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Actuarial Analysis is Helping to Secure Syrup Supplies

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Actuaries play essential roles in many organizations, working to minimize risks of all kinds. But one actuarial project has resulted in a different achievement: making sure the world always has a supply of maple syrup.

The Federation of Québec Maple Syrup Producers has just completed the acquisition of a factory warehouse that will allow for the packaging and storage of more than 220,000 barrels of maple syrup, thereby ensuring a continuous market supply, regardless of nature’s generosity. And the federation—plus maple syrup lovers—have an actuarial report to thank for this important development.

In 2008, after four years of poor harvests, demand was growing and syrup stocks were drying up. Consequently, prices soared.

Inventory support is central to controlling risk with maple syrup production, and ensuring a continual supply is essential for developing markets for maple products. So, to keep that supply flowing, Québec’s producers created a solution: a strategic maple syrup reserve.

In 2008, the federation acquired its first warehouse, in Saint-Antoine-de-Tilly, QC; that building is now filled with 15 million pounds of syrup in 23,000 barrels. Another 21 million pounds is stored elsewhere, and last year the organization had to rent extra space to cater for the harvest surplus.

However, according to a 2010 actuarial study, that is not enough. Actuarial analysis determined that, on average, the strategic reserve would have to total 40 million pounds in order to prevent stock shortfalls due to poor harvests.

Hence the recent acquisition of the 234,000 square foot warehouse in Laurierville, Centre-du-Québec. With this extra capacity, the federation now has enough space to fulfil the global strategic reserve.

The organization, which was founded in 1966 to protect and develop the interests of 7,400 producers, said markets would be able to receive a continuous supply of syrup, regardless of the harvest. Furthermore, the reserve will help to prevent discounted sales and price fluctuations, and provide stability. It will also ensure there is a secure supply in optimal storage conditions, and by planning around market requirements, Québec’s producers—whose properties are responsible for almost 80 per cent of the world’s maple syrup—can relieve some of the pressure on agricultural risk management programs run by the state.

Federation president Serge Beaulieu said: "In the long term, supply instability has a negative effect on everyone and harms development and innovation. Maple producers are eager to invest and show support for the global strategic maple syrup reserve. It’s the best strategy for managing risk in our industry, supporting its long-term development and reducing our dependence on governmental programs."


 

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