While there is a very strong localvore movement here in Vermont, we can protect a lot more forest by selling to export markets than we can by selling in the farmers markets.

In the export market, the big competition is the Canadians, who spend quite a bit of money marketing their syrup worldwide, largely as a single trading cooperative. Their marketing can sometimes sound as though they are talking down the maple syrup produced in the U.S. Speaking to several prospective Asian clients over the last year, as I have, you definitely get the impression that they’re being told frequently about the “unique” qualities of Canadian syrup.

I figure the best answer to that is sending barrels of maple syrup overseas so that people can see for themselves. We produced a brochure for international clients that can be seen here.

In South Korea, there has long been a market for maple sap, rather than maple syrup. They call the sap gorosoe. Sap, however, is impractical to transport half-way across the world, as it requires storage systems similar to those required by milk. Once it’s concentrated into maple syrup, it is sufficiently stable to ship. Reconstituting sap from syrup (adding water) can be done, but it will contain the diluted maple flavor of maple syrup. Uncooked sap does not.

To be filled with maple syrup barrels

Bruce was kind to take me through his new 45,000 square foot maple syrup warehouse facility, just about to come online. A lot of thought went into the design. Bruce is one of the people in the maple syrup business who sells enough and to sufficiently-sensitive food companies so as to have a lot of regulatory scrutiny on his operation. Some of the details in his warehouse may portend changes that will likely ripple through the maple syrup industry, for people selling maple at scale.

Bruce has an 18 inch curb around all internal sides of the buildings, for instance, to provide inspector access behind piles of full barrels. The receiving, storing and packing rooms are put in a certain fashion so that there can be a graduated set of cleanliness standards. In all, he mentioned a couple dozen items that most maple syrup makers will not think to design into a new facility until they’ve done it once or twice and had the food police come and look for trouble.

This new scrutiny, which is not a bad thing all around, might be a bit overkill for maple syrup, which isn’t as dangerous a product as, say, pork. Making forklift drivers in a maple syrup barrel warehouse wear hairnets, for instance, might be entertaining, but isn’t improving our food security. All that said, it’s coming our way, and it will likely be the sort of expensive compliance process that will drive the maple syrup business into farm gate producers versus big packers who can afford a 45,000 square foot maple syrup warehouse. This may prove to be a shift as significant as the dairy industry saw when they forced farmers to build milk houses in the early part of last century.

Moving Maple Syrup Barrels

This’ll be a two-day process of refiltering the maple syrup, heating it up in the finishing pan and transferring it in batches into our packing unit. We’ll be dealing with three different maple syrup grades from three different barrels, putting it into containers ranging from five gallons to 50 ml maple leafs. That should set us up to be ready for demand in the next few months, as we expect to have less time available with the coming baby.

The problem that needed to get solved was transportation and dispensing of maple syrup to increasingly large bulk maple syrup customers. Once every couple months, I make the rounds in New England, delivering barrels of maple syrup to some very interesting – sometimes innovative – whole sale customers using maple syrup for everything from granola manufacturing to restaurant use to wedding favors, corporate gifts, all the way to theatrical blood simulation. A lot of these businesses have similar issues about storing wholesale maple syrup and using it in their various batch sizes, all the while trying to prevent it from spoiling, crystalizing, etc. Besides, open topped barrels are just plan sticky.

As with our bottles, boxes and other elements, I’ve discovered that borrowing items from other related industries creates a much better economy of scale than purchasing items designed specifically for maple syrup. For instance, our liter bottles of maple syrup fit into wine shippers that cost about one third as much as the equivalent box for the more obscure maple syrup container shapes.

Thus, I came up with the keg scheme for bulk maple syrup. They’re interchangeable, common, and have their own flourishing aftermarket of related products for moving, cleaning and doing pretty much anything to kegs.

The first thing I discovered when I hopped online to learn where to get one for experimentation, was that breweries own their own kegs, and it’s actually quite difficult to come by them. Only when I discovered a brewery going out of business did I get a chance to snag some.

On my way back up from one of these treks across New England, carrying my wholesale maple syrup rounds, I stopped last at the brewery in southern New Hampshire and picked them up. There, a nice young fellow showed me how to open them up and remove the mechanism in the middle that allows for dispensing and pressurization. What he didn’t realize was that the keg he was using as an example happened to have been sitting in the summer sun for a few months with the dregs of a soured stout. When he pushed in the spring-loaded ball, out shot a vile stream of beer-turned-vinegar, splashing all over us. I had 90 minutes to be back up in Vermont for an event, and I didn’t have a change of clothes.

