July 6, 2013 / 1:13 PM / 6 years ago

Canadian quotas sweeten profits for U.S. maple syrup farmers

(Reuters) - For Vermont farmers Cecile and Tom Branon, the decade-long maple syrup boom allowed them to sell their 150 dairy cows and convert a team of working horses to pets while they focused on expanding their lucrative sugaring operation.

Steve Randle pours freshly made maple syrup in the finishing pan at Hollis Hills Farm in Lunenburg, Massachusetts in this February 19, 2012 file photo. REUTERS/Brian Snyder/Files

Hundreds of nearby farmers in northern New England have experienced similar windfalls, with U.S. producers, aided by favorable weather, increasing this year’s output by 70 percent, to 3.3 million gallons this year. Yet while American farmers cash in, production quotas in the cross-border province of Quebec limit the profits reaped by their Canadian counterparts even as they keep prices high for those unfettered by any restrictions.

Bulk syrup prices have risen 89 percent since 2000, to $2.82 (Canadian dollars) per pound this year, largely the result of the influence of the Federation des Producteurs Acericoles du Quebec (FPAQ), a cartel that controls production in Quebec. The Canadian province, where Native Americans introduced French settlers to the sweet treat more than 400 years ago, is now home to about 75 percent of the world crop.

In Quebec, each sugar maker is assigned a production limit. Excess syrup is stored in the FPAQ’s Global Strategic Maple Reserve in several giant warehouses, to be sold on consignment in years when production falls. The reserve made international headlines last year after police arrested several suspects for stealing $18 million of syrup from one of its storage facilities.

To keep prices up during a record crop, FPAQ expects to increase the reserve this year from 3.3 million gallons to about 6 million gallons — nearly double U.S. output. Quebec sugar makers don’t get paid for their excess production until FPAQ decides to sell it from the reserve, sometimes three or more years later.

Helped by a strong Canadian dollar and FPAQ’s quotas, U.S. producers in the Northeast and upper Midwest have added nearly 2 million taps over the past four years, while the number in Quebec has declined by 400,000 over the same period, according to FPAQ and U.S. Department of Agriculture statistics. “We are victim of our own success,” says Paul Rouillard, deputy director of Longueil, Quebec-based FPAQ.

The Branons are among those who have benefited from FPAQ policies. The couple has expanded their operation to 66,000 taps, connected by plastic tubing to the sugar house for boiling. This year they produced maple syrup with a market value of more than $1 million. Already in July, six months before the sap will begin flowing again, they have four staff in the woods adding new 5,000 new taps and repairing existing lines. Each tree can support between one and four taps.

“We had an exceptional year,” said Cecile Branon, 55, in an interview. “If you’re a property owner and you have maple trees you’re not doing something with, then someone is knocking at your door asking to tap the trees.”

Rejean Bedard, a Quebec native who now lives in Jackman, Maine, is also anticipating profits.

“The quota is benefiting us,” said Bedard, who opened shop in the U.S. eight years ago and plans to double his 48,000 tap maple operation in three years.

Eric Ellis, vice president of the Maine Maple Producers Association and operations manager for Maine Maple Products, expects even more Canadian sugar makers to migrate to the U.S. Of the 50 largest operations in Maine, all but a handful have traditionally been run by Canadians, he says.

Ellis’s syrup bottling and production company has expanded its sugaring operation about 70 percent in the past decade. “If you get a record-setting crop you would expect prices of maple syrup to be dropping, but at this point it’s not the case,” he said.

Of the quota, he added: “I’m glad we’re not involved in it, but it does keep the industry stable.”

As for Bedard, he is thankful for having had the chance to start a maple sugar production farm from scratch, even if it is in another country.

“In Maine, I have the opportunity to have a big (operation),” Bedard said. “Here if you want to increase to 200,000 taps, it’s no problem. (In Quebec), I could not sell my syrup.”

Reporting by Jason McLure; Editing by Arlene Getz, Barbara Goldberg and Prudence Crowther

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