National Maple Market Development and Policy.
I'm excited to give this presentation.
There's been a lot of activity that I've been involved
in over the past, let me say, 12 to 15 months.
And there are definitely people I think,
on this meeting tonight, and certainly people
at the different organizations that have maybe been active
in these conversations for a lot longer than I have.
So I'm gonna basically share with you the efforts
that I'm involved in right now through a working group
with the International Maple Syrup Institute
and how it connects to this bigger opportunity slash
question about a national Maple Market Development Program,
and just the different policy implications
that are out there as it relates to maple and promotion.
You folks have probably seen this website before.
Definitely wanna make people aware of that.
That's where all the registrations are
and we've been adding resources.
I know that Mark Isselhardt has a number
of maple sugarbush videos that should be going on to YouTube
in the next couple of days, if they're not there already.
And I think there'll be some links either
on this maplemanager.org site
or through the UVM extension Maple website.
Okay, tonight's the 14th.
We got a couple more sessions next week.
I'll do a presentation
on Maple Financial Planning and Profitability,
and then we're gonna have a week gap
on Wednesday, October 5th.
Chris Lindgren is gonna give a presentation
on SAP business models for those that are just producing SAP
and then transferring the SAP to another maple business.
And overview of what's coming on tonight,
it's not gonna pop up.
Here's the outlook for the next hour.
I'm gonna give a little bit of maple marketing history,
very little, but just put some things in historical context.
Also, give a little overview of a couple
of the agricultural policy laws that relate
to this topic area of market development.
Quick look at current market research projects
that have become available to the public.
And then at that point, I'm really gonna transition,
and talk about this process that I've been involved in
with the International Maple Syrup Institute,
an active sustainable funding committee
looking at market development.
And that'll lead us into a little bit more information
on different governance frameworks
for this concept of collective marketing.
And it can be a couple different formats.
I'll just say that by no means is this presentation meant
to decide or advocate for a particular action.
I've talked to a lot of maple producers,
on and off and producer associations,
and this is a theme that's coming up.
People are asking this question of,
"Could there be some collective
Maple Market Development Programs?
How would that happen?
What would it look like?"
And so this presentation is intended really
to get some awareness up,
some of the different features and the concepts,
and hopefully get a little discussion going,
hopefully by 7:45, 7:50, we can open up the mic
and get people's feedback on it.
Okay, so just a tradition of promotion.
Certainly maple has been an iconic product,
in different ways over the past couple centuries.
And I'm gonna be speaking predominantly
from a US perspective.
Definitely back in the 1800s
when maple syrup reached its highest level of production
in the US it was definitely considered more
of a utility product,
not quite the specialty product it is today.
For those of you that have looked
at any of the statistics,
you'll know that US maple production peaked somewhere
in the 1860s to the 1890s.
I found this fact that it's estimated based on population
at the time that the US per capita consumption
was around 28 ounces during those periods.
So that's just shy of two pounds per person or per capita.
A couple quotes I think are really interesting,
and some of you have seen these in the maple history books,
especially around the World War, I'm sorry, Civil War era.
There was a connection, kind of a patriotic theme
about keeping to domestic sweeteners.
So there's this quote, "Make your own sugar
and send not to the Indies for it.
Feast not on the toil, pain, and misery of the wretched."
I don't really want to get into a conversation
on slavery, but I do wanna make a note
that when we start talking about an industry
and promotion, communication and efforts like this are in
that world of driving consumption, driving markets
toward a particular group of products.
An unfortunate time in global history here
and it was directing people back towards maple.
This other quote I'm always fascinated by,
"Open Kettle Maple Syrup," and that comes
from a UVM extension experiment station report in 1905.
And there's context on that, and the report from the writer,
and the context is that basically even at that point
in 1905, there were producers that wanted to make a claim
to consumers about this nostalgic nature
of Open Kettle Maple Syrup.
I'm not exactly sure the era of when flat pans
or different flue pans came into use,
but I'm pretty sure from my recollection
that it was related to that.
And just to say that if any of you or you're involved
or you've seen the promotions for woodfired maple syrup
or non-RO maple syrup, nothing wrong with the claim,
just it's not a new thing for people to be making claims,
and maybe in this case, this was an idea really pulling back
to a traditional mindset.
Moving even back to open kettles compared
to what maybe the new fangled technology was of the day.
So these claims are not new.
There's always modern technology
and there's maybe a prior way of doing it.
I just wanna emphasize that as we move from the 1860s
and 1890s at peak production in the US,
we really saw a massive drop in maple syrup production,
historically maple sugar, maple syrup.
And at this point, I'd say we really are in this transition
or continuing into be in this transition
towards a luxury specialty product,
which is different dynamic than it was a hundred years ago,
which has implications to consumers and market development.
I'd like to make a mention on grading and standards.
I think often we talk about promotion,
people often shift towards marketing claims,
and features and advertisement.
I just wanna emphasize,
and this will relate to the USDA programs,
we'll talk about in a bit, you know, the relevance
of standard and grading in the concept of promotion.
Standards and grading, definitely, you know,
they support information flow
and they improve that efficiency
so people know what they're gonna get.
So if I can read the definition a little bit more
from the USDA, standards and grading offer a means
to evaluate level of quality and value.
They improve information flow
and they improve efficiency of transactions.
Many of you recognize the recent history shifting
from the historic maple grading system
to the more modern grades.
Well, the 2015 standards that have been established
and the shifting from the grade A
and the grade B to now, our grade A is
from golden down to very dark.
So I just wanna try to grab that concept.
We're talking about everything from marketing claims
and features of a product, the process of how it's made,
whether it's open kettles or a steam fire evaporator.
But then also these ideas of standards
and grades certainly relate to this idea
of communicating to consumers
and facilitating the flow of product
through the marketplace.
Taking a look back at US food policy that's relevant here,
2000, I'm sorry, 1902, False Branding and Marketing Act,
was an early phase law that was trying to remedy this issue
of false origin.
False claims of where something was coming from,
and if you go back into the history,
there were issues about state claims
of different, you know, sources of potatoes
and where they were coming from, trying to clean that up.
That led to the 1906 Federal Food and Drugs Act,
embodied some of the 1902 rules,
and then it definitely went a level farther
and started to specifically call out the prohibition
of interstate commerce for adulterated foods.
