Maple syrup is sticky business. If you’ve poured the sweet goodness over your pancakes recently, the chances are (if it was the real thing), it was produced in Canada, where 71% of the world’s maple syrup is produced. 92% of maple syrup produced in Canada comes from Quebec. Among the sugar shacks of the Eastern province, the powerful state-sanctioned cartel emerges as a powerful monopoly, controlling most of the world’s maple syrup.
How does the cartel work?
Recognising the power of the collective, the Federation of Quebec Maple Syrup Producers (the Federation) was formed in 1966 to represent all maple syrup producers in Quebec. The Federation has been able to effectively monopolise the maple syrup industry in Quebec, by limiting supply and raising prices.
There are 7,300 maple syrup businesses in Quebec. Each is permitted to send a fixed amount to the Federation each year, which is inspected, tasted and graded. The syrup is either sold or stored. Instead of flooding the market in the high-yielding years, all excess syrup produced is stored in the Federation’s warehouse as a strategic reserve (officially the International Strategy Reserve). Only once a barrel is sold can a producer be paid – this can be years after its produced. The Federation keep C$54 from each barrel; a levy for advertising, storage facilities and the like.
Has the Federation reaped its own sticky harvest?
Market power and limited supply result in higher prices. In fact, in June 2017, a barrel of maple syrup was worth $1700, more than 30 times more than a barrel of crude oil.
By maintaining a strategic reserve of maple syrup and protecting supply levels, the price is immune from normal fluctuations associated with poor weather or pests. In 2014, the strategic reserve contained over 25 million litres of maple syrup, valued over C$100 million.
The Federation has transformed a secondary source of income for farmers, into a profitable industry – complete with police-like enforcement, maple syrup lawyers and even its own black market.
Original data: Statistics Canada
The black market for maple syrup: does an incentive to ‘cheat’ exist?
Cartels are generally difficult to maintain. In theory, cartel members will be tempted to cheat on their agreement to limit production. By producing more output that agreed, a cartel member can increase its own profits, while reducing total economic profit of the cartel. Strict enforcement is a strategy to keep the cartel together – without it, it would fall apart.
Cheating is a problem for the Federation. So much so, that in 2012 C$18.7 million worth of maple syrup was stolen from the reserve. Barrel rollers, as they’re called, swapped barrels of syrup with barrels of water over the course of a year, and exported them across Ontario, New Brunswick and the United States. Puns about sticky-fingered thieves aside, it appears the enforcement of a cartel has led to ‘Prohibition-style smuggling’ and illegal sales.
The rise of so-called ‘rebel’ producers who argue that the Federation imposes a ‘heavy, inflexible handicap [on] the province’s performance’ has forced the Federation to take measures to curb further dissent. Last year, the Federation raised quotas by 12% in an effort to reclaim lost market share, and quell a rebellion by producers who might otherwise turn to the black market for revenue.
Is there any credible competition?
Life isn’t all sweet for the Federation, with competition from the US is on the rise. Over the past decade the Federation has lost 10% of its market share to the US. New York State alone has more maple trees than all of Quebec farms put together- however, they’re currently untapped. The US market represents 60% of Canadian exports, so evidently the Federation will look for ways to fend off competition. For instance, OPEC increased supply and lowered prices, making it difficult for U.S. shale oil producers to compete. Potentially, the Federation will employ the same strategy.
The Federation call themselves a ‘sales agency’, that represents the maple syrup producers of Quebec. It’s clear however, that what began as a group of concerned syrup growers is now a government-sanctioned cartel, that has monopolised the market in Quebec. Only time will tell whether the Federation is strong enough to withstand rebellion and competition. I for one, wouldn’t mind cheaper maple syrup at the supermarket checkout.
 Government of Canada. (2016) Statistical Overview of the Canadian maple industry- 2016. Retrieved from: http://www.agr.gc.ca/eng/industry-markets-and-trade/market-information-by-sector/horticulture/horticulture-sector-reports/statistical-overview-of-the-canadian-maple-industry-2016/?id=1509039990148
 Cohen, R. (2016). Inside Quebec’s great, multi-million-dollar maple-syrup heist, Vanity Fair, Retrieved at https://www.vanityfair.com/news/2016/12/maple-syrup-heist
 Virgo, J. (2017, June 30). At 30 Times the Price of Oil, This Precious Canadian Commodity Tastes Great, MDM, Retrieved at https://mdm.ca/about-md/news-and-events/md-market-updates/canadian
 Skerritt, J. (2016, August 1). Maple Syrup Cartel Battles a Black Market Rebellion, Bloomberg, Retrieved at https://www.bloomberg.com/news/features/2016-08-10/maple-syrup-cartel-battles-a-black-market-rebellion
 Syrup and Sin. (2016, November 12). The Economist, Retrieved at https://www.economist.com/news/americas/21710014-mobsters-take-quebecs-maple-monopoly-syrup-and-sin
 Hamilton, G. (2013, February 16). The Maple Syrup Cartel: Quebec’s syrup monopoly helped spawn smuggling, prohibition style, National Post, Retrieved from http://nationalpost.com/news/canada/the-maple-syrup-cartel-quebecs-syrup-monopoly-helped-spawn-smuggling-prohibition-style
Image: Maple syrup being poured over pancakes. (2018). Flickr. Retrieved 28 March 2018, from https://www.flickr.com/photos/usdagov/23783406616