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FOR A STRONG AND
COMPETITIVE MAPLE
INDUSTRY
21 MEASURES FOR GROWTH
FOR HARMONY
FOR PROGRESS
Report prepared by:
FLORENT GAGN
December 2015
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Table of contentsINTRODUCTION.................................................................................................................................4
MANDATE........................................................................................................................................................ 4
STUDY METHODOLOGY AND PROCESS........................................................................................................... 4
SUMMARY ........................................................................................................................................7CHAPTER 1: A UNIQUE BUSINESS MODEL ................................................................................ 10
1.1 QUBECS MAPLE INDUSTRY: AN OVERVIEW..................................................................................................... 10
1.2 AHIGHLY REGULATED SECTOR.......................................................................................................................... 11
1.3 THE ORGANIZATION OF THE MAPLE INDUSTRY...................................................................................................... 12
1.4 TIME TO TAKE STOCK .......................................................................................................................... 14
CHAPTER 2: A GLOBALIZING INDUSTRY IN AN EVOLVING MARKET ....................... 15
2.1 ATHRIVING INDUSTRY ............................................................................................................................. 15
2.2 AMORE COMPETITIVE GLOBAL MARKET ............................................................................................................. 18
2.3 THREAT OR OPPORTUNITY?............................................................................................................................ 202.4 PROMOTION AND MARKET DEVELOPMENT ................................................................................................ 22
CHAPTER 3: AN OVERLY RIGID, CLOSED SYSTEM ........................................................................... 26
3.1 CALLING THE SYSTEM INTO QUESTION.26
3.2 MORE FOCUSED CRITICISMS ........................................................................................................................... 28
3.3 CHANGES ARE NEEDED .................................................................................................................... 30
CHAPTER 4: REPOSITIONING THE BUSINESS MODEL ...................................................................... 31
4.1 ADAPTING IN CONTINUITY ....................................................................................................................... 31
4.2 DIRECT SALES TO CONSUMERS........................................................................................................ 32
4.3 RETAIL SALES WITH THIRD PARTIES......................................................................................................... 334.4 PRODUCTION QUOTAS....................................................................................................... 36
4.5 AN OFFER THAT ADAPTS TO THE MARKET ............................................................................................................. 41
4.6 THE MAPLE SYRUP RESERVE ............................................................................................. 43
4.7 PAYMENTS TO PRODUCERS .................................................................................................................. 46
4.8 UNION REPRESENTATION AND THE MARKETING MONOPOLY................................................................ 48
4.9 RELATIONS BETWEEN THE FEDERATION AND PRODUCERS.................................................................................. 51
4.10 THE RGIE DES MARCHS AGRICOLES ET ALIMENTAIRES DU QUBEC ........................................................................ 54
4.11 SYNERGY BETWEEN ALL STAKEHOLDERS ........................................................................................................... 56
CHAPTER 5: FROM THOUGHT TO ACTION ........................................................................................ 605.1 IMPLEMENTATION CHALLENGES .................................................................................................................. 60
5.2 PROVIDING SOME DIRECTION.......................................................................................................................... 62
IN CONCLUSION: TRUSTING IN OURSELVES....................................................................................... 64
LIST OF RECOMMENDATIONS.......................................................................................................... 66
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Writing: Florent Gagn
Proofreading: Diane-MichlePotvin
Graphic design: Jean-SimonGagn
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Introduction
Mandate
In a statement issued on May 15, 2015, Minister of Agriculture, Fisheries and Food Pierre Paradis
expressed concern about the future of Qubecs maple industry.
I notice, he said, that our position as a global leader in the maple industry is in decline. As
Minister of Agriculture, I cannot let the situation continue. I want to encourage Qubec
entrepreneurship, and it is my duty to find solutions. In this context, he announced his decision to
entrust the undersigned with the mandate to conduct a comprehensive study of the situation and
make recommendations.
Specifically, this study aims to identify the causes that have led to a loss of relative market share
and the obstacles to the development of Qubecs maple industry, and to determine possible
positions to adopt to ensure that Qubec remains the world leader in this industry.
Study methodology and processThe Ministre de lAgriculture, des Pcheries et de lAlimentation provided the author with extensive
reference materials in the course of this reports preparation. These documents contained
descriptions of the legislative and regulatory framework for Qubecs maple industry, statistics on
the various parameters of maple syrup production and marketing, and elements of interaction
between various industry partners in relation to problems or difficult situations that may have arisen.
They also included reports or more general reference materials on the agricultural sector.
The Federation of Quebec Maple Syrup Producers showed a similar openness and said that it
welcomed the conduct of the study. Throughout the process, it showed excellent collaboration by
making available a considerable amount of reference material that provided a comprehensive
insight into the policies, programs and methods of the Federation. In addition, on October 6, 2015,
the Federation submitted to the undersigned a memorandum titled ENTRETENIR ET
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DVELOPPER LE LEADERSHIP ACRICOLE QUBCOIS in which it expressed its desire to
[Translation] further embed Qubecs maple syrup industry in the global food market of the 21st
century. It made commitments and recommendations to that end. Other industry partners also
provided valuable information for the study and made suggestions for the future.
Discussion and consultation meetings were held with representatives of the Ministre de
lAgriculture, des Pcheries et de lAlimentation (MAPAQ), the Ministre des Forts, de la Faune et
des Parcs, the Federation of Quebec Maple Syrup Producers (FPAQ), the Conseil de lindustrie de
lrable (CIE), the Association des rablires-Transformateurs des Produits de lrable (AETPE),
the Conseil des appellations rserves et des termes valorisants (CARTV), the Union paysanne,
ACER Centre, Farm Credit Canada as well as the Forest Lavoie Conseil consulting firm.
In addition to that consultation, around 80 people were met individually or in small groups so they
could add their contribution to the project. Some of these people were specialists, such as
Jean Pronovost, who chaired the Commission sur lavenir de lagriculture et de lagroalimentaire
qubcois and whose report was made public in 2008, and Normand Bolduc, who prepared a
report in 2004 about the maple industry at the request of the Table filire acricole. Other
stakeholders working in maple product processing and marketing or in equipment sales were also
consulted.
Finally, meetings were held, sometimes at the other partys request, with individual producers, who
mostly had major recriminations against the current marketing system and its management by the
Federation, or supported it but wanted improvements. Many emails and phone calls were also
received from people wishing to discreetly share their views.
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The author of this report would like to thank all those individuals and organizations for their valuable
collaboration. Though the views expressed were very diverse, and even sometimes completely at
odds, they were all highly relevant to the theme of this study and reflected the will of everyone to
contribute to the continued development of a strong and competitive maple industry in Qubec.
Florent GagnDecember 11, 2015
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Summary
Every year, Qubec proudly produces over 100 million pounds of maple syrup. It is the worlds
largest producer of this commodity in an overall market of around 160 million pounds. This marketis on the rise, and the growth prospects for the coming years are most interesting.
Although the good performance of Qubecs industry has enabled a
context of stable and relatively high prices for our producers, it also
stimulated the growth of production outside of Qubecin New
Brunswick and Ontario, and especially in US states located directly
south of the province and the Great Lakes. For the moment, Qubec
has a comfortable lead, but the tremendous potential of US producers deserves to be taken into
serious consideration when the leaders of Qubecs maple industry make decisions to ensure its
medium- and long-term prosperity.
These decisions need to take into account an important fact: Qubecs producers, as well as the
other stakeholders in the industry, operate under a very different model than producers in other
jurisdictions. While the latter are in a free market context, without restrictions other than those
dictated by supply and demand, Qubec producers have chosen, for better and for worse, to adopt a
Plan conjoint and other regulatory mechanisms under the Act respecting the marketing of
agricultural, food and fish products.
