As I mentioned a few weeks back, some segments of ag are in the midst of challenges and changes. CSAs (community supported agriculture) are one area. Today, we turn our attention to a second - farmerâs markets.
Farmerâs markets go way back in the US. Indeed, they in some ways were the original grocery store. The ability of farmers to sell their wares directly to consumers without government interference was so important in early America that some states even had constitutional protections for farmers!
âSec. 7. No license required to peddle.
Any person may sell or peddle the products of the farm or garden occupied and cultivated by him without obtaining a license therefor.â
Minnesota State Constitution
Farmerâs selling their wares direct to consumers took place from colonial times. The earliest farmerâs markets predate the founding of nation by over half a century.
âMeet me at the Market" has for decades been a phrase commonly heard by Lancaster citizens. In 1730, when city planners designed the city they designated a 120 square foot lot in the center of town as a public market place giving birth to the Lancaster Central Market. Over the years the size of the market and the number of vendors has changed, but thereâs evidence that the farmers market may have had 400 vendors at one point in time.
The buying and selling of fresh, local produce, meats and baked goods was so essential to daily life - especially in a market town like Lancaster - that from 1818 until after World War I several "curb markets" sprung up around the town as well. These "curb markets" consisted of local farmers and merchants setting up their wagons on the curb of the streets and selling their goods to the community.â
Presidents such as Thomas Jefferson picked up their food at farmerâs markets while in office!
While farmerâs markets have never fully gone away, they experienced a massive decline from the late 1950s through the early 1980s. That decline then saw a sudden, somewhat unexpected rebound as major changes in consumer attitudes about food took root as we moved into the 21st century.
The resurgence of farmerâs markets
In the late 1980s, local food began a resurgence in many parts of the world, including the United States. This resurgence picked up steam in the 1990s, spiked in the 2000s, and then plateaued and ran into trouble in the 2010s. Farmerâs markets, in some ways the pinnacle of local food - food with a face and that goes straight from farm to fork - played a major part in this movement.
But like with CSAs
many farmerâs markets have hit choppy waters. Other food distribution channels have adapted to consumer demands for fresh, local produce, including organic options. Traditional grocery stores now carry âlocalâ and large amounts of organic items . Indeed, natural foods have penetrated so deeply into traditional food distribution channels that my local Kroger in rural KY had kombucha on the store shelves!Â This is something that would have been unimaginable just a few years ago, yet there it was last week as I walked through the store doing some research.
Also, new business models such as Blue Apron are making an impact as well. Instead of people having to go to the market or store, these businesses bring an online market or meal plan straight to them - allowing them to order whenever and have it delivered right to their door. Given how busy modern people rate their lives, these options are clearly capturing significant market share. Some of that share is coming from farmerâs markets.
A few years back, as I traveled the country on a speaking trip, I visited numerous farmers markets along the way. Many showed first hand the loss of traffic some markets are reporting across the country. Some markets that were once lively and well trafficked were almost like sceneâs out of the Walking Dead. It didnât seem to matter much what part of the country or economic region the markets were in as well. Some in rather economically depressed areas were bustling, while some in affluent areas were a bust.
This mirrors what both the USDA and others have reported. Sales at farmerâs markets in some areas and regions have been struggling.
In many areas, the types of vendors and customers that make up markets is shifting as well.
âThe decline in sales is, arguably, one result of the contemporary farmers market, which has evolved to meet the needs of a new generation of shoppers who view these outdoor markets as more a lifestyle choice than an opportunity to support local agriculture.
âConsumer and purchasing behaviors are changing, evolving, and Dupont is sort of the leader in many ways of those changes,â says Mike Koch, executive director of FreshFarm Markets and a cheese vendor himself.â
These changes in the nature of the markets and their customers also comes at a time that competition with farmerâs markets has increased dramatically.
âWhen the Dupont Circle market opened in 1997, Koch says, it practically had the organic produce market all to itself. It was a boon to farmers and home cooks alike. But those days are gone. Farmers markets now face stiff competition from bricks-and-mortar retailers such as Glenâs Garden Market and Whole Foods Market, and from online delivery services such as Washingtonâs Green Grocer and AmazonFresh. Farmers markets are even competing with each other: The U.S. Department of Agricultureâs national directory lists 8,553 farmers markets, almost double the 4,385 markets in 2006.â
Is this all bad news for farmers whose primary or major sources are revenue are such markets? No. But it is a wake up call that we can all learn from.
What can we learn from the ups and downs of farmerâs markets across the US?
Letâs look at the benefits and drawbacks to what is happening.
