Liquid Gold

• Author: Jacqueline Deslauriers
• Position: a Senior Editor at Finance & Development.

It was a heist the Pink Panther would have been proud of: over several months, a gang of thieves surreptitiously siphoned off hundreds of thousands of gallons of maple syrup worth more than $18 million from Canada’s global strategic maple syrup reserve.Â

That’s right: a global strategic maple syrup reserve. If you have never heard of it, you are not alone. Few had until the 2012 theft became public knowledge. The reserve is a Canadian cartel: something of a one-nation version of OPEC for maple syrup.

Maple syrup, like grain and milk, is an agricultural product subject to public policies on food and farming. Although its value to the Canadian economy may pale in comparison with, say, wheat or soybeans, maple syrup trumps the vast wheat fields of Manitoba and Saskatchewan when it comes to Canadian cultural identity. It is for good reason that the maple leaf is Canada’s best-known symbol. Canadians’ deep attachment to this exotic food shapes their attitude toward protecting the price farmers receive for producing maple syrup.Â

Governments the world over choose to control the price of certain commodities for any number of reasons—and by many different means. The maple syrup reserve is merely one Canadian manifestation of this phenomenon. Such government intervention in agriculture creates winners—usually the producers. Most economists contend that it also creates losers—mainly consumers. And because prices are kept artificially high, cartels can be threatened by those who do not participate in the cartel but sell the same (or virtually the same) product at a lower price. Seldom, though, are those competitors thieves.Â

Supply and demand

As a product, maple syrup lends itself to cartelization. Cartels work best when there are only a handful of producers (firms or countries). The product must be tradable and not easily replaced with a similar product.Â

What cartels do is manage the supply of the underlying product—and, by extension, the price. The ultimate goal is long-run profit maximization for the producers—which can include keeping the price from rising so much that consumers either seek substitutes or reduce consumption or both.Â

Maple trees, the source of maple syrup, grow naturally in eastern North America. Canada produces 80 percent of the world’s supply of maple syrup, and the province of Quebec, where the heist took place, accounts for 90 percent of Canada’s production, according to Paul Rouillard, deputy director of the Federation of Quebec Maple Syrup Producers. The United States accounts for the remaining 20 percent—nearly all of it from the states of Vermont and New Hampshire.Â

Maple syrup is a natural product derived from maple tree sap, which begins to run in the spring. Historically farmers inserted spouts into the trees (a process called tapping) and collected the sap—clear, watery, and sweet—in buckets affixed to the trees below the spout. Many still use this age-old technique, although in modern operations farmers use hoses to deliver the sap to a centralized processing point rather than collecting it...