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Quebec maple syrup producers demonstrate in front of the Quebec legislature on Tuesday, Feb. 16, 2016. In a policy about-face, senior Quebec bureaucrat Florent Gagné is urging the province to end strict maple-syrup quotas and let producers sell what they want, to who they want.Jacques Boissinot/The Canadian Press

The Quebec government has apparently decided it's time to get rid of agricultural cartels.

Well, one of them anyway.

In a policy about-face, senior Quebec bureaucrat Florent Gagné is urging the province to end strict maple-syrup quotas and let producers sell what they want, to who they want.

"It's hard to understand why in an international race that we impose constraints [on our producers] that the other players don't," Mr. Gagné lamented as he released a controversial report on the challenges facing the maple-syrup industry.

But the 72-page document is conspicuously silent on other much larger farm sectors that operate under a similar centrally planned model – dairy, chicken and eggs.

In spite of the obvious parallels, preserving the status quo in these traditional supply-managed sectors is still policy orthodoxy in Quebec, and elsewhere in Canada. And yet just like Quebec maple-syrup makers, dairy and poultry farmers are limited in what they can produce and must sell into common marketing pools.

Quebec apparently sees maple syrup as the exception to the rule – a cartel that should be liberalized.

Quebec has been called the Saudi Arabia of maple syrup, producing more than 60 per cent of the global output of the sweet and sticky stuff – roughly 100 million pounds a year. A provincially sanctioned cartel was created in the early 2000s, run by the Federation of Quebec Maple Syrup Producers and blessed by government. The federation imposes production quotas, stockpiles surplus syrup and sets the price paid to producers.

But the province is bleeding market share to New England states, Ontario and New Brunswick, where producers are free to make and sell whatever they want. U.S. producers, in particular, have been ramping up output at the expense of Quebec.

The tight controls have created a thriving maple-syrup black market, and conflict between rogue producers and the 7,400-member cartel. The renegade producers, who have been hit with hefty fines for selling outside the system, are challenging the restrictions on export sales in the Court of Appeal of Quebec.

Mr. Gagné's report predicts more litigation and more lost market share unless the industry embraces the free market.

Angèle Grenier, a 58-year-old maple-syrup producer from Sainte-Clotilde-de-Beauce, Que., has spent 15 years fighting the federation for the right to export.

"It's a mafia," Ms. Grenier complained recently to Globe and Mail reporter Bertrand Marotte. "They threaten us. Last year, they tried to seize my syrup. I had to [move the product into New Brunswick] at night. This year, they hit me with an injunction."

Ms. Grenier's fight is reminiscent of the struggles of now-defunct Georgian Bay Milk Co. of Barrie, Ont. In the early 2000s, the company was buying milk from a clutch of local farmers operating outside Canada's tightly controlled supply-managed dairy industry and exporting to dairies in New York State.

That sparked a challenge from the Dairy Farmers of Ontario, which runs the industry in the province. Ontario Superior Court eventually declared those exports illegal, ruling in 2008 that farmers must sell their milk exclusively through the province's official dairy-marketing board.

Like Quebec maple-syrup producers, Canadian dairy and poultry farmers can't operate on a commercial basis outside the closed marketing system. And they generally can't export.

And like maple-syrup producers, global market forces are disrupting their cloistered system.

Sharp increases in foreign imports of dairy and chicken products are destabilizing Canada's carefully calibrated economic model. Production of milk, chicken and eggs has been tightly regulated in Canada since the 1970s. Supply-management systems depend on three essential pillars: keeping most imports out, fixing prices paid to farmers at relatively high levels and then carefully matching production to consumption. Weaken just one of these, and the system becomes distinctly unmanageable.

The more domestic product that gets displaced by imports, the more difficult it has become for provincial marketing boards to prop up prices and manage production. Tightly managing supply is now creating unwanted surpluses of some milk products.

At some point, policy makers in Quebec and other provinces will reach the same economic conclusion as Mr. Gagné – that to thrive in the global economy, dairy and poultry producers will also need to be free.

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