Why Maple Syrup Costs So Much

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September 27th, 2008

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by Pallavi Gogoi

The idea for “Why Maple Syrup Costs So Much” came from Mark Menning. The founder of Lotus Bakery, a family-owned bakery in San Francisco, Menning has been an avid BusinessWeek reader for many years.

It’s hard to swallow: Since May, Mark Menning has watched the price of maple syrup soar to $6 a pound—up from $2 a pound a year ago. That’s a problem for Menning, since the maple syrup is a key ingredient in the cookies his San Francisco-based Lotus Bakery supplies to some Whole Foods Market (WFMI) outlets and Bay Area specialty grocery stores.

Add in rising costs for everything from oil to flour, and you’ve got a recipe for disaster. Says Menning: “These price increases can make or break you.”

What’s going on? Is there a shadowy syrup cartel manipulating prices? Has someone figured out how to turn maple sap into fuel? Not quite. Unfavorable weather in Quebec—the source of 80% of the world’s maple syrup—have depressed output to a 10-year low. At the same time, demand for maple syrup, which is slightly lower in calories than cane sugar and corn syrup, has been growing in recent years, as more Americans seek alternatives to processed and artificial sweeteners.

A Scarcity of Sap

Blame it on global warming, perhaps. But for the past three years, Quebec has seen cold winters turn very quickly into warm springs, which played havoc with sap collection. (Under ideal conditions, temperatures rise during the day and then dip back below freezing at night. This pattern encourages sugar maples to release their sap). That has cut sap production season in half, to two to three weeks. Quebec’s output slipped to 58.7 million tons this year, down from 61.7 million in 2007 and 86.4 million tons in 2004.

All of this comes at a time of growing appetite for the sweet, sticky stuff—not just in North America but also in Asia. Anne-Marie Granger Godbout, joint secretary of the Federation of Quebec Maple Syrup Producers, an industry group in Longueuil, Que., credits a global marketing campaign the group launched in 2004. Since then the value of exports to Japan has doubled, to $20.5 million last year.

In the U.S., meanwhile, maple syrup is not just a topping for pancakes and waffles anymore. With growing numbers of Americans willing to pay a premium for foods with more natural ingredients, maple syrup is now cropping up in everything from yoghurt to cereals to sausages. Menning’s operation, for instance, specializes in cookies that appeal to health-conscious people. He switched to maple syrup from honey a couple of years ago when he heard that the bees were disappearing in large numbers.

When Menning saw the price of Canadian maple syrup going through the roof, he found a U.S. supplier that sells him the product at about $4 a pound. Unlike their Quebec peers, New England syrup operations had a banner year, with output up 30% from 2007, thanks to favorable weather. But Tom McCrum, owner of South Face Farm in Ashfield, Mass., warns that U.S. supplies will just about run out by the end of 2008. “Another bad year [for the Canadians] and there will be major shortages, and prices here will go through the roof,” he warns.

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