Farmers' markets are markets in which producers sell directly to consumers. While farmers' markets do not have a measurable impact on the United States economy as a whole, many studies have found that farmers' markets impact state and municipal economies as well as vendors, local businesses, and consumers. These impacts are measured using the IMPLAN Input-Output Model and the Sticky Economic Evaluation Device (SEED), in addition to other methods. The economic impacts that are most frequently measured include effects on the revenue and income of local growers and local businesses, the effects on job creation, and the effects on other sectors of state and local economies. Some obstacles that may reduce impact or create negative economic effects include over-saturation, socioeconomic barriers, the opportunity cost of farmers' markets, and the projected unsustainable growth of farmers' markets in the United States.
Methodology Researchers use different methods to calculate the economic impact of farmers' markets on economies in the United States. The reason to include methodologies in this article is to demonstrate how impact is measured differently, which influences the findings and conclusions of the studies. The most common methods used are the IMPLAN Input-Output Model and the Sticky Economic Evaluation Device, which are mostly used to calculate the impact of farmers' markets on state, municipal, and local economies.
IMPLAN input-output model The IMPLAN input-output model is a quantitative economic software, technique, or data that facilitates analysis of spending. This analytic tool, created by the U.S. Forest Service and the University of Minnesota, uses the Bureau of Economic Analysis (BEA) input-output criterion combined with other data to compile tables that identify cash flows between different sectors of the economy. IMPLAN methodology has been used in studies on Portland and Iowan farmers' markets to calculate the economic impact by studying consumption-based transactions. It is also used to compute data supporting studies on the impact of farmers' markets on vendor revenue.
Sticky Economic Evaluation Device (SEED) Market Umbrella is a nonprofit organization that developed the Sticky Economic Evaluation Device (SEED), a tool that measures the economic impact of a public market on neighboring businesses. SEED multiplies the annual revenue generated by consumers of the market and abutting businesses by the multiplier. Specifically, the Regional Input-Output Modeling System II multiplier is used, which is generated by the BEA (BEA). The RIMS II multiplier measures how many dollars remain in the regional or local economy. "The greater the interaction each dollar has with the local economy, the larger the multiplier." This methodology also gathers information through customer-intercept surveys and head count tabulation in order to calculate the economic impact the market has on its region. Market Umbrella provides markets with access to their survey templates and facilitates report generating through the use of online accounts on their website. The sales tax revenue generated by market consumers, including purchases at neighboring businesses, is additionally captured. The SEED methodology, developed with farmers' markets in mind, has been used to measure the economic impact of Crescent City Farmers' Markets.
Economic impact on the U.S. economy and its regions There are few studies that focus on the impact of farmers' markets on the United States economy and on regional economies in the U.S. The USDA has the most research surrounding regional variation and overall composition of farmers' markets.
Impact on U.S. economy In 2012, the output generated by United States farms contributed $166.9 billion to gross domestic product, which was 1 percent of GDP. This figure includes all farms participating in economic activity, which suggests that the total contribution of farmers' markets to the U.S. economy in terms of output is very small.
Nevertheless, the number of farmers' markets in the United States is growing rapidly, with growth increasing by 8.6 percent per year on average. About 30 percent of these new markets are less than five years old and most of them report sales that are half the national average. These new markets have on average 22 vendors compared to the national average of 31, and 430 customers per week compared to the national average of 959. This explains why the growth in sales from $888 million in 2000 to $1 billion in 2005 was only 2.5 percent in spite of the rapid growth in the number of farmers' markets. The revenue generated from farmers' markets was $31,923 per month according to a 2005 USDA study.
Regional variation The regions that have the most lucrative farmers' markets are the Far West and the mid-Atlantic region. Managers of farmers' markets reported in a 2005 study that about 15 percent of the vendors at their market earned between $25,000 and $100,000 annually. This range was the largest reported level of income across the regions. The North Central and Rocky Mountain regions in contrast experienced the lowest level of sales with revenue between $1,000 and $5,000. This may be due in part to the seasonal variability of different regions. The markets in the Rocky Mountain region were open on average only 3.92 months, while markets in the Far West were open for 4.9 months on average. The Far West also experienced the greatest level of sales with $476,733 per market per year, while the Rocky Mountain region experienced the lowest level of sales with $90,169 per market per year.
Economic impact on states and cities Many studies assess the impact of farmers' markets in the United States on state economies and municipal economies. Most of these studies find that farmers' markets benefit state and local economies because they have direct and indirect effects on personal income, job creation, and on output generated in other sectors of the economy including manufacturing and transportation.
Iowa The Iowa Department of Agriculture and Land Stewardship conducted a study in 2009 to measure the economic impact of farmers' markets in Iowa using the IMPLAN Input-Output (I-O) model. Iowa is fourth in the nation in terms of its number of farmers' markets and ranks second in terms of the number of farmers' markets per capita.
The report shows that sales among Iowa farmers' markets increased by 92 percent since 2004, reaching $38.4 million in sales in 2009. The tables entitled "Market sales per city, 2004" and "Market sales per city, 2009" show the overall increase in sales among different areas of Iowa between 2004 and 2009.