This business model has enabled Qubecs maple industry to grow and
consolidate its position on solid foundations, including by reducing the risk for
producers and encouraging investments. Productivity and product quality
underwent significant growth thanks to the efforts of dynamic Qubec
equipment manufacturers, who developed cutting-edge tools and devices. As
for marketing, large buyers also benefitted, notably through better supply chain security, which is a
sine qua non for developing their markets. In short, the industry is healthier today, but it is essential
that it continue evolving.
Despite Qubec'scomfortable lead, thepotential of US producersneeds to be taken intoserious consideration.
The industry ishealthier todaybut needs to
continue evolving.
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So, do production quotas in a developing export market and the centralized marketing of maple
syrup by the Federation of Quebec Maple Syrup Producers still correspond, without qualification, to
the needs of todays context, where a growing part of production is in the hands of external
producers over which we have no control? Can maple syrup pricing on the basis of the balance of
power between the Federation and the Conseil de lindustrie de lrable get away with distancing
itself from the usual rules of a market economy? Is the Federations near-total control over the
various marketing channels necessary to maintain our gains? Is the system by which producers
behaviour is monitored and sanctioned by the Federation excessive? Or does it, by its very nature,
generate deviance? Can we achieve improvements in various components of the existing system
that would be beneficial to all without calling into question the entire model?
If no one wants things to regress to the way they used to be, it is clear
that the business model needs to be repositionedwe have to make it
more elastic, less all-encompassing, and give it the flexibility to cope
with the demands of a globalized industry. It is also essential that the model let Qubec producers of
all categories feel at ease and work within it with professionalism, talent and commitment, in
harmony rather than under a system of inspections and investigations that carry a heavy financial
and human cost.
The Federation of Quebec Maple Syrup Producers is not closed to change. In a memorandum
dated October 6, 2015, titled ENTRETENIR ET DVELOPPER LE LEADERSHIP ACRICOLE
QUBCOIS, it expressed commitments and recommendations that demonstrate that it is aware
of the need for adjustments. The courses of action that it presents are valid and deserve to be
supported. However, they do not call into question the most basic elements of the model, which still
appears highly necessary.
Changes should particularly focus on the following elements:
Conce rte d efforts s hould be m a de to de velopmarkets.
P roduct quality sh ould be cons ide red just as impo rta nt as increa sing volum e.
The Federation should ease the administrative burden on producers.
The Plan conjointshould exclusively concern bulk production.
P roduction quotas should be a bandoned.
The businessmodel should be
repositioned.
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A developme nt pla n s hould be put forwa rd.
P rice s s hould be tte r re fle ct ma rke t conditions .
The conce pt of ma rke ting e xclus ivity s hould be revis e d to a llow for ag ree d e xceptions .
S urplus production ma nag em ent should be a pproach ed m oredynamically and in a way thatrespects buyers needs.
Concrete ste ps s hould be ta ken to re store ha rmon y with all produce rs.
The Rgie des marchs agricoles et alimentaires du Qubec should contribute to the desiredchanges by amending certain practices.
Cons ultation a nd coope ration be twee n s takeholde rs should be more e ncourag ed.
The la w should be a me nded to give the responsible Minister power of initiative and oversight.
Qubec has all the elements it needs to ensure the growth and development of its maple industry. Ifit is willing to do so, it can create the changes needed to leave today and yesterday behind and
move toward a most promising tomorrow.
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Chapter 1A unique business model
1.1 Qubecs maple industry: an overview
Qubecs maple industry is periodically the subject of monographs published by the Ministre de
lAgriculture, des Pcheries et de lAlimentation. The latest monograph, which dates back to 2011,
provides fairly comprehensive quantitative data on the demand, supply, economic benefits,
marketing channels and competitiveness of the industry.
The Federation of Quebec Maple Syrup Producers also publishes a series of documents that
provide a rather detailed description of the characteristics of maple syrup production in Qubec and
of the industrys structure. Most of these documents, like those of the MAPAQ, are available online.
Repeating all this data in this report would be tedious, especially since it is public and easily
accessible. However, for brevity and to facilitate the understanding of readers less familiar with the
field, let us take a brief look at the broad strokes of this industry.
For years, over 80% of worldwide maple products and maple syrup production originated in
Qubec. According to the latest data, Qubec now accounts for 70% of global production.
However, over a 10-year period, this production increased from around 108 million pounds to over
160 million pounds in 2014.
The relative decline of Qubecs share, while worrying, conceals an
actual increase of approximately 30% of its production, which grew from
85 million pounds to 114 million pounds over the same period. It was
mainly US production which grew faster than Qubecs (more on this
later), while production in Ontario and New Brunswick experienced
more moderate growth.
For years, Qubec
accounted for over 80%of global production.
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Global demand has been growing steadily for 10 years, especially in Japan and Europe (particularly
Germany). The largest consumer, however, remains the United States by far, with a volume of
around 72 million poundsnearly half of global consumption, which is currently estimated at
156 million pounds.
From an economic point of view, the maple industry remains sizeable. Qubec has over
13,500 maple syrup producers working some 7,200 sugar bushes. The number of sugar bushes
has declined since 2000, but has been increasing slightly in recent years. Additionally, there is a
marked trend, in all producing regions, towards larger businesses.
Qubec production in 2014 represented a farm gate value of $318 million. It was also observed that
revenue growth in the maple industry outpaced that of the entire agricultural sector in recent years,
thanks to a combination of price maintenance and increased sales volume. The financial situation
of maple producers has improved and is now considered very healthy overall. The value of
businesses keeps growing, and the number of direct and indirect jobs is estimated at 5,000,
including around 700 jobs in the processing sector.
1.2 A highly regulated sector
In addition to remaining the worlds main producer even though its
relative share is slipping, Qubec differs from other jurisdictions in the
way it structures its maple industry. While maple syrup producers in
the United States and other provinces produce and sell their syrup
freely according to market rules alone, Qubec producers are required to work within the specific
framework whose foundations lay in the provisions of the Act respecting the marketing of
agricultural, food and fish products (R.S.Q., c. M-35.1).
This law (ARMAFFP), which was adopted in 1956, was a victory for Qubec farmers at the time. It
was the culmination of a long struggle to restore a balance between agricultural producers and the
buyers of their products. The law was substantially overhauled in 1990 and has since been the
subject of various amendments, although the principles and implementation mechanisms have
remained basically the same.
Qubec stands out forthe structuring of itsmaple industry.
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Essentially, the law establishes a set of rules that allow producers to take collective and organized
control over the production and marketing of their products. It offers producers the possibility of
implementing a joint plan that gives them the power to collectively negotiate the conditions under
which their product will be marketed and those in which it will be produced.
Additionally, the law gives the board responsible for administrating the joint plan the power to
formulate and adopt by-laws for its implementation and operation. The law also specifies the
supervisory and regulatory powers of the Rgie des marchs agricoles et alimentaires du Qubec
(RMAAQ), whose role is to promote efficient and orderly marketing, foster the development of
harmonious relations between parties and arbitrate disputes.
The ultimate goal of these combined legal provisions is to establish an equitable economic
relationship between producers and buyers and ensure a fair price is reached.
1.3 The organization of the maple industry
Over the last 25 years, maple syrup producers gradually availed themselves of the provisions of the
ARMAFFP. The first provincial joint plan was actually adopted in 1990; it applied to maple water
and maple syrup produced in Qubec and sold in barrels or in bulk. Originally, the Plan conjointdid
not cover syrup produced at a producers sugar bush and sold directly to consumers, and syrup in
small containers sold to a third party. It was amended in 2001 to regulate the sale of syrup to a third
party. However, in accordance with the ARMAFFP, direct sales to consumers remain excluded.
