Thursday, 17 December 2015

The strategic maple syrup reserve isn't in the interests of producers or consumers

Do we really need a maple syrup strategic reserve?

Yes folks there really is a strategic maple syrup reserve and it's in Quebec. It's not there for the benefit of the maple syrup producer but rather as a buffer to control market prices. This all lives with the Federation of Quebec Maple Syrup Producers, a government-sponsored cartel created in 1990 to fix the price and 'improve the marketing' of maple syrup. It's not universally popular even among the producers it's intended to protect:

Backed by the Canadian civil courts, the federation has the monopoly for selling Quebecois maple syrup on the wholesale market, and for exporting it outside the province. It sets the price for how much it pays producers, and it charges them a 12% fee per pound of syrup.

Producers are only allowed to sell independently a very small amount of syrup, to visitors to their farm, or to their local supermarket. And then they still have to pay the 12% commission to the FPAQ.

"We don't own our syrup any more," says Mrs Grenier, who calls the federation the "mafia".

Unwilling to put up with this state of affairs, Mrs Grenier and her husband have in recent years been selling their maple syrup across the border in the neighbouring Canadian province of New Brunswick.

In scenes that could come from a Hollywood drugs movie, they load barrels of syrup on to a truck as quickly as possible, and then race it over the border line under the cover of darkness.

The couple are breaking the law, but say they are fighting for the right to sell their syrup for a price - and to customers - of their own choosing.

Unsurprisingly the results of this cartel are two-fold - first there's folk like Mrs Grenier who want no part of it and smuggle the syrup out of Quebec and second other people in other places start to produce more (and cheaper) syrup:

Quebec has long dominated the maple syrup scene, holding some 80 per cent or more of world production in years past, partly by maintaining a strictly enforced supply-management, marketing and quality-control system. But aggressive U.S. rivals have made inroads, reducing the province’s market share to an average of 72 per cent over the past three years, said Paul Rouillard, deputy director of the 7,300-member federation.

And the projections are the Quebec will carry on losing market share to US (and other Canadian) producers. Dear readers this is always the result of protectionism and price-fixing. Maple syrup might not be oil or grain but the same rules apply.


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