IDNUMBER 201302160043
DOCID: 161535361
PUBLICATION: National Post
PAGE: A6
DATE: 2013.02.16
SECTION: Canada
EDITION: National
BYLINE: Graeme Hamilton
SOURCE: National Post
ILLUSTRATION: S.K. Export / Étienne St-Pierre, left, and
Julienne Boss-Desrosiers, right, operate S.K. Exports in
New Brunswick.; Wayne Cuddington, Postmedia News /
Quebec is seeing its share of world syrup production
decrease, slipping to 76% of global production in 2012
from above 80% 10 years earlier. American producers
undercut their prices.;
COLUMN: Graeme Hamilton
DATELINE: MONTREAL
WORD COUNT: 1606
Maple syrup cartel; Quebec's syrup monopoly helped
spawn smuggling, Prohibition style
During the spring and summer of 2012, a procession
of syrup-filled trucks from Quebec arrived at Maple
Grove Farms in St. Johnsbury, Vermont. There was
nothing seemingly unusual about that, considering
that Maple Grove is the largest packer of pure maple
syrup in the United States, selling to retail giants such
as Wal-Mart and Safeway - and considering that nearly
80% of the world's maple syrup supply comes from
Quebec.
But on July 30, when the Federation of Quebec Maple
Syrup Producers stumbled upon a massive theft from
its warehouse in Saint-Louis-de-Blandford, Que., the
deliveries took on a new significance. In newly released
documents filed before a Quebec administrative
tribunal, the federation alleges that hundreds of
thousands of pounds of the Maple Grove syrup - the
equivalent of 12 tractor-trailers full - was illicit and
possibly stolen.
The man who sold the syrup, Richard Vallières, was
arrested in December and charged with conspiracy,
theft, receiving stolen goods and fraud in connection
with the Saint-Louis-de-Blandford heist. He has been
described as the alleged ringleader of a theft that
made headlines around the world, making off with six
million pounds of syrup worth an estimated
$18million. His father, Raymond, who is also involved
in the syrup industry, has been charged, as has Sté-
phane Darveau, who sells syrup-making equipment.
News that millions of dollars worth of maple syrup had
been stolen from a Quebec warehouse prompted
amazement and the odd wisecrack. How could the
thieves have escaped detection as they drained six
million pounds of syrup from Quebec's "global
strategic maple syrup reserve"? How does anyone even
unload that much black-market syrup? And, Quebec
actually has a global strategic syrup reserve? The
provincial police threw everything at the investigation,
interviewing nearly 300 people connected to the
industry and executing search warrants in New
Brunswick, Ontario and the northern United States. In
mid-December, they announced a series of arrests,
including that of Mr. Vallières, and posted wanted
notices for seven other suspects. Today, 23 people
have been charged and are facing trial in Trois-
Rivières; another suspect is still being sought.
Beyond the jokes about sticky-fingered thieves, the
crime has exposed a simmering war in the woods over
syrup production and sales. And it has shed light on
an unexpected accomplice in the growing illicit syrup
trade: The province's enforcement of a syrup cartel
that has, since it was instituted a decade ago, helped
spawn Prohibition-style smuggling and illegal sales.
Since the Federation of Quebec Maple Syrup Producers
tightened its supply-management system, introducing
quotas and a single sales agency in 2002, a thriving
black market has developed. The theft from the
strategic reserve was certainly the most brazen assault
on the federation's strict control of the industry, but it
was far from the first one.
Supply management was implemented in the name of
ensuring producers were getting a "fair" price for their
product, and over the past decade prices for the now-
controlled product have predictably and steadily
climbed. Producers who exceed their quotas must
transfer the excess into the strategic reserve, which is
intended to cushion the effect of a bad season.
But for many, the federation's zealous oversight goes
too far. Cases before the Régie des mar-chés agricoles
et alimentaires, the administrative tribunal that
enforces the law governing the maple-syrup industry,
give an indication of tactics used by the federation to
enforce its cartel. Inspectors use aliases to stage
phoney illegal syrup deals to ensnare bootleggers, just
like undercover police conducting drug stings. And the
Régie can order producers to provide utility bills and
bank statements if they are suspected of selling their
syrup outside the approved market.
Mr. Vallières has a history of run-ins with the
federation, and in 2007 he was fined $1.8-million
after the Régie determined he had bypassed the
official sales agency to purchase 1.5 million pounds of
syrup. He had tried to get around the rules by buying
the syrup in four-litre containers, which producers are
allowed to sell directly to consumers, and then
transferring the product to barrels for wholesale
distribution.
