Boiling Point: Inside Quebec’s Maple Syrup War
With American producers catching up quickly, growing dissent among Quebec producers, and a recent, scathing government report, the maple syrup industry in Quebec may be rapidly approaching its boiling point.
When maple water is heated to 104 degrees Celsius, it reaches its boiling point.
At this temperature, enough water has evaporated to impart a rich amber glow upon it, not to mention other magical properties.
The resulting liquid is so precious and delicious that it can easily fetch $2,000 per barrel—roughly 13 times the price of crude oil. But anytime there is so much money to be made, basic economic forces dictate that competition will be fierce, as well as the incentive to control it.
Quebec is the world's biggest producer of maple syrup, pumping out roughly 100 million pounds annually—71 percent of the global supply. But with American producers catching up, growing dissent among Quebec producers, and a recent scathing government report, the maple syrup industry in Quebec may be rapidly approaching its own boiling point.
That's where Federation of Quebec Maple Syrup comes into play. Frequently referred to as the province's "maple syrup cartel" by Quebec media, the federation is essentially a state-sanctioned monopoly that fixes the price of maple syrup, imposes production quotas on producers, and stockpiles what's left in its Global Strategic Maple Syrup Reserve, much like OPEC's oil reserve.
It's also the very same maple syrup reserve which was the target of "The Great Canadian Maple Heist" that made international headlines in 2012 after thieves stole $18 million of syrup from their facilities.
Serge Beaulieu is the president of the federation which represents 90 percent of producers in Canada, and he is not down with being called a cartel. "It's not appropriate," he says. "Yes, we all get together to sell our product, and that's why it's called a cartel sometimes."
"But all of these rules are governed by the régie, which is a specialized tribunal set up by the government to deal with exactly this," Beaulieu adds. "They give us a slap on the wrist if we don't play by the rules, so I have trouble with the word 'cartel,' because there is a neutral organization, the régie, which supervises everything."
Beaulieu is referring to the Régie des marchés agricoles et alimentaires, the provincial bureaucracy in charge of agricultural competition which oversees—among other things—the price-fixing negotiations between the federation and large-scale buyers. This year, the price has been pegged at $2.95 per pound.
In doing so, the federation plays a crucial role in maintaining stable prices for both producers and consumers. "There are 7,300 producers in Quebec and ten major buyers who purchase 90 percent of that syrup in bulk. The best way to do that is to pool all of our maple syrup and put it on the market. And if there is too much syrup, we have a strategic reserve for the years when there isn't enough.
A key instrument in the federation's unique pricing scheme is a mandatory quota system. Eighty five percent of Quebec's syrup is sold in bulk, and under this system, any bulk producer of syrup (meaning those who sell barrels of more than five litres) is forced to hand over their syrup for inspection, distribution, and stockpiling. Producers are only paid if and when that syrup is sold by the federation at the price they have fixed.
This is obviously a cumbersome process, but the federation maintains that it became necessary after years of fluctuating prices made it very difficult for producers to break even during leaner years, and by extension, to get crucial loans or financing from banks.
"Before 2004, there was no quota system," Beaulieu emphasizes. "So if there were a million pounds of excess syrup, the prices would just collapse, and when that happened it wasn't even consumers who won—it was the bulk buyers who made maple products with it. They were able to buy the syrup for 80 cents a litre and producers were going out of business. Maple production fluctuates a lot and this helps balance things [out]."
Given that Quebec is the only place in the world where maple syrup production is so tightly monitored, it's not surprising that producers in neighbouring Ontario, New Brunswick, and, most notably, the United States, are making serious inroads. American maple syrup production is growing at ten percent per year, and some estimate that US production will actually surpass Quebec's in the next ten years.
Concerned with Quebec's "declining position as the world leader in maple syrup production," the province's Minister of Agriculture commissioned a report looking at Quebec's tightly controlled maple syrup industry in the context of a liquid gold rush in the US and a growing number of dissenting producers in the province.
To chair the investigation, the government appointed Florent Gagné, the former head of the province's police force. Gagné's report was, in many respects, scathing. He called the federation out for using heavy-handed tactics and described their regime as "autocratic" and a "reign of fear."