Since then, though, the bulk maple syrup keg idea has taken on some steam. After acquiring some compressed gas tanks and various fittings, we have maple syrup dispensing out of some test kegs, and even have our first household client, who wishes to stick a keg under the sink and have a maple syrup tap on the kitchen counter. Because we’re using nitrogen to replace the air inside as it dispenses, aerobic bacteria cannot grow. Pretty clever, those beer-drinking people.

After a couple more weeks of testing, we’ll be confident that the mechanism won’t get gummed up with our maple syrup, which is just a bit thicker than most. After we do some refrigeration tests and carbonation tests, we’ll green-light the bulk maple syrup kegs to send on to a couple of our business clients.

In particular, we bolted on an I-beam just under the ridge beam, allowing a wheeled trolley to slide back and forth with very heavy loads. You can see from the picture on the right that we made the beam pop out the second story doors, allowing us to hoist loads from trucks below.

And given that our 55 gallon barrels of maple syrup weigh about 650 pounds, we added a surprisingly cheap winch crane to attach to the trolley. If this contraption doesn’t kill one of us, it’ll be very handy. Most of our bulk maple syrup, intended for wholesale use, will be hoisted up into this second story for storage over the year.

Once the barrels make it through the doorway, we can drop them onto dollies and push them around. To accommodate this, the floor system up there was built 12-inch-on-center, with heftier stringers than you’d put in a residential structure.

Just because they felt like it, the boys opted to build the barn post-and-beam. Its a pretty old-timey structure, with about all of the design conforming to specific sugaring use. That seemed like a compromise at first, but it’s the more beautiful for it.

Robert and the boys have since thought they  might build these sorts of structures for other folks, seeing how smoothly this one went up. They went and created the site Vermont Cedar Cabins and have been doing some work in this line.

Meanwhile, back at the barn, we need to get the 600 gallon sap tank installed up top. Lots of vacuum plumbing yet to be done. That tank will have a four-inch pipe coming out of it, where we can operate a big butterfly valve from below to start the sap filling up our utility vehicle tank for transport over to the sugar shack. This’ll be quite a tweaking process. It doesn’t take much time for a four-inch pipe of sap coming from 18 feet off the ground to get someone wet. Should be interesting.

I’ve set up a small finishing room in the back, and that’s been working out nicely. We’ll be able to get the barrels up stairs started with heating (purchased a used barrel warmer), and then pipe it on down to get to sterile temperatures for packing.

[Average prices for maple syrup in various towns across the U.S.]

The upshot: retail prices for maple syrup are higher than we anticipated. The average location of more than 30 chosen randomly across the U.S. sold maple syrup for about $96.50 per gallon. Of course, this was sold in smaller units, making the out-of-pocket cost seem more reasonable. The average unit size for the cheapest maple syrup offered in the store was 18.8 ounces, which of course means that the average unit sold was smaller than that. We saw locally that – in the face of short supply – many retailers sold smaller units at higher prices, and this may have happened across the country as well. We will be able to see that in future years as we repeat this research to get year-to-year data. Several locations reported that they were out of half gallons and gallons of maple syrup that they once sold.

Probably the most notable unanticipated fact we found – aside from the high price of real maple syrup – was the high price of fake maple syrup. The average price for fake maple syrup was $26.13 per gallon, sold almost always in a 12-ounce container. The range of fake maple syrup prices was even greater than that of the real maple syrup. The cheapest fake maple syrup (I shudder to think of it) cost $5.19 per gallon. The most expensive: $35.73. When maple syrup packers complain to maple syrup producers about how the market cannot sustain prices above $4 per pound, remind them of that last number. Perhaps suggest that they go into the corn syrup business. I’m sure there’s a heck of a profit margin in that.

[Merced, CA - home of the very urgent syrup eaters]

Real maple syrup ranged from $74.96 in Willmar, Minnesota to the ludicrously high price of $131.94 in Merced, California. I should note that in each of these randomly chosen towns I called at least three different grocery stores and got at least two data points for each town. Interestingly, prices tended to keep to a much more narrow range within a town versus between stores in different towns. This suggests that there are significant regional effects on price, such as distance from producers, cultural use of maple syrup and local cost of living. I’ve put together some charts to explore those.

[Willmar, MN - looks like each home has its own maple tree]

Out of 30+ stores, six reported that they either didn’t sell real maple syrup or that they were out of it. I was pleasantly surprised to see that only two clerks showed some confusion about there being a difference between real maple syrup and fake maple syrup. The nation’s epicenter for not selling real maple syrup is Petersburg, Virginia. Three stores of five queried didn’t sell it. The one chain that did sell maple syrup (Ukrops) charged only $79.96 per gallon. Ukrops is a relatively high-end local chain that is well known for its prepared foods. That Ukrops charges about 15 percent below the national average for retail maple syrup prices and its competitors don’t sell maple syrup at all suggests that there might just be something wrong with the people who come from the greater Richmond area. Just saying.

