The following material is excerpted from the publication, "Farmers' Markets and Rural Economic Development: Entrepreneurship, Small Business Incubation and Job Creation in the Rural Northeast." To order the complete publication, click here and select "Publication Order Form."

Most research and popular press articles about farmers' markets have focused on consumers' and communities' points of view. Little attention has been paid to the vendors themselves. This publication examines farmers' market vendors in detail and shows how the benefits and opportunities that farmers' markets provide to their vendors are also shared by their communities.

Farmers' markets provide a wide range of benefits, opportunities, and services for the vendors, their businesses, and families. Markets can have three general impacts on vendors' livelihoods:

#1. Enhance Business Opportunities

Promoting Business Start-up and Development
Most vendors either did not have a business before they start selling at a farmers' market or they start on a small scale at their residence. Many vendors do not have the capital to open a retail outlet, or they perceive that they have few other marketing options available.

Farmers' markets can help entrepreneurs overcome these barriers.

Facilitating Product Development and Diversification
Large businesses often use focus groups to provide their product developers with feedback on what consumers like and dislike about their products. Farmers' markets can provide a similar service to vendors.

Creating Opportunities to Add Value to Products
Many vendors believe their market provides an opportunity to add value to their products through processing or through packaging and labeling.

Enhancing the Customer Base
Markets provide vendors an opportunity to expand the size and diversity of their customer base because of a stable market for their products and increased publicity for their business.

Expanding Sales and Income
Markets provide vendors opportunities to earn extra income above and beyond their normal sources and help to enhance sales at other outlets, such as their own roadside stands.

#2. Foster Business Skills and Entrepreneurship

Farmers' markets help vendors hone their skills in areas such as business management, marketing, communication, leadership, and entrepreneurship. They do so by helping the vendor improve their understanding of consumer needs, self- confidence in merchandising skills, cooperating with others, advertising and customer relations, pricing, and competing effectively.

#3. Positive Effects on Vendors' Families

The families of vendors benefit in a number of ways:

• market income contributes to the households financial wellbeing,
• the market provides a learning experience and job opportunities for children and spouses,
• potentially helps some public assistance recipients make a transition to regular employment by providing the opportunity to experiment with a small business.

Farmers' Markets' Contribution to Economic Development

The Incubation Function
Farmers' markets provide a rich entrepreneurial environment for starting new businesses or products, or changing the direction of existing businesses. They provide the opportunity to convert an avocational skill or hobby into a money-making venture, thus transforming an informal enterprise into a more formal one.

Other Community Impacts

1. Farmers' markets can plug economic leaks and promote a re-circulation of local dollars - that is, they can capture some of the dollars that formerly left the community as payments for food and household goods produced elsewhere.

2. Farmers' markets tend to have a unique blend of farm, food, and craft businesses. markets showcase the sights, smells, and sounds of a community - all of which draw tourists who bring new dollars from outside the community.

3. Consumers who come to a community to shop at a farmers' market also tend to patronize other local businesses - especially those close by.

4. Because they provide supplemental income and low-cost start-up opportunities, farmers' markets may be particularly helpful to communities which are undergoing severe economic dislocation or restructuring.

5. Markets can provide opportunities for youth entrepreneurship development and for retirees in the community to generate extra income.

6. As vendors' businesses expand, they may hire additional non-family labor. This creates further employment opportunities for rural residents.

7. Finally, by helping farmers stay in business, farmers' markets directly contribute to the preservation of open space, and the maintenance of the rural character of the land.

Important Caveats

Having clarified the business, job and income-creation potential of farmers' markets, it needs to be pointed out that:

• Farmers' markets are not for everyone.
• Farmers' markets alone will not revitalize a central business district.
• Vendors differ in their commitment to entrepreneurship
• Vendors differ in their visions for their farmers' markets.
• Many vendors want to keep things simple and with little formal organization and outside help.
• Although some market and enterprise successes are dramatic, most are small and incremental
• Not all promising businesses will be successful and flourish. (However, not all modest ventures are insignificant).
• Many vendors and markets are not conceptually aware of, or do not appreciate, the farmers' market "incubation function."

