Taps, labor, and product mix

[BreezyHill]

I was talking with the owner at bascoms last weekend and he has enough product to last til June. The amount of syrup on the market is abundant. The market is changing rapidly and many bulk producers will be scaling back soon as the break even point will be passed as prices drop.

Now more than ever it is imperative that producers use spreadsheets like Rand's.

Those that are in this for profit will need to analyze their operations to keep above the red ink line.

Another good season will damage the market for some time; while a poor season, will be good for the market; but will damage many producers that are leveraged.

[unc23win]

I was talking with the owner at bascoms last weekend and he has enough product to last til June.

That's not surprising since they buy most of their syrup in late April and into May maybe even June for more northern folks. If I am not mistaken they were still buying in the fall and bought C grade just the other day. So if they have enough to go until June then they have approximately 1 months worth extra which is about 8%. Most producers of crops would plan to have 10-20% more than what they figure they need.

[DrTimPerkins]

Another good season will damage the market for some time; while a poor season, will be good for the market; but will damage many producers that are leveraged.

I'm not so sure about this. Supply and demand is already totally out of whack in the maple industry due to the Federation's policy of maintaining the Maple Syrup Strategic Reserve. Now I'm not saying that the reserve is entirely a bad thing, as it has led to reasonably high and stable prices, however it doesn't allow the normal supply-demand economics to work, on either side of the border. The question is how long the Federation will continue to buy syrup (or more correctly, how long the producers will pay the Federation to store their syrup in warehouses without their being paid for it). There are relatively few options (re-institute the quota, drop the price of syrup, sell off a bunch of syrup at a highly reduced price) -- none of them are especially good. Right now the packers have the best of both worlds. There is plenty of syrup in the U.S. for them to buy, and there is plenty in Canada just in case. The prices are stable and known, so it is largely a matter of efficiency for them, as well as keeping track of the currency exchange rate. Again, this isn't a hit on the packers at all, they are as vital to the maple industry as the producers are, but right now they (and U.S. producers) have it pretty sweet (pun intended).

What is really affecting the price of syrup in the U.S. currently is NOT the supply (at least for those producers reasonably close to the eastern packing facilities), but is the U.S. to Canadian currency exchange rate. The Canadian $ has fallen to about $0.86 U.S., which means that with syrup at C$2.90, U.S. producers only get paid U.S.$2.49 for that same lb of syrup. That drop in price has NOTHING to do with supply at all.

Those that are in this for profit will need to analyze their operations to keep above the red ink line.

Completely agreed. Whether the price of syrup falls due to the exchange rate or to oversupply, the overall result is that the profit margin on bulk syrup for U.S. producers is lower, and those that are most efficient (and/or least leveraged) will succeed.

[DrTimPerkins]

Dr. Tim, is that backwards. Doesn't that mean that .86 US is worth 1 Canadian dollar?

Yes, you are correct....it is reversed. Thanks for catching that error. I've corrected it in the initial post.

[tuckermtn]

we are pretty close to selling out for this year, so I have our sales % breakdown for 2014.

777 gal produced (with a lot of purchased sap), plus 80 gallons of bulk purchased.

265 gal. (31%) sold as bulk
130 gal. (15%) sold wholesale
412 gal (48%) sold as retail
50 gal (6%) donated to fundraisers (ALS associations, snowmobile club, public TV auction)

just about inline with the NH state average for % of retail sales.

[jmayerl]

About 1000 taps
Me, myself, and I.
About 200 gallons this year, 100% sold at retail(85% syrup, 15% cream, sugar, candy)
Down to final 10 gallons so we will buy bulk to fill orders until season starts in April.