Outline for Today

• Market development in the pure maple industry • Economics of tapping vs. timber production • Pros/cons of birch sap and syrup production

12,000,000 Maple Syrup Production in the United States and Canada, US Maple Syrup 3.5 Exports & Imports and Per Capita Consumption 1975-2013 Sources: National Agricultural Statistics Service, USDA; Bureau of the Census; US Dept of Commerce; Statistics Ca 3.0 10,000,000

2.5 8,000,000

2.0

6,000,000 1.5

Gallons Gallons of SyrupMaple 4,000,000 1.0

2,000,000 0.5 Annual Annual Maple Syrup Consumption per Capita (oz/person/year) 0 - 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total US Maple Syrup Exports Total US Maple Syrup Imports Total US Maple Syrup Production Total Canadian Maple Syrup Production Annual Per Capita Syrup Consumption (oz/person) Current Consumption Levels are Very Low

• United States- between 3-4 oz/capita • Canada- between 7-8 oz/capita • Quebec 22 oz/capita • Japan 1.2 oz/capita

Far less than 1% of all sugars consumed in North America is pure maple What consumption levels are necessary for all of the syrup produced in a state to be consumed locally?

Consumption levels necessary at current utilization rate Consumption levels at 3% utilization rate

Per capita consumption in 1860

27 oz/person Outlets covered by the Nielsen Data

xAOC (Expanded All Outlet Channel) Food Projects to all Grocery Stores $2 Million+ annual ACV Includes projections for Natural Foods retailers such as Whole Foods, Trader Joes, as well as discount grocers such as Aldi Drug Projects to all Chains + Independents $1MM+ annual ACV (ACV includes Rx) Select Mass Accounts Target + Kmart + ShopKo + Pamida + Alco

Walmart Division 1 + SuperCenters + Neighborhood Markets Select Club Accounts Sam’s + BJs Does NOT include Costco Select Dollar Accounts Dollar General + Family Dollar + Fred's Dollar Does NOT include Dollar Tree or 99Cent Stores Select Military Accounts DECA (Defense Commissary Agency) only Does NOT include AAFES (Army Air Force Exchange Svcs) nor NEXCOM (Navy Exchange Command) Total sales ($) from July 2013-July 2014

22% Change in sales from July 2013-July 2014

4.7% Total volume (units) from July 2013-July 2014

9% Change in volume (units) from July 2013-July 2014

6% General Marketing Guidelines

• Look for new markets for pure maple products • Always compare maple syrup to other sweeteners • Make sure your syrup meets proper density, color, and filtration standards Net Present Value Analysis Tapping vs. Timber Production

Michael Farrell Cornell Maple Program Relevance to Forestry

• Many landowners do not tap their trees due to concern over reducing sawtimber value • No previous method existed for analyzing economics for a particular situation • Greater understanding of economic issues could lead to greater utilization of maple trees for syrup production Rationale for Net Present Value (NPV) Analysis • The many variables involved do not allow for a definitive answer for every tree in every situation • Microsoft Excel spreadsheet allows the user to input values for 36 variables specific to his/her situation • NPV analysis allows the user to compare costs and revenues that appear over different time horizons • Individual tree model provides opportunities to conduct sensitivity analyses • Leasing vs. stumpage payments to equalize the investment effort of the landowner Variables for Economic Analysis

Tree & Forest Variables Economic/Financial Variables •Initial Diameter •Merchantable Height •Discount Rate •Growth Rate •Log Scale Utilized -Diameter and Height •Stumpage Rates -% Annual Reduction - Tapped and Untapped •Species (“sugar” or “red”) - Red and Sugar •Management (“Tapped” or - Future Increases/Decreases “Untapped”) •Lease Payments •Effect of tapping on growth rate -Current Rates (diameter and height) -Future Increases/Decreases •Height of tapping zone -Diameter to add 2nd tap •Butt Log Market •Taxes •Number of defects •Time Horizon of Investment •Density of maples per acre Tree Size and Quality

Conditions that Conditions that Conditions that favor immediate favor long-term Variable favor leasing taps cutting timber production

Tree size and small initial tree large merchantable medium size tree quality diameter < 13”dbh trees above 16” dbh 13-16” dbh

defects in main stem no defects in trunk no defects in trunk

some dieback many lower branches visible in top tall straight tree

tree has been tree has never been tree has never been previously tapped tapped tapped

tree is a red maple tree is a sugar maple tree is a sugar maple Forest Attributes

