Like many of us, due to the busy nature of my work, I normally do my grocery shopping on the weekend. One bonus of my position acting as a farmers’ market manager is that I receive weekly opportunity to purchase at the market. But occasionally I forget to get something I need, so I will stop to a small grocery shop close to my house. As I was collecting onions at the grocery this past weekend, I thought of a typical topic I hear a lot: Am I spending more for my food at the store, or at the farmers’ market? There is a preconception that local goods are more expensive than nonlocal items frequently available in grocery shops. But is this true? Today we will study about how food is produced and how these elements effect the price tag we see at the shop as well as what current research shows about how costs compare between different food market locations.
Farm Finances: Putting a Price on Food
Regardless of which marketplaces farmers choose to sell their meals to, the pricing of their products boils down to the cost of producing those items and setting prices that cover those expenses with a margin of profit. To estimate production costs, producers have to account expenses of inputs such as seeds, land preparation, labor necessary for their specific crops or animals, packaging materials, equipment, and tools. All these components are summed together to produce their budget and are used to establish the pricing needed to pay these expenditures and earn a marginal profit. Some crops take more labor to grow (eg, tomatoes are expected to require 49 hours of effort per 100-foot row, compared watermelon which are projected to need 4 hours for the same space). For farmers selling directly to customers (ex. farmers’ markets, roadside stalls), costs also include packaging (crates, cartons, bags), transportation, labor and time to sell at markets, equipment (tables, tents, membership fees, etc.), and advertising materials. When a farmer sells wholesale, (ex. to supermarkets, restaurants, and institutions like schools), they often receive a lower price but there is decreased cost for labor and marketing, since the wholesaler covers this piece of the supply chain. To review, food price is decided by the cost of production, transportation, processing (if needed for the product), and marketing before it reaches us as consumers, whether we buy it at a farmers’ market or store. So now that we know how pricing is established, how do prices differ between direct markets and outlets like grocery stores?
Read Also: Local Sustainable Food Chain
Price Check: Are Foods Sold at Direct Markets More Expensive Than Grocery Stores?
As we have learnt today, there are a number of factors that impact the cost of food. In addition to agricultural prices, local food pricing is determined by place-specific factors, such as differential property taxes, cost of labor, and land value, therefore pricing will be different in every town. That being said, research has shown that, on average, local produce being sold in direct markets are cheaper than their counterparts sold at grocery stores, regardless of the time of year. A research done in 2011 in North Carolina indicated that 79% of commodities represented at farmers’ markets had a lower average price than at supermarkets. Another research in 2016 also in our state indicated that, on average, the prices of fruit and vegetables sold at farmers’ markets and roadside vendors are equivalent to and sometimes cheaper than those at supermarkets, depending on the product. For items that have higher priced in direct markets, such markets’ participation in nutrition assistance programs (ex. SNAP/EBT, WIC, Double Up Food Bucks, etc.) can also help cut costs on the consumer end.
Today we have touched on what variables go into the price tag we see for food in markets and how pricing varies between different market shops. This is an area of expanding research, and every community will be different with relation to price for food. However, the value of investing in local food also goes beyond what we spend as consumers. By opting to buy from our local farms, there is a larger likelihood of the “multiplier effect” occurring, which means that money spent to purchase local food is more likely to remain local and contribute to our local economy. The ripple effects of opting to purchase local food may assist our local food system as well as our community as a whole.
For more information on the cost of local food and how investing in local food may influence our community, call the North Carolina Cooperative Extension – Lee County Center and ask for Meredith Favre, our Local Foods Agent, for additional information.
Kari Pettersen
Like many of us, due to the busy nature of my work, I normally do my grocery shopping on the weekend. One bonus of my position acting as a farmers’ market manager is that I receive weekly opportunity to purchase at the market. But occasionally I forget to get something I need, so I will stop to a small grocery shop close to my house. As I was collecting onions at the grocery this past weekend, I thought of a typical topic I hear a lot: Am I spending more for my food at the store, or at the farmers’ market? There is a preconception that local goods are more expensive than nonlocal items frequently available in grocery shops. But is this true? Today we will study about how food is produced and how these elements effect the price tag we see at the shop as well as what current research shows about how costs compare between different food market locations.
Farm Finances: Putting a Price on Food
Regardless of which marketplaces farmers choose to sell their meals to, the pricing of their products boils down to the cost of producing those items and setting prices that cover those expenses with a margin of profit. To estimate production costs, producers have to account expenses of inputs such as seeds, land preparation, labor necessary for their specific crops or animals, packaging materials, equipment, and tools. All these components are summed together to produce their budget and are used to establish the pricing needed to pay these expenditures and earn a marginal profit. Some crops take more labor to grow (eg, tomatoes are expected to require 49 hours of effort per 100-foot row, compared watermelon which are projected to need 4 hours for the same space). For farmers selling directly to customers (ex. farmers’ markets, roadside stalls), costs also include packaging (crates, cartons, bags), transportation, labor and time to sell at markets, equipment (tables, tents, membership fees, etc.), and advertising materials. When a farmer sells wholesale, (ex. to supermarkets, restaurants, and institutions like schools), they often receive a lower price but there is decreased cost for labor and marketing, since the wholesaler covers this piece of the supply chain. To review, food price is decided by the cost of production, transportation, processing (if needed for the product), and marketing before it reaches us as consumers, whether we buy it at a farmers’ market or store. So now that we know how pricing is established, how do prices differ between direct markets and outlets like grocery stores?
Read Also: Local Sustainable Food Chain
Price Check: Are Foods Sold at Direct Markets More Expensive Than Grocery Stores?
As we have learnt today, there are a number of factors that impact the cost of food. In addition to agricultural prices, local food pricing is determined by place-specific factors, such as differential property taxes, cost of labor, and land value, therefore pricing will be different in every town. That being said, research has shown that, on average, local produce being sold in direct markets are cheaper than their counterparts sold at grocery stores, regardless of the time of year. A research done in 2011 in North Carolina indicated that 79% of commodities represented at farmers’ markets had a lower average price than at supermarkets. Another research in 2016 also in our state indicated that, on average, the prices of fruit and vegetables sold at farmers’ markets and roadside vendors are equivalent to and sometimes cheaper than those at supermarkets, depending on the product. For items that have higher priced in direct markets, such markets’ participation in nutrition assistance programs (ex. SNAP/EBT, WIC, Double Up Food Bucks, etc.) can also help cut costs on the consumer end.
Today we have touched on what variables go into the price tag we see for food in markets and how pricing varies between different market shops. This is an area of expanding research, and every community will be different with relation to price for food. However, the value of investing in local food also goes beyond what we spend as consumers. By opting to buy from our local farms, there is a larger likelihood of the “multiplier effect” occurring, which means that money spent to purchase local food is more likely to remain local and contribute to our local economy. The ripple effects of opting to purchase local food may assist our local food system as well as our community as a whole.
For more information on the cost of local food and how investing in local food may influence our community, call the North Carolina Cooperative Extension – Lee County Center and ask for Meredith Favre, our Local Foods Agent, for additional information.