Hans Mercier practises law in Saint-Georges in the
heart of Quebec's Beauce region, an area known for its
plentiful maple sugar stands. It is also a region "where
free enterprise is practically a way of life," Mr. Mercier
noted, "and this kind of over-regulated industry does
not fit well." He devotes a large part of his practice to
defending maple-syrup producers against the
federation, and currently has about 20 producers as
clients.
"Because it is a system that is hyper-regulated, hyper-
controlled, with no competition, the authorities can do
more or less what they want," Mr. Mercier said in an
interview. "Often they don't use kid gloves, which really
irritates the producers. They feel more like they're
dealing with a police force than a union representing
them."
He said the federation is the Quebec equivalent of
OPEC, dealing in syrup instead of oil. "It is a legal
cartel that was put in place. It's a marketing board, but
it has become much more. With the sales agency they
are, at the same time, the producers, the sellers, the
buyers. It's a total control of the market, from A to Z."
A federation spokesman did not respond to requests
for an interview for this article, but the organization's
website provides the rationale for its "collective
marketing" system. "The measures that were
implemented have ensured that the highest number of
companies remain in business, that profits are
maximized and that the industry minimized its need
for government assistance," it says. The previous
"free-market structure" had driven down revenue for
producers, forced some out of business and
"undermined the vitality of rural municipalities of
Quebec."
Benoit Girouard, president of the Union paysanne, a
farmers' union created to challenge the province's
main agricultural union, said Quebec's attempt to
tightly control syrup sales is backfiring. American
producers can undercut Quebec's prices, which are set
artificially, instead of by market forces, and include the
cost of the extra regulatory bureaucracy. The province
is seeing its share of world syrup production slowly
decrease, slipping to 76% of global production in 2012
from above 80% 10 years earlier.
Mr. Girouard said New York State is rapidly expanding
production and could threaten Quebec's dominance of
the market. "Businessmen can see an opportunity, and
they have realized that in Quebec, maple syrup is
going to stagnate because of the system that has been
implemented," he said. "For supply management to
work, there have to be closed borders," he said, but
with syrup, it's a free market everywhere but in
Quebec. A 2012 study by the Régie des marchés
agricoles et alimentaires noted that American
competition "is an important preoccupation for the
Quebec maple industry."
Mr. Girouard likened the syrup restrictions in Quebec
to Prohibition, and said it was to be expected that a
black market would emerge. Mr. Mercier agreed. "The
more coercive a system is, the more restrictive it is,
the more harshly people are suppressed, the more you
are going to stimulate resistance or, quote-unquote,
illegality," he said. "I think that is what has happened."
If anyone fits the profile of someone pushed to the
limit by the federation, it is Étienne St-Pierre, the
owner of S.K. Export Inc. in Kedgwick, N.B. He has
repeatedly bought syrup from Quebec without going
through the federation, arguing that its rules do not
apply to his operation across the provincial border.
One of his suppliers is Mr. Val-lières, and last
September the Sûreté du Québec arrived at S.K. Export
with a warrant. They cleared out Mr. St-Pierre's syrup
stocks for forensic analysis and seized his equipment;
the company put the total value of material hauled
away at more than $1-millon. In December, he was the
lone buyer charged when the police announced their
arrests. Mr. St-Pierre said he has been advised by his
lawyer not to speak to the media, but he allowed
himself one dig at Quebec's claim that it has
jurisdiction over his dealings in New Brunswick. "They
don't have control everywhere in the world," he said.
"That is what they would like." The general manager of
S.K. Export, Julienne Bossé was more outspoken,
referring to the syrup regulators as a mafia.
"The complete monopoly is not normal. It has a good
side, but they abuse their powers," she said. "We're not
in Russia. It's practically like a dictatorship."
She said the 2012 syrup purchase from Mr. Vallières
was no different than in previous years. "He did not
sell us more syrup this year than any other year," she
said. "He did not arrive with a surplus. If he had, we
might have been suspicious." She accused the
federation of using the theft as a pretext to send in the
Sûreté du Québec and seize their syrup. "The
federation has been harassing us for years and years,"
she said.
In Vermont, Maple Grove issued a statement last week
denying any knowledge that it had purchased stolen
syrup. It bought the syrup "in good faith with no
reason to believe that it was coming from Quebec or
that it may have been stolen," the company said.