Conditions that Conditions that Conditions that favor immediate favor long-term Variable favor leasing taps cutting timber production

maples are widely maples are widely Forest dense stand of maples, scattered, not easily scattered, not easily attributes easily accessible accessible accessible

large percentage of small percentage of small percentage of red (soft) maple in red (soft) maple in red (soft) maples stand stand

stand is located near no commercial no commercial many large sugaring operations sugaring operations sugarmakers nearby nearby Tapping Method

Conditions that Conditions that Conditions that favor immediate favor long-term Variables favor leasing taps cutting timber production

low height of tapping large height of large height of Tapping method zone tapholes/staining tapholes/staining

no metal objects used in metal objects used metal objects used collection in collection in collection

no records or no records or log buyer is familiar knowledge of knowledge of with the people who tap practices practices Growth Rate

Conditions that Conditions that Conditions that favor immediate favor long-term Variable favor leasing taps cutting timber production

Growth Rate slow growth rate slow growth rate fast growth rate

if tapping has if tapping if tapping minimal impact on significantly reduces significantly reduces growth rate growth rate growth rate Log Scale & Stumpage Rates

Conditions that Conditions that Conditions that favor immediate favor long-term Variable favor leasing taps cutting timber production

Log Scale Utilized Doyle or Scribner International 1/4" International 1/4"

low current prices for high current prices low current prices Stumpage Rates maple for maple for maple

relatively high prices uncertainty on high future prices paid for tapped logs future prices predicted

high price high price low price differential differential for differential for for tapped logs tapped logs tapped logs Lease Rates & Taxes

Conditions that Conditions that Conditions that favor immediate favor long-term Variable favor leasing taps cutting timber production

high lease rates at or Lease Rate above $.50/tap low lease rate low lease rate contract includes no annual increase no annual increase annual fee increases in lease fees in lease fees

ability to gain ag ability to qualify for ability to qualify for Taxes assessment by leasing 480-A 480-A high initial low initial low initial assessment assessment assessment

high tax rate low tax rate low tax rate Discount Rate & Time Horizon

Conditions that Conditions that Conditions that favor immediate favor long-term Variable favor leasing taps cutting timber production

Discount rate low discount rate high discount rate low discount rate

landowner needs landowner interested cash flow landowner interested in long-term profits immediately in long-term profits

long time horizon of short time horizon of long time horizon of Time Horizon investment period investment period investment period Website Address http://maple.dnr.cornell.edu/produc/tvs/index.htm

Questions?? Michael Farrell The Henry II and Mildred A. Uihlein Director of The Uihlein Forest Cornell University Department of Natural Resources 157 Bear Cub Lane Lake Placid, NY 12946 [email protected] http://maple.dnr.cornell.edu Office: (518) 523 9337 Cell: (518) 637 7000 Sell Taphole Maple Wood Products Tapping birch for sap and syrup production

Michael Farrell Cornell University Why tap birch trees? • Some places don’t have maple trees • High prices for birch syrup • Unique flavor for culinary applications & value-added goods • Get more use of your equipment • Synergy in timing of sap flow • Provides an incentive to keep more diversity on your land Why NOT tap birch trees?

• Sugar content is much lower, requires more time and fuel to process • Taste is considered inferior to maple • Maple producers are very tired at the end of sugaring season • You may not have a lot of birch trees- your equipment is not sized properly • Delays cleanup of maple season Paper birch Betula papyrifera Yellow birch (Betula alleghaniensis) Black birch (Betula lenta) Grey birch (Betula populifolia)

Sap collection in Belarus

Birch sap will often continue to run when it is freezing

Processing birch sap

• Birch sap is mostly fructose and glucose, which caramelizes at lower temperature than sucrose • Debate over how to process it; some advocate long, slow simmer while others prefer a rapid boil • Concentration with reverse osmosis is essential • Final sugar content is not not yet known Prices for Birch Syrup

• Usually 3-5 times that of maple syrup • Also due to higher processing costs • Limited supply and high demand Prices for birch and maple syrup 40 ml glass bottles • Wholesale $4.50 ($426/gallon) • Retail $6.00 ($568/gallon)

• Bottling costs $75/gallon Cornell research summer 2014

Traditional curative properties of birch sap

Taken from Terazawa (1995) International Symposium on Tree Sap Utilization