Consumers and communities benefit with locally grown alternatives¾and so do farmers, with direct access to customers and a great way to supplement income

Farmers throughout the Northeast are always looking for ways to enhance revenue. Competitive pressure, volatile price cycles, changing consumer preferences and increasing business expenses have prompted hundreds of farm businesses to expand their operations beyond conventional wholesale distribution systems.

With this in mind, an increasing number of farmers are turning to local farmers’ markets as an important sales outlet for everything from fresh produce to processed meats and dairy products.

And in 2004, the timing is perfect, thanks to rising consumer demand for fresh products available directly from nearby farms.

According to the United States Department of Agriculture (USDA), the number of farmers’ markets in the United States has grown dramatically, increasing 79 percent from 1994 to 2002. Today, there are more than 3,100 farmers’ markets operating in the United States, with more than 600 operating in the eight states served by the Northeast Farm Credit associations.

As we’ll shortly see, the choice to set up and sell at a local farmers’ market is an important business decision for the farmer who wants to enhance cash flow and create goodwill in the local area.

What’s a farmers’ market?

A farmers' market is a public market, usually operating one or two days each week during the growing and harvest seasons, in which farmers, growers or producers from a specific geographic area display and sell their own produce directly to the public. Markets are typically located in downtown areas or sites that are easily accessed by the public, such as municipal parking lots, side streets (that are temporarily closed to vehicle traffic), town commons and parks.

Product selections at typical farmers’ markets go well beyond fresh fruits and vegetables and often include dairy products, baked goods, jams and jellies, herbs and spices, garden and nursery starter plants, meats, fish and beverages. Typically, all products are grown, reared, caught, brewed, pickled, baked, smoked or processed by the stallholder. (Usually, the “locally grown and processed” requirement is stipulated by the state department of agriculture or by the market sponsor in vendor contracts.)

Who benefits?

The principal beneficiaries of farmers’ markets are small farm operators, consumers and local communities.

     Small farm operators. Participants in farmers’ markets include fulltime, part-time and lifestyle farmers. Farmers’ markets provide these producers with direct access to consumers to supplement farm income. Farmers also obtain valuable feedback from customers, and a market offers a relatively low-cost entry point for many farmers who have not previously marketed directly to consumers.

     Consumers. Consumers have access to locally grown, farm-fresh produce and the opportunity to personally interact with the professionals who grow and process the items on display. Farmers’ markets help to promote wholesome eating habits and nutrition education. Also, consumers clearly want farms in their future, and one of the best ways to ensure that this happens is to purchase directly from local farms.

     Communities. In the Northeast, farmers’ markets are in cities and towns of all sizes, from Boston to Bethel, Maine. For larger, urban communities, farmers’ markets provide easy access to fresh, nutritious foods. Farmers’ markets also boost a community’s economy, promote farmland preservation, strengthen the bonds between urban and rural residents, and bring a sense of excitement to downtown areas.

Business plan is necessary

Should you participate in a farmers’ market? If you own a farm and are finding it more difficult to compete in today’s commodity-driven wholesale market or are currently looking to diversify, connecting with a nearby farmers’ market may make sense for your business. However, in order to promote the success of a farm-market venture, you must do a significant amount of up-front homework and create a solid business plan.  

Deanne Herman, marketing manager for the State of Maine Department of Agriculture, notes that investment in a farmers’ market can deliver high profit margins, but there are some risks.

“Farmers’ markets aren’t for everybody,” Herman says. “First, it’s very customer-relations intensive. Things like packaging and the attractiveness of your display count a lot to consumers. You need to consider the cost of selling, which includes time required to travel to and from the market, to set up and staff the stall and to break down at the end of the day.

“Then you have to factor in a payback period. It takes time for the individual vendor to build up a following, so there will be a rollout period during which you will not necessarily get a return on your investment.”

Herman also advises farmers to take care when selecting a market in which to participate. Closest is not necessarily the best. “Consider not only what it will cost,” she says, “but also if it is a new market or one that is established. The established market usually delivers the quicker return. Then again, there may be excellent opportunities in new markets, especially in a region where there is a shortage of markets. Also, take a look to determine the extent to which the community is behind the market. Does the market have an attractive location? Do the sponsors invest in advertising and publicity?”

Herman cautions, “If farmers can get into an existing and successful market, that’s great, but it’s not always easy. Many markets have reached their capacity for vendors. Just remember that when joining a new market, it may take time for local consumers to change their buying habits and this may take a few seasons.”

Basically, as with any other outlet for their products, farmers need to assess the supply and demand equation. Regarding the situation in Maine, Herman says, “Right now, there is a higher interest in farmers’ markets than there is among farmers who participate, so farmers can pick and choose where they want to set up.”

Herman also notes that farmers must consider hours of operation and staffing. If a market runs say, from 7 a.m. until 4 p.m. on Saturdays, then the farmer must consider picking time, travel time, “show” time, breakdown time and return travel. This means that a 14- to 16-hour day is a distinct possibility. This leads to the issue of staffing and the possible need to employ hired help and rotate staff during the day.

Whatever the decision, farmers must plan to keep their stalls open from the moment the market opens until closing time — and to have adequate supplies of products to last through the day. Sponsors and consumers frown upon vendors who run out of stock and close up early.

Many rewards

This all sounds like a lot of hard work — and it is. But Northeast farmers are no strangers to hard work, and success in farmers’ markets delivers many rewards to those who do it right.

A farmers’ market allows you to inexpensively launch a new enterprise, exchange information with your customers, build your reputation in the local area, all while creating a new revenue stream. And it allows your customers to conduct business face-to-face with individuals who have a personal commitment to the produce and products they sell.

Farmers’ markets represent a growing meeting place for farmers and their customers, and if you are not already involved, this may well be the time to participate.

If you are thinking about participating in a farmers’ market check out:

• USDA Farmers’ Market at www.ams.usda.gov/farmersmarkets

• your state department of agriculture

• the North American Farmers’ Direct Marketing Association at www.nafdma.com

For assistance in incorporating a farmers’ market into your business plan, contact your local Farm Credit office.  

Contact us at info@farmcreditwny.com for more information.

© 1999-2005 Farm Credit of Western New York, ACA. All rights reserved.