Recession Threatens Los Angeles Farmers Markets

A recent article in the LA Times reports that the City of Los Angeles is considering imposing new fees on farmers markets within city limits. According to the city the fees are intended merely to recapture the cost of supporting the events. These fees, which in one example were projected at $80,508 per year, threaten to kill off a number of LA's 48 farmers markets.

"Farmers market managers in Los Angeles are in a tizzy over a proposed city ordinance that would charge more than 20 markets tens of thousands of dollars to recoup the city's costs of enabling their events, which could force them to close or move if new ways to cover the costs can't be found."

The recession, which has pushed the unemployment rate in California to 12.2%, the highest since WWII, has also put stress on local budgets. The City of Los Angeles is now looking to stop some of the bleeding by leaning on farmers markets when it had previously looked the other way: "In the past, the city issued a notional bill for services to farmers markets but, in effect, waived these fees and absorbed the costs in its budget; the new ordinance eliminates this waiver."

The potential that the fees may eliminate some LA farmers markets raises the question of whether closures will actually push gross receipts down. The USDA notes that farmers markets have numerous positive economic impacts on the local communities where the markets are based and on rural farmers who are able to sell their produce at full retail prices instead of wholesale. By imposing the fees the City may in fact be exacerbating its financial problems. The City Council has passed the ordinance and the new fees could start being assessed as soon as October if Mayor Antonio Villaraigosa signs the legislation.

More broadly, what impact will the recession have on farmers markets nationally? If the recent trend towards farmers markets is not well rooted - financial challenges facing consumers and cities may slow or even reverse this rapid growth. The data clearly show that growth in the industry has been substantial:

"Today, farmers markets seem to be everywhere -- there were almost 500 in the state last year, more than 80 of them in Los Angeles County. And although the farmers market movement is closely identified with California, it has exploded into a national phenomenon. There were more than 3,700 farmers markets in the United States in 2004, according to the U.S. Department of Agriculture, more than double only a decade before."

And according to the USDA, "Direct sales data were first reported ... in 1997,

when 110,630 farms sold $592 million of foods directly [$758 million of sales once adjusted for inflation]." In 2007, 136,817 farms sold foods directly and sales increased to more than $1.2 billion.

It's an open question as to whether this growth sustainable and what a slow down or reversal might mean for the rural farmers who supply the markets. There are too many variables to sort through here. There are a few factors weighing in favor of farmers markets and rural farmers. First, quality. Local markets offer higher quality produce that's picked when ripe, not a week or more before. Second, while difficult to quantify, farmers markets offer consumers access to community - an opportunity to interact with their neighbors and farmers. Finally, there is the massive size of the farm industry. According to the same USDA study above, direct food sales make up just 0.4% of the $300 billion in farm sales in 2007. So there's potentially a lot of room for growth... if they don't get run out of town first.