Changes in the Quebec Maple Syrup Industry and Economic Implications for Maine and the US

Abstract

Canada and the US are the only countries that produce maple syrup with 85%, and 15% of annual production, respectively (FPAQ, NASS, 2006). Producing approximately 79% of the world\u27s maple syrup or 93% of the Canadian supply, the province of Quebec is the industry\u27s major player. While Quebec\u27s production has experienced annual fluctuations, production has followed an upward trend, especially in the 1990s. In order to sustain prices in face of increasing production, Quebec producers opted for a Sales Agency, and later, for a production quota system. Given that the US is by far the largest export market for Quebec maple syrup, implications for the Northeast maple syrup industry are important. The Northeast might be able to free ride on Quebec\u27s production quota effort in the US and to benefit from higher prices while expanding its own production. On the other hand, the Northeast industry could suffer from more aggressive competition from Quebec. To adequately understand and predict the impact of Quebec policies on the Northeast maple syrup industry, an understanding of North American price linkages and estimates of demand elasticities are needed. This research aims to better understand the past and current marketing of maple syrup, to explore the economic rationality of quotas and supply management in Quebec, and to examine their impact on the Northeast maple syrup industry. In addition, this study analyzes and reports on maple syrup consumer demand and examines the feasibility of expanding maple syrup in Maine. The analysis shows that Quebec supply control has been successful at keeping high prices and reducing carryovers. However, our results suggest that the quantity of syrup imported is too large to maximize total revenue in the US. Results also indicate that maple syrup is a luxury good, that honey is a good substitute and that demand for syrup is inelastic in the US. Given the small size of the Maine industry, producers can enjoy higher prevailing prices yet still have the option of expanding production