13-10-2021 |
How are our sugar bushes doing in Quebec?
With ever increasing demand and declining production, maple syrup stocks were at their lowest in 2021. The profession reacted to promote expansions and installations by increasing the rights to produce. The context seems promising, except that the health crisis has severely affected sugar bushes focused on direct sales and catering.
Maple syrup producers are continually adapting. They are also constantly confronted with the vagaries of the life of their business, such as financing to expand or set up, sale or transfer. The valuation of their property is therefore an essential step. They must therefore be accompanied by a professional mastering valuation methods and aware of market trends.
A favorable context for producers, apart from a pandemic ...
The spring maple syrup season was an average year in Quebec for production. With a volume of around 133 million pounds, production is down sharply if we consider the years 2019 (around 166 million pounds) and especially 2020 (more than 170). The campaign was characterized by a relatively low yield, at 2.75 pounds per notch, whereas over the past 5 years, this has steadily hovered around 3.5 pounds per notch.
At the same time, syrup sales were growing steadily from year to year. In 2020, a record was broken with 147 million liters. The strategic reserve made it possible to meet demand in a context of limited production. Inventories, however, fell from 107 million pounds on March 1, 2021 to 80 in June of the same year. In this context, the Quebec maple syrup producers (PPAQ) initiated the release of 7 million new taps intended both for the facilities of new maple syrup producers and for expansions. Note that in 2020 there were 48.8 million taps in operation, according to the AGÉCO survey.
About 11,300 maple syrup producers currently produce in 7,400 businesses. While the context is favorable to a majority of them, the health situation has disastrous effects on the 200 to 250 sugar shacks offering traditional meals, in short those geared towards agro-tourism. While some are resigned to limiting their activity to bulk production, others are waiting for the end of the tunnel and the return to normal.
Source: Maple syrup statistics 2021, https://ppaq.ca/app/uploads/2021/06/Dossier_statistiques_2020.pdf
The evaluation of a sugar bush
Whether in the context of a sale, financing, or a family arrangement, the evaluation of your sugar bush by a Chartered Appraiser is an essential step in the process.
The appraiser mainly relies on 2 methods which are the comparison method and the cost method. The income method will only be applied if it is properly documented, in particular on the appropriate and up-to-date rates of return, as well as the income to be considered.
The number of taps, the holding of a contingent, the maple syrup potential, the quality of the stand, and the suitability for buildings and facilities are all indicators considered by the assessor. In any case, the quality of his work depends greatly on his knowledge and observation of the market and the databases he has at his disposal.
Whichever method is used, the value obtained is a market value, which represents the price paid by a wise buyer, within a reasonable period of time. This is the only value to allow financing, to set its selling price or to transmit its production tool.