Price Comparison of Farmers’ Markets, Grocery Stores, and Co-ops on Organic and Conventional Food
How much of the cost of food depends on how it is marketed? Do comparable items have a consistent price relationship when purchased in different venues?
Four years ago NOFA-Vermont published a study of both organic and conventional produce prices, when sold at farmers’ markets, grocery stores, and, for organic items, at food co-ops. The study grew out of a desire to understand why farmers’ markets were such a tiny part of the market, especially among low-income buyers. As Jake put it:
The number of farmers’ markets in the United States has precipitously grown in the last two decades, from an estimated 1,755 farmers’ markets 15 years ago to a current figure of 5,274. Vermont alone has experienced a 177% increase in farmers’ markets in the last 15 years, growing from 27 farmers’ markets in 1995 to the current figure of 75. The increase in farmers’ markets over this period corresponds to a growing concern over food production practices and a related increase in demand for locally grown food. Yet, according to USDA estimates, American consumers still only spend approximately 0.2% of their food dollars at farmers’ markets. More troubling, recipients of Supplemental Nutrition Assistance Program (SNAP) benefits spent only 0.008% of their total benefits nationwide at farmers’ markets in 2009.
The Vermont report mentioned earlier studies in Oregon and Iowa which found that consumers perceive farmers’ markets as having higher food prices than grocery stores. Was this perception accurate? The NOFA-VT study aimed to find out.
Five researchers were sent out in July, August and September to 21 venues — 9 farmers’ markets, 10 grocery stores, and 2 food co-ops. Efforts were made to be sure data collection included the first week of each month because that is when new SNAP benefits are received. Prices were collected for 12 core items, but cucumbers were compared both per pound and per item, and lettuce was compared for mixes and per head. Care was used to make sure items being compared were equivalent. When several vendors at a market all sold the same item, prices for each vendor were recorded. Likewise, if a store sold several varieties of an item, prices for each were used.
The items on which data were collected were:
- Blueberries: Priced per pint.
- Cantaloupe: Priced per pound.
- Corn: Sweet corn on the cob, priced per ear.
- Cucumbers: No pickling varieties or special varieties like European or miniature cucumbers. Priced per pound and priced per cucumber.
- Eggs: Large Grade A, priced per dozen.
- Peppers: Green bell peppers, priced per pound.
- Lettuce: Mesclun and spring mix cut varieties, priced per pound. Head lettuces, priced per head.
- Potatoes: Yukon gold and red skinned potatoes—no fingerlings—priced per pound.
- Peas: Snow peas, priced per pound.
- String beans: Only green—no other colored varieties—priced per pound.
- Squash: Yellow summer squash, priced per pound.
- Tomatoes: Slicing varieties, priced per pound.
The prices per item for each venue were averaged and the results compiled in three comparisons:
- farmers’ market conventional versus grocery store conventional
- farmers’ market organic versus grocery store organic and co-op organic, and
- farmers’ market organic versus grocery store conventional.
Figure 1 shows the conventional vs. conventional price comparison results.
When comparing conventional prices between farmers’ markets and grocery stores, farmers’ market prices are lower for 5 out of the 14 (about 36%) items compared, if one considers that cucumbers are cheaper by the pound and per cucumber as well. Surprisingly, one of the largest percent differences is between mesclun and spring mix lettuces. There is 49.7% difference between conventional lettuce mixes at farmers’ markets and conventional mixed lettuces at grocery stores. Cantaloupe, cucumbers, and snow peas were the other items that had a lower average price at farmers’ markets. Cantaloupe had the highest observed percent difference of 73.0%, while cucumbers priced per cucumber had the lowest observed percent difference of 3.82%.
Grocery store items were cheaper for 9 out of the 14 (about 64%) items compared. The greatest percentage differences were observed between eggs and potatoes, with percent differences of 43.3% for conventional eggs and 57.8% for conventional potatoes. Neither of these differences is particularly unexpected.
Producers of local eggs selling at farmers’ markets do not operate at nearly the level of production that conventional egg producers do, lacking the overall economy of scale that industrial egg facilities enjoy. Also, treating conventional eggs at farmers’ markets equivalent with conventional eggs at grocery stores is particularly difficult, because the practices of those selling locally at the farmers’ market, particularly related to animal welfare, may align more closely to organic practices.