Very unexpectedly, the cost of living differences between the towns seemed to have no discernable effect on maple syrup price. In other words, rich towns didn’t seem to charge on average higher prices than those seen in poorer towns. It appears as though the setting of maple syrup prices is based on very tough to predict market factors, such as the number of distributors and middle men in the distribution chain, and that market demand forces don’t seem to exert much of a controlling influence on this. The towns selected ranged in cost of living adjustment factors of 85 percent to 106 percent, averaging at 95 percent. This lower than 100 average is due to the fact that no major coastal cities were included in the data set.

When looking at the distribution of prices, as in the chart below, it seems as though there is a relatively thin floor in pricing extending between $75 per gallon and $90 per gallon of maple syrup. This suggests that the cheaper prices sold “retail” directly by maple syrup producers are the anomalies in the market. This is very likely the explanation as to why government data is not reflective of reality for the general consumer. In maple syrup-producing regions, which account for a very small percent of the U.S. population, people may be able to purchase syrup for $48 a gallon, as they can here at a local maple syrup farm in Thetford. But that same maple syrup producer can sell the same gallon for quite a bit higher elsewhere.

[Data set of 25 prices per gallon of maple syrup]

The distance from the major maple syrup producing state – Vermont – and the town in question does appear to have an influence on price. The further away from Vermont , not surprisingly, the higher the price of maple syrup, with some exceptions. The bar chart of the prices in the different towns (top chart) is organized by distance from Thetford, VT. The trend to higher maple syrup prices the further away you get is pretty obvious. This may be explained almost entirely by shipping costs. Most methods of moving maple syrup from one coast to the other cost about $20 per gallon.

It should be noted that all of these calls were made in February 2009, just prior to the new production season. This is the time of the lowest inventories of maple syrup and the time least likely to confuse the influences of two different maple syrup seasons in the market.

As with all data-oriented research studies, some of the most interesting stuff came out of the “verbatims,” or things said on the phone by the folks answering the questions. These aren’t necessarily representative, but it’s interesting to see these ideas floating out there, affecting in a very real way the maple syrup purchase decisions of people calling up a store to ask about a product:

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“All the grades taste the same, but the colors are different”

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“This actually isn’t that expensive for this product”

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“The Maple Grove brand must be better than this other one, because the other one is the store’s brand.”

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“There’s a generic brand, but you probably don’t want that.”

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“I can’t stand the fake stuff.”

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“We use honey or karo”

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“There used to be a lot more sizes”

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“Oh my god”

I knew I’d be upgrading to a larger used rig when we were sitting around a boil in the middle of last season. It was me, the two Roberts and John wondering why our new tricks (a homemade pre-heater, an improvised forced draft unit and a few other things, like dry wood) weren’t bringing our number of gallons boiled per hour much higher than it was the year before. We went from about 12 gallon an hour to just shy of 20 gallons an hour. When you have 800 taps, that’s not a lot of gallons, even with the ancient reverse osmosis machine we’d located and cobbled into some sort of working order. If each tap pushed out a gallon of sap in a day – a typical decent run day – we would be boiling at least 10 hours. Add a couple slow hours when starting up in the afternoon and some cleanup time at the end, and you might find yourself seeing the change of light toward dawn before slogging home.

So, sitting there during the boil with the other boys, I took the cordless phone and dialed up Leader Evaporator, finding their number on the back of a catalog. I spoke to a tired-sounding sales guy who proceeded to tell me that a 3×8 air-tight, wood fired arch with a new suit of their best pans would get to something close to $24,000. I put my hand over the mouthpiece of the phone and whispered the number to the guys. They immediately set to arguing about which piece of information I’d managed to screw up in relating our requirements to the sales rep. I told the fellow I’d stop wasting his time and went back to the boil and to the argument.

From that day on, we knew we’d be looking for an old-time rig that we could rescue. While the year before I’d seen plenty of wood fired evaporators in the classifieds section, suddenly they’d gone missing. With #2 fuel oil passing the $4 mark, people were sidelining oil rigs and snapping up the units coming on the market that used wood. That and the prices of stainless steel might explain a lot why Leader was demanding a starting year’s salary for an evaporator.