"A lot of procedures are afraid of the Federation," Gagné told MUNCHIES. "They apply their regulations in a very rigid way—either by fining producers or seizing their products. During the consultations that I held for my report, a few producers told me, 'This is what we think, but don't tell the federation that we said this!' Right or wrong, a lot of people are afraid of the federation, and it definitely stems from the fact that they have to deal with a highly centralized system, which forces those who don't comply to pay huge fines."
The federation has been known to come down hard on bulk producers who refuse to participate in their mandatory distribution system. Forceful tactics like hiring security guards to patrol rebellious sugarbushes to make sure that they don't sell syrup (and forcing those producers to pay for the security guards), or seizing an entire year's worth of syrup, are not uncommon.
Nicole Varin is one such outlaw producer who has given up on relying on the federation to make money. She has been dubbed as "récalcitrante," or rebellious, producer. It's a mantle she wears proudly as she awaits a legal showdown with the federation which could cost her more than a million dollars, she says.
"That's right, I'm a villain, a thief, and a bandit, call me whatever you want," she says. "But why should I pay? If my clients are happy, and I'm not affecting anyone else… I'm not hurting anyone. The federation already has barrels and barrels full of maple syrup. [...] The quota system is good for producers who have no clients. That's why it exists."
Varin's main offence: selling maple syrup directly to buyers in Quebec, Ontario, the US, and even France instead of handing it over to the federation first. While this would be considered a normal way of doing things in a free market system, it's not how things are done in Quebec.
"Producers in the province are being asked to limit their production, meanwhile Ontario, New Brunswick, and the US, they can make as much as they want," Florent Gagné says. "It's like being in a race where we're walking and others are running. Sure, Quebec is still way ahead of the pack in terms of production, but they are going to catch up at this rate. We have to be as competitive as markets who use a free market system."
As a result, in his report, Gagné recommended that the government put an end to the quota system. Not only would this make Quebec producers more competitive on a world scale, he argues, but it would "decriminalize" maple syrup production and "restore harmony" between the federation and its producers.
Gagné's call for an end to the quota was of course deemed "unacceptable" by the federation, who argues that Quebec's global dominance is a direct result of their system, specifically the strategic reserve. "The market was worth about 90 million back then, and now it's 160 million—it almost doubled. That's because there was a reserve of 60 million pounds," according to Serge Beaulieu. In terms of competition, Beaulieu argues that the federation's recent pledge to create 5 million new sugar taps across the province is one which will allow Quebec producers to keep up with American expansion.
Needless to say, Gagné's findings were music to Nicole Varin's ears; "I applauded the Gagné report. [...] I was sitting in front of my computer, saying, 'Finally, someone who understands!," she says, adding that the quota system did little to help her business, the one year where she did agree to play along. "In 2003, I sold my excess syrup to the federation and I didn't get paid until five years later. My business can't survive like that. Why would I continue doing that? So I rolled up my sleeves and said, 'I'm not doing this anymore.'"
During a press conference held shortly after the release of the report, Quebec's agriculture minister Pierre Paradis said he intended to put Gagné's recommendation into effect, though no clear timeline or framework has emerged. In the meantime, the possibility of regulation being loosened offers a glimmer of hope for producers like Varin whose outright rejection of the quota system has them staring down a double barrel of hefty fines and syrup seizures by the federation.
This growing discontent among 200 or so of the provinces 7,300 producers is another issue addressed directly in Gagné's report. "The federation, its rules, and, above all, its authoritarian way of implementing those rules, are effectively perceived [among certain producers] as characteristic of cartel that organized and legitimized with with the complicity of the state," he concluded.
Even though his report quotes producers who perceive the federation as a "cartel," Florent Gagné is not comfortable with using the term himself, in large part because he does not want to throw even more fuel on the flames.
"The word 'cartel' is used frequently to described the federation, but I wouldn't use it. I wouldn't want to further aggravate the situation. It's clear that the federation occupies a very central and powerful position, but the word 'cartel' seems a little excessive to me. You can use the word 'cartel' as a journalist, but I personally do not want to employ it vis-à-vis the federation."
But for producers like Nicole Varin, whose livelihood literally hangs in the balance, this issue is one of survival, not semantics.
"Our land here goes back three generations," she says. "My daughter, who was hoping to take over my business, is on standby because I'm telling her not to get involved in this world because it's not tolerable right now—not as long as we don't solve this problem."
- maple syrup cartel
- Federation of Quebec Maple Syrup
- The Great Canadian Maple Heist