warehouse for an unrelated business. That enabled them to drive large trucks into the building....

When no one else was around, Lieutenant Lapointe said, the thieves gradually began emptying syrup barrels. Some Quebec news reports indicated that they also filled some barrels with water to disguise the theft.

For more on the history of Quebec's maple syrup cartel, see this 2008 report (pdf) from Isabelle Gagné. She outlines the arcane Quebec labor laws that allow these cartels to form in the first place, and looks at how FPAQ has often been locked in a vicious struggle with the syrup buyers, who try to use their market dominance to force down prices. No one said that the syrup business was a cuddly one.

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