This past summer I found myself out in Enfield helping a friend of a friend look at the sugaring equipment that came with a house and garage he’d bought. He had no intent to sugar, but figured he’d ask me what the stuff was worth. It was a 3×10 wood fired Grimm from 1994. Pretty good condition. Raised flues, stainless, although the sugar pan looked like it had gone through some abuse. It came with steam hoods and all the stack pieces someone could possibly use. I’d made a list of prices for him, that I promptly forgot until a few months later, when my search for a used 3×8 unit proved fruitless.

This morning we picked up that unit, after taking a piece of the west wall of the sugarhouse off so that we could fit the new unit inside. After a century of disuse, this old chicken shack is about to burst its seams with both bulky equipment and the buzz of industry. I owe a big one to the Roberts, John and Mike for wasting a Saturday helping me get this monster over state lines. The picture above is of the trailer that had the 600 gallon feed tank and the evaporator behind it, with the back end just poking over the hitch. The rig filled that, the inside of the truck, and two additional pickups.

For those who’ve never done it, moving an evaporator involves knocking out the fire bricks one by one, transporting them, and then lifting the unit onto whatever is going to transport it. In general, it takes about three times as long you think it will.

The picture below shows the big rig in our shack, with Mike bringing in some bricks from the truck. Later, when we put the pans and hoods on the arch, the whole mass of metal reached just five inches below those cross beams on the ceiling. I still have to brick the arch in, but that’ll wait till worse weather this winter, and in the meantime, we’ll try to get the woods work done before the snow builds too high to work the line.

Where to Start?

Start with your bottle. The materials, shapes and sizes all affect shipping, sometimes in unanticipated ways (for a quick review of different materials advantages and disadvantages, see this older post. People tend to like plastic best for sending by mail, but I’ve had about as good luck with plastic as with glass – which is to say some pretty messy packages for every couple hundred ones sent without incident. You tend to pack glass with greater care. In fact, the only accidents I’ve had with glass have been bottle stoppers coming out in transit, rather than the glass rupturing. On the other hand, the plastic fiascos I’ve see involved rupturing, almost always at the interface between the container and the cap.

When people buy maple syrup for practical purposes – like putting in their coffee each morning – they tend to order plastic bottles, which is often cheaper than maple syrup sold in glass bottles (2007 proved the exception to the rule, when petroleum prices went so high that packing in glass was actually cheaper). Several companies make special plastic syrup jugs with oxygen barrier coatings that prevent the syrup from going bad after a few months. They also have the charm of fitting into those single-price/send-anywhere boxes that the United States Postal Service markets. All-in-all, a pretty efficient way to get a lot of weight of maple syrup across a lot of country.

For maple syrup operations doing bulk and wholesale business, shipping five gallon pails or larger barrels becomes the rule, more often using UPS or FedEx Freight for pick-ups. On a dollar-per-gallon sent ratio, larger barrels of wholesale maple syrup typically cost about $7 to $12 for moving across the country, depending on scale, location, need for a lift-gate truck and several other factors.

On the higher end of the market – and especially for gift bottles – customers tend to like to order glass bottles. Choosing the right size here is trickier. With all the cushioning that glass requires in the box, you can throw out those single-price boxes from the USPS, as they won’t be big enough. That hurts not just because of the loss of the low postage opportunity, but also because the USPS springs for the box. Now you’re really on your own.

Choose a bottle that fits with a box and packaging. I think I had a good idea a couple years back, realizing that the one-liter flask bottles are roughly the same proportions as a wine bottle. This was important because many, many wine producers send wine bottles by mail, which means there’s a small industry of companies that make special packaging for sending this very size of glass bottle through the mail. After spending $2.20 on a glass bottle, and $1.50 on a special mailer, a liter of syrup (about 3 pounds of syrup) cost an additional $10 to ship to most places east of the Mississippi from the maple syrup boondocks of Vermont. At 2008 prices, that was about 30 percent the cost of the liter of syrup. Folks buying bottles four at a time saw that shipping and packaging cost amount to only about 12 percent of the cost of the syrup. When you see that actual Vermonters must pay 6 percent sales tax for transactions made in the Green Mountain state, that’s actually not so bad for shipping and packaging costs to out-of-staters.

Sugar makers tend to like USPS versus UPS and Fedex, probably because of the flat rate boxes. When you give customers a choice, though, they tend to choose UPS or Fedex, even though it’s clear to them that it’ll cost more. I find that very interesting, and I suspect it’s due to a perception that greater care is given to packages at the private companies. Tillinghastmaple.com stopped offering Fedex and UPS simply because having a mish mash of shippers makes fulfilling orders much more painful. Besides, it gives me an excuse to visit with our local postal clerks, Bob and Henry, although I suspect they’d be happy to seem me go to UPS when the Christmas maple syrup gift rush is on.

