For the introduction see Part One
Fast forward to 2011. Years of increasing production led to a stockpile of close to three and a half million gallons stored in three warehouses including one in St. Louis-de-Blanford.
At the same time, production limits gave rise to a thriving black market. Instead of going to the Federation, some over-quota syrup was delivered to operations in New Brunswick and Ontario (both of whom have much smaller maple production) and from there sold to U.S. packers as New Brunswick or Ontario syrup. The Quebec police in many cases knew who these resellers were, but, because they were only breaking Quebec law and not Canadian law, the Sûreté du Québec had no jurisdiction.
This black market lead to something of a quandary for the Federation - they knew who in the United States was buying it and could retaliate by cutting off sales of legal Federation syrup. But those packers also buy hundreds of truckloads of legal syrup; cutting off their supply of legal syrup would inevitably raise the price and volume of black market syrup.
It was in this environment that a July, 2012 inventory check of the Federation warehouse discovered tens of thousands of empty syrup barrels (over five hundred thousand gallons, worth an estimated 18 million dollars). Details slowly emerged. Thieves rented the other half of the syrup warehouse, pumped out barrels and filled them with water at their leisure. Millions of gallons of syrup were inspected around the Eastern part of Canada and the U.S. Arrests were made - one of the more notorious black market dealers in New Brunswick (presumably because the theft was against Canadian law giving police jurisdiction to not only arrest him, but impound millions of dollars of his equipment) was taken into custody, along with more than 20 others.
Several New England packers are suspected of buying the stolen syrup. Since it would have been priced similarly to non-"hot" syrup, it is unclear whether they knew it was stolen, and what action, if any, could or should be taken against them.
Personally, I have a few observations.
First, I doubt that the producers whose syrup was stolen (since they still actually owned the syrup in the warehouse) are on the hook for its cost. I assume it was insured for its full market value. Initially this made me think that the syrup would never resurface - that the whole thing was an insurance scam by producers to get paid for their surplus syrup that was sitting in the warehouse (collecting storage rent payments) by dumping it out, and at the same time reduce stockpiles and potentially raising prices.
Since I was evidently wrong, I am mystified at how the thieves expected to be able to add millions of gallons of stolen syrup into the market without someone noticing. To launder a volume of syrup representing a non-trivial percentage of worldwide production is impossible. But, they tried to, and did, sell most of the stolen syrup (although a lot of it was eventually tracked, not much was recovered).
How did that much stolen syrup get sold? Blame needs to be assigned to U.S. packers who ended up with the stolen syrup - can we really believe that they didn't ask questions about syrup coming in the door from traditional back market routes when they found out there had been a theft? All parties involved claimed that no more syrup than usual was being sold by their sources and that it was being sold at normal prices. This, again, is had to believe.
Does the existence of this black market mean that U.S. packers should be responsible to better track point-of-origin on the syrup they buy? Do U.S. packers have an interest (moral or financial) in supporting the Federation's policies? Should the U.S. impose fines for breaking Quebec law? Or should Quebec's laws be enforced solely though punitive actions against producers within the province? Politically for Quebec, punishing packers outside the province's borders by cutting off legal syrup is much more palatable than fining local producers, but probably less effective too (since U.S. packers can always buy black market syrup). We will find out - the Federation is seeking to remove Maple Grove Farms in St. Johnsbury, Vermont, one of the world's biggest re-sellers and one of the packers who allegedly bought stolen syrup, from its list of approved buyers. Maybe that will raise the price of Vermont syrup.
In maybe ways, by expanding operations in Vermont, we are hurting the Federation as much as buying black market syrup does. Does that mean that we should extend Quebec's controls across the border? No, having a healthy growing industry in Vermont is good for the state and for consumers. However as an industry, it is important that we do work to increase global sales volume. As producers in Vermont, we can't just put their heads down and make as much syrup as we can the way we are now and expect the bulk market to absorb it all. Eventually, consumption would increase but only after a painful fall in prices (syrup demand is elastic - consumption changes dramatically with price - as opposed to milk or gas which are relatively inelastic - we consume the same amount no matter what the price is).
This has two implications. First, we need to continue to reduce input costs. This means making more efficient use of labor, land, and equipment - figuring out more better ways for us to work to save time, how to boost the vacuum pressure to increase yields, how to cut fuel use in the evaporator, and how to cut shipping costs. Cutting our costs will lower the cost of syrup, opening new markets and increasing consumption.
