Price Check for Maple Syrup

Buying Maple Syrup, Price Predicting

If time allows, both will be updated prior to the next season. That will provide interesting longitudinal price data.

Building on our maple syrup keg concept from some months ago, Ellie and I installed a system the new counter top that sits on our dishwasher. For less than $50, we purchased the hardware needed to have a professional draft beer tap hooked into a 13 gallon keg of bulk maple syrup sitting under our sink. Pressured up to 500 pounds per square inch, this guy will give us a year’s supply of maple syrup on demand.

We designed this originally for some of our small- and medium-scaled food manufacturer clients – folks like Ola Granola and Red Kite Candies, who use a significant amount of our maple syrup for their yummy products, and find it difficult to handle large barrels in their kitchen facilities. It turned out, though, that while the flow of maple syrup is fine for personal use, it’s too slow for efficient application when drawing a few cups at a time. But now we’re getting interest from folks looking to install a draft maple syrup system in their own kitchens. Nothing Vermontier than maple syrup on tap.

One element I’ve been thinking about: if we’re boiling down extra strong, the sugar content of that syrup is obviously higher than normal. A New Hampshire syrup might be below 68 percent sugar. A Vermont syrup should be just above 68 percent. We’ll pack it at about 70 or so. But when the sugar comes out of solution like this, folks say it’s just back to normal syrup. Except, I think it’s not. You see, those sugar crystals don’t taste like maple syrup. They’re just pure sugar. Which means that all the extra maple flavor associated with that volume of syrup remains in the bottle. Here is a picture of the same bottle in the evening…

[This is, quite literally, stored energy]

I need to test this more carefully, but I believe that a bottle of overstrength maple syrup that has been brought back to normal strength through sugar crystals forming will have a higher rate of maple syrup flavor than a bottle that was just brought to normal density in the first place. We could probably best test this with some Grade A Fancy, where the normal strength maple syrup lacks the strong flavor of the darker grades of maple syrup. Sounds like a great excuse to do another tasting.

[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:

-

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

-

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

-

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

-

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

-

“I can’t stand the fake stuff.”

-

“We use honey or karo”

-

“There used to be a lot more sizes”

-

“Oh my god”

Here is an example of one producer’s ad appearing next to a urine odor advertisement for just that reason.

There’s not much one can do about incorrectly targeted ads appearing at the same time as your maple syrup ads, but you can usually prevent your own ads from appearing on inappropriate sites. Systems like Google and Yahoo allow you to use “negative” keywords, which essentially prevent your ad from appearing after users use certain keyword terms. For instance, if you use the negative keyword “furniture,” your ad won’t appear on pages dealing with “maple furniture.”

Maple syrup happens to run into this sort of problem quite a lot. There are two different fad diets out there, each using Grade B maple syrup as a key component. But these diets: the “Maple Syrup Diet” and the “Master Cleanser Diet,” along with a few other variations, involve some pretty disgusting behaviors. They remind me of my friends in high school who were wrestlers, always trying to make a lower weight class. Before weigh-in, they would sometimes take large quantities of Ex-Lax to eliminate additional weight. These maple syrup diets use pretty much the same principle, and are probably about as permanent a solution to weight gain.

Some maple syrup makers have keyed into these markets. One of the most popular New Hampshire maple syrup producer sites even created a special package of Grade B maple syrup specifically for one of the diets.

Many online ad networks allow you to prevent your ad from appearing on particular sites. It’s usually a good idea to explore all the targeting options on your ad account to ensure sure your maple syrup ad doesn’t appear with some embarrassing juxtapositions.

Here is a picture of a maple syrup bottle consumed slowly over a year, leaving a residue of maple sugar crystals…

Interestingly, we’ve been polling people over the 2008 to see whether they prefer thicker, “normal” or thinner maple syrup. The vast majority of people said they preferred the standard thickness. One or two said thinner, and perhaps a quarter said thicker. This surprised me, as I assumed everyone would prefer thicker maple syrup over the norm.

When asked both if they knew their preferences well and whether they liked lighter or darker maple syrup, the folks who indicated they knew their preferences mostly said darker maple syrup, perhaps by a 2-1 ratio. The people who indicated that they weren’t confident in their preferences were more apt – but not by much – to say lighter maple syrup. This is consistent with studies done by maple research centers, although I have not seen them couch their questions with the information about how confident the respondents are in their various answers.

A before and after shot of the bottles of overstrength maple syrup.

The maple syrup bottles above are a recent gift to some in-laws, next to the bottle just recently finished off from last year’s gift. Some customers see the maple sugar crystals growing in glass containers and assume that it must be some sort of organic growth. I find that they express this concern particularly when maple sugar just starts to come out of solution, as the early crystals look an awful lot like a fuzz on the inside bottle surface, and sometimes floating just under the maple syrup’s surface.

I am not sure about this, but I suspect that overstrength maple syrup is less friendly to growths because of its lower than normal water ratio. Typically, growths in maple syrup happen only in the thin layer of water at the top of the bottle, often resulting from condensation.

