Recently by Jeff Horwich

veggies.jpgLet's do some word association: Farmers Market.

What comes to mind? Probably words like fresh, local, community.

How about competition... collusion... even price? Didn't think so! So it is with the economists and other academics who have studied the modern farmers market phenomenon in the US. The more romantic, "civic agriculture" aspects of farmers markets dominate our conversation about them, as well as the research literature. Consequently, there's been surprisingly little effort put into understanding how the "markets" in "farmers markets" actually work.

To an economist, one critical aspect of how markets work, of course, is competition. And one way to assess the state of competition is: what happens to prices when more vendors are competing to sell a product? In my recently published Masters thesis, an original Food Industry Center dataset allowed us to look at precisely this dynamic across five different metro areas. The data also let us look at the interesting question of whether farmers market prices seem to have much to do with prices at nearby supermarkets.

I'll share the outcome in a minute... but why do we care? After all, aren't farmers market shoppers supposed to be folks with plenty of money, who really just come for fresh food, open air, a sense of community, and supporting local agriculture? Do prices and competition even matter?

Here's my argument, in a nutshell. Farmers markets are exploding - even right through the recession, they opened at record pace. More and more Americans are shopping there, of all types, and the old stereotype is fading (the paper traces this development, at some length, through the literature). In addition, the US government has explicit policy goals to encourage more markets in lower-income neighborhoods, and to expand the use of WIC and food stamps in farmers markets. So while price is certainly not the only thing that matters at the farmers market, it does matter - more all the time.