Canada Taps In

Shortly after the US announced a release of petroleum from the Strategic Petroleum Reserve coordinated with several other countries, Canada announce that they too would be tapping in to their strategic reserves…of Maple Syrup. The Federation of Quebec Maple Syrup Producers, which produces more than 75 percent of the world’s maple syrup was formed in the 1950s to regulate the production and sale of maple syrup and help maintain a stable price for maple syrup producers. This year there was a rather short harvest season and a 21 percent increase in demand. This resulted in a significant shortage which precipitated the release of 50 million pounds of maple syrup from the strategic stockpile. With the release of nearly half of the country’s stockpile, producers are planning ahead to next year to tap more trees and increase supply. If the harvest season is short again, they will hopefully be able to meet market demand. If the harvest season is better, then they can simply resupply the reserves.

Discussion Questions:

1. Would you expect demand for maple syrup to be elastic or inelastic? Explain your answer.
2. Based on your answer above, what impact would increasing supply and lowering price have on producers’ revenues?
3. The Federation of Quebec Maple Syrup Producers is a legally sanctioned cartel. Discuss how their regulation of supply affects consumer and producer surplus compared with the outcome that would be achieved if individual farmers competed with each other.
4. Maple syrup prices range substantially based on quality and place of origin. Discuss the role of product differentiation on these price differences.

Sources: CNN Politics: Biden announces release of oil reserves, but says gas prices will not drop overnight; NPR: Canada taps into maple syrup reserves to deal with massive shortage; Wikipedia: Federation of Quebec Maple Syrup Producers; BBC News: Amid shortage, Canada taps into emergency maple syrup reserves; Photo by Eduardo Vázquez on Unsplash