Every farmer in a farmers’ market is operating his or her own small business. The role of the farmers’ market is more akin to that of a shopping center, providing space for multiple small businesses to operate, than to a grocery store where the operator is selling food.
Each of the farmers in a market has the right to set his or her own prices. Your ability as a market manager to control pricing is very limited. While it may not have been tested in the courts, the opinion of many in the farmers’ market industry is that any attempt to limit prices that farmers can sell at would likely be considered “price fixing” and would therefore be illegal under state law.
The University of California Small Farm Program offered this advice concerning prices in its 2005 publication, Growing Your Farmers Market:
While it may seem unlikely that anyone would enact Sherman Antitrust laws against a market or vendor, the potential does exist. In one case, a complaint was made against a market because of a clause in its rules that stated that “vendors cannot price their goods more than 25 percent lower than the going rate for that item.” The intention of this rule was to limit “dumping” of produce at the market, but it had unintended effects. You can avoid similar controversies at your market by letting vendors set their prices independently. It is better to protect your vendors by maintaining a carefully balanced market mix that meets customer demand without too much oversupply than to try to regulate prices arbitrarily.
While you don’t have the ability to set or control prices, there are steps that you can take to influence prices:
- As you invite farmers to sell at your market be upfront with them about the community that you want to serve. Let them know if you are targeting a lower income community that is likely to be cost-sensitive.
- Do price comparisons at local grocery stores or corner stores and provide that information to your farmers so they understand the prevailing prices for food in the community and are better able to set competitive prices.
- Do everything you can to keep your costs of operating the market low so you can keep the amounts that you charge farmers to participate low as well. This demonstrates to the farmers that you are committed to their success and are doing what you can to support their efforts to charge affordable prices.
- If there is sufficient consumer demand, invite the participation of several farmers with similar products. Competition between farmers often results in lower prices, and can motivate farmers to invest further in marketing and merchandising strategies for their product.