Around the same time, the first marketing efforts began with the establishment of the
Regroupement pour la commercialisation des produits de lrable du Qubec, consisting ofrepresentatives of buyers and producers. The Regroupement supported inventories, the first step
towards the creation of a reserve. The first agreement on the marketing of syrup sold in barrels or in
bulk was signed in 1998 with buyers; this agreement laid out the conditions to be recognized as an
authorized buyer, set the minimum price for each grade of syrup and defined payment terms for
buyers.
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Furthermore, in 2000, the Federation created a syrup bank, called the strategic maple syrup
reserve. This tool is used, among other things, to mitigate production variations due to weather
conditions. For buyers, it guarantees a consistent supply. The initial objective was to hold in reserve
a quantity equivalent to half of the annual demand.
The Regroupement pour la commercialisation des produits de lrable du Qubec experienced
difficulties that led it to be dissolved in 2002 and replaced by the current sales agency. The
Rglement sur lagence de vente des producteurs acricoles,approved by the Rgie des marchs,
assigned the marketing of bulk maple syrup to the Federation, which acts as an exclusive sales
agency. The regulation excludes the sale of syrup containers under 5 L. It also provides that
producers be paid only for the syrup sold, according to payment schedules and terms it establishes,
and that fees for marketing and storage can be charged to all producers.
In 2003, an additional step was taken with the adoption of the
Rglement sur le contingentement de la production et de la mise en
march du produit vis par le Plan conjoint des producteurs
acricoles du Qubec, which introduced the concept of supply
management. From that moment, every producer under the joint plan
had to obtain a production quota from the Federation based on their production history. For 2004,
the quota was set to 75% of historical production. Thereafter, adjustments were made to take into
account the evolution of demand and specific situations such as the start-up of new maple
businesses.
With the Plan conjoint, the marketing agreement, the sales agency, the strategic reserve and
production quotas, Qubec strongly differentiated itself from other maple syrup-producing
jurisdictions in the last quarter century. For better or for worse, Qubec producers are working in a
legal and regulatory environment that has no equivalent anywhere else.
1.4 Time to take stock
For a quarter of a century,Qubec has stronglystood out from other
maple syrup-producingjurisdictions.
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Maple syrup has traditionally been associated with Qubecs
food and culinary culture and, more generally, has served as
an iconic emblem of the province. The maple industry,
through its size and its place in Qubec and in the world, has become a flagship of Qubec
agriculture. However, the greatest danger it could face is falling into complacency and refusing to
see that real threats are looming on the horizon and have begun taking shape, including the
observed acceleration of US production. Chapter 2 will give us the opportunity to analyze this issue.
Furthermore, relationships between various stakeholders in the maple industry have been under
constant stress for several years, and some fundamental differences of opinion have surfaced.
Many are those who demand targeted adjustments or even radical changes to the imposing legal
and regulatory apparatus that characterizes our maple syrup production and marketing. Qubecs
experience, expertise and development potential must serve as cornerstones to define and
implement adjustments that have become essential.
The greatest danger theindustry could face is fallinginto complacency.
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Millionsoftaps
Chapter 2A globalizing industry in an evolving market
2.1 A thriving industry
First, we should mention that Qubecs maple industry is not in a weak or declining state, far from
it. Like any sector of the economy, our maple industry has its share of difficulties and could
probably use some improvements, as we will see later, but the first thing that must be noted and
even emphasized is the strength and vitality of this area of the agricultural world.
Over the last 20 years, the maple industry has experienced major progress which can be easily
summed up with a few figures:
In 1985, Qubec sugar bushes had 14 million taps; in 2000, there were 33 million, and thereare about 43 million today. The total potential is estimated at 100 million.
Cumulative Number of Taps in Qubec, Out of an Estimated Potential
of 100 Million
100
80
60
4340
33
20 14
0
1985 2000 2015
Year
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Tonsofmaplesyrup
P roduction qu ota leve ls g rew from 65million pounds, when quotas were implemented in2004, to 111 million pounds in 2014.
Global production h a s grown rap idly over the las t 10 yea rs, increasing from 108 million pounds in2004 to around 160 million pounds in 2014.
During the s am e p e riod, Qu be c increa se d its production from 86million pounds to113 million pounds, but its relative share of global production slipped from 80% to 70%.
180
160
Qubec and Global Production
160.6
140
120
100
80
108.5
22.1
20%
145.9
36.5
25%
46.9
30%
Production
outside Qubec
Production in
Qubec
60
40 86.4
109.4 113.7
20
0
2004 2009 2014
Year
Source: Federation of Quebec Maple Syrup Producers, Dossier conomique et Statistiques agricoles, 2014
Ca nadian e xports increas ed from 72million pounds in 2010 to 85 million pounds in 2014an
18% increase.
On a verage , in the las t five yea rs, Qu be c e xported 70% of its a nnua l production.
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Weight
edprice($/lb)
The price paid to producers for maple syrup increased from $1.54/lb in 2001 to $2.80/lb in2014; the price has also greatly stabilized since 2009, as opposed to the erratic variationobserved in previous years.
3
2.8
2.6
2.4
Weighted Price. All Grades Included. in Qubec20002014. Excluding Flavour Defects
2.72 2.742.78 2.82
2.90 2.87
2.14 2.18 2.152.22 2.22
2.2
2
1.8
1.6
1.4
1.2
1
1.54
2.02 2.03 2.02
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
Source: Federation of Quebec Maple Syrup Producers, Dossier conomique et Statistiques agricoles,2014.
The number of maple businesses grew only slightly, but we see more and more larger-sizedbusinesses as well as the development and use of advanced technologies.
Over the last five years, the Federations sales increased by about 10% per year, andpayments to producers increased by 8.5% per year.
The financial situation of maple producers is generally very good; according to Statistics
Canada, the net income after amortization of maple businesses (17%) is significantly higherthan that of all agricultural operations (7.3%).
In the past, the Qubec maple industry has gone through difficult years, and producers alternately
suffered from the vagaries of nature, a lack of organization or the omnipotence of buyers who
dictated the rules.
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The industry is generally much healthier now, largely thanks to the
collective efforts of producers who took action using the means offered
by the ARMAFFP. Buyers also played an active role in this effort to
clean up and consolidate the industry, and the relationship between
producers and buyers has greatly improved in recent years.
While tensions still persist between the industrys various stakeholders, the great battles of the
past are essentially behind us, and progress has been significant. Although its actions have
been (sometimes wrongly, sometimes rightly) heavily criticized, the Federation of Quebec Maple
Syrup Producers must be recognized for its major contribution to this organizing effort. Today,
the Federation is able to guarantee volumes and ensure a constant supply thanks to the
strategic maple syrup reserve, which is probably its most valuable achievement.
Despite the criticism some parties have levelled at it, the Federation transformed Qubec maple
syrup into a product thats available to buyers and profitable for producers. Even among those
who strongly criticize the organization, its policies and its practices, most agree that the situation
was worse in the past and that destroying everything that has been built would be indefensible.
The most widespread idea is that the current system has produced great things, but must now
continue to evolve and adjust to the changes necessitated by a world that itself is changing
rapidly.
2.2 A more competitive global market
Qubec is still, by far, the world leader in maple syrup production. However, it would be wrong
to believe that this is set in stone and that we can ignore whats going on elsewhere with
impunity. This is especially relevant considering that over 70% of our production is destined for
the export market. Developments in the US maple industry deserve special attention, and so do
those in New Brunswick and Ontario, though to a lesser degree.
Recognizing this, the Federation and the Conseil de lindustrie de lrable (CIE) joined forces in
2014 to commission a study: the tude sur le contexte de dveloppement de lacriculture en
The industry isgenerally muchhealthier now.
