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Yak Herders

May 3, 2011 • Demand, Supply, and Markets, Developing Economies, Innovation, Thinking Economically • 119 Views    No Comments

Demand is soaring for yartsa gunbu, a “nutty tasting fungus” from China’s Tibetan Plateau and similar Himalayan regions in Nepal and Bhutan. Reputed to have cancer fighting capability, aging retardants, and libidinal qualities, the fungus invades the dead bodies of caterpillar larvae and then “shoots up like grass out of their heads.”

The reported benefits of yartsa gunbu remind me of the early days of Coca-Cola in Atlanta. Described in Mark Pendergrast’s excellent For God, Country and Coca-Cola, Coke was originally sold as a “nerve tonic.” This excerpt is from a June, 1887 Coca-Cola label (p. 33):

“…This Intellectual Beverage and Temperance Drink…makes not only a delicious, exhilarating Beverage, but a valuable Brain Tonic and a cure for all nervous afflictions–Sick Head-Ache, Neuralgia, Hysteria, Melancholy, etc…”

The Economic Lesson

On the demand side, according to National Geographic, residents of Beijing and Shanghai are pushing price increasingly higher. One report claims that price rose 900% between 1997 and 2008.

With more demand creating skyrocketing prices for yartsa gunbu, yak herders are earning record levels of cash income. Perhaps doing less yak herding, more people are gathering the fungus during the 4 weeks of the spring harvesting season. Still though, supply is said to have remained relatively constant.

An Economic Question: How would you graph the market for yartsa gunbu?

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