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I won't argue that the Federation should exist, but I will argue that these producers are idiots for wanting it to stop existing. It's giving them their livelih

by mabbo 11y ago

I won't argue that the Federation should exist, but I will argue that these producers are idiots for wanting it to stop existing. It's giving them their livelihood. Maple Syrup prices continue to rise year after year (addicts like myself will tell you all about it). Supply is highly variable- some years the weather just doesn't work well, and there's little produced, other years there's an abundance. The Federation's cartel powers and large reserve mean that they set syrup prices (increasing, always) and they make supply constant. They also market it, increasing demand. As an individual producer, the lack of the Federation is problematic: have a bad year, and you have nothing to sell; have a good year, well, so does everyone else- so now the price of syrup is rock-bottom, and you make very little profit, unless you decide to store it yourself and wait for a bad year. Demand can also drop with supply variability. What company would start depending on pure maple syrup, knowing that next year it's price may double? These guys want to have the prices that only exist because of the Federation's cartel powers, but refuse to follow the their rules. I have little sympathy.

iolothebard 11y ago
Yeah, god forbid they should be able to do what they want with their own property. Morons, who wouldn't like giving away 12%/pound for the privilege of someone doing price fixing for you.
- mabbo 11y ago
  Don't misunderstand me, I agree with you- I think it's a bit oppressive that laws like this exist. But I can't understand why, now that it exists and these producers are making so much more money from it, they'd want to dismantle it. Edit a moment later: in regard to "who wouldn't like giving away 12%/pound for the privilege of someone doing price fixing for you.". A: Someone who gets 13% (or 113%) more because of the price fixing.
  - iolothebard 11y ago
    Sounds like the mafia. Except jail instead of being maimed/killed.
- hackbinary 11y ago
  I suppose Mrs Grenier would like her free market system like the one we have in the UK with the Milk production industry where dairy farmers are bullied by the Dairies and large supermarkets for ever lower prices, and is pushing the family run farms to consolidate into massive argi-businesses, controlled by a few people.
  - icebraining 11y ago
    Maybe she would? "We're threatening her with jail for her own good" doesn't sound particularly appealing.
- vinceguidry 11y ago
  > Yeah, god forbid they should be able to do what they want with their own property. Those choices of what they can and can't do with their property is inextricably tied with the existence of the cartel. The cartel does the work to keep prices up, so that's why producers want to grow maple syrup. If there were no cartel, then they wouldn't want to grow maple syrup, or at least they wouldn't be able to make as much money with it. Nobody is helped by these guys rocking the boat. Not consumers, not producers, not the government, not the food industry that wants a steady supply and standards.
gnrme 11y ago
Yep. Either go with: a free market approach - facing the full force of globalisation and international politics, where one year you could be producing at a loss and another year a good profit; or be protected by a nationalised system that's predictable and, well, mediocre. No in between, as that will undermine either system.
3pt14159 11y ago
Cartels in the long run lead to the expansion of activities outside of the sphere of influence near the cartel. Also, futures markets generally cover variations of price, especially with a highly storable product like maple syrup. But in the short term, it's probably in the interests of small suppliers to have the cartel. Of course there is always a market incentive to defect, but since the cartel is backed by QC, I highly doubt that she'll get away with this.
- mabbo 11y ago
  Having governments enforce your cartel certain helps keep the outside activities to a minimum. A free market system with futures, and competition, etc, can indeed help deal with variation of prices and supply. But it still is a free market, in which price is determined by supply and demand. Producers are at the whim of the market in terms of what they make. With a cartel, supply is controlled near-absolutely, and therefore price can be controlled. The cartel can choose the price at which expected revenue/profits are maximized- often a price that lowers total sales, but increases total revenue (as revenue is price * sales). This is why I say that the Federation is terrible for consumers (who don't seem to care much) but great for producers- even the ones being told to cut back how much they produce. The Quebec government has an incentive to enforce the cartel- higher syrup prices means higher exports, more money coming into Quebec, which is all taxed. Yep. It's awful for guys like me who want to goddamn soak their pancakes in the gold stuff. It's great if you happen to own 100 acres of Maple trees. Even if you're told to pretend you own 80.
- reality_czech 11y ago
  Yes, exactly this. Across the border in the US, farmers are starting to produce a lot more maple syrup. And there is no cartel here. http://www.economist.com/news/finance-and-economics/21677990-american-forces-are-freeing-canadian-icon-captivity-sticky-situation http://www.economist.com/news/finance-and-economics/21677990... As the article points out: "keeping maple syrup expensive limits demand and encourages substitution" (of corn syrup). Meanwhile, "production is outpacing what the Federation can sell. Its “strategic reserve” has swollen to 25m litres of syrup—almost a year’s worth of sales. As America’s output grows, the organisation will have to cut its members’ quotas, stockpile ever more of Quebec’s harvest, or allow prices to fall."
ksherlock 11y ago
> What company would start depending on pure maple syrup, knowing that next year it's price may double? That's kind of why the futures market exists.
qubex 11y ago
First law of a cartel: everybody has an incentive to defect.
- pzone 11y ago
  Yes, which is why legalized cartels are one of the most heinous abuses of regulation that exist.
pzone 11y ago
You're mixing up two separate things which the cartel offers: insurance and quotas. You can also roughly split the "membership dues" into to parts. The 12% can be thought of as a fee for "all-in" crop insurance, which pays for things like storage for later sale during bad years of production and so on. Production quotas can be thought of as the fee for cartel membership. The insurance issue is a purely financial problem, it can be fixed by financial products like crop insurance and futures contracts. That's how modern agriculture works. With a competitive market, the cost of this insurance would go down for farmers, since it would be provided at competitive market rates. 12% is an enormous fee. (The fees of financial products are harder to measure, since they are measured implicitly through things like futures prices and so on. But they would be much less than 12%.) 25 years ago these financial innovations not as developed as they are today. Quebec is still relatively isolated from these markets in all likelihood, but I bet we'd see good alternatives being marketed to farmers if FPAQ were dismantled. The only benefit to farmers of a cartel vs. competitive markets is price-fixing. That is wretched and immoral, and self-destructive by its nature, as we see here. The fact that farmers can freeload on both the fees and the insurance makes it even worse.