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Amrique du Nord. Some of the elements highlighted by this study, which was conducted by the
Forest Lavoie Conseil consulting firm, were the scale of US production growth in recent years
and the tremendous potential of US producers. The study, which is available online, also
showed that:
The number of taps in US states increased by 45% between 2007 and 2015, going from8.2 million to 11.9 million.
The yie ld pe r ta p is no w significa ntly highe r tha n tha t of Qu be c de s pite the two being s imila r
10 years ago.
The two pre viousfactors enabled US production to grow by 45% between 2007 and 2012.
The high and stable price of maple syrup and the consistency of market conditionsestablished in Qubec are the main factors driving the development of US maple syrupproduction.
Larger maple businesses are more numerous and are responsible for a greater share ofproduction. Technology also plays an important role in productivity.
US producers rec eive a bout $0.50 more per pound than Qubec producers, in part because
they do not contribute to the costs of Qubecs marketing system while still reaping its
benefits. This additional income is then used to invest in advanced technology and develop
new taps in a system free of production quotas.
According to some studies, US territory holds theoretical potential for 2 billion taps. It is
estimated that the most easily accessible and usable maple trees, in the short term, number
around 200 millionwhich is still impressive, especially considering that only 6% of this
volume is currently being used. For comparison purposes, Qubec is said to have tapping
potential for 100 million maple trees, 43 million of which are already in use. As for Ontario, it
has a tapping potential of about 108 million, of which only a small percentage is in use.
The strength of the m a ple indus try growthin the US has so far caused Qubec to lose around
1.2% of its market share on average over the last 10 years in an otherwise growing globalmarket. Despite its market share decreasing from 78% to 69%, Qubec still sells 12 millionmore pounds annually than it did 10 years ago.
Global consumption actually increased by 35% in the last five years, going from 114millionpounds to 156 million pounds, which allowed Qubec to increase its sales despite growingUS competition.
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However, Qube cs s a le s on the US m arket have not increa s e d s ince 2007 d es pite this
market still being Qubecs main export market and the main consumer.
The Farm Bill adopted by the US government in February 2014 includes a new programworth about $20 million per year to support the maple industry.
Based on the econometric models used, it is estimated that US production, which was
36 million pounds in 2013, could increase to 44 million pounds in 2018.
For their part, Americans are monitoring the situation closely. An article
published in the November 7, 2015 edition of The Economistdescribed
the Federation of Quebec Maple Syrup Producers as the OPEC of maple
syrup and questioned its strategy. Just like OPEC, it reads, the Federation controls the level of
production to keep prices high and stable. After discussing the potential strength of the US by
reminding readers that the state of New York alone has more maple trees than all of Qubec, the
author writes that US producers definitely have the ability to surpass Canadian production.
Continuing his parallel with OPEC, he then explains that the Federations strategy of limiting
production and maintaining a high price may have the dual effect of stimulating US production and
encouraging consumers to substitute maple syrup for cheaper products. In such a context, the
Federation could find itself forced to choose between tightening quotas or letting the price of maple
syrup fall.
One can certainly disagree with or qualify the authors views, but it is clear that a fundamental
question is being posed, and that it would be unwise, to say the least, not to take it as seriously as it
deserves. After all, market forces will inevitably be shaping the evolution of an important sector of
Qubecs economy.
2.3 Threat or opportunity?
Though Qubecs maple industry remains strong, it is obvious that the global context has changed
irrevocably and that it would be rashirresponsible, evento close our eyes to developments in
other maple syrup-producing jurisdictions in North America and mainly in neighbouring US states.
During consultations with associations and people working in Qubecs maple industry, the
development of US production was one of the most commonly discussed topics.
The OPEC of maplesyrup.
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In general, stakeholders took the issue very seriously; most of them felt that published data grossly
underestimated the growing and accelerating US phenomenon. This was particularly true for
equipment suppliers, who had the advantage of working directly in the field with US producers. The
Forest Lavoie study also reported marked underestimations when comparing data from various US
sources and the situation actually observed in the field.
In fact, some believed that the US could experience annual growth rates of 10%, or even more, in
the coming years. At this rate, a production of 37 million pounds in 2015 would reach almost
50 million pounds as soon as 2018 and 60 million pounds in 2020. While remaining hypothetical,
these projections should be taken seriously.
Some viewed the development of US production as a direct threat to
Qubecs interests, foreseeing that Americans will be self-sufficient in
less than 10 years and that Qubec will thus be deprived of its main
foreign market, which currently absorbs 66% of our maple syrup
exports.
Without disputing these figures, others were more optimistic and viewed the development of USproduction as a sign that the global market for maple products is strong and will remain so in the
coming years. For them, opportunities will come back to those who will be able to develop and
seize them.
Still, all the stakeholders consulted insisted that the situation needed to be brought under control
and that Qubec had to act to remain a major and competitive player in the maple syrup industry.
Though few thought that Qubec could take back the market share that would return things to theway they were 10 years ago, many believed that Qubec can and should continue developing its
maple industry, which still has the potential of one and a half times its current production.
In other words, Qubecs 10% drop in global production share in recent years is not perceived as a
catastrophe in itself, nor as a goal to recapture, but rather as a serious signal that cannot be
Opportunities willcome back to thosewho will be able todevelop and seize
them.
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ignored. The worst approach would be to let events take their course and leave everything up to the
market and the seasons. If Qubec wants to ensure the sustainability of an industry that has been
developing well for 20 years, strong measures must be taken without delay.
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2.4 Promotion and market development
The first of these measures is most certainly to ensure progressive market development. If thesustainability of Qubecs maple industry is to be reconciled with an accelerated development of
US production, it is essential that global demand for maple products grow. This is a course of action
that is as sound as it is necessary, and it demonstrates the intent of all parties not to remain
passive about the situation. Initiatives in this direction are already underway.
For instance, the Federations organizational structure includes a
Promotion, Innovation and Market Development Service whose
mandate is to increase the reputation, visibility, value and sales of
Qubec and Canadian maple products nationally and internationally. In
collaboration with all its partners, the Federation was also closely involved in the development and
implementation of a long-term international strategy known as New Generation of Maple 2020,
which is periodically updated and serves as the basis for developing five-year action plans.
More recently, the tude sur le contexte de dveloppement de lacriculture en Amrique du Nord,
commissioned from Forest Lavoie Conseil by the Federation and the Conseil de lindustrie delrable (CIE), included an appendix with an action plan submitted to the attention of partners. After
warning of the dangers of maintaining the status quo, the authors pointed out: [Translation] a
strategy wherein markets would be developed in a forceful and concerted manner seems most
appropriate to limit the impact of the growth in US production on Qubecs industry. The action
plan identified four targets and proposed specific courses of actions to achieve each of them.
Authorized buyers, represented by the CIE, have also made significant efforts in recent years togrow sales, especially exports, which are on the rise right now. In 2014, Canada (mainly Qubec)
was exporting $310 million in maple products to 88 countries, including 63% to the United States,
9.6% to Japan, 8.4% to Germany and 4% to the United Kingdom.
While the Federation and buyers had somewhat tense relations in the past, they now seem to have
moved on to collaborating and trying to find possible solutions to improve the maple industrys
Only growth indemand can ensure
the future.
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competitiveness together. They are aware of the challenges, including the issues brought up by the
accelerated development of US production, and so they jointly took the initiative to commission the
study conducted by Forest Lavoie Conseil. They were invited to work together to implement the
action plan appended to the report.
If it is to remain competitive and ensure its development, the Qubec maple industry has no choice
but to continue and ramp up its efforts to develop markets and take its rightful place within them.
Though all signs are positive regarding the potential for growth in global consumption of maple
products, it is clear that the benefits of such a development will come to those who will have worked
to bring it about.
Producers and buyers, respectively represented by the Federation and the CIE, have a leading role
that they need to play with discipline and determination. Governments also have their contribution
to make by maintaining their support for the generic promotion of maple products in international
markets.
