Why Is Maple Syrup Controlled by a Quebec Cartel Anyway?
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?
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.