The Canadian Maple Syrup Cartel
Yes, it is a Real Thing
At first glance of the headlines, I thought surely this must be a joke. But no, shortly after the US government announced it would be releasing 50 million barrels of oil from its Strategic Petroleum Reserve, here comes the Canadian government announcing the release of 50 million pounds of maple syrup from its strategic reserves.
The stated reason the US released a big dump of oil was to lower gas prices in this environment of rapidly increasing prices. However, the Canadians say the reserve-drain of syrup will accommodate the 24% shortfall in the year’s expected production coupled with the increased demand overseas.
The entity that manages the strategic syrup reserve is the government-sanctioned Québec Maple Syrup Producers (QMSP) organization, established in 1966. It was formally known as the Federation of Quebec Maple Syrup Producers (FPAQ).
The QMSP’s purpose and mode of operation is clearly in line with the characteristics of a cartel. Straight from its own website, the QMSP states,
Inventory levels in the Reserve are calculated annually on an actuarial basis. When stocks decline, QMSP may replenish them by issuing additional quotas to maple producers. When inventories grow too large, incentives may be offered to buyers to stimulate markets and sales.
This is a collective effort by Québec maple producers, an ambitious and effective way to manage our markets. The stability it creates lays the groundwork for better planning and development. Furthermore, the Reserve is wholly owned by QMSP so, when maple syrup is sold from the stockpile, maple producers get paid.
This is why the QMSP is considered the OPEC of maple syrup.
What I find interesting is that there is a lot of frustration from Canadian producers with the QMSP’s quotas and limits, especially considering US competitors in Vermont are not subject to the syrup-cartel’s limits. So, it’s not surprising Canada is facing a shortfall in production. As funny as it sounds, this has resulted in a black market of maple syrup.
For years, dozens of rebels — as a Quebec judge dubbed them — sold their syrup on the black market in an act of defiance. The rebellion played out in a series of dramatic clashes between the federation and the rule-breakers. Producers snuck barrels of syrup out of their sugar shacks in the middle of the night for sale on the black market. The federation posted guards outside problem sugar shacks. Inspectors raided sugar bushes, checked production logs and bank accounts, sniffed out black market sales and seized syrup.
The old adage, “government hates competition,” rings true again.
50 million pounds of syrup is about half of the strategic reserve, which is significant considering total sales in 2021 were ~122 million pounds per QMSP.
Unless Canadians enjoy giving US competitors an edge, perhaps QMSP should rethink their production limitations.
I’ll leave you with this related fun fact that I just learned about:
In 2011, 3,000 metric tons of maple syrup were stolen from the reserve in a feat now known as The Great Canadian Maple Syrup Heist. Clever thieves used the old trick of siphoning off the goods from barrels and then refilling the barrels with water so that no one would immediately notice. The stolen syrup was trucked to the US, where it was typically sold to legitimate syrup distributors who were unaware of its origin.
But, as the operation got hot and heavy, the thieves grew careless and started siphoning syrup off barrels without refilling them. Well sure enough, several months after the start of the theft, the FPAQ (now known as QMSP) performed its annual inventory inspection and discovered the empty barrels. This led to the eventual capture of the sticky bandits.