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The seasonal production volume of maple syrup is very sensitive to temperature patterns. One year you have a huge production and the next few years almost nothi

by maxki 11y ago

The seasonal production volume of maple syrup is very sensitive to temperature patterns. One year you have a huge production and the next few years almost nothing, and it's not about efficiency, only about freezing/defreezing patterns. In such a "market", where the production side is practically random, it will cycle from boom to bust forever. I don't see other solutions than a cartel to solve this. What they do is accumulate surplus during "boom" years, and release it during "bust" years, the offer becomes a smoother curve. Without such a mechanism, no rational investor will invest beyond a "hobby" scale production. An investigation on how industries subject to "random like" production variations can solve the price unpredicability problem would make a more interesting article. Presenting it as an "evil cartel" story, is more sensationalist and involves much less research for the journalist.

icebraining 11y ago
As far as I know, the way the rest of the agriculture producers solve this is with futures. Cartels have some advantages, but they are often unstable, and so they have to be enforced with threats of jail, as in this story, and which helps the characterization as "evil".
- slavik81 11y ago
  Unfortunately, this sort of cartel is not unusual in Canadian agriculture. I have mixed feelings about Stephan Harper, but abolishing the Wheat Board and pardoning protestors [1] was a definite achievement in my books. [1] http://www.cbc.ca/news/politics/harper-pardons-farmers-arrested-under-old-wheat-board-law-1.1146436 http://www.cbc.ca/news/politics/harper-pardons-farmers-arres...
aianus 11y ago
Nothing is stopping entrepreneurs from stockpiling tanks of syrup in good seasons to sell at a profit in bad seasons. If the extremes are like you say, it would be good business and would help stabilize prices somewhat. No insane cartel required.
- maxki 11y ago
  That only works if a sufficient majority of producers do it, and do it in a coordinated manner. If they manage to do this, then there is a strong incentive for individual producers to go against the "coordinated group", i.e. sell when the production is high, while the "coordinated group" is stockpiling.
  - maxerickson 11y ago
    I don't understand your only. Absent a cartel, why can't Warren Buffett (or anyone with a big fun pile of money) buy during high production years, store the syrup and then sell it in low production years? I totally agree it will be more profitable with the coordination, but that is a big part of why there are frequently laws against coordination.
    - maxki 11y ago
      > why can't Warren Buffett (or anyone with a big fun pile of money) buy during high production years, store the syrup and then sell it in low production years? Isn't that a price fixing scheme ? The only difference is that it uses a huge pool of purchasing power to acquire the ability do dry the market. The only difference between price fixing by "buying power" and establishment of a cartel is that the profitability increase goes to oligarchs instead of farmers. How can that be more acceptable ? I am against cartels in general, since they are a form of monopoly, and I am against monopolies in general. However I think that in some cases, they are the "less worst" solution. And I totally think that the fact that a government can "legislate into existence" cartels is problematic, and creates plenty of room for dirty politics. Now that I think about it, my opinion on the "evilness" of a cartel is that it's proportional to how much the "legislated good" is necessary for survival. The less something is essential the less you can pressure the price upwards. In this case, we're talking of a luxury good, which is why I see no scandal in the situation, or perhaps a minor one.
      - maxerickson 11y ago
        The point of the example was that it provides a way to match current supply with future demand without any extra coordination between the sellers. All it requires is that each be willing to sell to any buyer, which is not coordination in any meaningful sense. Your comment said That only works if a sufficient majority of producers do it, and do it in a coordinated manner., so I asked about another way that I thought would work (in fact, the way proposed in the parent of your first comment).

by maxki 11y ago

icebraining 11y ago

As far as I know, the way the rest of the agriculture producers solve this is with futures. Cartels have some advantages, but they are often unstable, and so they have to be enforced with threats of jail, as in this story, and which helps the characterization as "evil".

slavik81 11y ago
Unfortunately, this sort of cartel is not unusual in Canadian agriculture. I have mixed feelings about Stephan Harper, but abolishing the Wheat Board and pardoning protestors [1] was a definite achievement in my books. [1] http://www.cbc.ca/news/politics/harper-pardons-farmers-arrested-under-old-wheat-board-law-1.1146436 http://www.cbc.ca/news/politics/harper-pardons-farmers-arres...

aianus 11y ago

Nothing is stopping entrepreneurs from stockpiling tanks of syrup in good seasons to sell at a profit in bad seasons. If the extremes are like you say, it would be good business and would help stabilize prices somewhat. No insane cartel required.

maxki 11y ago
That only works if a sufficient majority of producers do it, and do it in a coordinated manner. If they manage to do this, then there is a strong incentive for individual producers to go against the "coordinated group", i.e. sell when the production is high, while the "coordinated group" is stockpiling.
- maxerickson 11y ago
  I don't understand your only. Absent a cartel, why can't Warren Buffett (or anyone with a big fun pile of money) buy during high production years, store the syrup and then sell it in low production years? I totally agree it will be more profitable with the coordination, but that is a big part of why there are frequently laws against coordination.
  - maxki 11y ago
    > why can't Warren Buffett (or anyone with a big fun pile of money) buy during high production years, store the syrup and then sell it in low production years? Isn't that a price fixing scheme ? The only difference is that it uses a huge pool of purchasing power to acquire the ability do dry the market. The only difference between price fixing by "buying power" and establishment of a cartel is that the profitability increase goes to oligarchs instead of farmers. How can that be more acceptable ? I am against cartels in general, since they are a form of monopoly, and I am against monopolies in general. However I think that in some cases, they are the "less worst" solution. And I totally think that the fact that a government can "legislate into existence" cartels is problematic, and creates plenty of room for dirty politics. Now that I think about it, my opinion on the "evilness" of a cartel is that it's proportional to how much the "legislated good" is necessary for survival. The less something is essential the less you can pressure the price upwards. In this case, we're talking of a luxury good, which is why I see no scandal in the situation, or perhaps a minor one.
    - maxerickson 11y ago
      The point of the example was that it provides a way to match current supply with future demand without any extra coordination between the sellers. All it requires is that each be willing to sell to any buyer, which is not coordination in any meaningful sense. Your comment said That only works if a sufficient majority of producers do it, and do it in a coordinated manner., so I asked about another way that I thought would work (in fact, the way proposed in the parent of your first comment).