Even during this period of rapid expansion and popularity spurred on by the local food movement, a startling number of farmers' markets close within, or after, their first year of operation according to a new study from Oregon State University.
In a seven-year study of the performance of Oregon farmers' markets, 62 markets opened and 32 closed for a net statewide gain of 30 markets, said Larry Lev, a marketing economist in OSU's Department of Agricultural and Resource Economics. Nationally, more than 2,000 farmers' markets have opened since the mid-1990s. Oregon is a hotbed for this growth with 80+ markets scattered around the state. However, the increasing popularity of the markets is in direct contrast with their surprisingly high failure rate.
"Farmers' markets are a great success story for Oregon agriculture. They connect consumers with farmers and increase local food security. But underneath that success is the hidden story that says for every two markets that opened during the study period, one closed." -Larry Lev
New markets were most vulnerable to failure with 24 percent closing during or after their first year of operation. These failures represent almost half of all market failures in the state and illustrate the heightened vulnerability of first-year markets, said the researchers.
Other factors that increased risk of market failure, included:
- Small number of vendors;
- Need for a greater variety of farm products with specific emphasis on fruits and vegetables - products considered basic to farmers' markets;
- Lack of administrative revenue to meet operating needs;
- Low paid or volunteer market managers;
- High manager turnover.
These five factors are all connected to the supply and demand relationship between customers and farm vendors and can affect older markets as well, said Garry Stephenson, an Extension Small Farms specialist in OSU's Department of Crop and Soil Science. The smaller markets often fail to attract sufficient customers. Because there are few customers, fewer vendors are attracted to the market, resulting in a lack of products. In turn customers don't want to attend a market with a limited array of products.
"The relationship is different for farmers' markets than for most retail outlets," said Stephenson. "A viable farmers' market must have enough customers to be attractive to farm vendors. If the market is out of balance it may not succeed. A thriving farmers' market can become an integral part of a community linking small farmers to consumers and serving a key role in local food systems. When successful this form of civic agriculture helps communities realize their economic development objectives and their social and environmental goals." - Gerry Stephenson
To increase odds for market success, the OSU researchers are working closely with the Oregon Farmers' Market Association to develop tools, share information and solve problems. They recommend market organizers devote time to planning and promoting new markets before the high-risk first season. This should include setting realistic goals for market size and employee training. Market organizers should also identify the possibility of community support and financial support through sponsorships and public funds.
- When things don't work: some insights into why farmer's markets close. G. Stephenson, L. Lev, and L. Brewer. 2006. Oregon State Extension Service. Corvallis, OR. (Available online at: http://smallfarms.oregonstate.edu/sites/default/files/small-farms-tech-r...) (verified 11 Mar 2014).