And I'll put economic adulterated foods.
Maple is definitely in the history
and related to the evolution of this law,
the concept of cutting maple syrup
with cheaper sucrose, cheaper sugar options.
It could be, I guess, less easy to identify.
So the concept of economic adulteration,
not to say contaminate something,
but to do something to change the cost of the good
and potentially still chase a premium in the marketplace.
And then these drugs have certainly been adapted
and evolved and the 1938, Federal Food Drug and Cosmetic Act
continued to build upon these rules.
So I just wanna, I wanted to point out origin
and adulteration and certainly and maple being relevant
to these historic national policy laws.
Then we get to 1922, the Capper-Volsted Act.
This is relevant for our conversation
on collective marketing.
So in 1922, this act was passed
and it gave agricultural producers
and their associations basically the ability
to act together and it gave them this exemption,
or limited exemption, from what we consider antitrust rules.
That meaning that producers could get together
and discuss things about the marketplace,
discuss things about price and not fall foul of the law.
So the '22 Capper-Volstead Act
does something really important for agricultural producers
in saying, "Yes, you can work together,
individual producers can band together in associations
and multiple associations can band together,
and it won't be considered collusion if you work together
to discuss the dynamics of marketing, expansion,
even production and pricing."
Another feature of the Volstead Act is this concept
of consumer protection.
It's a little vague, and I'm not an ag policy expert
just yet, but there is clauses, there are clauses,
that protect consumers from undue price enhancements
that result from monopoly positions.
So it's, I think, subjective the way I understand it.
But I'm sure there's laws or court cases historically
that have looked at when producer groups have actually been
in the right in saying they're discussing pricing
and supply, and when that potentially those decisions
could cause undue stress on consumers.
And there is a line there that could be crossed,
that could say maybe they've gone too far.
Another historical marketing agreement,
1937 Agricultural Marketing Agreement Act.
This is gonna be relevant.
This is basically the formative law
that will lead us to maybe 15 minutes from now
when I start talking
about the agricultural marketing service programs
we've been looking at.
In 1937, this act provided the authority
for federal marketing orders and marketing agreements.
So at the time, this is New Deal era,
and at the time coming off of
or within the depression period,
there was a situation of large agricultural surpluses
in the United States, also declining foreign markets
and kind of a whole host of pricing
and distribution problems and this was put into the toolbox
as a mechanism for industries to be able to,
agricultural industries, to be able to,
enact these agreements, to do something like
what the Capper-Volstead Act said.
Basically to work together and to strategize
on the dynamics of supply demand, price
and a few other things, we'll get into today.
It's a pretty quick walk down memory lane there.
So leading from that history in the early 1900s
into 2000, 2022 today,
but in 2021, the International Maple Syrup Institute
established a sustainable funding committee.
So what were the goals?
What were the goals of this committee?
To investigate frameworks for funding the promotion
and marketing of primarily pure maple syrup?
The committee based on producers and industry leaders
in manufacturing, packaging and distribution wanted
to advance the investigation of this concept
of a self-funded mechanism, meaning that the funding is
coming from the producers themselves.
I'll leave that there.
So a self-funded mechanism.
I just wanna note the committee
as we've got some members here.
I was asked, I was invited to join the committee.
We've got some on the call tonight,
at least six states in case I've missed somebody.
We've got producers, we've got syrup buyers,
maple distributors and equipment dealers
discussing this concept.
And as I said earlier, this presentation
and hopefully discussion's a lot
about awareness and dialogue.
In this group alone, we've had
so many opinions, great ideas, great input and contention
on this concept of collective marketing
within the United States.
By no means is it a foregone conclusion
about how it will happen, but the one thing
that I think sticks everyone on this committee together
is the belief that this is worth investigating,
this is worth exploring.
Is there a mechanism that we can enhance our market presence
in the maple community or for the maple community?
So what are the rationale of this committee in general?
Advances in technology, expansion of maple taps
in the US and Canada, an increase in annual maple crops.
This is the reality, and you can all see that
from the statistics and you know that probably
from your business and your peers.
We've got more maple syrup out there generally,
and we continue to hit record crops.
There's a desire to ensure market development
and market expansion occur at pace with the increase
in maple syrup supply.
We can all look at other agricultural specialty crops
and commodities in Vermont.
We're very keen on looking at the dairy industry
and we're very attuned to what the concept
of oversupply means for pricing
and what price volatility means for producer livelihood.
So this committee and this charge is definitely based
on this concept of, we need to be active as
an industry looking at market development,
especially if production and volume is going to increase.
And we recognize the balance of demand
in pricing this whole concept that market development
and promoting demand potentially has impact
to either elevate prices or at least stabilize prices
or prevent pricing shocks.
So looking at the US maple situation a little bit more.
We know that the United States is the largest market
for maple syrup globally.
The majority of the syrup on the globe is produced
in Quebec and a good deal of that is imported.
Exported from Quebec imported into the United States,
roughly 60/40 Canada US syrup makes up
the US domestic supply and I think that number has
been coming closer to 50/50.
So it may be something like 55% Canadian syrup
to 45% American syrup that makes up the US consumption.
So we know we have an increasing supply domestically
as the US production grows and there's also the recognition
of the PPAQ, the producer,
Quebec Maple Producers Association,
that they have been operating
with an evolving market management system
that's included promotional efforts.
We've also have learned, some of you may know directly,
I hear through the grapevine that the PPAQ
has been investing generic promotion
into the United States to prop up this market development
and there's serious considerations
about how those priorities from the PPAQ potentially
will shift or have been shifting
as international, other global markets potentially
show growth opportunity as well.
I've got a question from Nick.
"Is there a strong difference in US consumption
by state or relatively equal?"
You know, and in a couple of minutes, Nick,
I'm gonna pull up some new market research
that's been available.
I won't be able to answer that question.
I'm gonna say just off the cuff here,
from talking to people leaders in the maple industry,
I'd say there is definitely strong consumption
in the traditional maple-producing regions
of New England and the northern Midwest.
We can expect higher consumption rates.
I gotta see if the market research would bear that out.
I think there's also a collective understanding
that there's huge opportunities
and priorities about expanding demand
in the non-maple producing region.
So the other states of the United States
and the southeast and southwest and far west.