But the federation is not buying that, and it is playing
hardball, seeking to have the company struck from the
list of approved buyers. Maple Grove should have
known "Richard Vallières is notorious in the milieu as
an illegal buyer of maple syrup," the federation states
in its request to the Régie, adding that the price
charged Maple Grove was "well below" the minimum
set by the provincial sales agency. "Such an incident
constitutes a major breach of trust."
ghamilton@nationalpost.com @grayhamilton
DOCID: 161535361
PUBLICATION: National Post
PAGE: A6
DATE: 2013.02.16
SECTION: Canada
EDITION: National
BYLINE: Graeme Hamilton
SOURCE: National Post
ILLUSTRATION: S.K. Export / Étienne St-Pierre, left, and
Julienne Boss-Desrosiers, right, operate S.K. Exports in
New Brunswick.; Wayne Cuddington, Postmedia News /
Quebec is seeing its share of world syrup production
decrease, slipping to 76% of global production in 2012
from above 80% 10 years earlier. American producers
undercut their prices.;
COLUMN: Graeme Hamilton
DATELINE: MONTREAL
WORD COUNT: 1606
Maple syrup cartel; Quebec's syrup monopoly helped
spawn smuggling, Prohibition style
During the spring and summer of 2012, a procession
of syrup-filled trucks from Quebec arrived at Maple
Grove Farms in St. Johnsbury, Vermont. There was
nothing seemingly unusual about that, considering
that Maple Grove is the largest packer of pure maple
syrup in the United States, selling to retail giants such
as Wal-Mart and Safeway - and considering that nearly
80% of the world's maple syrup supply comes from
Quebec.
But on July 30, when the Federation of Quebec Maple
Syrup Producers stumbled upon a massive theft from
its warehouse in Saint-Louis-de-Blandford, Que., the
deliveries took on a new significance. In newly released
documents filed before a Quebec administrative
tribunal, the federation alleges that hundreds of
thousands of pounds of the Maple Grove syrup - the
equivalent of 12 tractor-trailers full - was illicit and
possibly stolen.
The man who sold the syrup, Richard Vallières, was
arrested in December and charged with conspiracy,
theft, receiving stolen goods and fraud in connection
with the Saint-Louis-de-Blandford heist. He has been
described as the alleged ringleader of a theft that
made headlines around the world, making off with six
million pounds of syrup worth an estimated
$18million. His father, Raymond, who is also involved
in the syrup industry, has been charged, as has Sté-
phane Darveau, who sells syrup-making equipment.
News that millions of dollars worth of maple syrup had
been stolen from a Quebec warehouse prompted
amazement and the odd wisecrack. How could the
thieves have escaped detection as they drained six
million pounds of syrup from Quebec's "global
strategic maple syrup reserve"? How does anyone even
unload that much black-market syrup? And, Quebec
actually has a global strategic syrup reserve? The
provincial police threw everything at the investigation,
interviewing nearly 300 people connected to the
industry and executing search warrants in New
Brunswick, Ontario and the northern United States. In
mid-December, they announced a series of arrests,
including that of Mr. Vallières, and posted wanted
notices for seven other suspects. Today, 23 people
have been charged and are facing trial in Trois-
Rivières; another suspect is still being sought.
Beyond the jokes about sticky-fingered thieves, the
crime has exposed a simmering war in the woods over
syrup production and sales. And it has shed light on
an unexpected accomplice in the growing illicit syrup
trade: The province's enforcement of a syrup cartel
that has, since it was instituted a decade ago, helped
spawn Prohibition-style smuggling and illegal sales.
Since the Federation of Quebec Maple Syrup Producers
tightened its supply-management system, introducing
quotas and a single sales agency in 2002, a thriving
black market has developed. The theft from the
strategic reserve was certainly the most brazen assault
on the federation's strict control of the industry, but it
was far from the first one.
Supply management was implemented in the name of
ensuring producers were getting a "fair" price for their
product, and over the past decade prices for the now-
controlled product have predictably and steadily
climbed. Producers who exceed their quotas must
transfer the excess into the strategic reserve, which is
intended to cushion the effect of a bad season.
But for many, the federation's zealous oversight goes
too far. Cases before the Régie des mar-chés agricoles
et alimentaires, the administrative tribunal that
enforces the law governing the maple-syrup industry,
give an indication of tactics used by the federation to
enforce its cartel. Inspectors use aliases to stage
phoney illegal syrup deals to ensnare bootleggers, just
like undercover police conducting drug stings. And the
Régie can order producers to provide utility bills and
bank statements if they are suspected of selling their
syrup outside the approved market.
Mr. Vallières has a history of run-ins with the
federation, and in 2007 he was fined $1.8-million
after the Régie determined he had bypassed the
official sales agency to purchase 1.5 million pounds of
syrup. He had tried to get around the rules by buying
the syrup in four-litre containers, which producers are
allowed to sell directly to consumers, and then
transferring the product to barrels for wholesale
distribution.