Declining sales at farmers markets are actually helping some farmers
Yes, a loss of sales at through one distribution channel isnât necessarily a bad thing for the farmers involved. Many years ago, I met a local farmer who had completely sworn off the local farmerâs markets. I got into a long conversation as to why. He pointed out, âI like spending time with my family.â Farmerâs markets can have slim margins, while requiring lots of work for uncertain outcomes for sellers. Rain, weather, and so many other factors can impact success, not just season to season, but week to week!
Many farmers use the marketâs as a stepping stone to establish a clientele and then switch to other avenues for distribution that are more efficient and less costly, especially in terms of time. Farmers graduating out of markets to better and more profitable options isnât a bad thing.
2. Over expansion eating into market sales?
I remember as a kid seeing a restaurant chain rapidly expand in our little city. A family member quipped, âboy they are going to regret that!.â A decade later, many of those locations stood empty. There were too many restaurants too close together with too few customers to support them all.
The incredible expansion of farmerâs market numbers was heralded by many as a great thing. But those of us with backgrounds in economics and business voiced concerns about market saturation. Would the markets begin to cannibalize each others customers? In some areas, the answer is a clear, âyes!.â
Check out the data for yourself.
Letâs say a city has a single market with $100 in sales per day. A second market opens. The two markets together now capture $160. That means the first market has lost $20. The overall net gain to local farmers is a net loss at a single market. This small loss can have a major impact on any marginal or borderline producers at the first market. But in some areas, the numbers may be much worse. The two marketâs may be bringing in only $120 or $140 compared to the single marketâs $100.
The data support this analysis - while the total number of markets has doubled in a decade, the total sales have not even come close. Markets are attracting some new customers because of better location or other factors, but at the same time the customer pool isnât expanding as quickly as the number of markets in play.
âThe U.S. Department of Agricultureâs national directory lists 8,669 in 2017, almost double the 4,385 it listed in 2006.â
âWhile USDA surveys still show sales increasing each year, theyâre no longer growing at double digits, as they were up to 2007.â
It is also worth nothing, farmerâs market sales numbers are may no longer be reliable metrics either. Many markets are now full of non-farmer vendors - trendy coffee businesses and other artisan food sellers. This isnât bad, but these entrants often have much higher profit margins and sales potential than traditional produce sellers at markets. If markets are aggregating all of this data together and reporting it as market sales without breaking out actual farm product sales, then things could be worse than many following the data realize.
3. Other sales avenues continue to expand and grow for local farmers
âWhile sales at farmers markets declined, food hubs and farm-to-school programs exploded. From 2007 to 2012, the number of food hubs â local groups that connect farmers to food-using businesses â increased 288 percent. Here's an even more ridiculous number: Since 2006, the number of school districts with farm-to-school programs jumped 430 percent, according to the USDA.â
This change in how farmers are getting food to people isnât a bad thing, but it comes with significant challenges. Such programs require larger farms who meet different regulatory standards and clear sometimes costly regulatory and insurance hurdles. For smaller farms or farms just starting up, such programs are often out of reach or off limits.
Other farmers have found opportunity growing at larger scales for grocery stores or similar merchants, especially those who have sorted out how to do substantial season extension. The larger volume plus premium price that stores can charge for such produce makes the lower prices compared to direct to consumer work for many operations.
4. Increases in other options donât hide the competition local farmers are facing
As mentioned above, farmerâs markets used to have a captive audience for a wide variety of foods. But this is true no longer. Local supermarkets, pre-boxed meal services, and direct delivery food vendors often carry similar products. Coupled with continuing declines in consumer time spent on cooking, and farmerâs markets and the farmers who depend on them need to innovate, adapt, and market better to do well. The easy days of a decade ago are now gone.
5. Value added is becoming a bigger part of farmerâs markets
A big difference between farmerâs markets of a decade ago and today is the number of value added products and vendors. Many markets are now a place to grab coffee or breakfast, pick up medicinal herbs and even some non-vegetable staples. Farmerâs who can incorporate value added products into their mix (LINK to article) have a significant advantage at a farmerâs market. Such products face less competition coupled with a generally eager customer base.
6. Local food is less resilient to larger economic trends
A final note related to our previous discussion of CSAs and the above look at farmerâs markets. Much of the data, especially in the 2008-2012 range, shows that the economic downturn in the later half of the 2000s hit local food especially hard. Thus, for farmerâs whose livelihood is tied up with local food, finding ways to strengthen your consumer ties is key to weathering major economic and other events. The data shows that we face far more risk during such times than the larger food supply.
What has been your experience selling at farmerâs markets over the past decade or more?
Did you start at what and transition to other models, or are you considering getting into a farmerâs market to build your farm business? What are your thoughts on the direction of direct farm to consumer sales?