Syrup is heavy stuff – 11.4 pounds per gallon, not including the container. Heavy stuff is much more likely to have accidents, spillages or packaging escapes, as the item’s own weight creates a momentum when its moving that can be pretty destructive when it comes to an abrupt stop. And, as it happens, getting maple syrup all over a customer’s mail tends to make them pretty irritable. The weight is also one of three key factors in determining the price of sending a package – along with distance sent and desired delivery speed.

Make sure that the maple syrup is completely immobilized within the packaging. Any room for movement – including after some of the packing settles – will lead to some degree of shock force on the container. When you introduce a new type of container or packaging, it’s best to test one out by doing a few drop tests on a hard surface.

People selling syrup online may be tempted to offer free shipping, but those costs could be a lot higher than anticipated, as the folks most attracted to that offer are often the ones who live the furthest away, causing a much higher than average shipping cost. It’s also an odd form of subsidy for western and southern states. If you think about it, a maple syrup producer who pays for shipping is effectively charging New England states and those nearby a higher amount than those to whom he’s shipping maple syrup in Hawaii and California.

Repackaging

It often makes more sense – and can be kind of fun – to order syrup in bulk and then split the larger amount into many smaller containers to send on to friends and family. Keep in mind that syrup intended to be stored any length of time should be “hot packed,” and you can find directions on how to do that properly here.

The method I used to draw this conclusion has two key flaws, one obvious and the other less so. The obvious flaw is the fact that we cannot precisely predict the 2009 crop. However, we can use the running averages and trends, and factor in new developments (such as the vastly increased equipment sales) to predict various pluses and minuses. We must also apply that same logic to the changes in demand, such as the delayed effect of large food industry players moving away from maple to protect themselves from high prices and volatility.

The less obvious flaw in the system is the fact that the world market is largely controlled by the Canadians, who have in there very Canadian fashion set up a bureaucracy that holds over oversupply from one year and dumps it on a future year, making charts of production versus price a somewhat indirect measure of actual supply. We have a few data points we can throw in on this, and I have calls in to various Canadian bureaus to see if they’ll part with the specifics of their market movements over the past five years. If I can find that, I’ll update the model.

[Update: on 12/21/08, I received Bascom's new catalog in which Bruce Bascom writes on 2009 pricing. He predicts $2.50 to $3.00 per pound on the table grades, with commercial grade coming in about half a dollar lower. That translates to a Grade A price of $28.50 to $34.20 per gallon. Bruce has a vested interest in low producer prices, but he has proven highly accurate in the past.]

(Data to 2007 from USDA. 2008 estimates from Bascom report on market.)

The chart above shows the relative production of Canada and the U.S. in terms of gallons of syrup. The obvious trend: the proportion of Canadian production that the U.S. is also able to produce roughly doubled from 17 percent in 2003 to 34 percent in 2008. This trend is due largely to weather happenstance, particularly in the latter two years. Combined, the world’s two maple producing countries produced much less syrup over this same time period.

This fall-off in production forced the marketing board that controls bulk syrup sales in Quebec to dip into their once-overflowing stockpiles, depleting them in 2007. It is that depletion that is likely the single most shocking event to the market, causing wholesale and retail prices in 2008 to burgeon from the 30’s to the 50’s and 60’s.

[Footnote 1: A cross-town neighbor actually engaged in local syrup arbitrage earlier in the year, noticing that some of the producers - who generally run to the older and crankier sort - were insisting on selling syrup in the low $30s, probably out of embarrassment for charging anything higher. This fellow went around asking to by batches in 50 gallons and 100 gallons, with the intent on unloading it on one of the big packers, which at the time were paying $44 per gallon.]

The reason both the wholesale and retail prices are roughly the same shows a wonderful and curious example of the sort of microeconomics of small towns that doesn’t often make it into the textbooks. The books might refer to it as a lack of “price elasticity,” but that doesn’t begin to cover the social dynamics that affect the retail price of maple. Most maple producers are small-scale in the U.S., and less so in Canada. These small producers don’t have the scale to conduct formal marketing, transport their syrup great distances or generally waste much time on the whole affair. They sell to friends and family, over the years developing a highly valuable customer list that year-in and year-out allows them to sell all their crop. These individuals on the list feel as though they are – and they are – on the inside track with something very special. There is a relationship between these small-time farmers and their customers that doesn’t abide 40 percent price hikes in a year – no matter the global commodity price rationale.