In this context:
It is recommended that the Federation of Quebec Maple Syrup Producers, the Conseil de
lindustrie de lrable and other partners in the maple industry work together, with
support from the MAPAQ, to ensure the healthy development of the international market
for Qubecs maple syrup.
Furthermore, these market development efforts should not only target higher volumes but also
focus on the development of a Qubec brand image built on the authenticity, quality and
traceability of our products. Interesting initiatives have already been launched, but we are still far
from done on those fronts.
In 2014, the Federation and the CIE joined forces once more to commission a study on the subject.
Both organizations were alarmed by the growing number of signs that maple products could be
subject to tampering and alteration, as this unfortunately happened elsewhere for other industries
such as olive oil and wine. The absence of guarantee on the quality of Qubecs maple syrup may
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turn out to strongly harm the image of the product, especially on the international market.
The report by the consulting firm Zins Beauchesne and Associates, titled De lrable la table :
tude de faisabilit pour garantir lauthenticit du sirop drable, was not able to arrive at a
consensus approach with industry stakeholders to develop a comprehensive, integrated system to
ensure the authenticity, traceability, quality and safety of Qubecs maple syrup. However,
interesting and promising avenues were identified. The reports main recommendation included
proposals for international monitoring and random quality checks to detect counterfeiting and poor
quality. Additional recommendations were also made to ensure Qubecs product is of better
quality.
During consultation meetings with industry stakeholders as part of
this study, the issues of quality, authenticity and traceability of
Qubecs maple products were raised as major factors for the
promotion of Qubec products on the international market. In a
context of greater competition with producers in other jurisdictions,
it would be in Qubecs interest to pitch its identity and connect it ever more closely to the concepts
of quality, safety and authenticity, which are highly prized by todays increasingly demanding and
knowledgeable consumers. The demand for organic syrup is also high, and producers should be
encouraged to transition to this type of production.
In this regard, Qubec already has valuable tools: inspections by ACER Centre, producer
identification and traceability, mandatory certifications for processors and sellers, theAct respecting
reserved designations and added-value claims and its traditional image to promote the
development of distinctive and high-quality products in Qubec.
For its part, the Federation has stated its commitment to maintaining producers investments in
research and development of new products and to developing, in concert with the industry,
marketing initiatives to raise consumers level of knowledge and confidence. In its memorandum
titled ENTRETENIR ET DVELOPPER LE LEADERSHIP ACRICOLE QUBCOIS, dated
October 6, 2015, the Federation outlined several interesting measures to foster market
development and better meet consumer needs. It is desirable for the Federation to move forward
Bank on the developmentof a "Qubec" brand
image focused on theauthenticity, quality and
traceability of our product.
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with these measures, which directly concern product quality and authenticity.
At the International Maple Symposiumorganized by the Federation in November 2015, the themes
of quality and authenticity were heavily discussed as an essential condition for success in market
development.
In this context:
It is recommended that Qubecs promotional efforts focus not only on the availability
and security of the provinces maple syrup supply, but also on the distinctiveness of
Qubecs product, concretely supported by a strong process that guarantees quality
and authenticity.
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Chapter 3An overly rigid, closed system
3.1 Calling the system into question
Though the maple industry is still thriving overall, strong measures are needed, as we mentioned in
the previous chapter, to ensure the maintenance and development of Qubec production when
faced with the rise of US and, to a lesser extent, Ontario and New Brunswick production. In this
context, developing markets is an essential process that must absolutely be undertaken as a
priority. Yet, even though this measure is imperative, it would be nave to think that it is, by itself,the solution to every issue faced by Qubecs maple industry.
No one can dispute the fact that the Federation took steps that made the industry healthier, but its
relations with producers have had major shortcomings. These difficulties are not new and continue
to this day, representing a serious obstacle to the healthy development of the industry. They also
did not go unnoticed by local and foreign media.
In an article titled Maple Syrup Rebellion, published in theApril 25, 2015 edition of the Financial Post, journalist Peter
Kuitenbrouwer described in great detail the tense relations between
the Federation and several of its members. Other media outlets, in turn, highlighted the rivalry
between producers and the Federation, which was exacerbated by dramatic seizures of syrup
barrels from producers and the surveillance of sugar bushes by private security guards hired by the
Federation, the costs of which were then billed to the producers concerned.
During consultations conducted as part of this study, this discontent was felt very strongly. While
the Federation considers that the situation is confined to a few producers it describes as
recalcitrant and says that the vast majority of producers are satisfied, it quickly became clear that
the unrest goes far beyond what the Federation is willing to admit. Either there is a disturbing
information gap between the Federations establishment and a growing number of producers, or,
more likely, the Federation has deliberately made the strategic choice of minimizing the problem.
Relations with producershave had majorshortcomings.
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This unfortunate situation is far from new; it has characterized the last 30 years of Qubecs
production and marketing coordination.
During this study, we met with producers who called into question the entire system built on theAct
respecting the marketing of agricultural, food and fish products. In their view, the existence of a joint
plan, a sales agency, a union representation monopoly, the Federations regulations, supervision
performed by the Rgie des marchs and the other characteristics of the Qubec system is a
breach of their rights and freedoms. They are calling for the full right to produce and market the
fruits of their labour as they want. The Federation, its regulations and its application of those
regulations (which they deem authoritarian) are seen as components of a legal cartel backed by the
State.
One stakeholder summed up his thoughts as follows: [Translation] Currently, without a quota,
producers can only sell in small containers (while being harassed by the Federation, which
continually requires evidence and launches investigations with the Rgie) or sell or export their
syrup through illicit channels. The option of delivering it to the Federation results in excessive
payment delays or, for production without quotas, gives rise to severe penalties.
Proponents of this view are quick to compare the situation of Qubec producers to that ofproducers in other provinces and in US states, who work in total
freedom. In a market characterized by the predominance of exports and
by growing competition from other jurisdictions, they view Qubecs
current system as a heavy, inflexible handicap to the provinces
performance as well as a source of injustice for affected producers. They
feel that the current system has lost its place, its purpose and its legitimacy.
This perspective reflects an ideology which we feel is entirely defensible, with logical and
well-founded arguments. In the long term, it would certainly be desirable that Qubecs economic
agents in the agricultural industry be able to work in conditions offering the same freedoms and
opportunities as those their competitors enjoy.
It is often morerealistic to work toimprove existing
things.
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However, it is often more realistic and certainly easier to work to improve existing things instead of
dreaming of a radical change which, in practice, is unlikely to become a reality. The Qubec model
has had definite successes and produced tangible benefits for the maple industry and for
producers, but it undeniably needs improvements and even major changes if optimal conditions for
the evolution and development of a strong export industry in an increasingly globalized and
competitive world are to be established. It seems more productive to work on the desired changes
instead of tearing everything down and starting from scratch.
3.2 More focused criticisms
In fact, many people have serious complaints against the Federation and Qubecs marketing
system without necessarily calling their existence and all their workings into question. Still, they
definitely make striking, direct and often severe statements on the current situation.
Generally, they deplore the fact that the Federation is too powerful and that, according to them, it
has built over the years a very tight system that gives it the right of life and death over producers
and other industry stakeholders. The ARMAFFP, by giving the Federation the ability to enact
regulations that legally compel industry players, is in their eyes a disproportionately strong tool
which the Federation has abused.
They consider that the State has abdicated its responsibility to legislate in
this field and fell back too easily on an external bureaucracy with a
distinctly "all-or-nothing approach. Obviously, the detractors continue, it
aimed for all, and got its wish thanks to a triple threat of a monopoly,
union democracy they call questionable and supervision by the Rgie des marchs agricoles often
judged complacent. More specifically, they attack the Federations regulations, especially theRglement sur le contingentement de la production et de la mise en march du produit vis par le
Plan conjoint des producteurs acricoles du Qubec.Their complaints include that the allocation of
quotas to producers by the Federation is done in a restrictive, obscure and even arbitrary way.
