Monday, August 24, 2015

Is There a Maple Syrup Cartel?

I happened to have pancakes for breakfast this morning – with honey not maple syrup. Then I saw two related items. Alex Tabarrok writes:
Quebec produces more than 70 percent of the world’s maple syrup and the Federation of Quebec Maple Syrup Producers is a cartel every bit as rapacious as OPEC or De Beers. The Federation is government backed and all producers must sell to them.
He cites one passage from this story:
To keep prices high, the federation enforces strict quotas for the province’s 7,400 producers. Instead of flooding the market during years with bumper crops, all syrup produced beyond that amount is stored in the federation’s warehouse, which helps prop up prices by limiting supply. When seasons are lean, it releases the syrup, to maintain stable supply and pricing.
This passage alone is not that convincing as one can see that as simply stabilizing prices as opposed to driving them systematically higher. The entire article is worth the read and the Federation does seem to brag about keeping prices high. I do have to make one small protest to its actual pricing evidence:
The federation changed the calculus. In 2003, a majority of federation members voted to make production quotas mandatory, meaning farmers could sell only a certain amount each year. Farmers are required to sell all their syrup through the federation or its designated agents. Under the system, prices have risen to 2.92 Canadian dollars a pound for the highest grades of syrup, from 2.14 Canadian dollars in 2004.
This represents a 36% nominal price increase. With Canada’s consumer price index have increased by about 20% over the same period, we are talking about a real increase closer to 14%. Then again, I would argue there are close substitutes for Quebec maple syrup but then I may be biased as I love my honey.

3 comments:

Sandwichman said...

No. There is no "close substitute" for maple syrup.

Sandwichman said...

Ha! The Captcha pictures for my comment were WAFFLES!

john c. halasz said...

Did you miss the story of the great maple syrup heist? It was thought to have been carried out by producers, perhaps from outside Quebec, who were disgruntled with the quota system.