Yesterday evening I had a phone conversation with a producer on the other side of town. I had a big order I couldn’t fill by myself, and I was trying to marshal together a few of us to meet the demand. As most folks around here, she was sold out, but she added that she’d sold her gallons at $48 a piece. I pointed out that she could sell it wholesale to Maple Grove for $50.16. She replied that she knew that, but that she’d spent more than 20 years building that list and she’d be darned if she were to do it over again.

It seems that in the U.S. market, there is a price premium effect due to the non-commodity nature in which the product is often sold, yet this price is very inelastic when price pressures attempt to move it upward.

U.S. producers almost always sell a higher proportion of their product at retail than the Canadians do, which makes for a generally higher average price as well in the U.S. This is not only because of the retail premium, but also because the smaller sizes that are typically the best sellers at retail command a further sizing premium. Canadians, with their enormous operations, sell the brunt of their product in bulk and wholesale.

[Footnote 2: It should be noted that the USDA data on pricing among states and sizes does not seem accurate in some aspects. In particular, at the lower size packages they appear to show an inversion in the retail and wholesale prices, which is highly unlikely. This may be due to a low number of people in their poll at these more obscure sizes. Similarly the full gallon pricing is very volatile in the past year or two, as many, if not most retailers stopped selling the size in favor of the higher-margin pints and half-pints. The Maine prices also did not look at all consistent with prices I checked in the summer of 07 along the coast. While I was in just one area, it was the expensive area, and in high tourist season, so the fact that I was seeing lower prices makes me think this data set should be used with caution.]

(Data from USDA and StatCan)

The chart above shows the movement of prices over the past six years, showing the general price – which really means the U.S. and Canada – in blue, with the red line of the U.S-only price above it. Figures for 2008 are estimated based on current December 2008 wholesale price offers from New England packers (which currently range from $44 to $50.16) and an informal competitive survey of retail syrup prices sold during the same period.

Over the time period shown in the chart above, the Quebecois have depleted their syrup reserves – the last drop reportedly being sold in 2007. This may help explain the ground the Canadians seem to be making up, pulling somewhat closer to price parity with their southern neighbors. Two warnings on this assumption:

- About 56 percent of Canada’s exports go to the U.S. That’s several times what the Americans make themselves, so pretending that U.S. and Canadian markets are discrete is a bit deceptive.- Maple producers in Quebec have strict reporting requirements designed to limit bulk sales outside of their Federation marketing scheme. If producers there evade that scheme by selling syrup at the higher U.S. rates directly, the lack of reporting on those transactions would – and probably does – skew the U.S./Canada pricing data.

- When wholesale prices ratchet up, as they have in the past two years, it opens up a much greater temptation for U.S. producers to skip the hassle and expense of retail operations, with both price and friction factors coming into that decision. In fact, we see that surface in the data, with the USDA reporting that all New England states but New Hampshire showing significant movement from retail to bulk and wholesale sales methods between 2006 and 2007. I expect that trend to continue at a faster pace in 2008 due to the spike in wholesale prices. This may also be affected by a trend away from old-school hobby bucket operations – which tend to be retail-only – and toward larger mainline operations. That trend depresses U.S. prices as seen from the producer’s perspective.

Which brings us to the relationship between the supply and the price. We see the prices going up in the chart above. Look at the one below, where the annual production figures are pasted in…

(Data from USDA, StatCan, Federation des producteurs acericoles du Quebec. First data point is 2003, on left. Right-most data point is 2008.)

This certainly suggests that declining production spiked prices, but the real story is a bit more complex than that. The second to last set of data (2007) shows the biggest production decline, yet the price rose merely along with the continuing trend. This is likely because, according to Bascom, the Canadians dropped their last batch of reserve syrup (about 35 million pounds) on the market that year, more than making up for the supply drop. And then, in 2008, the unmoderated market forces broke loose as supply sank with no reserves to make up for the deficit.

THE DEMAND SIDE

The demand side is poorly understood. We have a great deal of public data on the production side, and even some on the supply side, with the Canadian market moves, but our understanding of the demand side is still wrapped up in an old fashioned and increasingly out-of-date impression who buys maple syrup and why.

The map below shows the geographic breakdown of domestic interest in a maple syrup sales message to a maple retail website during the holiday season 2008. Interest is consistent with population centers, not surprisingly. Actual transaction data showed increased interest in those regions of the country (Northwest, San Francisco, Colorado, Alaska and Hawaii) where children of Vermonters are more likely to settle.