Some highlights:

- A good deal of what we know (which is still pretty incomplete) about how and why sap flows

- Optimal tapping studies, including depth and placement

- Paraformaldehyde pros and (mostly) cons

- Basics of sap collection, including piping and vacuum mechanics

- Sugarbush management

- Forestry elements, such as optimal stocking

- Some very extensive bibliography information on lots of additional research

- A look at learnings about maple tree genetics and reproduction (still pretty rudimentary)

- Costs and economics of sugaring, including analysis of buckets versus lines

- Wood versus oil and gas

- Use of preheaters

- Employing baffles under flue pans

- Alternative evaporator designs, like vapor compression and tubular evaporator pans

- Marketing maple syrup

- Maple syrup grading history and differences between jurisdictions

- Consumer attitudes (perhaps a little dated) on maple syrup

- Review of older container options

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

(Kit used for grading syrup samples by color)

Grades of maple syrup probably cause more confusion than clarification. They meant one thing a hundred years ago, another thing five years ago, and now new technologies have yet again shifted the significance of the various grades.

The upshot: the closer to Grade A Fancy, the lighter the color. In the past, those grades also meant “more subtle flavor” to those who liked light syrup and “less flavor” to those who were fans of the darker stuff. But nowadays, due to the new technologies that lighten the color of syrup, there is less of a connection between grade and flavor. This new factor is now reflected in the syrup market, where maple producers are being paid the same amount of money for Grade A Fancy syrup and Grade A Dark Amber syrup.

The Evolution of Grades

Since before the Civil War, and especially during the Civil War, New England maple sugar was the primary sweetener used locally. The country’s poor transportation network, and the great distance to the can sugar plantations down south caused that sweetener to be more expensive. Almost all maple production was made into granulated sugar, rather than the syrup we most often see today. Because this was used in great quantities in cooking, people often wanted to avoid the strong maple flavor, depending on the dish. Cooks preferred the lightest and least flavorful maple sugar, which is why the top of the grading scheme is reserved for the lightest syrup.

Today, maple sugar is sold mostly in the form of syrup, usually for a few specialty purposes where the strong maple flavor is very desirable. Many consumers mistakenly think that the higher the grade, the more maple flavor it will have. An old professor of mine who used to sugar nearby once did a taste test at the local country store to see what local folks actually preferred. He determined two things: that everyone likes free syrup taste testings, and that if people can’t see what their tasting, they tend to like either Grade A Medium Amber or Grade A Dark Amber.

The Destruction of Grades

A very few years ago, some producers introduced a bubbler machine into the maple boiling process, with the intent of allowing air bubbles to create yet more surface area through which water could be evaporated out of the boiling sap. It actually worked, and to the surprise of all, lightened the syrup grade to boot. No one knows why or how; probably something to do with an interference with a complex set of protein reactions known as Maillard reactions that give maple syrup its color and flavor. The sap going in would have made dark syrup, and the final product does indeed taste just like dark syrup, but the bubble process took away much of the color.

Not a lot of producers started using the bubbler machines, but the ones who did install the expensive machinery were some of the largest syrup producers in the country, trying to squeeze out yet more efficiencies in their operations. The result: a huge additional quantity of Fancy syrup that doesn’t actually taste at all like Fancy. Consumers now can’t tell the flavor of the syrup from the color, so grading is more an exercise in tradition than anything more useful.

Alternate Grading Systems

If you think about it, there are two different variables that really matter with maple syrup, after the basics such as cleanliness and clarity are taken care of. There is flavor, and there is thickness. The Canadians put together a “flavor wheel,” that sets out many different subtle flavor aspects together. Using that flavor wheel would make you sound like a wine snob when tasting syrup: “this has a hint of blooming flowers with a woody finish.” Some University of Vermont folks are putting together a less foofy version of that wheel, but I still wonder if it should be considered a wheel at all, instead of merely a list of known flavor possibilities.

Small syrup producers often find that their unique operations produce different flavors than the traditional “maple” flavor you get when you mix hundreds of producers’ products together. These individual flavors can sometimes be especially wonderful, and a few producers are actively marketing their syrup as unique flavors, as do wine makers or cheese makers.

State regulators have long put requirements on a syrup’s thickness, mostly so that customers don’t get cheated with dilute syrup, and thereby hurt the reputation of the syrup produced in the state. Most states call a solution with 66 percent solids in it syrup, and Vermont goes a little further, requiring at least 67.1 percent. That might seem a trivial difference, but it is not. The human tongue is especially sensitive to the difference in texture of fluids between 65 and 70 percent solids, with most people being able to easily tell you which of two fluids is the thicker, even with solutions separated by only 0.1 percent solids.

I have a theory as to why this is. I suspect humans evolved that taste sensitivity because foodstuffs like syrup that are above 67 percent solids have so little water in them that most molds and bacteria cannot grow well in them. Fluids with just 62 percent solids are fantastic places for pathogens to grow, so perhaps those forebears of ours with less sensitive tongues didn’t make it through life long enough to pass on their insensitive tongues to us.

Syrup finished off to 68 percent solids has a thick, smooth feel to it that makes it seem like a meal. Syrup finished to 66 percent feels thin and runny. Syrup finished much past 68 percent solids packs a super flavor punch and thick texture, but over time loses its thickness to sugar crystals that come out of solution, usually at the bottom of the bottle. It’s a special treat that can’t last very long, so people typically don’t sell it. Last year we made a special “Overstrength Reserve” run that proved very popular. It started out about 72 percent solids, and was great sipping straight out of a wine glass.

While I would like to see subtle gradations of thickness be incorporated in a new grading standard, the state folks, when they get around to creating one, will almost certainly use flavor as the controlling factor. This will make grading syrup much harder to do, and less consistent, but much, much more informative.