As with eggs, the economy of scale that a conventional potato producer operates at is far greater than a local Vermont farmer selling at a farmers’ market. The comparative advantage afforded to conventional potato producers through greater scale of production and possibly optimal climatic conditions, therefore, is likely indicated in the price difference for conventional potatoes.
If one were to factor out eggs and potatoes, the average percent difference between the prices of the remaining 7 conventional items (blueberries, corn, peppers, string beans, squash, tomatoes, and head lettuce) would only be 19.8%, with the lowest percent difference of only 9.57% existing between conventional grocery head lettuce and conventional farmers’ market head lettuce.
Figure 2 shows the organic (farmers market) vs. organic (grocery store) price comparison results.
Organic prices at farmers’ markets were less than organic prices at grocery stores for every item other than potatoes, and less than every item other than cucumbers per pound and potatoes at coops. There is on average a 38.8% difference between the price of organic items that were cheaper at farmers’ markets and the price of organic items at grocery stores, and a 28.7% difference between the farmers’ market organic items and their co-op counterparts. There were no organic observations at grocery stores for corn, snow peas, or string beans. In fact, only about 17% of total observations at grocery stores were made of organic items. In contrast, about 53% of total observations at farmers’ markets comprised of organic items, indicating that organic producers in Vermont have a healthy share of the overall local market, at least at farmers’ markets. It is also of interest that of the farmers at farmers’ markets who did not have certification, 57% identified their practices as organic.
Figure 3 shows the price comparison between organic items at farmers’ markets with conventional items at grocery stores.
Because organic observations comprised slightly more than half of all observations at farmers’ markets, a comparison of organic prices at farmers’ markets with conventional prices at grocery stores seems appropriate. Organic items at Vermont farmers’ markets have in a sense become a conventional offering, in so far that one can go to a farmers’ market and reasonably expect there to be a wide range of organic offerings. As we have seen with the farmers market organic vs. grocery organic comparison, the substantially greater supply of organic items at farmers’ markets may be playing a part in making those items more price competitive than organic items at grocery stores. In other words, the scarcity of organic items at grocery stores is partly responsible for the price premium received by those organic items. Consequently, it becomes pertinent to see how price competitive a more abundant supply of organic items at farmers’ markets is with conventional items at grocery stores
Organic prices at farmers’ markets were less for 4 out of the 14 items (about 29%), with prices for 9 out of the 14 (about 64%) conventional items being less at grocery stores. The average price per cucumber was the same in each case. As with the conventional vs. conventional comparison, average prices for organic cantaloupe, lettuce, and snow peas were less than the conventional grocery price for these items. There were, however, a small number of observations for cantaloupe. Organic head lettuce as well, by a slight margin, was less than the conventional option at grocery stores.
Once again, it is not surprising that conventional eggs and potatoes are notably less at grocery stores. For eggs, especially, this is so because organic feed for chickens is significantly higher than conventional chicken feed. Examining the percent differences in which the prices of conventional grocery items at grocery stores were less than the organic items at farmers markets, excluding eggs and potatoes, reveals an average percent difference of 31.2%.
The study found that prices of conventional produce at farmers’ markets are in many cases competitive with conventional produce at grocery stores. But the real farmers’ market advantage exists for organic items. Every organic item, aside from potatoes, was observed to be less at farmers’ markets than at grocery stores. In some instances organic items at farmers’ markets were even less than conventional items at grocery stores. Due to the affordability of organic items at farmers’ markets, consumers who are interested in buying more organic food but who also have budgetary constraints should consider purchasing organic produce at farmers’ markets as a viable alternative to purchasing organic, and, in some instances even conventional items at grocery stores. Not only will they encounter cheaper organic prices, but there is also a good chance that they will have a greater variety of organic produce available to choose from.
Paradoxically, the abundance of organic options at farmers’ markets may be fueling the perception, at least in Vermont, that prices at farmers’ markets are much higher than they are at grocery stores. In one study it was shown that SNAP recipients had the perception that farmers’ markets sold primarily organic items, and that they in turn perceived organic to be more expensive in general. It is plausible that consumers are constructing their perceptions of organic prices at farmers’ markets based upon their encounters with organic prices at grocery stores. In response, farmers’ markets could more deliberately emphasize the strength of their organic offerings, conveying to consumers that not only are organic prices affordable at farmers’ markets, but the value received for the price is comparatively high – that is consumers are receiving, at a reasonable price, a healthy, locally, and sustainably grown product.