While it may be true that pancakes are pointless without maple syrup, there are a lot of other reasons why people use maple syrup. The rise in Polynesian and other Asian-style “fusion” cooking has added demand, along with the Maple Syrup Diet – a terribly disgusting fad weight loss program that is best not described – as well as the opening of new sizable markets in Japan and Germany, along with their respective currencies rise against the U.S. dollar.

For our purposes of determining syrup price for 2009, it’s instructive to see how these trends are moving relative to this past year.

- Asian and other culinary interest: Very consistently positive

- Maple Syrup Diet: Fading fast

- Japanese, German, other markets opening: Very consistently positive, with perhaps downside risk temporarily due to economic troubles. This may be somewhat offset by decreasing shipping prices.

- Currency exchange rate effect: The U.S. dollar has strengthened quite a bit since its days of falling earlier in 2008, although it has not made up lost ground. Interestingly, Canadian exports to Germany declined 54 percent in 2007, made up with commensurate gains in exports by U.S. sugar producers. This is very likely due to the U.S. dollar’s decline versus the Loonie.

Domestic direct consumption will likely prove a slightly downward trend in light of the current prices. Domestic industrial consumption is likely to move downward faster, as companies that required plant resetting time in order to accommodate a more reasonably-priced sweetener will likely come online in 2009, reducing commercial demand as a latent effect to 2008’s very high prices.

The net of all of this – heavily weighted to the domestic consumption side of things – is rather negative. We have seen demand rising in all of the preceding years, and next year is likely to be the first where that actually reverses.

Bascomb Maple Farms, the biggest market maker in New England, writes on its website that the world demand for maple is about 110- to 120 million pounds of syrup. In 2007, that was about what was supplied when the surplus was added back in by the Canadians. In 2008, only about 80 to 90 million pounds of syrup hit the market, as that was all that was produced and was available. Which means that there is quite a bit of demand that can leave for other sweeteners without necessarily jumping prices down drastically.

One hidden factor is how much demand was lost in the current 2008 pricing regime. We know we sold only those 80 to 90 million pounds, but we cannot know how much more we could have sold at those prices. I think it is safest to assume additional supply would have significantly affected prices. We see evidence of that regionally, where Maple Grove in Vermont offered wholesale prices about eight percent higher than Bascom’s during the year. Visiting the Maple Grove website at different times over 2008, the larger sized packages were out of stock, or taken down entirely, replaced by very small packages at relative premiums. This caused the average price per gallon of their sales to be extraordinarily high.

It was only a couple years ago, the industry used to stratify their pricing based on grade. Those days are over, with the advent of bubbler systems that change the color of syrup. It seems that the new stratification mechanism is unit size, and retailers can create an impression of great demand and price by not carrying the larger sizes. This is a volatile situation, as the reverse is true as well. Faced with a normal crop and low demand, retailers will price the product to move, and in the face of fewer transactions will increase the unit size. This will quite possibly happen in 2009, creating a record price decline to match the record price rise.

2009 PRODUCTION

Ask an experienced sugarer how the next year looks, and almost always, you’ll get a sour answer. Listing the reasons why things probably won’t go well makes a normal year seem all the more positive. That sugarer has a lot of evidence on his side this year.

People have been making very deliberate efforts and capital expenditures to increase their production capability for the 2009 season. The two largest equipment manufacturers in northern New England indicate they are having near record years for major capital equipment, such as upgraded evaporators and technologies such as reverse osmosis and various types of preheaters and preboilers, perhaps due to sugarmakers attempting to take advantage of the high prices. Those near record revenues, however, may also come from the record steel prices that factor into their equipment.

The Federation des producteurs acericoles du Quebec announced it is increasing quota amounts among its farmers by 12 percent this year, encouraging still more production increases.

If the weather cooperates with a “normal” season, North American sugarmakers should be producing roughly 10 million gallons of syrup, a 10 to 15 percent rise over the average actual production of the earlier part of this decade, which back then was then supplemented with reserve syrup.

If that comes to pass, the effect on price will depend on how quickly that supply is brought to market. The maple sugar industry typically has a short season with a long dormant season, encouraging many operations to dump syrup on the market at the same time, around late April. If wholesalers and packers determine that the season is a normal or good one, they will likely low-ball the price early on in the hopes that a great deal of April and May syrup will flow to them. Only if the season appears to be poor through the first month or so will packers be willing to offer the price premiums seen in 2008.

Precedent shows that supply will be brought to the market in large chunks early on, encouraging a return to the pricing regime of 2005 and 2006, when (coupled with Quebecois maple syrup reserves returned to the market) effective supply was around 10 million gallons. A possible downside risk is that demand will have been more stymied than many sugarers anticipate, having caused a lot of pain on the part of industrial companies using maple syrup as an ingredient. Those companies changing their recipes and processes would likely be able to roll out the reformulated products only in 2009.

