Farmers Market Sales May Have Hit Peak

Feb 5, 2015

Call it “peak farmers market.” Or maybe the plateau of “know your farmer.”

After more than a decade of explosive growth in the local food economy, the most visible portion of food sales within that sector has seen a slowdown. A new report from the U.S. Department of Agriculture shows the growth of sales of local food at farmers markets, farm stands and through CSA models has lost momentum.

Even the rate of growth in the number of farmers markets nationwide has slowed in recent years, rising just 1.5 percent from 2013 to 2014, after several years of rapid growth.

But that’s not necessarily bad news for farmers. In fact, it could mean the entire local food movement is growing up.

The USDA calls these transactions “direct to consumer sales,” taking into account when you buy fruits and vegetables at a farmers market or through a CSA share.

From 2007 to 2012 the value of food sales that take place when a farmer is face-to-face with a consumer dropped by one percent in real dollars. For some context, from 2002 to 2007 that value increased 32 percent. The increase was 36 percent in the five-year period before that.

Let’s go through the theories as to why this slowdown occurred.

No. 1 We’ve hit peak farmers market

One cause for the plateau could be a stagnation in the number of people who actually care about local food. Or as the USDA puts it: a plateau in consumer demand for local food. An explosion in farmers markets has benefited farmers. But it might be too much of a good thing.

“In densely populated urban areas, farmers’ markets often compete with each other for vendors and consumers,” the report reads. “In other areas, newer, more strategically located farmers’ markets may lead to the decline of previously established markets.”

There are only so many dollars out there being spent on local food. At a certain point regions can be saturated with too many markets, fragmenting the consumer base for local food.

“That’s been something producers have been concerned about,” said Ashley Colpaart, coordinator for the Northern Colorado Food Cluster, a group designed to support the nearby local food system. “And a reason why they’ve been pushing for a singular, community marketplace that’s the one stop shop for local food.”

But farmers markets and CSAs are just a couple of the channels farmers use to get their food to consumers and they can be labor-intensive, turning small farms into customer service businesses.

 

No. 2 The local food economy is maturing

Farmers markets may be a good marketing tool for a small farm, but the profit margins are slim and can be onerous to attend and prepare for, says Sarah Low, a USDA economist and lead author on the report.

“There’s a lot more opportunity for people to purchase at farmers markets, but that puts a lot of pressure on the producer,” Low said.

Consumers are still demanding local food, Low says, it’s just that farms are increasingly using middlemen -- selling to restaurants, grocery stores and distributors. With an increasing share of their produce, dairy or meat going to those intermediated channels, some farmers may choose to forgo the farmers market.

“It’s just not as cost-effective for producers to be face-to-face with consumers,” Low said. “A lot of farmers like to spend their time farming, not necessarily marketing food.”

Other figures in the report bear out this theory too. While sales at farmers markets declined, food hubs and farm to school programs exploded. From 2007 to 2012, the number of food hubs, local groups that connect farmers to food-using businesses, increased 288 percent. And 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.

“It’s much more efficient for the farmers to sell to a food hub or sell to a grocery store,” Low said. “It’s probably not that interest is declining, it’s that these sales are shifting to these intermediated outlets.”

 

No. 3 The recession slowed everything down

The recession spurred by the collapse of the housing market in 2008 likely played some role in slowing sales at direct-to-consumer sites, Low says.

The report notes how some consumers view local food as expensive. A Mississippi case study in 2001 found that food sold at farmers’ markets and farm stands didn’t compete with grocery stores. Instead they were perceived as complementary activities, not replacements for grocery store shopping. It could be that in tough economic times consumers cut out spending at farmers markets they saw as complementary and not necessary.

Essentially, this theory acknowledges that the Great Recession touched nearly every part of the economy and not even local food was able to weather it, nor to secure a rebound by the time data was collected in 2012.  

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