Econ 919 - Diging into the economics of farmers markets

Aug 16, 2019

When you think of the value of farmers markets, what likely comes to mind is fresh, local produce, where you can meet the people who grew it just down the road from where it’s sold.

And, sure, it’s commerce, so there’s money involved. But shoppers might not be thinking about everything they’re supporting when they buy that zucchini or jar of jam.

In honor of Aug. 4 through 10 being national Farmers Market Week, let’s take a look at the economics of farmers markets.

Robbi Mixon is the local food director at Cook InletKeeper, based in Homer. One of the programs she works on is the Alaska Farmers Market Association.

“Over the past 15 years we’ve gone from about 13 markets in the state to over 50, Mixon said. “We have all kinds of different farmers markets around the state, all the way up from Tanana Valley in Fairbanks, who owns their own market location, to up-and-coming markets that are run by volunteers, essentially. So it kind of runs the gamut.

Those markets benefit more than just shoppers who want to buy local.

“Farmers markets serve as business incubators. So, down here in Homer, we’ve had a few businesses that started at the farmers market that have gone on to build brick-and mortar-business and have several employees year-round out of their success,” she said.

Markets are supported primarily through membership fees and space rentals from vendors.

Bill Howell, of Sterling, and his wife, Elaine, started Krafted on the Kenai in 2017, making pickled onions, garlic and hot sauces. They chose to join the Soldotna Saturday Farmers Market, which is the oldest farmers market on the central peninsula. They took over managing the market in 2018 when the market founder, Clayton Hillhouse, retired.

“A lot of it is — wait for it —marketing. That’s really one of your big things is you’re trying to promote the market to make sure people are aware of it,” Howell said. “We advertise on the radio, we advertise in the newspaper, we advertise online, we’re a member of the chamber of commerce advertising there. We’re trying to make sure that tourists at RV parks know about us so we’re making rack cards.”

That’s a lot to accomplish without a big budget. The annual membership fee is $10, then vendors pay $15 per week for a 10-by-10 space or get a 15 percent discount if they commit to the entire season. Budgeting is particularly tough because the biggest costs of the market, like insurance and advertising, have to be paid at the beginning of the season before collecting many vendor fees.

But the Howells say the market has been successful so far this year, with as many as 26 vendors in the peak of the season, compared to 11 that same time last year. And as many as 575 customers in one day, up from 433 for the biggest day the previous season.

Vendors make more money, the market makes a little extra off additional vendor fees, which pays for even more marketing to draw in even more customers who go home happy with whatever strikes their fancy. It’s a tidy little economic ecosystem in itself, but Howell points out how the markets have a much wider impact.

“We need to improve the food resiliency here in Alaska. When the big quake of ’64 hit, Alaska was producing 50 percent of the food we ate, today we produce less than 5 percent. So anything we can do to work in the other direction is a positive step,” Howell said.

We’ve got a couple fresh-picked numbers for you this week, courtesy of the Kenai Soil and Water Conservation District:

In Alaska, the value of food sold directly to consumers increased from $2.2 million in 2012 to $4.5 million in 2017.

On the Kenai Peninsula, direct sales of food to consumers more than tripled in the same period, to just under $1 million a year. Every dollar spent on locally grown produce generates $1.48 of local economic impact, compared to the $1.14 that is generated from products grown outside of the area.