An intentional, an awareness to be intentional
about getting product into those marketplaces,
especially in some of the local regions here
where people are really experiencing strong competition
in the marketplace trying to sell syrup locally.
I wanna look over on the right-hand side, another rationale
for considering these options of market development.
2020 report out of Quebec looked at per capita consumption.
This is in kilograms, so I'm not gonna do conversions.
The all Canada per capita maple syrup consumption, 2020
was 0.62 kilograms.
Look at the US, all US per capita consumption estimate
at 0.16 kilograms per capita.
And then look at the Quebec per capita consumption.
1.4 kilograms per capita in Quebec in 2020.
I don't have the honey stat up here.
I may reference honey as the presentation goes on.
Honey is, you know, I would say a direct substitute
in the sense that it's a premium specialty sweetener more
on the natural lightly processed side
that maple definitely competes with.
And I can't tell you the number,
but that report's got the honey consumption
and it's definitely higher.
Oh, thanks Arnie.
35 ounces in a kilogram.
So point of reference there, if it's 35 ounces in a kilogram
and the US consumption right now is 0.16 kilograms,
I think that earlier 1860 stat had us
at somewhere around 28 ounces of per capita consumption
in the US.
So, how do I say this?
I don't know if we can say that maple markets
are falling apart at all, and we don't wanna say that,
but when you look at a chart like this and you say,
"Huh, what would happen
if the all US per capita maple consumption quadrupled
to get to the all Canada number around a little,
around a half a kilogram?
What would that mean for prices?
What would that mean for maple syrup movement?"
These are the questions
that I think this project is trying to get at.
There we go.
Okay, Nick hit us right?
Looks like the honey consumption could be
at 1.8 pounds per person and US maple syrup consumption
still almost 1/4 of a pound, 0.25 pounds per person compared
to honey at 1.8.
So the you know, the question is, well what are we doing?
We seem to be moving our annual crop here,
but are we actually moving the market in the direction
that our competitors are moving the market?
Whether it's competitors moving syrup in other locales
or if it's a competing product like honey
and they could potentially be
on a positive growth trajectory for per capita consumption.
So more numbers from that Canadian report,
Canada consumption up 42% from 2016,
2016 to 2020 up 42% growth.
United States up 18%, that's not a bad number,
positive 18% growth is good.
But again, the head scratcher,
why is Canadian consumption up 42 and why are we only up 18?
Are are we leaving something on the table there?
And I mentioned this earlier, I do think there's a lot
of recognition that US growth outlook could be very strong
as we move out of non-maple producing regions.
That's not to mean it's a slam dunk.
There's a lot of cultural distinctions
and sweetener preferences, but I do think
there's a kind of a bullish mentality
that if we can get this product in those other regions,
we could definitely see some more growth.
The question came up about consumption in other states,
and I would say this is the place to go.
I can't click in there while I'm presenting,
but specifically the second bullet there, the maple maps,
this is available I think if you Google,
maybe before we end, I'll try to find it
and put it in the chat or if anyone's double tasking
and can type in maplemaps.gitlab.
I think that's the server or one of the addresses.
This came out of the University of Southern Maine
in cooperation with the Atlantic Corporation,
kind of a very interactive mapping option.
And there's a number of different things
on preferences and consumption.
Good, it's popping up in the chat.
So this would be, to answer that earlier question
about state consumption,
I don't know if we'll see it in per capita
or if we'll see it maybe in dollar value purchases.
So I'd encourage maybe someone to check that out.
So we've got that Maple Maps and that link popped up.
The other one that came up definitely
over a year and a half ago,
the Vermont Maple Data Dashboard.
Another interactive one based on research,
again with the Atlantic Corp
and the Vermont Agency of Agriculture,
looking at different consumer preferences
and starting to disentangle like where are the features?
What's the packaging?
Where's are the sales of maple coming from?
I don't have a site, and I don't know if it's published yet,
but I just wanna reference
the New York State Maple Producer Association.
Helen Thomas has been recently presenting
on consumer demand research
and results that they've been developing.
They're midway through a project
and the one thing that I heard from looking at one
of the presentation notes was,
what they're finding is there's a lot of, there's
some people that are committed to syrup,
and if I say this right,
there's a number of consumers out there
that actually aren't able
to accurately identify pure maple syrup
as something different from
what we'll call the corn syrup-based table syrups
like the Log Cabins.
So really important research there that indicates
that yes, there are some really loyal maple supporters,
but there could be a large portion of the population
that really does not get it yet.
They have not got the educational messaging
about pure maple syrup and they're not able
to identify those pure products compared to some
of the other options within the grocery store.
So this market research is popping up
and I just wanna make sure that people are aware of it.
The rest of this session really we're gonna shift
into this concept of, well,
what would a collective marketing promotion look like?
I think if you're a business owner,
these options are really gonna help you fine tune your
specific based business strategy,
but these also provide the information
that could inform a collective strategy from broader groups.
So it's exciting to see that information coming out
and I know there'll be more results being shared.
So this concept of collective promotion,
the idea of multiple agricultural producers working
on a market development together.
Definition, generic promotion.
I think it's really difficult to use the word generic
when we're talking about maple syrup.
I've talked to a few people
and they cringe at the idea,
but I think it's important to emphasize,
when we say generic promotion,
we're really talking about not this private
or branded product promotion or product advertisements,
but this idea of raising consumer and buyer awareness
for a group of products.
In this case, pure maple syrup
or a key ingredient to benefit market development
for the entirety of the participants in the sector.
And I think that's key.
We're trying to raise awareness about a group of products,
not a particular branded product.
And we're trying to raise that awareness
for the benefit of all the participants,
meaning all the producers.
So collective group puts information out there
about pure maple syrup,
consumers understand pure maple syrup
and however they get back, they get back
to a purchase moment, back to the private brands.
But we're not talking about the private brand.
Another definition I think is important
and our committee, I think sometimes forgets
to check ourselves with what we're talking about,
the idea of demand here.
So demand economically, the desire to own
or consume something.
So the goal in the context of collective market development
would be to increase demand over time, to maintain price
or potentially apply reasonable upward pressure on price
that could sustain or enhance producer purchasing power.
This was the issue in the 1920s and '30s
from some of those old agricultural acts that I mentioned.
