There is nothing that tastes quite as good on a pancake or a waffle as maple syrup, so this week’s action by Canadian farmers to ensure their national product keeps flowing provides seasonal good cheer. Millions of pounds of “liquid gold” — half of Quebec’s strategic maple syrup reserve — are on their way.
It is irresistible to laugh at the fact that the province of Quebec not only dominates the global maple syrup market but operates a cartel that rivals Opec, the organisation of oil-producing countries, in effectiveness and aggression. But if you make syrup that has fetched up to 25 times the price per gallon of oil, it needs careful handling.
Quebec had a poor harvest last spring: the temperature was too warm for the cycle of night frosts followed by daytime thaws that push sap out of maple trees to be boiled for syrup. Faced with a fall in production and a pandemic urge to stock up, the Federation of Quebec Maple Syrup Producers are unsealing thousands of barrels they keep in a warehouse for such a day.
“People of the same trade seldom meet together . . . but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices,” the economist Adam Smith observed in The Wealth of Nations in 1776. The federation has managed to contrive gently rising prices for its 11,300 producers over the past two decades by controlling syrup supplies.
When spring is fine and more syrup is refined than the quotas set by the federation, threatening a fall in prices, producers have to hand over their excess. The reserve is stored away in 45-gallon barrels in a 267,000 sq ft warehouse, closely guarded since an improbable $18m syrup heist in 2012.
No matter how neat this arrangement, it is a clear restraint of trade, albeit one that is backed by law and enforced with fines, rather than being blocked by antitrust bodies. Since Quebec’s 34m sugar and red maple trees are the source of 72 per cent of the world’s maple syrup, most economists would frown on such blatant price-fixing.
But my objection to the syrup conspiracy is not that it defies the free market. I sympathise with Quebec’s sugarers, and not just because I acquired a maple syrup habit while living in New York. Sure, they operate a supply monopoly, but who are we kidding? In a world of supermarket chains and discounters such as Aldi, tree-tappers are hardly the most fearsome force.
Jeremy Clarkson called his British farm, made famous in an Amazon Prime series, Diddly Squat, for that is what small farmers often earn. Prices for agricultural products are set in global markets, and producers face constant price pressures. The price that Aldi pays for bananas, for example, determines the livelihoods of many Latin American farmers.
We do not throw up our hands in horror at Fairtrade International, but it is a pricing scheme, designed to set a floor on the price that commodity farmers gain for their output. Apple growers use patents and trademarks to brand their produce, such as the Cosmic Crisp produced in the US state of Washington, and combat the supermarket squeeze.
Climate change and the volatility of weather patterns also means that the strategic syrup reserve, amusing as it sounds, could become a model for other commodities. Global warming has altered wine harvests, and the price of huckleberries has doubled in the past two years because of extreme heat in the west of the US. If only there were a huckleberry reserve.
No, the problem with the syrup conspiracy is that it enforces compliance too rigidly and inflexibly. It is, as an official report pointed out in 2016, “a system that encourages deviance, which the federation never fails to punish heavily”. Woe betide the black market sugarer who tries to sneak maple syrup across the southern border to Vermont without approval.
Storing huge quantities of syrup in big barrels draws attention to the fact that it is fungible — there is no difference between one Quebec syrup producer and another. This presents a difficulty for the enterprising sugarer who wants to market something distinctive, like single malt whisky from just one distillery, or craft beer from a hipster brewery.
The report found that it was “perfectly normal and defensible” for syrup producers to crave greater identity, and suggested one compromise: bulk syrup could still be subject to quotas while producers sold their brands freely in smaller quantities. It sounds sensible enough to me, but the federation responded furiously that lifting quotas would “lead the maple syrup industry to ruin”.
Really? Opec manages to be quite powerful although it controls only 40 per cent of global oil production, and other agricultural collectives work well on a voluntary basis. US syrup producers have been growing faster than Quebec’s, and the province has to keep up with the consumer.
Still, we should give thanks for the strategic syrup reserve. As global supply chains snarl, computer chips run short and huckleberry prices soar, maple syrup keeps pouring smoothly. O Canada, that is sweet.
source https://d0llars.com/quebecs-maple-syrup-cartel-should-be-sweeter/
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