Why Are Farmers’ Markets So Expensive?

We have been shopping at farmers’ markets many years before we started this jam business, so we now have both the outsiders’ and insiders’ perspective on these unique shopping experiences.

For most people who start shopping at farmers’ markets there usually is sticker shock to some degree. Yes, you can find food vendors where you can get more potatoes than you can shake a stick at for $2, or a bag of oranges half the price of anywhere else. But on the flip side, there are farmers who charge several dollars a pound for pristine peaches and apples. And these price whoppers are what everyone complains about but no one has ever explained.

First off I want to examine the mentality of shoppers at farmers’ markets. When we used to rise early Saturday mornings to visit the Embarcadero farmers’ market, which was originally in a parking lot, and many years ago moved to the now glamorous digs of the restored Ferry Plaza, we would load up on cash from the ATM trembling with excitement on what amazing things we would find.

This eagerness to spend is a completely different mind set from most people in grocery stores. When you are at the grocery store you usually have a list of things to buy, or just ran out of eggs for a cake you need to bake for a birthday party and have rushed to buy them. Shopping in the grocery store, while still exciting is much more a routine activity like going to work or brushing your teeth. Farmers’ markets are like gong on vacation – something you don’t do as often,where you feel much more spontaneous and is a place usually full of surprises. We can personally attest that our spending habits are much more frenzied and carefree at farmers’ markets than in the grocery store. So, pointer number one: people are usually in an amplified spending mode at farmers’ markets.

Back in the day, we would usually pull out about $40-$60 in cash from an ATM and would usually run out of money in the first 10 minutes at the market. It always amazed us how fast the money went. I am sure for most of you reading this you are familiar with this experience. And, for most people going to a farmers’ market they know this will happen and somehow justify this immediate lack of funds as a sign it is wise to leave otherwise you will blow an equal amount almost instantly if you visit an ATM again.

The upside of draining your bank account and pockets of cash in record-breaking time, is the amazing things you have purchased that have an air of rarity to them. Where else can you buy pumpkin blossom honey, uncured olives, strange heirloom melons, or miners’ lettuce? And this is the primary reason people shop at farmers’ markets: to buy things they can get no where else and that are not found in their grocery store. Pointer number two: rarity.

Another advantage of farmers’ markets is freshness. The basil you just bought a massive pile of for $2 was just cut early that morning instead of the tiny wilted pile at the grocery store that looks a week old, or the carrots and radishes still coated with wet clumps of black, rich soil that are more crunchy than any you have purchased in the store. Pointer number three: freshness.

So are rarity and freshness worth a high price? To people like us we think so and we are willing to pay. But we still can complain how fast we drained our allocated farmers’ market funds which leads me to believe it isn’t the price so much but the amazing selection of products that tempt us to spend more than in the grocery store with the usual suspects we have been seeing displayed since we were kids.
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But how about the farmers who charge a fortune for an apple or peach? Isn’t that robbery? Isn’t that taking advantage of the poor schmucks pulling up in their new fancy cars, with their special farmers’ market hand-woven baskets they never seem to use in the grocery store, who as I said are trembling with excitement on spending their cash? Not really.

On the flip side the people selling at the markets have priced their products according to a wide range of criteria. First, many of the farmers who sell at markets are smaller operations than those who sell to grocery stores. Maybe they have 10 acres of land compared to 60 or 100 or 200 acres and rely almost exclusively on markets for income. And when you are a farmer who has a small lot of land, you grow less and therefore make less money. The only alternative when you have limited product is to raise the price to increase revenue. It is just common sense. Compare this to the farmer who has 10 times as much land and it is obvious how they can get away with charging less since they have much more product to sell. It is the same economics behind the pricing at Costco compared to your corner store.

Also, for farmers and small food producers, selling at the farmers’ market is a rare chance to sell direct. Most farmers rely on selling to stores, or as is usually the case, a distributor who resells it for a small profit to stores. When you sell wholesale, you usually make 50 percent less then when you sell direct. So farmers are excited for the opportunity to sell direct to the public and get full price for a way of living which is usually in stark contrast to those shopping at farmers’ markets. How many farmers do you see driving around in a new BMW or Mercedes, who own a well appointed house in a desirable neighborhood, and can afford to take a few weeks off each summer for a trip to Europe with their family? Being a farmer, and a small crop farmer especially, has a completely different income than being in the corporate world. Also farming income varies year after year depending on crop yield, what crops they planted and what they can sell it for. A long period of rain, snow or cold weather can decimate a crop that when picked supplies most of their yearly income. What do you do when you were expecting to sell $100,000 of oranges and you only picked $30,000? How do you pay your farm equipment loans, your line of credit for supplies, your mortgage?

So right off the bat you should never moan and groan about the price you pay direct to someone who grows or makes something because usually they earn less than you do and usually this is a rare chance for them to make some extra money – cash even.

Another factor at farmers’ markets is farmers have to pay a fee each day for selling at the market. Sometimes that is a percentage of what they sell and sometimes it is a flat fee. Among all the factors that go into pricing you have to remember some of the money farmers make that day at the market have to be paid to the association that gives them the opportunity to be there. And when there is a rainy day when no one shows up, or maybe a big event nearby that keeps the usual crowds from coming to the market, the $400 they were expecting to earn in 5 hours of selling is now $150. And usually they still have to pay the fee to be there meaning somedays after paying gas to travel from the farm and the rental fee for that day to sell, they have almost enough to buy movie tickets for a night of escape and that is it. Days like that are very depressing – especially if you were relying on a certain amount of money you desperately needed for an upcoming bill.

We know. Since we started doing farmers’ markets we have seen the ups and downs of income that simply never happen when you have a job with a regular pay check. This past winter and spring California had an unusual excess of rain. Since we were in a drought that was much needed. But for selling at farmers’ markets, when it seemed to rain every day, almost no one would show up and we made hardly any money. And just like farmers we started doing markets since selling wholesale to stores was not making enough money to pay all the bills on time. We were hopeful this extra income would make up the difference, but the only thing we got out of it was standing in the rain and wind hours on end for month after month for nothing.

Next time you are wandering around the farmers’ market keep in mind that those standing in the booths, with their feet killing them, and in the colder months, freezing to death, are not getting rich doing this. The extra money they charge for their extra fresh, extra rare and delicious products is truly a bargain if you think about all the work and sacrifice that went into it. And the one thing  you probably don’t know is the cash you hand over, trembling with excitement, or maybe begrudgingly after finding out the price, is more appreciated than you could ever imagine.