Morels and Markets
Lauren Etter and Janet Adamy report ($) in the Journal about the morel rush now happening along the Whitefish Range west of the divide. A fascinating local market develops around the wild crop, with impromptu buyers popping up along roadsides to pay the pickers who roam last year’s wildfire burns in search of the fungal delicacy. There’s plenty of incentive:
Pickers here are selling a pound of fresh morels for about $3.50, which is low, they say. Wholesalers are selling fresh morels for as little as $8 a pound, not quite half last year’s going price. . . .
Cooks love morels, which have a spongelike appearance, because of their nutty taste and extraordinary ability to soak up sauces. A pound of morels sells for as much as $40 at fancy food stores like Dean & DeLuca in New York.
On the production end, the forest service charges $100 for a season harvesting permit and $500 for a buying permit in National Forests (commercial harvesting is banned in wilderness areas and Glacier National Park). For those prices and the cost of a tent to live in, one picker-buyer profiled in the Journal article said he could earn $800 a day all season, but he also faces high theft rates and vigilantism by armed pickers protecting “their” territory. It’s no place to raise a family, but he does: his wife and three young children share the tent.
June 24th, 2004 at 12:19 pm
In our society-wide quest for efficient markets, we have a habit of squeezing out the little guy. Collecting mushrooms is a pretty low-tech way for somebody who hasn’t had the benefit of education or access to capital markets to still make a buck.
I agree regulation could make the market more orderly, safe, and efficient. But at the price of accessible?
As long as organized crime hasn’t gotten involved, or innocent bystanders hurt, I’m sure it’s such a bad thing.
June 25th, 2004 at 8:10 am
John, I agree that at some point permit prices would be so high as to make morel picking unprofitable and therefore put the little guy out of business. (Though I can think of at least one other market where astronomical permit fees have actually brought more “little guys” in: in New York City taxi medallions go for several hundred thousand dollars each, and although only taxi companies can afford to buy the medallions, the margin on driving a taxi for those companies has become so thin that recent immigrants appear to be the only demographic to find taxi driving worthwhile relative to their other opportunities.)
But I don’t see efficiency opposed to accessibility, which I agree is a good thing. A more efficient market in morels here is unlikely to bring in “big guys” with lots of capital harvesting up all the morels with big fungus combines–the woodlands of northwestern Montana probably can’t be rushed into greater morel productivity by multinational agribusiness. Instead, efficiency would–at the right permit price point–lower costs rather than raise production, meaning that people like that little guy profiled in the WSJ article would spend less on a permit (and the public good of law enforcement) than they would otherwise need to spend on guns, ammo, losses to theft, etc. (These prove costly to the little guy even without organized crime or innocent bystanders getting hurt.) And while it may be hard to sympathize with morel consumers, efficiency in general favors the little guy who has to buy the tent and food to shelter and feed his family.
That’s an empirical question of course, and the Forest Service already might have thought about it in setting their permit fees (they are getting better at economics recently). And if there is a more efficient (less costly) way to run the morel market, the little guys should favor it because it means more food on the table for their families, unless they’re just in it for the sport. The Wild West was many things–free, adventurous, romantic–but it was neither efficient nor (excepting the rare pioneer who struck it rich in gold or land) particularly accessible to the little guy.
June 29th, 2004 at 1:49 pm
Let me come at this a different way: why is there any fee at all? If the Forest Service is in fact providing more law enforcement with the fee, perhaps it can be justified, but I do not think that is the case.
Otherwise, the morel picker is “producing” a highly perishable product which he re-sells for his income without costing the government anything—say, as opposed to receiving a government transfer payment– so aren’t we all better off–the government, the morel picker, and you and me as consumers, who will have our preference for morels met (and probably at a price which is lower due to the larger morel harvest.)
Your reference to taxi medallions is curious, since the person who pays the ultimate price for the outrageous cost of the medallion is the taxi consumer. The driver does not benefit; in fact, if there were no such price for a medallion, both the driver and the taxi consumer would be better off. The driver would undoubtedly make more than he currently does, and could offer a lower price to the consumer.
Your medallion example is really a textbook case for the government letting a market flourish without regulation, in which case the producer and the consumer will both benefit. It is only where there are costs external to the basic transaction that government regulation and intervention can be rationalized.
And as to property rights I would agree–an absolutely essential function of government-(see I’m not totally against a governmental function). Hernando de Soto has written a fabulous book –The Mystery of Capital– where he shows that stagnant economies of South America are due to the government’s failure to secure individual property rights–thus a person does not have access to collateral or capital to support any entrpeneurial activity.
June 29th, 2004 at 6:40 pm
jr– Those are great points. In my comment I was coming at it mainly from a distributional standpoint (looking out for the little guys), but your welfare analysis (both of morels and medallions) seems right. The only open question then may be the original question of externalities (crime, public safety) that John mentioned, and we all hope I overstated them.
I’ve had de Soto on my wishlist for a while, so thanks for the reminder.
And thanks for reading.