Producer purchasing power was in decline
because there was a surplus and prices dropped,
which meant there wasn't enough money moving
into the producer's pockets to enable them
to run their business
and, you know, keep the rural economies uplifted.
So the idea of demand is the idea of getting that desire
to own or consume something up,
and I wanna emphasize over time.
And then I'm gonna flip the next definition,
so demand is increased over time.
That is different than sales here.
We're not talking about actual sales
during a specific period of time.
So the concept of sale is the transaction, right?
The transaction of a good
and the exchange for a dollar here.
This is not talking about how to get the participant
on this webinar to sell out this year.
That's great.
You know, we want that to happen.
This is about building the demand over time
so that the marketplace is expanding.
And here's the dilemma.
If Arnie, I'm gonna pick on Arnie.
If Arnie sells out this year, that's great.
That hasn't grown the market.
Arnie's outta syrup, he can't sell anymore.
So the idea of building demand is saying,
we don't want people to sell out and say,
"Well we can't supply anymore, we're sold out."
It's the idea that you want that demand to be building
and building and building as the production
and supply builds as well.
So we're trying to grow the market.
We're not trying to empty the warehouse and be done.
We're trying to build them to over time.
Another definition that's worth mentioning here,
advertisement communication to persuade
or motivate consumers to purchase now, right?
We're not talking about advertising in these programs.
We're talking again about generic promotion.
How do we lift up demand that's gonna benefit the entirety
of the participants in the sector?
Not a particular company, not a particular label.
Yeah, "Got milk," Darren.
"Got milk's" an example,
and I'm gonna give you a couple more industries
in a second here of agricultural sectors
that have moved forward.
So our group got together, we had this rationale, right?
We've been having these meetings
and then we're talking about,
well, what do we see out there?
So what are the other sectors doing in the United States?
I got three buckets here.
We've got a group of crops that we've investigated
that are working within the USDA market orders
or research and promotion program framework, on the left.
In the middle we've got some cooperatives,
and on the right we've got this one unique model.
So I'm just gonna mention these
and when we get to discussion,
we maybe could pick at a few of these more.
But we did look at honey, we looked at beef,
we looked at pecans.
Pecans, one of the newer USDA market orders.
Christmas trees is another newer USDA,
I'm pretty sure it's a market order
and I gotta check to see if it's not,
it's a research and promotion program.
Hazelnuts has a market order.
In the US right now there's at least 22 research
and promotion programs.
It's a certain type of program area
and there's 28 market orders
and they each have some different features.
So we looked at these things
and we thought, well these are the industries
that are doing this.
Going to the middle, cooperatives right?
Capper-Volstead Act, whatever that year was in the 1920s,
said, "Hey, you all can get together
and you can talk about pricing and you can talk about supply
as long as it doesn't cause any undue pain on consumers."
In the US the dairy industry is very, you know,
very established with cooperatives.
A couple other ones.
Cranberry, Ocean Spray, one of the largest cooperatives
in the United States.
Almonds, what's...
I think it's Blue Diamond is one
of the leading cooperatives, almonds and nuts.
There's a number of cooperatives also that I think are,
that I'll mention that are merged.
A lot of like commodity crop and services cooperatives
that are agriculturally related,
but they're not particularly just
to selling the agricultural products.
Feed seed type cooperatives as well as equipment
and supplies.
Something I wanna note on cooperatives,
it's another way to structure collective activity.
There are buyer's cooperatives.
There are cooperatives that form
by basically harnessing the buying power of a group
of people to bring in inputs.
It could be a consumer cooperative that buys in bulk
and then the buyers can then access that discount.
Industries also do this as well.
They create buyer's cooperatives so they can get discount
on heavily used items, let's say like fuel and utilities.
The opposite would be a seller cooperative where groups
of people are putting in product
and becoming co-owners of this business entity,
and then collectively branding, marketing, distributing,
inventorying product that moves out theoretically
under probably a unified brand.
So there's just two dimensions there to cooperatives.
I think primarily we're sort of shifting
towards this concept of seller cooperative
with market development.
But I don't want maple producers to miss out this detail
of a buyer cooperative could potentially be a great source
to procure inputs or services in a reduced fashion.
And I know that some of the producer associations function
in a way, like maybe you get discounts
on insurance through your producer association,
not necessarily cooperative,
but the same idea of leveraging your group.
Over on the right there was this one unique model,
this seafood quality program
through the National Oceanic Atmospheric Administration,
if I've got that right, NOAA, a very different look,
but this is an example of a industry
that's working with a federal agency
and they're facilitating markets and trade
by supporting quality standards and all the details
that allow seafood producers to label and trade
and possibly export their product
and it's a fee-based program.
So in some sort of collaboration
with the US government, they found a way
to establish a service of value and a fee structure
so that people could subscribe as members
and then receive these services
to help them actually enhance their marketing capacity.
Okay, so these are the ones we looked at here,
and now I'm gonna flip, I think to some of the features
of the USDA programs.
Oh, important to mention here, yes, there's a huge amount
of cooperatives, dairy, almonds and all that.
A lot of those cooperatives nationally still flow
into USDA agricultural marketing service market orders
or research promotion programs.
So they're not explicit and you just have a cooperative
and that's it.
Cooperative is definitely a private entity,
a private mechanism to collectively mobilize a group
of people.
But in this case, a lot of these sectors still flow
into these federal programs.
Okay, so I mentioned the private cooperatives.
I think our group has been very mindful
that we may have some suspicion or some disinterest
in working, quote, "with a government program."
So we did wanna look at the private cooperatives
as an option.
Voluntary programs, historically there have been a lot
more voluntary programs.
What we've learned from talking to agencies regional
and federal, is that a number of the voluntary programs
have actually either dismantled
or they've converted into mandatory programs
at the federal level.
Generally because of the free-rider issue,
there were checkoff programs regionally
that potentially were successful at one point in time,
but they've just had so much trouble being
that they're voluntary and had so many participants in
that sector not actually opt in and not make contributions,
that the programs failed more or less.
So they said it's very rare to see a successful
and viable voluntary collective program.
Which leads us to this third bullet there,
the USDA, Ag Marketing Service,
the Governed Agreements and Orders.
So I'm gonna dig into those a little bit more
and talk about the features.
On the right here. great picture.