Many say that the system is too rigid and that as a result, a lot of producers are put in a situation
A system thatencouragesdeviance.
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where they have no choice but to deviate from it to sell their production. Its a system that
encourages deviancewhich the Federation never fails to punish heavily afterwards.
In this regard, they denounce the activism and zeal of the Federation, which does not hesitate to
prosecute its members as well as harass them with repeated administrative and legal procedures,
administer unfair penalties to them, cut their eligibility for other agricultural support programs and
contact financial institutions to have their credit suspended. Some freely go so far as to speak of a
regime built on terror and intimidation, designed to keep producers well behaved and muzzled so
that they do not express their dissatisfaction too openly. These threats can be made following a
simple disagreement on the interpretation of the regulatory text.
One producer who has been waiting for a quota for several years expressed his exasperation in this
way: [Translation] The Federation should help me or leave me alone. Those few words reflected a
sense of deep frustration and abandonment felt by many towards their union, which they viewed
more like a distant and authoritarian bureaucracy that defends a rigid system and its own corporate
interests rather than taking its members side.
Other producers provided extensive documentation illustrating the difficult personal experience
theyve had in recent years when they were in conflict with the Federation. In some cases, they
were led into a financial dead end, and some even had their personal and psychological health
affected.
Among all these testimonies, there are probably exaggerations, frustrations being vented or even
scores being settled; we must be prudent in our assessment. However, the testimonies are too
numerous and diverse, and the documentary evidence too fleshed out, to overlook the conclusion
that the Federations policies and their application have created profound unrest.
3.3 Changes are needed
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Given that Qubec producers will face increased external
competition in the coming years, it wont be enough for them to
focus solely on growing internal and external markets if the maple
industry is to develop in a healthy and harmonious way. It will be
essential that they, with help from the State, make the appropriate corrections to the Qubec
system to make it more efficient and able to meet the expectations we can legitimately have for it.
Though the system has been successful in some areas, it needs to be simplified, relaxed and
oxygenated.
If we work courageously and judiciously at solving our problems, we can maintain a prosperous
maple industry that will be a source of satisfaction and pride for all those who work in it and a
motivating environment for those who will eventually take up the torch. To this end, the next chapter
lays out courses of action that we encourage all those who care about the good functioning and the
necessary development of Qubecs maple industry to adopt.
The system needs to besimplified, relaxed and
oxygenated.
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Chapter 4Repositioning the business model
4.1 Adapting in continuity
As weve seen, Qubec stands out from other maple syrup-producing jurisdictions due to the
existence of a collective production and marketing system that has no equivalent elsewhere. In other
provinces and US states, maple producers freely produce and sell their products under free-market
rules. While it must be recognized that our collective scheme has allowed the establishment of a fair
price for producers and of a constant and sufficient supply for the market, we must also realize that
this system is very rigid and badly needs to be modernized and adapted.
While preserving the gains it has enabled, the system needs to be simplified, liberalized, lightened
and refreshed in several aspects. For reasons of its own, the Federation has chosen over the years
to take a very comprehensive approach in its designs and implementation, which has led to it having
a tight control over almost everything related to the production and marketing of maple syrup. In fact,
nothing escapes it, except for small containers sold directly to consumers by producersand even in
that case, it tries to insert itself into the process by demanding accountability.
Even though such an autocratic ideology may have seemed
appropriate in the first years of the system, it now appears to be
increasingly called into question, not only based on the principles
arising from the rights and freedoms we enjoy as citizens, but also due to its peculiarity when
compared to what is happening elsewhere in developed countries. This last point is especially salient
in a strongly export-oriented industry. For these reasons, we must not hesitate to make the necessarychanges or even to sacrifice some sacred cows.
An autocratic ideologythat is being questioned.
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4.2 Direct sales to consumers
Currently, there are three marketing channels for maple syrup in Qubec:
Direct sales to consumers by the producer of containers of less than 5 L (approximately 10% ofproduction)
Sales to a third party (a grocery store, for example) by the producer or a producer-processor ofcontainers of less than 5 L (approximately 5% of production)
Bulk sales of containers of 5 L or more, usually in barrels (approximately 85% of production)
The Plan conjoint des producteurs acricoles du Qubecdoes not apply to the first channel (maple
syrup produced in a producers sugar bush and sold directly to consumers by this producer).
Accordingly, the Rglement sur lagence de vente des producteurs acricoles and the Rglement
sur le contingentement do not apply. This sales channel therefore allows a producer who so wishes
to produce the quantity they want and sell it at the price they set.
In principle, this freedom should exempt the Federation from needing to control or request
information from producers engaged in this type of production. The Federations president actually
recently stated that producers can make unlimited use of this sales channel [Translation] without
any sort of control or scrutiny from the Federation(Info-Sirop newsletter, June 2015).
However, during the consultations, several participants complained that they were being held
accountable by the Federation for this type of sales even though it is not covered by the Plan
conjoint. We have indeed seen that the Federation asks producers to declare annually, when
renewing their registration forms, the number of their direct sales of small containers to consumers.
In addition, many producers in this category said they had been subjected to repeated requests from
the Federation that went as far as demanding lists of all the names of those who purchased their
product, with purchase amounts and quantities. These requests are accompanied by threats to
inform, in case of non-compliance, La Financire agricole du Qubec that there is a dispute, whichwould cause producers to lose access to the programs it administers. In other cases, the
Federations requests were explained by a need to control the quality of the product, even though
this product is not covered by the Plan conjointnor by the Rglement des producteurs acricoles sur
les normes de qualit et le classement.
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The Federation would greatly contribute to improving relations with
producers of this type if it freed them from all forms of control,
administrative hassles and scrutiny. Given that the product concerned is
not covered by the Plan conjoint,it appears difficult to justify burdening
producers with these restrictions and requirements we would be hard-pressed to justify, except
perhaps an exaggerated desire for supervision and control on the Federations part.
Consequently:
It is recommended that the Federation of Quebec Maple Syrup Producers amend its
practices so that the production and sale of maple syrup not covered by the Plan conjoin t
may be conducted freely and without administrative hassles for producers.
4.3 Retail sales with third parties
It is estimated that there are just over 500 maple producers who package their syrup in containers of
less than 5 L or process it into derivative products (maple butter, maple taffy, candy, maple sugar,
etc.) and who market their products through third parties, including wholesalers, grocery stores and
convenience stores. Most often, these are small artisanal producers who are meeting local demand
for a product in the region, or larger companies working in wider markets.
The Plan conjointhas applied to this type of production since January 2001, unlike direct sales of
small containers to consumers. In addition, these producers are also covered by the Rglement sur
le contingentement,but their situation is completely different from that of bulk producers.
Producers in this category develop their own markets and thus contribute to the prosperity of
Qubecs maple industry. Their work targets market demand not for a standardized product, but for a
more differentiated one which is often closely associated with the producer through particular
packaging. This business model is based on integration between production, processing and
marketing instead of focusing solely on volume like bulk producers.
Through vertical integration, this sector becomes more efficient at adapting quickly to consumer
Requirements wewould be hard-pressed to justify.
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demand and providing the expected innovations. The emphasis is firmly on business opportunities in
a market that favours a differentiated product often associated with its producer.
But in reality, these producers are subject to supervision that is hardly compatible with their situation,
since the Plan conjointis in no way intended to stimulate entrepreneurship,
variety in business models, the production of differentiated products or the
satisfaction of market demand for original products. The Plan conjointwas
obviously designed essentially for bulk production and marketing, and is
unsuitable for this sector.
