Canada's maple syrup cartel puts squeeze on small producers

QUEBEC CITY — Twenty-five years ago, Quebec made a bold move to produce the most maple syrup in the world. Today, the syrup giant is unstoppable.

Just ask those in its path, like small producer Angèle Grenier, who will face criminal charges if she sells this year’s harvest to her buyer of choice.

In previous years she has sold syrup to a broker in New Brunswick. But this year, a Quebec court order will force her to hand all the syrup produced on her small patch of land to the Federation of Quebec Maple Syrup Producers.

The family has three choices for the upcoming harvest — capitulate to the demands of the court, cease production, or continue to sell it outside the province and face criminal charges.

“The federation’s goal by taking our maple syrup is that by taking our income, we cannot pay our lawyers,” says Grenier. “We’ll send our syrup to them this year because we need the money.”

Welcome to Big Syrup.

“They’re like a mafia,” says Étienne St. Pierre, the owner of SK Export. He is notorious within the syrup community for his outspoken defiance of the federation. When the syndicate's members speak of an illicit 'black market' for syrup, they’re referring to St. Pierre. He entices producers in Quebec to abandon the consortium and instead sell directly to him. Though he offers less, his system doesn’t have the strings attached that producers in Quebec typically have to untangle. It comes as no surprise that St. Pierre is also a regular in the court system and has felt the wrath of the federation during multiple cross-provincial raids. At present, he is involved in three separate legal disputes.

These cases reflect a broad strategy to ferret out and quash rogue producers and buyers. While the tactics of the federation may seem hardheaded, they emerge from a time in which producers were once at the mercy of both the weather and buyers eager to scoop up syrup for as cheap as possible. Rather than being a ‘black market,' Grenier and St. Pierre occupy more of a grey market. While the two are breaking Quebec law, the unending legal process shows the courts aren’t quite sure how to make sense of Quebec’s monopoly and how it applies to the rest of the country.

It can be difficult to square the federation’s popular support with its pursuit of producers who refuse to comply.

“We’re young, and there’s sure to be growing pains. But the vast majority of producers support us,” says federation spokeswoman Caroline Cyr.

Of the 7,300 producers, Grenier says there are 70 who are vocally against the system.

“The federation wins most of their cases,” says Antoine Aylwin, a partner in the Montreal office of the law firm Fasken Martineau. Alywin defends purchasers within Quebec who have been accused by the federation of illegally buying syrup.

“There's a lot of instances where they won, but were unable to enforce the decision,’’ he says. “People would go bankrupt or they would hide from the federation for years. It's been very challenging for them to pursue the people not acting within the system.” 

Aylwin estimates that syrup issues eat up more than a quarter of the docket of the Agricultural Marketing Board, an arbiter for disputes that precedes court involvement.

Both St. Pierre and Grenier have permits issued on behalf of the Canadian Food Inspection Agency to produce and export syrup. They argue that because a federal agency grants the permit, they should be free to sell anywhere in Canada. The federation, on the other hand, argues the law is very clear: It has the right to regulate all syrup production and export both inside the province, and between Quebec and any other markets.

In 2012, the theft of $18 million US worth of syrup from the federation’s Global Strategic Reserve became fodder for late night television and pun-laden headlines. The heist seems like a Canadian caricature, but brought to light the larger, more complex nature of an industry worth hundreds of millions of dollars. The robbery of so much syrup weakened Quebec’s position, with the federation having already emptied the stockpile a few years before. The bulk of the reserve is now kept at a new facility in the township of Laurierville. Critics of the federation allege the theft gave it a tacit mandate to crack down on producers and buyers supplying the ‘black market’ but under the guise of investigating the robbery.

On Sept. 25, 2012, days after the theft at a Quebec warehouse, the federation initiated a cross border raid on St. Pierre’s warehouse in the neighboring province of New Brunswick. Everything was seized: forklifts, barrels and boilers. The authorities took almost $1.6 million US in syrup. The courts argue the seized syrup is part of an ongoing investigation, so three years later, St. Pierre still hasn’t seen it.

Sitting in his office, St. Pierre emphatically denies any link to the theft. He has maintained his innocence over the years, and argues that there are neither anomalies in his sale records nor any reason for him to buy stolen syrup. He does concede, however, that there’s no way to tell if some of the syrup he has purchased from Quebec producers could potentially be from the stolen batch, given that it was siphoned out of multiple barrels over a period of time.

“Nothing we’re doing is illegal. We have permits for everything,” says Fernand St-Amand, marketing agent at SK Exports. The two see themselves as businessmen, haggling in conference rooms with buyers over pennies to cover their margins, not the criminals the federation makes them out to be. Both are skeptical about some details of the theft.

“You’re telling me you’ve got $30 million worth of inventory and no security?” asks St-Amand, shaking his head.

Cyr says that the facility was a temporary rental, an oversight at the time, and the permanent warehouse in Laurierville is less vulnerable. The nondescript building in Laurierville is outfitted with cameras, motion activated lights, electronic key access and security guards.

Grenier’s son, Pierre-Luc, sees the theft of syrup as an excuse for the federation to focus on producers refusing to play by the rules.

“Why don’t they leave us alone? There’s 5,000 producers in the United States who are eating up the Quebec maple syrup market.”

If disgruntled producers cause an annoyance, there is a growing threat in the federation’s largest market: the United States.

In 2007 poor harvest seasons in prior years forced the federation to empty its stockpile, spiking the price of syrup. Ever since, prices have remained high, coaxing more and more people into the syrup business.

“Since 2008, production in the US has almost doubled,” says Michael Farrell, head of Cornell’s own maple syrup production facility and a researcher in maple tree ecology.

Despite the maple leaves as the insignia of the industry, the syrup business hasn’t always fallen under the control of Canadians. During the 1880s, American consumption of maple products peaked with millions of gallons. It wasn’t until the 1950s that United States maple syrup industry began its slow decline.

A group at Cornell University in New York is spearheading the reinvigoration of syrup production in America. It argues that current American output is pessimistically low and with the right investment, could relax Quebec’s current grip on the market. It is intuitive: The majority of Quebec’s exports are shipped south, so why not rebuild the infrastructure domestically?

Both Vermont and New York have tried unsuccessfully to push the Maple Tapping Access Program through Congress, which would give producers $100 million in grants over five years. New York Gov. Andrew Cuomo recently announced $1.4 million in funding for agricultural projects, including expanding maple syrup production.