Some of us were at the IMSI annual meeting
in Essex Junction, Vermont this June,
and one of the representatives
from the PPAQ and Quebec showed us some examples
of some of their generic promotions.
If I understand this, I think these are maybe sample boxes
that are possibly going overseas
and maybe going to key people like chefs
or cooking schools.
This is a great example of generic promotion, right?
This is not a branded product, this is not a sale,
this is not leading anyone to a particular company.
This is promoting pure maple syrup from Canada
and they've got some features there.
"One ingredient, one delicious flavor."
And they're moving the awareness forward in that way
with the assumption that enough activity
could then draw people to make their purchasing transaction.
So a nice example of some of more recent PPAQ campaigns,
I think that's active.
So I wanna dig into this idea of market orders and research
and promotion programs help people become aware
of what they look like and how they're structured.
So participation, they're mandatory programs, right?
The idea is these are not voluntary programs
with people deciding if they're in and out.
These are programs that when they're established,
they're mandatory for those
that will say are, quote, "covered"
and there are exemptions.
So the build out of any program would specifically identify
who would be exempt, and I'll talk about that in a second.
But mandatory, binding programs, once they're established,
if they're established.
They have a specified geographic coverage.
It can be broad, being national,
or it could be specific like the hazelnut market order
is all of Oregon and I think a couple
of counties are regions in the state of Washington
that embody the bulk of the US hazelnut production,
that's under market order.
But they draw the line and they can cross state lines
and they can cut states in half if they need to.
Other main feature that an assessment is collected.
I think from our experience looking
at these different industries, you're looking
at roughly 1 to 3% of the value of the product
at the wholesale level
or whatever their initial transaction is.
So an example of the PPAQ, the portion of their assessments
that are specifically for marketing and promotion,
I think, we're thinking six and a half
or maybe 7 cents on a pound of syrup, Canadian,
is what the assessment is in Quebec right now.
They have a number of other assessments as well
and we looked at that for honey and potatoes,
Christmas trees and things like that
and you know, 1 to 5 percentage and definitely closer,
probably 1 to 3% of the value
of the product could be the assessment.
An example would be Christmas trees, you know,
could be $15 a tree, the beef checked for a while
I think it was a certain dollar per head.
Okay, what's the activity of the program?
Ideally generic promotion, like we've discussed,
research and development, definitely people looking
at different varieties, genomics, especially say
in the apple or in hazelnuts.
They're looking at resistance, in stock protection,
things like that.
Quality regulations in standards, as we mentioned.
Those can be encompassed into a governing framework
to establish uniform standards.
Maple certainly has those standards now.
Not every industry had them historically.
Quantity regulation is an option,
particularly in the market orders.
The market orders do allow for measurement
and a determination of how much supply, how much,
and when and in what form, especially for different grades.
Import regulations also an option in these programs.
There is the potential to consider what happens
for product moving into the US marketplace
from other countries.
It could be assessed and there could be different parameters
and the regulations of how to handle
that product coming in.
Governance, this is, I think, worth noting.
A lot of people have said,
"We wanna investigate self funding
within the maple industry.
We don't want a government program."
These orders are under a government rule in the sense
that the government framework is there
and the legality is there.
It's made available through
those acts I talked about earlier.
To say you can work together as a group
and there's a structure and process.
The boards, however, are based on the covered members again.
So these are not necessarily government decisions.
And what we've learned from talking
to ag marketing service people is the boards are often based
on membership and voting representation
very often reflects the member contribution.
So the beef promotional council, for example,
different voting based on the states
and the quantity of beef that they produce,
either historically or on running averages.
Different votes get dealt out based
on how much product they're putting into the order
and you know, through product, meaning how much money
are they putting into the order.
There definitely is USDA review on the activity
of the promotion boards to make sure
that the communications, promotional campaigns, language,
all of that has to be legal within the statutes
that enable these things to actually happen.
So there is a USDA review process,
but the government governance is very much appointed
or volunteer, I'm sorry,
I actually don't know if they're paid or not.
I wanna say representatives within the industry.
So the producers, packers, distributors are very much
at the table if they're covered by the order.
Another feature here is exemptions.
In all the market orders and promotion programs we looked
at, they all have a different rationale
for creating exemptions from people that participate
in their sector.
But it's been decided that that's not the type of producer
or the amount of product that we wanna include and assess.
So this is gonna vary by sector and program.
Very often it's by scale of producer,
either the volume of the producer,
how many thousands of pounds they sell in a year,
or there could be a sales cap that we've seen
in some of these examples.
Let's say a business that's got less than $20,000
in sales could be just explicitly exempt.
Market channel of sales is also something
that could be an exemption.
With hazelnuts, the assessments all happen
at the shelling facilities,
as I understand if I've got that right?
So if you're actually selling hazelnuts online
or you're doing any direct sale,
you're gonna be potentially exempt.
But if you're moving your nuts through a facility
for shelling and then they're moving through
to a distributor co-op, there may be an assessment there.
So the direction of the product
could create a mechanism for exemption.
And then as I mentioned with these programs,
there certainly is the decision
to cover domestic product only,
or in some cases to explore the imports coming
into the US marketplace, whether they would be assessed
or whether they would be subject to quantity
and volume amounts coming in and out of the marketplace.
A lot of tools here and it's really up to the governing law
that gets established of what that program
would look like for maple.
Just as it has for pecans and Christmas trees and honey.
Moving backwards here just a little bit
on establishment here.
If the maple industry were to look at something like this,
there's a process of creating an industry program,
feasibility plan, combination of market research,
confirmation that the participants
in the industry think it's a worthwhile endeavor.
It can't just come from nowhere.
And the USDA does its due diligence to make sure
that it has a reasonable potential to be viable financially.
The way it's designed and that people are behind it.
There's a hearing process, review process, comment period,
that could take, you know, months if not years.
And then eventually there's a referendum vote
that would go to the people that would, only the people
that would be covered under the proposed order
would actually be voting on it.
So this comes back in, I think, to the exemption clauses.
So that is, there is quite a process
to work through these as well.
This is a very different process
than say, creating a private cooperative entity
and working within a group of group of people
and creating a framework that way.
So I'm gonna close off here before I open up
for conversation and just mention one thing.
As we've investigated these USDA programs,
this very important dilemma comes up,
the organic maple syrup dilemma.