Also, imposing production quotas to producers who sell their product at retail through third parties
seems completely at odds with the dynamics of those businesses which, through their efforts,creativity and initiatives, directly contribute to market development. Indeed, it would seem perfectly
normal and defensible for producers who process and market their own product in small containers
to be able to produce the quantities they need, especially when it allows them to bolster the
development and vitality of the maple industry.
Moreover, the level of control exerted by the Federation pursuant to the Plan conjointfor this type of
producer appears excessive and difficult to justify. For example, section 14 of the Rglement sur le
contingentement de la productionprovides that producers who make third-party retail sales must
submit copies of their sales invoices to the Federation. Nevertheless, the annual producer
registration form not only asks for the total quantity of product sold to third parties, but also includes
an appendix titled Register of third-party retail sales, in which the producer is asked to provide the
name of each customer and specify for each one the point of sale, whether it is a new customer, the
nature of the product sold, the quantities and amount of each sale and the number of sales per year
to this customer.
On its website, the Association des rablires-Transformateurs des Produits de lrable issued a
news release in which it invites its members to be cautious regarding the Federations demands. It
expresses the following reservation: [Translation] Customer lists are trade secretshighly
confidential information that you have the right to protect.
The Plan conjointwas essentially
designed for bulkproduction.
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In case of non-compliance, the Federation may demand that producers provide even more accurate
and complete information such as production volumes and schedules, detailed accounts of all sales
with supporting documents, invoices for purchases of small containers, electricity or oil bills, the
number of taps in operation, the sugar bushs cadastral designation, any lease or managementpermit issued for public land, bank statements and a copy of their financial reports for several years.
In addition, the form letter the Federation uses for this purpose sets out a possible threat to transfer
the case, when applicable, to the Rgie des marchs agricoles et alimentaires du Qubec (RMAAQ)
for an investigation or to ask La Financire agricole du Qubec to suspend the producers eligibility
for its programs and services. The Federation bases its authority on a provision of the Plan conjoint
which states that it may obtain from producers all information deemed useful to the application of the
Plan conjointand of regulations.
It is difficult to understand what purpose the Federation may derive from all these heavy and detailed
requirements besides establishing its power and wish for absolute control, in addition to imposing a
very substantial administrative burden on targeted producers.
Since the sale of maple products to third parties takes place in a context that is very different from
that of bulk producers, one can seriously question the necessity and relevance of applying to the
former a joint plan clearly designed and controlled by the latter.
In a 2004 report, the president of Qubecs Table filire acricole, Normand Bolduc, had already
recommended that sales of products to third parties be exempted from the Rglement sur le
contingentement to allow producers to continue developing their markets. The Federation
vehemently and authoritatively rejected this recommendationjust like the rest of Mr. Bolducs
report, in factwith a response delivered in a magisterial and belligerent tone.
Nevertheless, this recommendation still appears valid 11 years later. In fact, we believe it does not
go far enough and that there is now a need to remove these constraints for maple producers who
engage in third-party retail sales, in order to simplify and streamline the regulation of maple
production.
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Consequently:
It is recommended to exclude from the Plan conjoint the production and marketing ofmaple syrup produced and sold by a producer to a third party in containers of less than
5 L.
With these changes, the Plan conjointand the Federations supervision
would now apply exclusively to bulk production. As this production
represents 85% of total production, the benefits associated with the
products collective marketing would not be compromised by this
streamlining of the maple industrys operational framework. On the
contrary, there is reason to believe that refocusing the Plan conjointonto its main purpose would free
the Federation from many self-imposed constraints and allow it to better serve Qubec maple
producers, who are overwhelmingly engaged in the production of bulk maple syrup.
4.4 Production quotas
As a result of the adoption in 2003 of the Rglement sur le contingentement de la production et de la
mise en march du produit vis par le Plan conjoint des producteurs acricoles du Qubec, the
Federation started imposing, during the 2004 season, quotas on the production of maple syrup in
Qubec, except for producers who sell their product in small containers directly to consumers.
Initially set at 65 million pounds, the overall quota has been revised steadily and is today set at
110 million pounds.
According to the Federation, the first purpose of the quota is to pass on the markets message to
producers, since the total quota is established based on overall market demand. The quota is also
used to establish payment priorities for producers when syrup is sold to buyers. Thus, syrupproduced by a producer within their authorized quota is paid at the price set out in the sales
agreement, less contributions, in proportion to the total quantity sold out of all of Qubecs
production.
The Plan conjointwould now apply
exclusively to bulkproduction.
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Producers who produce more than their quotas must deliver this product to the Federation, but they
can be paid for it only when all the in-quota syrup has all been sold and paid for. They are allowed to
use their surplus to complete their quota in a subsequent year. As for producers without a quota,
they cannot produce except for direct sales to consumers in small containers, which is excluded from
the Plan conjoint.
It goes without saying that the system is very restrictive for producers. Those who have no or
insufficient quotas are doomed to stagnation or are strongly tempted, by necessity, to produce
outside the rules of the system, which is strongly reprimanded and a source of severe tension
between the Federation and the producers affected by this situation.
Criticism about the way the Federation manages quotas comes hard
and fast. Besides the text of the Rglement sur le contingentement,
which makes for a very dry read, no clear policy seems to exist on the
procedure for granting the right to produce or the order of priority that must be followed. If such a
policy exists, producers do not seem to be aware of it. In fact, many producers claimed that the
Federations control over production is applied arbitrarily and gives rise to acts of favouritism or to
questionable arrangements to settle derogations or grant rewards to informers in such situations.
It was not possible, within the limited framework of this study, to fully verify the merits of such claims,
which remain troubling if only for the sheer number and diversity of the people who made them. One
thing is certain: the issue of quotas is, by far, the main point of friction between producers and the
Federation. It has been the cause of numerous investigations, seizures, prosecutions and
proceedings before the RMAAQ.
Are quotas effective in limiting production? Is it even necessary to limit production? Those are
important questions.
By the Federations own admission, quotas do not limit the total quantity of syrup to be produced.
The quota certificates delivered to producers show the quantity in units of mass i.e., in pounds. A
producer can exceed this quantity and deliver it to the Federation, the only restriction being that the
This system is very
restrictive for producers.
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syrup will be paid for only when the entire quota volume has been sold on the market.
It goes without saying that depending on the seasons and the operating conditions, the average yield
per tap can vary and create a situation where producers end up exceeding their authorized quotas.
What happens to the surplus? Producers can use it to complete their quotas in a subsequent year or
deliver it to the Federation, which will pay them according to the terms mentioned above. Over-quota
syrup is never destroyed or discarded. It is then fully marketed, in compliance with current
regulations. Another possibility is for this surplus syrup to be sold on the black market.
Furthermore, producers without a quota simply cannot produce syrup besides the amount they can
sell directly to consumers in small containers. They cannot store their syrup in barrels to sell them
freely to buyers, since the regulations strictly prohibit it.
Currently, there is no data on the quantities that may be produced in contravention of the
regulations, but it is generally accepted that there is a major clandestine syrup productionnot only
from producers without a quota, but also from producers who have a quota and exceed it. This
production can be sold to buyers who pay cash, which is of course interesting for the sellers.
Although it deviates from the regulations, syrup produced without a quota can end up on the market,
just like syrup produced over a quota.
Though the Rglement sur le contingentement may have curbed
the number of taps, one cannot deny that it has not prevented
legally and illegally produced surplus syrup from reaching the
market. In a study conducted in 2005 (only a short time after the
introduction of quotas), economists Pierre Fortin and Marc Van Audenrode had already made the
following observation: [Translation] Whether production quotas are effective for eliminating syrupsurpluses is uncertain. First, they introduce a significant financial incentive to cheat, which can
undermine both their social and economic effectiveness. Secondly, the markets for maple products
are subject to interprovincial and international free trade.
