Farmers’ Market Finances

Farmers’ market finances are not that different from finances for any other project: you create a budget, track income, track expenses, compare to your budget, and use the information to make financial decisions that are in the best interest of your farmers’ market and your organization.

As you prepare to launch and operate your farmers’ market, be sure to have plans in place for each of these important elements of a financial tracking system.

  • Funding and Income
  • Market Expenses
  • Tracking Liabilities
  • Keep Seasonality in Mind

Funding and Income

If you have grant funding that is helping you to launch your farmers’ market you may want to track that activity parallel to income and expenses from the fees generated by the farmers’ market. Doing so will help you to more easily see what your farmers’ market finances might have looked like if the grant funding had not been available. This can be very helpful in predicting whether or not your farmers’ market will be able to be self-sustaining financially once the grant funding has ended.

For most farmers’ markets, stall fees collected from farmers and other vendors are the primary source of income. When crafting your budget for the year you can take the number of farmers and vendors you expect to have in your farmers’ market throughout the year, times the number of times each farmer or vendor will be present, times the amount that you charge for stall fees. This provides a good starting point to budget your income for the year. If you are budgeting more conservatively, you may want to reduce that figure by 5% to 10% in anticipation of farmers or vendors who skip a week due to illness, lack of crops or equipment breakdown. If you are budgeting aggressively, you may want to increase that figure in anticipation that one or more new farmers or vendors whom you have not yet contacted, will agree to sell in the farmers’ market during the year.

Market Expenses

When budgeting for expenses, be sure to include staff time for farmers’ market planning, correspondence, promotions, and reporting as well as staff time to be present in the farmers’ market on market days. Once a farmers’ market is up and running it is not unusual for a market manager to spend each week, 10 to 15 minutes in office work for each hour that the farmers’ market is operating.

While some farmers’ market expenses may be easy to budget, others are dependent on outside forces. Your farmers’ market will be subject to inspections by your county’s department of agriculture and department of environmental health. Your farmers’ market will be billed for the time that the inspectors spend in your farmers’ market conducting the inspections. You may want to check with these county offices when crafting your budget to generate an estimate of the potential inspection costs during the year.

The inspection processes, frequency of inspections, and rates will vary from county to county. If an inspector finds problems you may face citations which include financial penalties and have to pay for follow-up inspections to prove that the problems have been solved. Operating your farmers’ market in compliance with state and local regulations is the most cost-effective solution.

When tracking farmers’ market expenses it can often be useful to track separately purchases that have usefulness for a year or more from those that have only a single use. For example, a tent, table or promotional sandwich board can last several farmers’ market seasons. You may want to budget and track these expenses as “equipment.” Other purchases such as paper signs or promotional shopping bags that have a single use or that will be exhausted by the end of the farmers’ market season could be tracked separately as “supplies.” This division is especially important in the first season of your farmers’ market operation as it allows you to more easily identify your startup costs, which will not need to be repeated the following year, from ongoing operational costs.

Tracking Liabilities

One of the most complicated elements of farmers’ market budgeting and finances can be the tracking of financial liabilities. As you will be operating a retail establishment, you may find that from time to time you are issuing a scrip of some kind to your customers that has a financial value.

For example, if you are operating the CalFresh processing for your farmers’ market, CalFresh customers will swipe their EBT cards with your staff or volunteers who will then issue them scrip, usually paper coupons or plastic or wooden tokens, that the customers will then spend with the farmers and vendors to purchase food. If your customers purchase $100 in scrip during the day but only spend $75 of the scrip that day, choosing to hold on to the remaining $25 to make purchases at a future market, you have created a $25 liability for your farmers’ market.

Similarly, if you are using coupon vouchers to attract customers or incentivize farmers’ market purchases (see Section 6, “Promoting Your Farmers’ Market” for more information on coupons), you are creating a liability as each coupon voucher represents a promise to pay the bearer in goods or services at a future date. From a financial perspective it is a best practice to put expiration dates on coupons that you create, even if the expiration date is the last date the farmers’ market is scheduled to operate for the year, so you have the ability to cancel these outstanding liabilities.

The need to track these types of liabilities is something that you should discuss with your accounting team. In part, the decision depends on the scale of the liabilities relative to your total farmers’ market budget and your total organizational budget. If the liabilities are small relative to the overall budget, your accounting team may decide that it is not cost effective to invest the additional time into tracking them. If the liabilities are a significant enough percentage of your budget, it may be decided that tracking those liabilities is important in order to assess the long term financial viability of the farmers’ market.

Keep Seasonality in Mind

It is not unusual for farmers’ market expenses to exceed income at the beginning and end of the season when there are fewer farmers available to sell in the market. 

As was discussed elsewhere in this guide, farmers’ markets are dependent upon the produce that is harvested seasonally. This means that the presence of farmers is not a constant throughout the year but will instead shift with the season as farmers who begin to harvest crops enter the farmers’ market and those whose harvest has ended leave the market. This shifting supply of farmers has a direct impact on your budget and overall farmers’ market finances. It is not unusual for farmers’ market expenses to exceed income at the beginning and end of the season when there are fewer farmers available to sell in the market. The goal is to make up those losses in the peak months of the farmers’ market when there are more farmers available and income exceeds expenses.

Randii MacNear, the manager of the Davis Farmers’ Market, wrote about this pattern in “Starting a New Farmers’ Market,” published by the University of California Small Farm Program.

When evaluating and reviewing the budget during the course of the year, keep in mind that most year-round markets do not begin to operate in the black until midway through the budget year. For example, a market that uses a calendar-year budget (January to December) will most likely be in the red on financial statements until June or July. […]

After July, the market should begin to see the financial picture shift into the black. Typically markets do not begin to see adequate income-to-expense ratios until the spring and summer sales volumes occur; however, expenses such as salaries, office rent, and health benefits remain constant on a monthly basis all year long. To evaluate how the market is doing, the market manager can compare year-to-year financials and year-to-date financials for increases or decreases or red-flag items. In other words, newcomers to budgeting should know not to panic if the market operates in the red for six months out of the year. This is a fairly normal occurrence for year-round markets.

“Farmers Market Management Series Volume 1: Starting a New Farmers Market,” US Small Farm Center, 2005.

A Guide to Opening Small Farmers' Markets in San Jose, California