by mabbo 11y ago

iolothebard 11y ago

Yeah, god forbid they should be able to do what they want with their own property. Morons, who wouldn't like giving away 12%/pound for the privilege of someone doing price fixing for you.

mabbo 11y ago
Don't misunderstand me, I agree with you- I think it's a bit oppressive that laws like this exist. But I can't understand why, now that it exists and these producers are making so much more money from it, they'd want to dismantle it. Edit a moment later: in regard to "who wouldn't like giving away 12%/pound for the privilege of someone doing price fixing for you.". A: Someone who gets 13% (or 113%) more because of the price fixing.
- iolothebard 11y ago
  Sounds like the mafia. Except jail instead of being maimed/killed.
hackbinary 11y ago
I suppose Mrs Grenier would like her free market system like the one we have in the UK with the Milk production industry where dairy farmers are bullied by the Dairies and large supermarkets for ever lower prices, and is pushing the family run farms to consolidate into massive argi-businesses, controlled by a few people.
- icebraining 11y ago
  Maybe she would? "We're threatening her with jail for her own good" doesn't sound particularly appealing.
vinceguidry 11y ago
> Yeah, god forbid they should be able to do what they want with their own property. Those choices of what they can and can't do with their property is inextricably tied with the existence of the cartel. The cartel does the work to keep prices up, so that's why producers want to grow maple syrup. If there were no cartel, then they wouldn't want to grow maple syrup, or at least they wouldn't be able to make as much money with it. Nobody is helped by these guys rocking the boat. Not consumers, not producers, not the government, not the food industry that wants a steady supply and standards.

gnrme 11y ago

Yep. Either go with: a free market approach - facing the full force of globalisation and international politics, where one year you could be producing at a loss and another year a good profit; or be protected by a nationalised system that's predictable and, well, mediocre. No in between, as that will undermine either system.

3pt14159 11y ago

Cartels in the long run lead to the expansion of activities outside of the sphere of influence near the cartel. Also, futures markets generally cover variations of price, especially with a highly storable product like maple syrup. But in the short term, it's probably in the interests of small suppliers to have the cartel. Of course there is always a market incentive to defect, but since the cartel is backed by QC, I highly doubt that she'll get away with this.

mabbo 11y ago
Having governments enforce your cartel certain helps keep the outside activities to a minimum. A free market system with futures, and competition, etc, can indeed help deal with variation of prices and supply. But it still is a free market, in which price is determined by supply and demand. Producers are at the whim of the market in terms of what they make. With a cartel, supply is controlled near-absolutely, and therefore price can be controlled. The cartel can choose the price at which expected revenue/profits are maximized- often a price that lowers total sales, but increases total revenue (as revenue is price * sales). This is why I say that the Federation is terrible for consumers (who don't seem to care much) but great for producers- even the ones being told to cut back how much they produce. The Quebec government has an incentive to enforce the cartel- higher syrup prices means higher exports, more money coming into Quebec, which is all taxed. Yep. It's awful for guys like me who want to goddamn soak their pancakes in the gold stuff. It's great if you happen to own 100 acres of Maple trees. Even if you're told to pretend you own 80.
reality_czech 11y ago
Yes, exactly this. Across the border in the US, farmers are starting to produce a lot more maple syrup. And there is no cartel here. http://www.economist.com/news/finance-and-economics/21677990-american-forces-are-freeing-canadian-icon-captivity-sticky-situation http://www.economist.com/news/finance-and-economics/21677990... As the article points out: "keeping maple syrup expensive limits demand and encourages substitution" (of corn syrup). Meanwhile, "production is outpacing what the Federation can sell. Its “strategic reserve” has swollen to 25m litres of syrup—almost a year’s worth of sales. As America’s output grows, the organisation will have to cut its members’ quotas, stockpile ever more of Quebec’s harvest, or allow prices to fall."

ksherlock 11y ago

> What company would start depending on pure maple syrup, knowing that next year it's price may double? That's kind of why the futures market exists.

qubex 11y ago

First law of a cartel: everybody has an incentive to defect.

pzone 11y ago
Yes, which is why legalized cartels are one of the most heinous abuses of regulation that exist.

pzone 11y ago

You're mixing up two separate things which the cartel offers: insurance and quotas. You can also roughly split the "membership dues" into to parts. The 12% can be thought of as a fee for "all-in" crop insurance, which pays for things like storage for later sale during bad years of production and so on. Production quotas can be thought of as the fee for cartel membership. The insurance issue is a purely financial problem, it can be fixed by financial products like crop insurance and futures contracts. That's how modern agriculture works. With a competitive market, the cost of this insurance would go down for farmers, since it would be provided at competitive market rates. 12% is an enormous fee. (The fees of financial products are harder to measure, since they are measured implicitly through things like futures prices and so on. But they would be much less than 12%.) 25 years ago these financial innovations not as developed as they are today. Quebec is still relatively isolated from these markets in all likelihood, but I bet we'd see good alternatives being marketed to farmers if FPAQ were dismantled. The only benefit to farmers of a cartel vs. competitive markets is price-fixing. That is wretched and immoral, and self-destructive by its nature, as we see here. The fact that farmers can freeload on both the fees and the insurance makes it even worse.