Mastering Marketing
NESARE Farmers’ Market Survey Project Results-Growing Better Markets
Farmers’ markets (FMs) could be considered the original flag bearer of the local foods movement. They represent one avenue in addressing customer demand for “locally grown” and provide a means for farmers to capture 100% of the customer dollar. FMs may also increase customer loyalty and create noneconomic benefits and ties between farmers, consumers, and communities.
Brown (2002) estimates that between 1970 and 2001 FMs in the United States grew from 340 to over 3,000. They attribute part of the expansion to funding from the Farmer-to-Consumer Direct Marketing Act aimed at the expansion of direct marketing of agricultural commodities from farmers to consumers (U.S. Congress 1976). In 2009, the USDA launched the “Know Your Farmer, Know Your Food Program” as a means to better connect consumers with local producers, support marketing associations and market managers, and improve the effectiveness and accessibility of federal nutrition programs at farmers markets. Federal funding from the Farmers Market Promotion Program has existed for several years, as have various efforts at state levels.
The number of FMs nearly doubled in the past decade (i.e., 4,385 to 8,687), but more recently growth has slowed considerably; e.g., between 2016 and 2017 the number of FMs increased by only 0.2% (AMS 2018). Further, based on recent Agricultural Census data, Low et al. (2015) found flattening trends of both farm participation and farm sales at direct-to-consumer (DTC) markets. They noted that between 2002 and 2007, the number of farms participating in DTC markets was up 17% and farm sales through those markets up 32%; but over the next five year span, growth levels declined to only 6% and 8%, respectively. By 2017, the number of farms with DTC sales actually decreased by 10% from the 2012 level (NASS 2019).1 On the customer side, farmers and FM managers are attesting to a marked decline in customer participation and sales at FMs, creating uncertainty regarding the viability of FMs to sustain farming operations in the long term (Eggert 2018).
So what’s happening? Several hypotheses exist. First, farmers may be shifting to other channels (direct and/or wholesale) with relatively higher financial returns. While shifts to other DTC channels are accounted for in the DTC census statistics above, expanded wholesale opportunities are surfacing through restaurants, groceries, and institutions. Schmit & LeRoux (2014) demonstrated that on over 30 diversified vegetable farms, FMs were the worst performing channel in terms of sales per hour of marketing labor; specifically, FMs averaged $32, while wholesale channels were $51. If marketing channel reallocation away from FMs is occurring for this reason, financial impacts at the farm level may be ameliorated or improved. Further, if farmers are shifting away from FMs, changes in consumer purchasing patterns for local foods should coincide. Even so, that leaves considerable concern to FMs themselves, which often serve multi-purpose goals, including low entry barriers for new farm entrants and human and social capital benefits to the communities they operate in.
Mastering Marketing is produced by Ginger S. Myers and is published periodically containing important seasonal marketing information.