I've gotta check the information
to figure out if I know the status,
but at one point there was a pending organic market order,
a general market order for organic products
across milk, vegetables, maple,
and because there was a pending organic market order,
organic producers still do legally have the option
to self exempt from any AMS market agreements
or market orders.
Now, in other industries, this maybe is not such an issue
because organic production is a smaller fraction,
let's say less than 20% of domestic supply.
But at this point right now, US syrup we're estimating
is gonna be 50, 60 maybe plus 60% certified organic
within our US domestic supply.
It would certainly be viable if every organic producer were
to say, "Oh, I'm in on a program like this.
I will just, I will voluntarily contribute."
But it's important to know that right now,
as the law is there is this organic maple issue
where producers could opt out.
I think what's happening is if this other market order
does succeed, producers can't be double assessed.
You can't be assessed by the organic market order
and then have a maple producer,
then be assessed through the maple market order.
And I think the producers, again, would kind
of have the option which one they might put into.
This is a big sticking point right now.
We haven't gotten into the next level
of what could change legally,
but we know that it is a dilemma.
So I'm just gonna go to the chat box here
and see if I've got anything.
And that may be it for slides.
Question from Matt, "Are you saying
that the International Maple Syrup Producers Association
is looking to this?"
Yeah, so right now there's an active committee looking
at sustainable funding and really our task was
to investigate all the different frameworks.
When we first started we had four people
that said. "We only wanna see a voluntary framework happen."
And then a few other people said,
"Well we've looked at a voluntary framework and we don't
think that's gonna work."
So we've actually been as a group kind
of going through the process of looking
at different industries, having conversations
about the frameworks.
So yeah, so we're looking at this concept
of what could happen collectively within the US
in addition to the good stuff that's happening now.
And we're looking at all these different options,
having conversations like tonight to share a little bit
of what we learned and also get people's feedback.
Reading back here, Arnie says, 3, 3.5% percent
of US milk is organic.
Great, that's a little different than 60%, right?
So if the organic producers opt out,
not a big deal for the "Got Milk" campaign.
I'm gonna scan through, let me see what I got.
Oh yeah, ongoing research, just to say
that we're doing some research on this now.
I'm gonna get back into the chat window here
and if anyone wants to unmute, feel free
and we'd love to hear opinions here.
I think that's one thing we wanna emphasize.
We've heard a lot of opinions in our committee here.
We've kept it very friendly and it's been fantastic
because this concept of collective effort,
I won't say what it pushes on you, you may know,
but it pushes on some things that people take seriously.
So let me see, Nick says, "Difference between a market order
and an RMP program?"
The way it's been explained to me,
market orders are pretty complicated.
The research and promotion programs
are a lot cleaner, limited tools
in a research and promotion program
but as our committee I'd say would assume
that the research and promotion program
seems a lot more fitting for maple in the sense
that it offers a mechanism to create an assessment structure
and focus it on research and promotional activity
to develop the market.
The market orders have lots of other features
like establishment of standards,
already been done for maple.
We don't need a program
that does new standards establishment,
but a market order could include establishment issues.
The market order I believe also does
have production curtailment, call it quota,
call it supply management mechanisms in it.
That's something that's different
than what the RMP programs allow.
So market orders, much more complicated,
many more tools there.
The research and promotion one is much more of,
let's collect money, let's advance primary research,
market research and generic promotion.
But let's see, "Stu, are you estimating
that 50 to 60% of US maple production is organic?
Seems really high."
Well what do you all think?
We, I don't have the NAS stats in front of me there.
There's been some periodic organic production calculations.
Also been some issues with NAS.
We did a survey in 2019 across the northeast
and we hit I think 61% of the crop in the survey
was certified organic.
And all I can say is I've mentioned this,
in the eyes of a couple major packers in the US
and I've gotten them to nod in group environments
and then said, "Yeah, that that's not too far off."
What we do know about this is this 50 or 60%
of the US crop, if it's organic,
it's not coming from the majority of the producers.
This could be coming from 10 to 15% of the maple producers
as we know it.
And that 10 or 15% of those producers,
very likely the producers
that are exclusively 20, 40, 50, 100,000 tap operations.
So the volume of the crop is not reflective
of the number of producers because of the scale.
The larger, a lot of the larger enterprises
have gone organic.
But speak up if anyone has contention
'cause we don't have a lot of information on this.
We're really early on in research
in these dynamics for maple.
-Could possibly -[Darren] Hello?
Yeah, go ahead Darren.
[Darren] Yeah this is Darren
and it seems like a lot of the, pretty much
every new sugar bush that's coming in, in Wisconsin,
at least in my area, is going organic
because the state is subsidizing the certification process
and it's, they're getting a premium on their syrup.
Okay, okay, there's an incentive.
Matt question, "And this could possibly become mandatory?"
So Matt, you know, the couple different things
on the table just this evening,
we certainly have got the USDA programs
as they're established.
Those are are binding mandatory programs,
given the exemptions that I discussed,
and every active program has a long list of exemptions
where participants don't contribute
because they're not deemed to be the target
for the market development.
But cooperatives, let's say, you know,
these private mechanisms do exist
and those aren't mandatory at all.
Those are independently governed corporations,
a group of member owners.
So we're trying to kind of keep that open
and understand we've got private
and then we've got these USDA mandatory programs.
Great question.
You know, I think that pushes at the heart of it.
I'm doing interviews right now
and I've heard a lot of people say,
"Yeah, I'd contribute just 'cause I wanna contribute
to the group."
And I've heard other people say,
"No, I'm doing this on my own.
I don't wanna be a part of it."
So we're not naive to the fact that that starts to,
it changes people's worldview a little bit,
especially if you talk to people in Canada.
Folks in Canada definitely
have a different perception, different culture
when it comes to collective agricultural units.
Hear the chat, speak up and just as the ongoing research,
so as part of this IMSI committee,
we're investigating the market dynamics in general,
and some of you may hear from me,
we are gonna be putting out an invitation.
I've started to do private interviews with people basically
to get that feedback of,
what does this concept sound like to you?
What are the features of collective promotion
that you think are important for the future of US maple?
What are the features that you're not so keen on?
Yeah, and yeah, dairy I love it.
Yeah, go ahead, whoever's speaking
and then we'll get to the comment about dairy.
[Darren] Yeah, well it, that's part
of what I was gonna say, this is Darren again.
