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Global business: Canada's maple syrup cartel is so successful it's destroying itself

The Doerflers’ Quebec maple farm has around 20,000 maple trees. (Photo by Justin Olsvik)


Global Business Journalism reporter

MARSTON, QUÉBEC – There are few things more quintessentially Canadian than maple syrup – its source is literally the symbol of the nation. What pancake enthusiasts probably don’t know though, is that they paid for their favorite breakfast condiment at an inflated price, artificially fixed by a government-sanctioned cartel with a global monopoly.

Canada’s sugary dominance is undeniable, producing around 77% of the global maple syrup supply in 2020. Of that, around 90% comes just from the province of Quebec, where the industry is strictly regulated by the Producteurs et Productrices Acéricoles du Québec (PPAQ, previously known as the Fédération des Producteurs Acéricoles du Québec, and still called colloquially “the Federation”). It’s a private organization, but has been granted powers by the provincial government to ensure their regulations are followed with law enforcement.

And those regulations are pretty extensive.

Farmers are required use the Federation as a distributor and marketer of their bulk syrup, and any sales directly to supermarkets or restaurants come with a $0.14 per pound (or 0.45 kilograms) fee paid to the PPAQ. Farmers are allowed to sell their product directly to the consumer without the PPAQ, but this is rarely a large proportion of a serious farm’s income.

More significantly, the PPAQ sets quotas for every farmer that sets a maximum amount they are allowed to sell per year. Any excess is taken, without compensation, to be stored in the “Global Strategic Maple Syrup Reserve”. Then, in years when farmers are unable to meet their quotas, the Federation releases syrup from the reserve to the market. Only then do farmers get paid, which could be years down the line.

“In Québec, you might as well start a pot farm instead,” laughs Abraham Doerfler, a maple farmer from the Eastern townships of Québec. “There are fewer rules.”

Quotas begin

The original purpose was to provide stability in an industry where weather can cause harvests to vary wildly from year to year. In years when the harvest was good, the market was saturated with an abundance of syrup and the prices were correspondingly low. Likewise, in years when the harvest was poor, supply could not meet demand and prices rose for consumers. The quota system was created to combat this – by carefully controlling the supply, the Federation also controls the price.

“It’s absolutely not necessary if you ask me, since it’s an export product,” says Doerfler. “You don’t see quotas for peanut butter, or robots, or anything else we might export.”

That said, this plan has essentially worked. Since the quotas were implemented in 2004, prices have stabilized at near-historic highs, despite the continuing natural fluctuation of the harvest.

Yet, there have been some unforeseen challenges for the Federation.

These strict rules have given rise to a black market syrup industry. Farmers irritated by the Federation’s micromanagement smuggle their syrup over provincial borders and sell it there, free from PPAQ regulation. The existence of this black market even made possible the most stereotypically Canadian crime one could imagine – “The Great Canadian Maple Syrup Heist.” Over the course of several months, nearly 3,000 tons (about 2.7 million kilograms) of syrup was stolen from the Strategic Reserve, valued at over $18.7 million. It is the largest theft in Canadian history.

Besides incentivizing sticky-fingered warehouse workers, the Federation may be a victim of its own success. While Québec currently has a monopoly on maple production, it by no means has a monopoly on maple trees themselves, and farmers outside of the province are taking notice.

Quotas backfire

Maple farmers on the open market get to take advantage of the Federation’s inflated maple prices, but are free from its fees and regulations. Québec’s production has increased by 89% since the quota system came into effect, the least of all syrup producing regions. Compare that to Vermont, just across the border, where production has increased 264%. Québec’s global market share has fallen from 80% to around 70% in that timeframe, almost all being taken by Vermont and other American states. Before the Federation’s quota system, growth in the U.S. syrup industry was almost stagnant.

It’s an imbalance not unnoticed by Doerfler. While he still runs twenty thousand taps at the family farm in Québec, they have also started a second farm with 30,000 more just 50 km away – in Vermont.

“Over there it’s a lot cheaper, you can sell all your syrup, you can install at the rate you want,” lists Doerfler, counting on his fingers. “If you ask me, you can get pissed about it (the quota system), or you can deal with it.”

The same conclusion has been reached by policy analysts in Québec.

“Considering that the province already harvests close to 50% of its potential, compared to just 5% on the American side, it is imperative to give Québec producers back their freedom to produce and sell their maple syrup without having to submit to the FPAQ’s dictates,” advises a report from the Montreal Economic Institute. “Otherwise, their share of the global market will likely continue to fall.”

Until then, it seems like maple farmers outside of Québec will keep having it pretty sweet.

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