MOST LIKELY SCENARIO

Because of this relatively pessimistic brew of factors, I predict average syrup prices in the U.S. to be about $36 per gallon in 2009 among the higher-paying packers. That translates to $3.16 per pound of syrup. With demand subsiding and supply returning to “normal,” the price could be lower than that, but I am also anticipating that the most recent price records will provide pressure on sugarmakers to withhold syrup from wholesalers in an effort to exploit what they perceive as a less price sensitive retail market. The $3.00 per pound of syrup psychological barrier may provide a great deal of price support at that level as well.

OTHER SCENARIOS

The pessimistic scenario would involve prices seen in the earlier part of this decade, around the $28 per gallon mark. There is limited downside risk below that point because of the likely market actions that the Quebec federation would take if syrup prices were to fall further.

The optimistic scenario would involve either a poor season’s production, a more controlled release of the year’s crop onto the market, and/or the growth of international markets despite curtailed consumer spending. Pricing would average about $40 per gallon.Barring ice storms or other acts of God, I do not see prices returning to the $50 per gallon at wholesale level once 2009 production starts to flow.

As always, I welcome feedback on the data and logic used for this analysis. Please feel free to comment either publicly below, or by emailing me privately. Perhaps readers will be able to contribute further data points and additional observations.

CITATIONS:

Agri-Food Canada

http://www.ats-sea.agr.gc.ca/supply/3310_e.htm

Industry Canada

ic.gc.ca

la Federation des producteurs acericoles du Quebec

http://www.siropderable.ca/AxisDocument.aspx?id=503&langue=en&download=true&document=Info-sirop_ete_2008.pdf

USDA

http://www.nass.usda.gov/Statistics_by_State/New_England_includes/Publications/0605mpl.pdf

Bascom Maple Farms

http://www.maplesource.com/Press_Room/Releases/2008_crop_report.pdf

For some unknown reason, sugar maple trees produce much, much more sap and much sweeter sap than other trees do. The sap is the fluid that brings nutrients up to leaves, and sugars and starches back down from the leaves after they’ve done their photosynthesis magic with the sun. On days when it gets to be about 40 degrees Fahrenheit after a night of temperatures about 20 degrees Fahrenheit, sap wells up in sugar maples.

People collect some of that sap by making small holes in the sides of trees and collecting the clear liquid in buckets, or by hooking those holes up to plastic lines leading to a collection tank. As this is done during the spring’s first thaw, often with deep snow on the ground, it’s quite a bit of work.

The sap – which starts off with at about 2 percent sugar – needs to be boiled down to a higher concentration. Sugarers boil sap on a contraption called an evaporator. It consists of an arch – the bottom part that holds the fire – and the pans, the vessels sitting directly on top of the arch that contains the liquid. Through ingenious fiddling, the evaporator came to have all sorts of features and add-on devices that help increase the rate of boiling. Boiling forces water molecules to escape as steam, leaving more and more of the solution’s solids behind. When so much water has been forced out that the solution becomes 67 percent sugar, it can be called maple syrup.

(Feeding the arch, with the pan above)

At that point, the sugarmaker filters the syrup to take out certain types of tasteless solids that come out of solution and make the liquid cloudy. This is done in small operations with wool filters and in larger operations with devices called filter presses that force the fluid through sandwiches of grit between paper filters. Either way, a big sticky mess is pretty much guaranteed.

Once the syrup has been filtered, the sugarmaker grades it, comparing a small sample jar of it up against the light with some standard samples to figure out which category the final product’s color fits into.

(Grading samples. Note the samples for the year across wall.)

At this point, the syrup – while still hot enough to be sterile – might be packed into individual containers, or put up in larger bulk containers, such as barrels. A gallon of finished syrup weighs 11 pounds (the same amount of pure water weighs 8 pounds), so a barrel of syrup is quite a thing to move around. We find it most often requires the use of both hands.

Sugar farms often sell their syrup right from the roadside, or at local fairs and events. The excess gets sold to wholesalers who either pack it into their own branded bottles, or forward the bulk syrup on to food processors, restaurants and other companies that use syrup on an industrial scale.

Syrup is made in Canada and the U.S., with the American production being only about 15 percent of the whole, and that on a good year. Vermonters make about one half of the U.S. production. We here at <a href=”http://www.tillinghastmaple.com”>Tillinghast Maple are responsible for 1/1000^th of that.