Monday, April 29, 2013

Some Hard Data on Farmers Markets

Whether you work with government-sponsored nutrition programs like the Snap program or not, you’ve probably heard the buzz by now about farmers markets. Every spring they sprout up in vacant lots in urban areas, in Yuppie neighborhoods, or in church parking lots anywhere in America. We know where they are and what they are. What we don’t know are the business issues underlying them.

The U.S. Department of Agriculture’s Office of Research andAnalysis has shed some more light on the inner workings of these markets with a new study, “Nutrition Assistance at Farmers Markets: Understanding Current Operations.” It provides a look into how these markets operate and what makes them sustainable.

The data for the study were gathered from a national survey of nearly 1,700 markets and 600 farmers who market directly to the public.  The survey results covered into four areas:

1.       Operations
2.       Funding
3.       Products
4.       Snap participation

The study showed a gradual evolution in market operations. For example, markets that were authorized by USDA for Snap EBT and were actively accepting that form of tender were more organized and tended to have more rules regarding market participation.

These markets also tended to partner with some other types of organization. They also required the vendors to report the value of their sales, and had operating expense greater than $25,000.

Direct sellers who actively sold to Snap program participants were likely to be long-time, full-time farmers.  Nearly two-thirds of them also sold in farmers markets. And, if a farmer was currently Snap-authorized and redeeming, he was more likely to have annual farm revenue above $100,000. That farmer was also likely to see more than 25 percent of his total revenue come from direct food sales.

Despite the focus on food, both markets and direct-from-the-farm sellers rely on other sources of income, according to the survey. Over four-fifths of farmers markets rely on vendor fees. Roughly 40 percent of farmers markets and 30 percent of direct sellers got outside financial or in some cases non-financial aid. Sources of this aid included non-federal government agencies, non-profit agencies or private businesses.

The Cooperative Extension Service was the largest provider of aid to direct-marketing farmers.

Both farmers markets and direct-from-the-farm sellers sold more fruits and vegetables than any other product. However, direct-selling farmers were less likely than markets to feature other products, according to the survey.

Snap Participation and Barriers to Participation
When an entire markets not authorized to accept Snap benefits it is still likely that some of the vendors in the market are Snap-approved. The converse is also true, according the survey. When the market is Snap-authorized, there may be some vendors within the market that do not participate in the program, according to the study.

Lack of infrastructure was the factor most cited by non-participating sellers and the reason for not participating in the Snap program.  Infrastructure could include a “card-accepting device,” that allows the seller to “read” the card data, or telecommunications connections that allow the seller to transmit the electronic card data for authorization.

The USDA survey is a valuable tool for understanding the business and operational issues of farmers markets. But questions remain, such as: Exactly how viable a business is farmers market? Is it sustainable for the long run? Could it survive without the subsidies and grants that 40 percent of markets and 30 percent of direct marketing farmers receive, according to the data?

And if the answer to the survivability question is no, then rather than looking market business models, we should examine whether there is a compelling public interest that underlies farmers markets. If the answer to that question is yes, then perhaps markets should be treated as another nutrition channel, similar to the School Lunch program or WIC, and federally supported as such.

But there is even a problem with that. According to the survey, just the process alone of becoming Snap-authorized may be problematic for sellers and markets. This includes the application process, the necessary end-of-day accounting, the potential need to hire staff to deal with the paperwork and the cost of equipment.  When direct marketing farmers who redeem the most benefits only see a quarter of their sales from the government program, there’s not a big incentive for other farmers to join in.

Nutritional Assistance of Farmers Markets” is a good piece of research. But we still have a long way to go before we figure out whether farmers markets will be a viable piece to solving our nation’s nutritional puzzle, or a Saturday morning curiosity for the Starbucks crowd.