$13 cauliflower is just the beginning

Cauliflower was in the news today, for being sold at the incredibly high price of $13. That's pretty extreme of course, and may be an example of the supermarkets taking advantage of their market power. On the other hand, higher prices are an inevitable consequence of the situation we find ourselves in (and weirdly, high cauliflower prices in March seems to be a thing, as I've posted on this same topic twice before, here and here). On Tuesday I posted about the costs of illegal goods rising because of coronavirus. But legal goods are going to be hit by higher prices too. This article in The Conversation, by Michael Rose (Australian National University) outlines a number of reasons why, but this one is most relevant:

The major variable in whether the coronavirus crisis will hurt fruit, vegetable and nut supplies (and prices) depends on how they are picked while the nation’s border remains closed to the foreign seasonal workers on which Australian farmers depend...

Rural Australia’s dependence on the muscles of tens of thousands of backpackers and workers on temporary working visas is sometime minimised by official statistics...

The indefinite closure of Australia’s borders to non-resident foreign nationals jeopardises this supply of farm workers.

Pretty much the exact same dynamics will play out in New Zealand. Much of our horticulture industry relies on migrant labour, and the border closures mean that the labour is either not available, or is going to be more expensive if it is. Even if you believe that local workers laid off as a result of coronavirus could pick up the slack, local workers have proven unwilling to take up these jobs in the past (which is why we have migrant labourers doing this work in the first place). Rose quotes migration researcher Henry Sherrell in reference to Australia:

 “In theory, Australians laid off in the many sectors now facing recession could head for the countryside and start picking fruit,” he argues in an article co-authored with Stephen Howes, an economics professor at the ANU Crawford School of Public Policy.

"In practice, it is just not going to happen. The work is difficult, and farms often geographically isolated. It would take years not months to change the reality that farm work is just not in the choice set of most Australians – who, after all, live in one of the most urbanised and richest countries in the world."

A lack of horticulture workers, or more expensive horticulture workers, raises the costs of production of fruit and vegetables. This looks the same as in the demand and supply model I posted on Tuesday,

A decrease in supply of fruit and vegetables (from S0 to S1), leading to an increase in price (from P0 to P1). You may be worried about $13 cauliflower, but it is just the beginning.