Quotas have in no wayprevented legally and
illegally produced surplussyrup from reaching the
market.
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This last point is very important. The merits of imposing production
quotas are even more questionable in a context where our maple
industry is largely export-oriented and now operates in an
environment where other players have a larger role and are free to
produce as they wish. How do we explain and justify Qubec hindering its development in an
international race where the other players are speeding up and are not limited in any way?
In correspondence on the subject, one producer said: [Translation] I have nothing against quotas,
but since this is a global market, Id like the quotas to be global. Otherwise, let me have the same
freedom too. A provincial quota for a provincial market is fine, but we are far from that. Why do we
have a provincial quota when there are international players? Wheres the justice in that?
Back when Qubec was the source of over 80% of worldwide production, the relevance of
maintaining a quota system was a less pressing question. In a global market where other players
take up more room, the question becomes fundamental. While production quotas and centralized
management of bulk sales can function quite well in a closed market or in a near-monopoly market
where all players are subject to the same rules, this approach becomes
downright problematic in an open market. This observation is all the more
important for highlighting unfair treatment: producers outside Qubec get to
reap the benefits of Qubecs system without having to pay for it in the form
of production restrictions or contributions to marketing costs.
It can be argued that the system has helped to build a price; we must recognize that fact. But at the
same time, isnt it ironic that despite our producers working under a collective marketing system
whose ultimate goal is to provide them with optimal income, they have lower revenues per pound for
their product than producers in New Brunswick, Ontario and the United States? This paradox
remains disappointing to say the least, even though we can attempt to rationalize it.
In such a context, would it not be better to let the price undergo a slight correction in favour of a
greater volume, with just as interesting and likely higher income for producers? If, as the Federation
alleges, the aim of quotas is to pass on the markets message to producers, what better way to
communicate that message than having a fair price and letting production adjust?
Qubec is hindering itsdevelopment in an
international race where theother players are speeding
This approachbecomes downright
problematic in amore open market.
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It would be mistaken to expect an anarchic development of production that would crush the price.
Producers must make significant investments to develop their production; this cannot be done
quickly. We must also consider the ability of equipment suppliers to keep up with installation
demand. In addition, Qubec has already put nearly 50% of its tapping potential to work, and
operating new sugar bushes is likely to be more demanding in the future. US producers, with their
formidable potential for development, and the province of Ontario, with its largely untapped capacity,
represent a much more concrete threat of loss of control than the development that can still take
place in Qubec. It may be unfortunate, but that is the reality we face. Can we avoid it?
The overall quota for Qubec has not been increased since 2009. But since that time, global
demand has risen by about 15 million pounds, roughly the yield of 5 million taps. The Federation
says it is aware of the need to increase production and is awaiting a decision from the RMAAQ
regarding the addition of 500,000 taps in the 2016 season. For subsequent years, the Federation
would like to obtain the authorization to increase the quota itself to respond to market needs with
flexibly. Ultimately, it would like to add an additional 2 million taps in 2017.
When you consider the twin facts that all lights are green for market
development and that the Federation itself says it is willing to relaxrestrictions on production levels, it may be worth wondering what the
purpose of imposing quotas on Qubecs maple industry is, considering
that maple producers elsewhere are free to produce as they wish.
In fact, the real stabilizing element for Qubecs maple industry is the buyer-seller collaboration
brought about by the establishment of a marketing agreement and the maintenance of a strategic
reserve to absorb surpluses and ensure supply consistencyquotas have nothing to do with it.
Rather than limit production, wouldnt it be more judicious to devote our resources to designing a real
plan to develop Qubecs maple potentiala plan that identifies objectives, timelines and means of
action, and that producers could use as a solid reference tool for their business decisions? The
industry would be better served by replacing the control approach that has prevailed thus far with
Quotas are not the real
stabilizing element forthe maple industry.
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policies focused not only on volume, but also on quality and productivity, while being in line with
growth potential of global demand.
Producers must be given back the right to produce and measure up to external competition in
optimal success conditions. The threat of competition should be a stimulus to growth. As a bonus,such a shift would decriminalize maple production and restore harmony between the Federation
and all producers.
In this context:
It is recommended that production quotas for maple water, concentrated maple sap and
maple syrup produced in Qubec be abolished.
It is also recommended that the MAPAQ define and implement, together with the
Federation of Quebec Maple Syrup Producers, a plan for developing maple potential in
Qubec.
4.5 An offer that adapts to the market
Without quotas, is there a risk of production significantly exceeding the Federations capacity to
receive it and market it? We feel this risk is relative and manageable, since the Federations pricingmechanism and syrup acquisition policy are powerful tools that supply is bound to adjust to.
As weve seen, the current quota policy was not designed as a tool to control the quantity of syrup
produced, but more as a payment priority tool. All the syrup produced is either sold or placed in
reserve as provided by the rules, or else it is sold clandestinely. And in any case, Qubec cannot
control external volume in an open and international market such as the one this product is sold in.
In fact, abandoning quotas can only help create healthier and more realistic pricing dynamics.
Between 2000 and 2014, the weighted price of maple syrup increased from $1.56 to $2.92, an
increase of about 80%, while the production volume increased by 33% during the same period. This
means that the revenues of maple producers have grown much more
as a result of the rise in price rather than volume. In addition, the poorCreate healthier and morerealistic dynamics.
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harvest of 2008 led to a hike in the price of syrup that has not gone down since.
It would be desirable to see the balance shift more towards productivity and rigorous management
instead of a simple power dynamic between the Federation and buyers. It would certainly offer better
guarantees for the establishment of a fair price and a better equilibrium between market forces.Moreover, in a global marketplace, pricing will need to take into account global supply and demand in
the future. If, as the Federation claims, one of the goals of quotas is to pass on the markets message
to producers, it is clear that setting a fair price is a much more direct and effective way of getting
producers to understand that message and regulate their production accordingly.
Moreover, the Federation must manage inventory and could very well, even in the absence of
quotas, have a direct influence on production levels by setting the total quantity it can receive from
producers each year based on market demand and the level of the reserve. Beyond that quantity,
the Federation could, for example, offer a lower price for any additional quantity. Producers would
have the choice to either accept the reduced price or sell their surplus production themselves. This
approach would have the advantage of being less drastic and authoritarian than the current quota
system while still influencing producers behaviour.
It would also be a way of giving producers a certain degree of freedom, as syrup offered to the
Federation and not bought by it could be sold directly by producers. In the present state of affairs,syrup produced over the quota or without a quota causes problems, as we have seen.
In this context:
It is recommended that the Convention de mise en march du sirop drableestablish a
two-price system for bulk syrup: one price for syrup bought within the level of acquisition
set by the Federation of Quebec Maple Syrup Producers for each marketing year, and
another, lower price for any syrup exceeding the desired volume.
It is also recommended that the Rglement sur lagence de vente des producteurs
acricoles be amended so that producers can freely market any volume offered to the
Federation for collective marketing purposes and not accepted by it.
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4.6 The maple syrup reserve
One of the greatest and most significant contributions the Federation has made to our current
system is, without a doubt, the creation of the strategic reserve. With it, the Federation has the ability
to guarantee security of supply, despite volume changes resulting from seasonal variations or
fluctuations in the market. This mechanism is certainly a major factor in stabilizing the supply and
price.
Created in the early 2000s, the maple syrup reserve has allowed the removal from the market, in
certain years, of syrup quantities that were not needed by buyers. Conversely, at other times, it also
compensated for sales that could not be fulfilled by just that years production. Maple syrup
production was less abundant between 2005 and 2008, and the reserve had to compensate; while it
contained 60 million pounds in 2004 and 51 million pounds in 2005,
the reserve was down to 37 million pounds in 2006 and found itself
empty in 2007