Food

More Farms Vie for the $1 Billion Spent at Farmers' Markets


Farmers' markets boost margins and help growers understand shoppers

Photograph by Patrick Schneider

Farmers' markets boost margins and help growers understand shoppers

(Replaced with magazine version.)

For decades, Beechwood Orchards in Biglerville, Pa., sold its apples, peaches, and other fruits and veggies to wholesalers, who would then consolidate the produce with shipments from other farms and dispatch it to supermarkets across the region. These days, Beechwood is more often cutting out the middlemen. The orchard’s owners, Melissa Allen and her brother, now travel to as many as 14 farmers’ markets a week in places as distant as Leesburg, Va., a three-hour drive away. The family gets about half its revenue from direct sales to consumers. “It’s a new way to do things at a farm that has been around 100 years,” says Allen, the fifth generation of her family to work the soil at Beechwood.

The number of farmers’ markets in the U.S. has nearly doubled since 2004, to more than 7,000, according to the U.S. Department of Agriculture, throwing a lifeline to struggling family farms. Though only about 2 percent of farm sales in the U.S. are retail, the USDA estimates that consumers spent $1 billion at farmers’ markets last year. Growers today “are willing to try new things, new products, interact with customers,” says Nicky Uy, a senior associate at the Food Trust, a Philadelphia nonprofit that runs 26 markets. “It bodes well for the future of small farms, especially near big cities.”

While the rising popularity of locally sourced food is contributing to the increase, competition from agribusiness is also spurring small farmers to reserve a spot at the local market. After markups from distributors and supermarkets, consumers typically pay about four times what a farmer gets selling his produce wholesale, says Larry Lev, a professor of agricultural economics at Oregon State University. And markets let small farms create brands, Lev says. “They are selling produce that is identified as theirs,” he says, “which they can translate into better sales.”

Those sales mean a lot of hard work. Jim Daily takes produce to four farmers’ markets a week for his daughter and son-in-law, who own a farm in Woods-town, N.J. Rain or shine, Daily loads up his van at 6 a.m., picks up a couple of teenage helpers, and gets to the market early to set up three tents and several tables. He chats with customers, bags tomatoes, asparagus, and other veggies, and tracks sales in the ledger book he keeps at his side. “It’s not just a party,” Daily says. “But the hours are condensed and busy, so you don’t notice the time going.” Since Daily started selling at markets a few years ago, direct retail sales have grown to about 20 percent of the $1 million the farm grosses every year.

Jonathan Ray says the benefits of closer contact with customers and neighboring farmers make it worth the hassle. Ray grew up at Cates Corner, a farm in Hillsborough, N.C., that his family received eight generations ago under a land grant from the King of England. After earning a degree in agribusiness from Appalachian State University in 2009, Ray realized that the 200-acre farm might not survive for another generation. So he decided to take advantage of increasing suburbanization in the area, near Chapel Hill, by catering to new residents eager to buy local produce. Today the farm gets about 60 percent of its “low six-figure” revenue from farmers’ markets, says Ray, who has been impressed with how much his customers know about food. The market “is a good time to connect with your customer base, to see what they will buy,” Ray says. “And it is a social time, to get to chat with other farmers for other ideas.”

Strauss is a Bloomberg Businessweek contributor.

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