Though they are not an economic development panacea, farmers' markets should be considered an important component of a comprehensive local economic development strategy.

Supporting the Economic Development Contributions of Farmers' Markets

Our research suggests that the greater the public and private support of farmers' markets, the more their economic development potential will be realized, and the greater their contribution to the community will be.

Local agencies can help support the economic development contributions of farmers' markets by assisting with.

1. Finance

• Raising funds for facilities and promotion.
• Providing appropriate and adequate liability insurance coverage.
• Establishing a revolving loan fund for market vendors that can provide growers with seasonal start-up funds in spring, or that can help a food processor buy needed equipment. The fund could be capitalized with support from larger businesses, local financial institutions, and the vendors themselves.

2. Education and Training

• Linking educational and training opportunities in marketing, merchandising, market gardening, bookkeeping, food processing, state and local regulations, personnel management, and labor regulations. Many educational agencies can provide training support for farmers' markets, including community colleges, vocational centers (e.g., Future Farmers of America), Small Business Development Centers, Service Corps of Retired Executives (SCORE), Minority and Women-Owned Business Development Centers, and Cornell Cooperative Extension, e.g., 4-H
• Training and professional development of market managers so they can further help the vendors regarding county and state regulations, permits, sales tax, product labeling, and referrals for business counseling.
• Identifying possible clients for more intensive support. Representatives from agencies should be encouraged to occasionally visit the farmers' market to talk with vendors, ask and answer questions, find out who the serious entrepreneurs are, what stage their businesses are in, and where they would like to take their businesses.
• Preparing manuals for new vendors, including how to make stalls more attractive, how to keep products from spoiling, etc.

3. Facilities/Organizational Development

• Helping to secure a permanent farmers' market location, or, if desired, a year-round facility. Dealing with zoning, and regulatory/tax relief.
• Helping to establish a certified inspected food processing center either at a farmers' markets (as part of an indoor facility), or at some other location specifically for farmers' market vendors.
• Helping to establish producer cooperatives as separate business entities that sell product surpluses wholesale to local restaurants, grocery stores and institutions.

4. Regulatory Assistance

• Helping market managers and vendors to stay abreast of local, state, and federal legislation affecting them.
• Working with local code enforcement, zoning, and planning agencies to ensure a safe and prosperous market.

5. Public Relations

• Facilitating open and ongoing dialogues with local businesses to alleviate concerns about traffic congestion, parking problems, competition, etc.
• Promoting inter-agency cooperation to avoid organizational turf battles which inhibit community development. Potential collaborators include Cooperative Extension, Agriculture and Farmland Protection Boards, Chambers of Commerce, planning departments, economic development agencies, consumer groups, churches, etc.

Conclusions

Farmers' markets permit entrepreneurs to achieve as a group what is extremely difficult to do as individuals - that is, to tap a large and loyal customer base. We have also shown how farmers' markets offer a package of benefits and opportunities to their vendors. The capability of the farmers' markets to do this varies from market to market and community to community. Furthermore, these contributions are most likely under-utilized by market sponsors and local economic developers. Not all vendors or farmers' markets will be as successful as some of those described in this bulletin.

However, if success is defined modestly as enjoying the opportunity to establish, expand, or change the direction of a business, then farmers' markets are making an important contribution to that success. There is room for further development of the "incubation function" of farmers' markets, and we have identified some of the ways that communities and local economic developers may be able to support farmers' markets and enhance their capacity to foster economic development and improve the quality of life in rural communities

For more information, contact:

Community Food and Agriculture Program (CFAP)
216 Warren Hall
Cornell University
Ithaca, NY 14853
(607) 255-0417
dlh3@cornell.edu