Hans Mercier practises law in Saint-Georges in the
heart of Quebec's Beauce region, an area known for its
plentiful maple sugar stands. It is also a region "where
free enterprise is practically a way of life," Mr. Mercier
noted, "and this kind of over-regulated industry does
not fit well." He devotes a large part of his practice to
defending maple-syrup producers against the
federation, and currently has about 20 producers as
clients.
"Because it is a system that is hyper-regulated, hyper-
controlled, with no competition, the authorities can do
more or less what they want," Mr. Mercier said in an
interview. "Often they don't use kid gloves, which really
irritates the producers. They feel more like they're
dealing with a police force than a union representing
them."
He said the federation is the Quebec equivalent of
OPEC, dealing in syrup instead of oil. "It is a legal
cartel that was put in place. It's a marketing board, but
it has become much more. With the sales agency they
are, at the same time, the producers, the sellers, the
buyers. It's a total control of the market, from A to Z."
A federation spokesman did not respond to requests
for an interview for this article, but the organization's
website provides the rationale for its "collective
marketing" system. "The measures that were
implemented have ensured that the highest number of
companies remain in business, that profits are
maximized and that the industry minimized its need
for government assistance," it says. The previous
"free-market structure" had driven down revenue for
producers, forced some out of business and
"undermined the vitality of rural municipalities of
Quebec."
Benoit Girouard, president of the Union paysanne, a
farmers' union created to challenge the province's
main agricultural union, said Quebec's attempt to
tightly control syrup sales is backfiring. American
producers can undercut Quebec's prices, which are set
artificially, instead of by market forces, and include the
cost of the extra regulatory bureaucracy. The province
is seeing its share of world syrup production slowly
decrease, slipping to 76% of global production in 2012
from above 80% 10 years earlier.
Mr. Girouard said New York State is rapidly expanding
production and could threaten Quebec's dominance of
the market. "Businessmen can see an opportunity, and
they have realized that in Quebec, maple syrup is
going to stagnate because of the system that has been
implemented," he said. "For supply management to
work, there have to be closed borders," he said, but
with syrup, it's a free market everywhere but in
Quebec. A 2012 study by the Régie des marchés
agricoles et alimentaires noted that American
competition "is an important preoccupation for the
Quebec maple industry."
Mr. Girouard likened the syrup restrictions in Quebec
to Prohibition, and said it was to be expected that a
black market would emerge. Mr. Mercier agreed. "The
more coercive a system is, the more restrictive it is,
the more harshly people are suppressed, the more you
are going to stimulate resistance or, quote-unquote,
illegality," he said. "I think that is what has happened."
If anyone fits the profile of someone pushed to the
limit by the federation, it is Étienne St-Pierre, the
owner of S.K. Export Inc. in Kedgwick, N.B. He has
repeatedly bought syrup from Quebec without going
through the federation, arguing that its rules do not
apply to his operation across the provincial border.
One of his suppliers is Mr. Val-lières, and last
September the Sûreté du Québec arrived at S.K. Export
with a warrant. They cleared out Mr. St-Pierre's syrup
stocks for forensic analysis and seized his equipment;
the company put the total value of material hauled
away at more than $1-millon. In December, he was the
lone buyer charged when the police announced their
arrests. Mr. St-Pierre said he has been advised by his
lawyer not to speak to the media, but he allowed
himself one dig at Quebec's claim that it has
jurisdiction over his dealings in New Brunswick. "They
don't have control everywhere in the world," he said.
"That is what they would like." The general manager of
S.K. Export, Julienne Bossé was more outspoken,
referring to the syrup regulators as a mafia.
"The complete monopoly is not normal. It has a good
side, but they abuse their powers," she said. "We're not
in Russia. It's practically like a dictatorship."
She said the 2012 syrup purchase from Mr. Vallières
was no different than in previous years. "He did not
sell us more syrup this year than any other year," she
said. "He did not arrive with a surplus. If he had, we
might have been suspicious." She accused the
federation of using the theft as a pretext to send in the
Sûreté du Québec and seize their syrup. "The
federation has been harassing us for years and years,"
she said.
In Vermont, Maple Grove issued a statement last week
denying any knowledge that it had purchased stolen
syrup. It bought the syrup "in good faith with no
reason to believe that it was coming from Quebec or
that it may have been stolen," the company said.
But the federation is not buying that, and it is playing
hardball, seeking to have the company struck from the
list of approved buyers. Maple Grove should have
known "Richard Vallières is notorious in the milieu as
an illegal buyer of maple syrup," the federation states
in its request to the Régie, adding that the price
charged Maple Grove was "well below" the minimum
set by the provincial sales agency. "Such an incident
constitutes a major breach of trust."
ghamilton@nationalpost.com @grayhamilton
Comment