The Farmers’ Market Problem – Not Enough Demand For Overpriced Vegetables

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Isn’t this the most lovely surprise – supply and demand applies even to Farmers’ Markets. Those little diagrams at the beginning of absolutely every economics textbook are true, a realistic representation of the way humans behave in this, our, universe. That is, the number of people willing to buy overpriced vegetables exists, but is small, rather smaller than can support the number of people willing to sell at those high prices.

Gosh, who would have thought it? Except, obviously, everyone who has ever thought about the idea. For those supply and demand curves were originally drawn in response to observation of simple markets. In English at least a market originally meaning exactly what we today call a farmers’ market. The varied growers of stuff bring it to town on one day a week and try to sell it to the varied potential consumers of foodstuffs. Our descriptions of markets are drawn from observation of what happens next. Thus it really shouldn’t surprise that what happens now is what happens in the textbooks. Expensive stuff doesn’t have all that many buyers.

Add in that there are fixed costs to a market stall, as well as those variable ones dependent upon volume of sales and we’ve the complete explanation for what happens:

Why Are So Many Farmers Markets Failing? Because The Market Is Saturated

Who could not predict this from the first three pages of any economics text?

Nationwide, the number of farmers markets increased from 2,000 in 1994 to more than 8,600 in 2019, which led to a major problem: There are too few farmers to populate the market stalls and too few customers filling their canvas bags with fresh produce at each market. Reports of farmers markets closing have affected communities from Norco, Calif., to Reno, Nev., to Allouez, Wis.

The lack of buyers is because such markets are expensive. The lack of sellers is because volumes of sales won’t cover those fixed costs of setup. And there we are.

Now, given that we can see that these market basics are in fact true, that Econ 101 does describe the real world, when will everyone admit and agree that they apply to labour markets and the minimum wage, to housing and rent control, to taxation and the Laffer Curve?

Hmm, what’s that? Because? Yes, but because what? And we’d like to see your workings too please. Supply and demand really does work with price as the third variable. Yes, for tomatoes, even heritage ones, as much as for work and housing.

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Rhoda KlappManofBathGR8M8SJonathan Harston Recent comment authors
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Jonathan Harston
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Jonathan Harston

This has been one of my concerns bubbling at the back of my mind. My local town (ie parish) council has had thoughts about taking over the town market, intending to revigourate it from the “downmarket” tourisity stuff being sold there. I worry that if we kick out the cheap tat purveyors and try and let the stalls to upmarket Farmer’s Market stuff, people won’t buy because it’ll be too expensive, and traders won’t come because there’ll be no sales. I know that I’m one of the problems, I prefer to do all my shopping in the Co-Op store instead… Read more »

GR8M8S
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GR8M8S

The answer is simple. The parish gets to take over the planning and running of the market as the privateers have clearly failed. After a democratic consultation amongst the diversity advisors in the council they decide on what products are to be sold and who can do so. Naturally, local produce, which by definition is green, will be favoured over foreign muck from the parish next door and beyond. Prices are set by a sub-committee, chaired by the Head of HR, who get to set prices. You guessed right, local stuff will be set at prices so that local suppliers… Read more »

ManofBath
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ManofBath

Farmers’ markers were partly set up because supermarkets weren’t offering farmers a decent price to enable producers to make a ‘decent’ profit. So the producers sell direct to the customer using open air stalls that can’t be too expensive to run. However, instead of splitting the increased profit margins with consumers to encourage sales, the producers turn out to be as greedy as the supermarkets by charging prices higher than the supermarkets. The products on offer are hideously overpriced and simply not that much better to justify the higher prices. There simply aren’t enough middle-class handwringers to buy all that… Read more »

Rhoda Klapp
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Rhoda Klapp

I didn’t miss the pleasures of dealing with a market trader. The thumb on the scales, the items taken from the back of the pile, the paying for mud. Those markets lost when supermarkets came in. Supermarket shopping is way more convenient. But farmers’ markets, all of the fun the old market but with high prices, I can manage without.