Market sales per city, 2004 City Est. Sales ($1,000's) Population Per Capita Sales ($) Cedar Rapids $480 120,758 $3.97 Davenport $3,300 129,634 $25.46 Des Moines area $9,500 274,157 $34.65 Sioux City $340 85,013 $4.00 Waterloo $760 68,747 $11.06 Total $14,380 678,309 $21.20
Market sales per city, 2009 City Est. Sales ($1,000's) Population, 2008 Per Capita Sales ($) Cedar Rapids $4,788 128,056 $37.39 Davenport $2,394 133,411 $17.94 Des Moines area $19,178 290,847 $65.94 Sioux City $574 82,807 $6.93 Waterloo $736 104,721 $7.03 Total $27,670 739,842 $37.40
Using the IMPLAN I-O model, the $38.4 million in farmers' market sales translated into "$59.4 million of gross sales among sectors in the Iowa economy." Additionally, the I-O model found that $12.2 million was linked to "personal income effects directly or indirectly related to farmers' market activity." The study also concluded that 374 jobs were directly linked to farmers' market activity, while 200 jobs were "indirectly attributed to the activity."
The 2009 report also focused on how farmers' markets affect other sectors of the Iowan economy. The two sectors of the economy most impacted by farmers' market activity were agriculture and mining and wholesale and retail trade. The direct impact on agriculture and mining was about $24,960,000, with another $1 million in "business-related indirect impact" and "consumer-related induced impact." Construction, manufacturing, transportation, finance, professional services, and personal services were not directly impacted, but between $1 million and $4 million generated in each sector reflected indirect and induced impacts of farmers' market activity. The table entitled "Output impact of Iowa farmers' market activities" shows these impacts.
Output impact of Iowa farmers' market activities, 2009 Sectors Direct Impact Business Related Indirect Impact Consumer-Related Induced Impact Total Impact Agriculture & Mining $24,960,000 $915,629 $123,876 $25,999,504 Construction 0 $1,060,974 $111,077 $1,172,052 Manufacturing 0 $2,374,500 $862,535 $3,237,035 Wholesale & Retail Trade $13,440,000 $1,080,607 $1,819,466 $16,340,074 Transportation & Utilities 0 $1,702,314 $708,567 $2,410,881 Finance, Insurance & Real Estate 0 $2,164,023 $2,450,352 $4,614,374 Professional Services 0 $1,173,101 $1,856,549 $3,029,650 Personal Services 0 $966,701 $1,610,661 $2,577,362 Total $38,400,000 $11,437,850 $9,543,083 $59,380,932
Portland, Oregon The City of Portland's Office of Sustainable Development (OSD) commissioned a report in 2008 to study the impact of Portland's 14 farmers' markets on "the regional Portland metro-area economy." The 14 farmers' markets studied in Portland had sales of approximately $11.2 million in the aggregate in 2007.
The study found that the direct impact of "spending at farmers' markets" stays within the region, while sales at the traditional grocery store "leak outside the region." Therefore, the estimated direct impact of $11.2 million in farmers' market spending is equivalent to only $3.4 million "in economic impact in a traditional grocery market" due to importation of goods and household marginal decision-making in the retail sector.
Using the IMPLAN Input-Output Model, the study also measured the economic impact of product sales, prepared food sales, and management fees, or "the payment of market management fees by vendors," on output, employment, and employee compensation in the Portland economy.
The study concluded that the 14 markets in Portland produced approximately $17 million in output, 150 jobs, and $3.2 million in employee compensation. The table entitled "Total est. economic impact of 14 Portland-area farmers' markets, 2007" shows how product sales, prepared food sales, and management fees impacted the Portland economy in 2007.
Total est. economic impact of 14 Portland-area farmers' markets, 2007 Output Direct Indirect Induced Total Impact Product Sales $10,757,603 $2,994,949 $1,886,048 $15,638,600 Prepared Food Sales $438,030 $131,996 $96,273 $666,299 Management Fees $515,436 $191,682 $126,454 $833,572 Total $11,711,069 $3,318,627 $2,108,775 $17,138,471 Employee Compensation Product Sales $1,333,566 $841,790 $556,560 $2,731,916 Prepared Food Sales $133,047 $33,677 $28,412 $195,136 Management Fees $145,579 $57,088 $37,31 $239,986 Total $1,612,192 $932,555 $622,290 $3,167,038 Total Value Added Product Sales $4,880,840 $1,628,146 $1,137,365 $7,646,351 Prepared Food Sales $195,199 $68,432 $58,054 $321,685 Management Fees $282,692 $107,665 $76,255 $466,612 Total $5,358,732 $1,804,242 $1,271,675 $8,434,648
Crescent City Farmers' Market, New Orleans, Louisiana Using the SEED methodology, marketumbrella.org analyzed the economic impact of Crescent City Farmers' Market-Mid City, Crescent City Farmers' Market-CBD, and Crescent City Farmers' Market-Upt, in New Orleans, Louisiana on vendors, the "host neighborhood," and the "surrounding region."
The combined economic impact included vendor revenue, the revenue of nearby businesses, and sales tax revenue. The combined impact of the Crescent City Farmers' markets was $6,655,614.52 on vendor revenue, $5,008,742.34 on neighborhood business revenue, and $236,014.04 on municipal and state tax revenue.