Will Farmer's Markets Benefit from the Food Tariffs? ---PART 1---
There's something special about farmer's markets. My family and I love farmer's markets. In grad school at Purdue, we hit up all available, and rarely missed any. Saturday mornings across the river in Lafayette; Wednesday evenings just down the street in West Lafayette; and outside the school year, Thursday mornings on Purdue's campus (side note: why don't more college campuses host farmer's markets?)
Before we had any kids, in 2016 my wife and I went to Boston for the AAEA annual meeting (ag economics conference). In Copley Square beside Trinity Church was the largest farmer's market I've ever been to in my life, even to present day. Blueberries brought down from Maine, locally baked goods, just about anything you could think of was available in massive quantity.
We're rather partial to our small, local market in Downtown Murray. It's a fraction of a fraction of the size of the market we went to in Boston, and is still working to find an equilibrium in its offerings as the city evolves (an persistent surplus of craft tables, still scarcely any international foods). But we know some of the vendors personally and enjoy supporting them, it's a good lesson about supply chain dynamics and supply & demand for our daughters (and my ag econ students), it's a fun outing given the right weather, and we tend to view the quality of the produce as better than that available at either one of our two available supermarkets.
The general opinion of farmer's markets in our culture today seems positive, at least overall. This could be due to the fact that the majority of patrons tend to have higher income, higher level of education (like, way, way higher), and consider themselves more health-conscious, so of course their choice to frequent such venues is a positive one! Maybe the American DNA of "support our farmers" still influences our thinking, more than we realize. Possibly we're fed up with mediocre offerings from mainstream grocery retailers.
But is the produce at farmer's markets of necessarily better quality? Is it really locally grown, or is that just a sales tactic? Perhaps, but as we semi-regularly converse with vendors at any given market, we find there's a surprising amount of arbitrage going on...
(e.g. there's money to be made by selling 'local' produce to people who aren't generally price-sensitive to begin with, so just load up at a fruit auction within 100 miles, haul it to the market of your choice and label it appropriately to attract customers, mark it up 25-100%, and enjoy the profits).
So much so was this a problem in Murray that a price floor (see Market Rule #8 on their website) had to be implemented. Even if truly local vendors sold at a loss, they still couldn't compete with the undercutters who bought bulk produce at an auction out of state and drove 2+ hours to sell it here. One interesting study from a few years ago found that only certain patrons such as myself find this issue important (read more here). The word "local" could really mean "grown somewhere in the US, don't worry about it", just as the word "organic" hand-drawn in sharpie on a cardboard sign could mean things like "organically grown", or "we forgot to fertilize this year, so no synthetic stuff here", or "treated with organic insect repellent after we'd emptied that last bottle of Sevin". But labeling is an entirely different story in itself.
Speaking of importing food, and certain people even caring about it in the first place, a common feature of farmer's markets is that the prices tend to be higher. Maybe it's "better quality", maybe it's "fresher", maybe it's "local" --- whatever any of these words is supposed to mean in order to make a sale --- and the premiums are totally justified. But now, before it's even market season, we're seeing some grocery prices creep higher. So much of our food at the supermarkets is imported: we generally grow our own potatoes and eggs, but not our own avocados or mangoes.
Are shoppers going to descend upon farmer's markets en masse now that they're stuck paying higher grocery prices regardless? I think it's a real possibility, and I'll write more on this later.