More importantly we, as producers, need to leverage ourselves to market our own syrup, particularly to market it to consumers who don't currently use it. One of the things we have done at Slopeside in the last three years that I am most proud of is to have a gotten our syrup in places where Pure Maple had never been previously marketed (primarily ski shops and ski helmets).
As a consumer - use more syrup! If you eat Mrs. Butterworth's, for god's sake stop! And if you already use syrup on your pancakes, use it to sweeten your coffee, to glaze pork chops, make salad dressing or bake bread.
And please, use Slopeside.
We are going to try out a new blog format (and publishing frequency) here at Slopeside Syrup by collectively writing blog posts. One of us will start in about some aspect of what we are doing and the others will respond. Hope you like it.
- Roger - How to grow?
We are at a good point here at Slopeside. With the poor production of 2012 in the rearview mirror (for a while, hopefully), 2013 saw a solid production volume (~.3 lbs per tap, a little under our target of .4, but in the ballpark), continued growth in our wholesale accounts and volumes, and in our online sales.
Now where do we go? We have some tap expansion left to do on the property. An additional four to six thousand taps are left to install above and to the right of the ski area (south-west for everyone keeping score at home), and just below the very peak of the hill, the "ski bowl". (It was nicknamed the ski bowl after our first production season came in the deepest snow year Chittenden County has had in a long time, since then it could be called the "we-need-more-snow-to-ski-it bowl".)
But, tap installation is not as simple as it sounds. It seems like whenever you want to make capital improvements in a maple farm, you get yourself into a Chinese finger trap of connected projects...
- Jim - We decided the best way to prioritize our capital improvements was on how they effected the bottom line. Adding taps goes to the top of the list- the additional trees are there producing sap so we may as well capture it. Expanding the sugar house goes down the list (along with the slopeside-syrup-mobile). So we've begun the installation by pulling high tensile wire along routes flagged last spring. It's sloppy work right now. The woods are wet, the underbrush is thick. It's like that saying... "You can't see the forest for the trees that are slapping wet leaves in your face". Ha ha. Here's a Frost poem with a nicer spin on rainy New England:
A Line-Storm Song
The line-storm clouds fly tattered and swift,
The road is forlorn all day,
Where a myriad snowy quartz stones lift,
And the hoof-prints vanish away.
The roadside flowers, too wet for the bee,
Expend their bloom in vain.
Come over the hills and far with me,
And be my love in the rain.
The birds have less to say for themselves
In the wood-world’s torn despair
Than now these numberless years the elves,
Although they are no less there:
All song of the woods is crushed like some
Wild, easily shattered rose.
Come, be my love in the wet woods; come,
Where the boughs rain when it blows.
There is the gale to urge behind
And bruit our singing down,
And the shallow waters aflutter with wind
From which to gather your gown.
What matter if we go clear to the west,
And come not through dry-shod?
For wilding brooch shall wet your breast
The rain-fresh goldenrod.
Oh, never this whelming east wind swells
But it seems like the sea’s return
To the ancient lands where it left the shells
Before the age of the fern;
And it seems like the time when after doubt
Our love came back amain.
Oh, come forth into the storm and rout
And be my love in the rain.
You may have seen it in the news recently - "sticky fingered thieves steal a half a million gallons of maple syrup out of Quebec's strategic maple syrup reserve" (the Daily Show got it mostly right). Wait, what? A strategic maple reserve? In Quebec? From which thieves stole almost as much syrup as Vermont produces in a year? What’s going on up there, eh?
I will break this down into two blog posts - first, how did Quebec's maple industry come to be completely controlled by a single agency, and then I will get into the theft itself.
So - why is there a strategic maple reserve in Quebec?
The short answer is that their maple industry is huge (as a percentage of the world market and as a percentage of their agriculture) and it is controlled by an OPEC-like cartel that oversees production, sales and marketing.
The province accounts for about 75% of the world's maple production (Vermont makes up almost half of the rest), and plays a critical economic role in the province. Maple is the largest crop (non-dairy or livestock) in the province and accounts for 12% of Quebec's agriculture ($258 million out of $2.2 billion total) compared to 5% in Vermont ($40 million out of $757 million). Its economy is affected by all aspects of maple production and marketing; landscape - farmers tap 30% of all maple trees in the province (by contrast, in Vermont 3% of trees are tapped); manufacturing - CDL , Lapierre and Dominion & Grimm (D et G?), three of the big four maple equipment makers are Quebecois (the fourth, Leader Evaporators , is in Swanton, VT); and Quebec's syrup is exported all over the world .