So yeah, there's, you know, dairy is, you know,
the cooperatives in dairy have a lot of power
to the point where they, you know,
they're vertically integrating now
and you know, there's a big concern,
you know, when they're starting to get into,
you know, their own brands and such.
You know, same thing with cranberry, with Ocean Spray
and so forth and you know, how, you know, is there concern
about any kind of, you know, creep in some of these programs
or moving from just a marketing, you know, plan
to something that's much more in depth
and embedded in the whole industry and vertically.
Right, right, good question.
One thing I'll say from my investigation,
well let's look at the Quebec example.
Speak up, if anyone on the line is from Quebec,
you know, Quebec's maple market management program is not
where it was 40 years ago.
That program has evolved and then they have added features
and different dynamics to that program.
So these programs definitely are likely to evolve.
With reference to USDA research and promotion programs,
one of the things we're researching right now
is a number, well not a number,
but there are promotional programs that have been,
I dunno what the term is, terminated, right?
So you've got an active board
that's implementing a program based on the design
that they saw fit for their industry.
And they are subject to, I don't know if they're subject
to regular renewal or if there's an option
to sort of call question to the validity of the program,
and there are examples of programs that were established
and have been voted out.
So I just want to mention that there is a mechanism
for programs to be terminated and that does happen.
This idea of vertical integration.
I, yeah, I don't want to get too into that,
'cause I do know like the dairy example,
those are cooperatives that are functioning separately
that relate to the market order.
We definitely don't have that cooperative momentum,
in US maple at all yet so I think it is a bit
of a different beast,
but the point on dairy is super relevant,
and I have talked to people and they've said,
"Well, you know, this concept actually sounds pretty good,
but good luck getting this off the ground with anybody
that's got experience with dairy
because the pricing and the dynamics of dairy industry
have, you know, they don't become a huge success story
for something like this."
And I get it and the counterpoint I'll say
as the person with the mic right now is,
dairy's an extremely perishable product.
Fluid milk is a extremely perishable product.
Maple doesn't last forever, but I would say
it's a significantly different product format.
So I'd be looking at some other examples of market orders
and research from promotion programs like honey,
for example.
Maybe look at olive oil and other industries like that,
that are semi shelf-stable for a period of time
and look to see what kind of traction
those programs have had,
given that dairy is such a different beast.
But I think point taken.
[Darren] Well that goes back,
I mean your first slide I think where maple is a luxury,
whereas dairy is very much a grocery store,
similar to, you know, gasoline or any other commodity.
It's very much about, you know, priced based
because it's something
that's considered a standard supermarket commodity
as opposed to luxury,
whereas olive oil or cranberries or almonds.
Right, yeah.
Yeah and there's no guarantee on this for sure,
but I think that's the kind of stuff
where I think we're trying to, you know,
we're looking at it, we're having this conversation tonight
just to see what bugs people
and what's, you know,
let's go back to that per capita consumption figure
and say, is there, is there a reason
we're at 0.16 kilograms per person in the US
like from a nutrition standpoint,
maybe that's a good place to be?
Or is there an opportunity for something different?
[Matt] So Mark, who's gonna run it?
Run what?
[Matt] Well, if we're looking at this co-op kind of thing,
there's somebody at the top who runs it.
So who's going to be, all co-ops have a committee at the top
who's going to be that committee at the top?
Well if we're mentioning, I mean a cooperative
is a private business entity made a member owner,
so we'd be waiting to see what maple producers decided
that they wanted to invest equity in
and go in on a cooperative
and I would say that a cooperative is going to have a board
of directors based on who joins that cooperative.
Cooperative would be completely voluntary
because that's not a mandatory program.
So, you know, example, you know, Matt, I don't know,
I'm not sure, I know there's
a couple smaller cooperatives regionally here.
I don't know if the maple industry has an appetite
for a large cooperative.
-Haven't seen yet. -[Matt] I might be terming
it incorrectly, if it becomes the government mandate.
Right, right, right.
[Matt] Who runs it?
Yeah so, you know, the different, active USDA,
let's call 'em the AMS market agreements
that are in place for other commodities,
they are run by boards
and the boards are built with people,
with voting rights on those boards
that are the included part,
the included participants, the contributors.
So those that pay into the programs become the participants
and they are then built into the boards.
And I can't explain to you right offhand
how those members are appointed.
I don't know if it would be a progression
through say state producer associations.
I'm not exactly sure how the delegates get selected,
but that is part of it, that's part
of the government's framework is to identify how would
that board be built and who would be put on it.
So, great question.
[Matt] So I'm hoping, I'd like to expand
on my question a little bit,
and I'm hoping you can tell me I'm wrong.
I fear that a seat on that panel can be purchased
not through maple syrup, but through money.
So somebody who has nothing to do with maple syrup
can buy a seat and a vote on that board if it is government,
and if I understand it correctly, that's the case.
But I might be wrong and I hope I am.
I'm not aware of that.
The little we looked at into board makeup was
that representing bodies or associations
or in this case regions, had voting delegates
based on the volume of product they actually put in.
So the example that we looked at was like beef
and that certain states like Vermont
don't have voting members on the beef council, let's say.
But Oklahoma may have a number of voting delegates compared
to New Mexico compared to,
I don't know who I've said, Arizona or something like that.
So yeah, I think you're getting to the heart of it,
especially as we're talking about governances.
How is that structured?
Here's a relevant example for maple.
As it was described to me,
if a maple program under USDA frameworks
went into effect in the United States,
there could be an option to include imported Canadian syrup.
If that was the case,
the importers would potentially have a seat at the board
and it would be based on the volume of syrup
that moved through.
So this was a discussion that happened early
on was, huh, interesting.
So if most of the syrup in the US is actually Canadian syrup
that comes across the border,
if we were to establish a program
and divide the voting delegates based on volume,
there could be more voting power in the hands of importers.
At that particular time, I think a lot of people said,
"I don't know if that's the direction
we wanna go with this."
So there's a definite, you know, the structure
of the programs I think relate to your question
of who gets on the voting board
and I don't know the specifics, that idea
of if there are appointees
and how that happens,
I think there's a certain amount of,
I gotta assume there's some politicking
if there's state representatives.
I don't know if there's mechanics in the statutes
of how the USDA has to let that be navigated.
