By: Roshni Rangwani
Since 2004, The Federation of Quebec Maple Syrup Producers’ (FPAQ) quota system has brought price stability to a notoriously volatile global market — but its long-term challenges are mounting.
The maple syrup industry is one that seems remarkably predisposed to the formation of cartels. Between the sugar maple’s naturally limited range along the Atlantic seaboard and its fickle yield season-to-season, producers have both the means and incentive to band together to weather boom-and-bust cycles. Enter FPAQ, a government-sanctioned private organization that exclusively regulates the production and sale of Quebec’s syrup. Given that the Canadian province yields 71% of the world’s output, this translates to enormous market power. By assigning each farm quotas, FPAQ restricts supply to stabilize prices and stockpile surpluses for the future. It also heavily markets its members products domestically and abroad (most recently experimenting with a children’s website for its caped mascot, “Siropcool”), charging them a fee for the service.
While theoretically beneficial, the system is not flawless. For instance, when reserves ran dry in 2008, the panicked FPAQ was forced to ask producers to add extra taps to trees mid-season. Moreover, many producers resent that FPAQ and the local government enforce mandatory participation in a system that cannot guarantee when they will be fully paid for stockpiled syrup. Although both institutions insist that the majority of members benefit from quotas, a 2016 study by the independent Montreal Economic Institute disagreed. It concluded that ignoring the protests of “maple rebels” had supported the rise of a black market aimed at less regulated neighboring provinces and the U.S. In fact, FPAQ’s drastic countermeasures, including posting 24/7 guards at the expense of the farms being surveyed or issuing exorbitant fines per pound sold beyond quotas, have driven many producers into financial ruin. More bizarrely, the burgeoning black market and surplus system also fueled the “Great Maple Syrup Heist of 2012”, when over 12% of the stockpile was siphoned and replaced with water. Since a maple syrup barrel is worth about a whopping 20 oil barrels, this amounted to the theft of over 13 million USD!
Ironically, some of FPAQ’s efforts have given its competitors a boost in the industry. Thanks to its policies, producers in the U.S. and other provinces have been able to free-ride on the price stability assured by FPAQ without having borne any of the constraints faced by their Quebecois counterparts. Just as OPEC’s restriction of oil supplies can make unusual deposits profitable, FPAQ have helped their less experienced competitors secure easier loans and expand faster on the back of stable future incomes. The results are startling: while a mere 10 years ago, Quebec sold 78% of the world’s maple syrup, that percentage has already fallen to 69%. Since New England actually has four times as many maples as Quebec, it remains to be seen whether FPAQ can maintain its syrup supremacy in the future.
Image Source: maximebernier.com
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