How the TPP could cripple Big Syrup

As published in the Boston Globe:

WHEN DAVID AND LUCY MARVIN started Butternut Mountain Farm in the mid-1970s, they wanted to try the road less taken. So David, a trained forester, turned to maple sugaring. “It was pretty unusual at the time,” says his daughter, Emma. 

The season in Johnson, Vt., for harvesting sap only lasts a brief six weeks every spring. But that narrow margin for error belies a long-term nature of the investment: Red maple and sugar maple trees have to be about 40 years old before their sap can be harvested for the first time. They can then continue to be tapped for the rest of their lives, sometimes a couple of centuries.

Butternut Mountain is now one of the largest producers and distributors of syrup in the country, with 17,000 taps spread over 1,200 acres, a 75,000-square-foot processing and distribution facility, and 90 full-time employees. 

Today, business for the Marvins and their fellow American syrup producers is poised to boom, thanks not just to the technological revolution in the age-old art of sugaring but because of a free trade deal on the other side of the world.

The United States produced most of its own maple syrup until the 1930s, when Canada began to grab more market share. Canada has seen a dramatic rise in production since the 1990s, when the country began making significant investments, particularly in the province of Quebec.

For decades now, maple syrup has been an iconic Canadian product; the maple leaf is centered on the Canadian flag, after all. It’s as Canadian as poutine or the Mounties. And at the peak, Canadians were producing about 90 percent of the world’s maple syrup.

But Canada’s sticky dominance might be coming to an end. The terms of the Trans-Pacific Partnership, or TPP, suggest that the United States is well positioned to regain its place as the world’s leading producer of maple syrup.

The TPP includes 12 Pacific nations, including the United States and Canada, and, if ratified, will represent 40 percent of world trade. Under the deal, Japan has agreed to eliminate its 17.5 percent tariff on maple syrup over three years after implementation. Japan is usually the second-largest importer of American maple syrup. Other TPP countries that have syrup tariffs will also be dropping them, including Australia, Chile, Mexico, Peru, and Vietnam. 

There’s more money in syrup than you might imagine: A barrel of it is currently valued at about $1,385, or 25 times the price of a barrel of Brent crude oil.

Because of its value and the fickle nature of the cycles of production, the industry has long relied on government subsidies. In 2002, the Federation of Quebec Maple Syrup Producers began setting production quotas and high, stable prices. The aim was to protect farmers from seasonal fluctuations. 

The federation, which has been compared to OPEC, now also holds a strategic reserve of the product, which was made famous in 2012 when a group of thieves managed to make off with 6 million pounds of syrup, valued at $18 million.

In the United States, the maple syrup industry stagnated through the 1990s. But seeing the higher prices that Quebec farmers were fetching, US farmers decided to tap into the business once again. “The United States producers frankly have benefited tremendously from the federation’s quota and price controls,” says Matthew Gordon, executive director of the Vermont Maple Sugar Makers’ Association. The average value of total US production has more than doubled in the last decade or so.

The primary objective of the federation is to ensure that farmers get their fair share, says Sylvain Charlebois, a food-policy researcher at the University of Guelph in Ontario. But, he says, “They never thought the Americans would start producing more maple syrup.”

Over the past three years, American producers have increased their world market share from 16 to 23 percent. In the same period, Quebec’s share has fallen to 72 percent from 80, according to a report by Quebec consulting firm Forest Lavoie.

The Quebec federation announced late last month that it plans to add 2.5 million taps in the province by 2017, bringing the total to more than 45 million. By comparison, there are currently almost 12 million taps in the United States, located mostly in Vermont, Michigan, New York. and Pennsylvania. Researchers at Cornell University have estimated that there are nearly 2 billion potential taps throughout the country.

Not only will tariffs fall with the TPP, producers and buyers also expect that demand will increase. And in the fight for new markets and market share, Americans have an edge. “We can always underprice Quebec because we’re not bound to the production quotas and the price levels that the federation sets,” says Art Woolf, an associate economics professor at the University of Vermont.

Quebec, meanwhile, is concerned about American growth. “I hope [the Quebec agriculture minister] is going to say that the federation is going to be optional,” says Steve Côté, a maple syrup producer in Saint-Mathias-de-Bonneterre, Quebec. 

Côté runs a 450-acre farm with about 25,000 taps. He produces about 5,000 gallons of syrup a year on a farm located just a stone’s throw from the New Hampshire border. While the federation claims that most of its members support the system, Côté has been trying to work outside of it. 

He’s trying to sell his product himself, and not to the authorized buyers in Quebec. So the federation has punished him, seizing the entirety of his production for the last three years. His American competitors, “can produce as much as they want, and they can sell wherever they want. It’s a free market. That’s the way it should be,” says Côté. 

But a US resurgence isn’t guaranteed. Currency fluctuations are as unpredictable as the weather. With the Canadian dollar currently sitting at about 75 cents, it is making it harder, at least for the time being, for American producers to compete. 

Meanwhile, Quebec remains defiant. Daniel Dufour is the general manager of the Maple Industry Council in Quebec. “We know Americans have expectations and that they have increased production over the past few years, but Quebec processors are very competitive and confident that they’ll remain the leaders,” he says.

Whether the nimble markets in the States or the stable cartel in the north prevails is an open question. Either way, maple syrup producers, like Emma Marvin, have their work cut out for them. “You can feel OK about shipping it around the world because it’s not like there’s a regional maple syrup production in the South Pacific,” she says.

Sarah Reid is a freelance reporter and a journalism fellow with the Munk School of Global Affairs at the University of Toronto.