So, great question, terrific question, good active chat.
I'm willing to stay on for a couple minutes
if anyone's gotta get off, feel free to get off.
Let's just go for like another five minutes max here
and we'll see...dairy comments.
"How does PPAQ, our honey marketer,
protect the small producer?
Nick, great question.
I think the idea of protect is a little bit,
you know, subjective here because I don't know
if these, in the case of honey,
I don't know where the exemptions are.
So I don't know if honey has small producers
that actually are required to pay assessments in
or if they're exempted.
But I think scale is always relevant in our discussions.
I think a lot of people have assumed there's some cutoff
for maple of small scale producers
where there's just not enough syrup coming
from smaller producers to try to like disenfranchise them
with an assessment.
If they're selling syrup from their door yard as an example,
and they're doing their own marketing promotion,
they're selling syrup, we're not really trying to pull them
into assessments to grow demand.
But then when we mention
the 70,000 tap organic maple operation,
that's maybe putting it all in bulk barrels
and we think that may be a target,
that's a syrup that could benefit from market growth.
So not a great answer there.
[Matt] So the purpose of this, I'm sorry, Mark,
I'm not interrupting anybody else, am I?
No, no, no, go for it.
We got, yeah.
[Matt] So the purpose of this is
to develop the expansion of maple, of syrup.
Not production, production's getting expanded on its own.
This, the idea of this,
we're investigating collective market development programs
to do two things.
To say we wanna make sure that the market demand
for syrup grows and the idea of it being collective,
I think also is saying, yes, there may be state
and local promotion programs, but there may be a reason
for there to be something broader
to encompass all of US efforts,
given the dynamics of the market changing.
So trying to grow markets for maple.
[Matt] So what happens if the market grows,
and we have a year like last year where the reserve
went to, what was it, 2 million pounds of table grade syrup?
And we just grew a market and now we can't meet demand.
No, I think that, I think you, you raise a great point.
This is the dynamic of do we, are there,
do you mediate kind of that kind of, those ups and downs?
Do you have to kind of ride with them?
In this case, the reason the market
wasn't extremely interrupted was because the PPAQ
has a market management program
with an inventory program right?
What would've happened if the PPAQ
did not have a strategic reserve?
I don't know of one in the US.
[Arnie] Well in the US it's at Bascom's and Anderson's
and all of the major housing places, our historic buyers,
but I don't know how they did.
Maybe they were buying from Quebec.
Yeah, great question.
I mean, yeah, you don't wanna grow markets faster
than they can be served.
There's a balance there.
I'm gonna hit the chat again here.
Arnie, 55% of Christmas tree growers voted
in '19 to continue their program.
So the program, even though the program
was showing good ROI, so there's an example
that the vote came up again for Christmas tree.
It's a relatively new program showing good results
and 55% said, "Yeah, we want it."
Close to being voted out.
Darren says, "Would a market order inhibit local state,
or regional marketing?"
No, I don't think so.
I think there's a big question of, you know,
what would a market order do?
What would the generic message be?
There are definitely instances right now where some
of the national market orders and promotion boards have sort
of a interaction with state based associations
and I think there's even some fund sharing
that gets put into it.
So I think there are different ways to go about that.
And it's, I don't think it's an either or.
I think there's an "and" thing going
where there's still state promotion happening
and then there is the recognition for some of the products
where they've said, "Hey, state origin doesn't matter
to someone in Santa Fe, New Mexico,
so we're not gonna bother calling it New England beef.
It's just beef."
So there's the beef promotion saying
we're gonna go generic here.
We don't need, they don't care what state it comes from.
That's very different than someone say in Ohio wanting
to do like an Ohio maple promotion.
[Matt] You're from Vermont, right?
I live in Vermont, I'm from Syracuse, New York.
Okay, well I'm, it just, it puzzled me
when you said somebody from Vermont is not worried about
what state maple syrup comes from.
Sorry, had to pick (laughs).
Well, no, I, no, I'll say that quite clearly.
I work with a lot of Vermont producers
and they're saying we get our syrup
into other markets, other metro markets across the US
and there is conversation, they're saying they don't care
if it's from Vermont.
They want high quality maple syrup,
and there are some people in other parts of the country,
they don't know the difference
between Vermont and New Hampshire.
And I think that's the importance of market research is that
for maple producers there's a certain ethic or an idea.
And that's not to say Vermont doesn't have cache.
I know it does.
Historically, it has.
I do know from talking to packers,
Vermont doesn't have a premium
on shelves anymore, payment premium.
It may make someone decide to buy syrup from Vermont,
but the price premium isn't there anymore,
and I think this is where we get at the dynamics.
Is the market today the same market it was 20 years ago?
And you know, I think it's changing.
Let's get one more here.
"Stu, I have not heard anything
that suggests government mandated.
The question is what, if anything, maple producers want
to do to promote marketing?"
Yeah, I mean I think that's the general question here.
You know, are producers gonna continue
to work independently?
Nothing wrong with that.
Packers are certainly doing a great job moving record crops
and record crops.
So we're not saying the system is broken,
but there's a lot of people
that look at that per capita stat
and they say, "I don't know, could we, could we do better?
Could we pull resources?"
Open question.
Yep, Darren makes a good product, different, good point,
different product forms.
Maple syrup as a table grade is different
than value added, it's different than ingredients
and food products.
Lot to peel away.
Well I wanna wrap up,
I really appreciate the folks
that stuck on a little bit longer,
but I wanna respect everyone's time
and what I will say is for those of you on,
if you have any really strong opinions
and you wanna follow up with me, please send me an email,
Mark Cannella, mark.cannella@uvm.edu
and you could find it online.
We are looking at potentially another year of research
to get people's input on this
and I think it's great to hear points, counterpoints.
What about the dairy?
This scares me.
Even the comments here really gives us a good understanding
of what it means for people
to think about this idea of promotion.
And I'll also asking questions
about what do people feel about not knowing
where prices are gonna be.
'Cause that's part of the dynamic
as well of, you know, price volatility.
So I'm gonna leave it at that,
I wanna thank you all for coming.
Next week I am doing a webinar on Maple Finances
and then two weeks out, Chris Lindgren, or three weeks out
Chris Lindgren on SAP Enterprises and wish you all the best.
Have a good evening.