The story of how the Quebec maple industry ended up so tightly controlled started in 1958 with the formation of the Federation of Quebec Maple Syrup Producers as a maple marketing cooperative of the producers in the Beauce region of Quebec (along the Maine border). In the late 80's the provincial government, looking for ways to stimulate economic development, proposed expanding that cooperative to cover the whole province, allowing for stable prices and a greater commercialization of the industry. A unanimous vote in 1989 maple producer referendum ed to the adoption of the "Plan Conjoint ", governing the production and marketing of syrup in the province.
The Plan gave the federation the power to control sales (either as the buyer and reseller, or as a broker between producers and large retailers), place a per pound tax on all barrels of syrup and to set production limits. Producers, granted the opportunity to adopt the Plan by a Canadian law designed to protect food producers, were interested primarily in the marketing and price stabilization aspects of the plan, while the other major players in the industry - syrup packers (packers are syrup re-processors - they buy syrup in bulk, and bottle it, brand it, market it and resell it - the creameries if you will) - who (at times) benefited from price instability, had no choice but to accept this new regime (at the time there were eight major packers in Quebec and over seven thousand producers).
None of these elements are unheard of. The sale of milk in the United States is subject to a variety of price controls and subsidies (not that the dairy industry is necessarily the model of stability ). And many agricultural products have checkoff programs , where a tax is assessed on each bulk unit of sale and the revenue goes to fund promotional programs (maybe all Pure Maple needs is Matthew McConaughey's voice and whoever this guy is).
The only part of the Plan put into practice initially was a dollar per gallon tax for general maple marketing (a big part of this was to develop Quebec quality and grading standards).
Continued price instability in the bulk markets through the 90's, however, led to the implementation of price controls by the Federation in 1997. The Federation set the price that buyers were required to pay for bulk syrup and made buyers financially responsible for carrying any surplus (effectively requiring them to buy the entire crop). Ideally, this would limit packers' abilities to take advantage of producers by playing fluctuations in the market, buying up syrup when prices were low in years of high production and not buying when prices went back up later. This can lead to a much larger discussion about the "invisible hand ", but the bottom line was that highly variable revenue was difficult for producers (and felt to be unfair).
In reality, things were a little different. Price controls allowed producers to make as much syrup as they could without worrying about the effect of oversupply on prices. The spring of 2000 brought a bumper crop, initiating a rebellion by packers who took legal action to force the Federation to activate the clause of the Plan that called for production limits. For the 2004 production season each producer would have a quota of syrup based on their past three seasons' production. Every gallon of syrup over the quota was required to be sold to the Federation at a much discounted rate. Syrup sold directly to retail customers by farmers was exempted. Initiation of new commercial operations was effectively banned, although the Federation helpfully noted that new operations could be started by selling the entire crop direct to consumers. Syrup consumed by the farmers and their immediate families was also exempted - a 2005 study estimated 1% of the syrup crop in Quebec was consumed that way. And, the cost of any carrying over unsold syrup was shifted from packers to producers, communally paid for by an increase in the per pound levy.
This was a big deal. At public meetings in the wake of the announcement Federation representatives needed police protection.
But the change went through, extending the Federation's mandate over virtually all aspects of the maple industry in the province. Over the next seven years there were a few developments.
Packers, allowed to buy syrup only at Federation prices, protested that they were being forced to compete with the direct sales by the Federation in international markets and that the Federation was using what were supposed to be generic maple marketing dollars to increase sales of their own syrup stocks. Some smaller packers stopped re-selling syrup outside of Quebec altogether.
The rules governing over-quota syrup changed. Surplus syrup was still required to be delivered to the Federation, but producers would only be paid for that syrup when it was sold out of the Federation's stocks, and, until it sold, farmers had to pay an annual storage fee. This cost was enough that producers often received little or no compensation when their surplus syrup eventually sold.
Fast forward to 2011. Years of increasing production led to a stockpile of close to 3.5 million gallons stored in three warehouses including one in St. Louis-de-Blanford.