image used as white space
MSUcares header Link to home page
Logos of MSU, Extension Service, and MAFES Links to home page of website.
Publications

Economic Impact of
Farmers’ Markets in Mississippi

pdf icon Printable PDF version (4 pages)

As the U.S. economy continues to struggle, so are many communities. Even when times are good, many communities, especially rural and small ones, face economic challenges. These and other challenges multiply and increase in magnitude during tough economic downturns.

Establishing farmers’ markets is one rural development strategy that communities are implementing across the state. These facilities provide growers with an established place to sell locally grown produce directly to consumers. Farmers’ markets are good for local economies, farmers, and consumers. They provide growers with extra income since many farmers and local citizens must work full-time either off the farm or outside the local area to support their families. Farmers’ markets help producers to receive higher prices by removing the broker and selling directly to consumers.

Farmers’ markets provide consumers more outlets to buy fresh produce and create local economic impacts. The communities in which these facilities operate benefit from more money spent in the local economy, creating spending, re-spending, and higher multiplier effects in the area. Besides retail spending by consumers, farmers’ markets help promote business development and expansion in the local area.

The potential for fruit and vegetable sales from farmers’ market facilities is strong since most consumers in the United States no longer grow their own produce. Mississippi food and beverage industries sold almost $7.2 billion in fiscal year 2008. Many of these purchases left the state because a significant amount of the sales occurred in supermarket chains, which is where most consumers buy their farm produce.

Farmers’ Markets in Mississippi

There currently are 54 active farmers’ markets in Mississippi, with more starting each year. Most of these facilities are seasonal in operation, opening two to three times per week during a 3-to 4-month period. The operating periods of farmers’ markets usually correspond to the growing season in the local area.

To understand the economic impact of farmers’ markets in the state, Mississippi State University’s Department of Agricultural Economics and MSU’s chapter of the National Agricultural Marketing Association (NAMA) conducted a survey of these facilities in Mississippi in September 2009. During a 4-week period, NAMA students attempted to contact all 54 farmers’ markets in Mississippi. The students obtained information from 26 facilities in the state. These facilities were further divided into three classes based on the size of the community they served—fifteen were small markets, nine were medium-size, and two markets were large (Table 3).

The MSU survey revealed that 446 vendors sold produce at the 26 farmers’ markets surveyed in the study (see Table 1). About 127 vendors participated in the small farmers’ markets, 207 vendors at medium-size markets, and 112 vendors at the large farmers’ markets surveyed (Figure 1). These findings suggest farmers’ markets in Mississippi met some of the marketing needs of growers and demands of consumers for fresh produce in those areas, especially in the small- to medium-size markets.

Total sales among vendors exceeded $1.4 million at these facilities in 2009 (Table 1). Sales by size of the facility were $236,100 for small, $665,781 for medium, and $514,000 for large (Figure 2). Sales at medium-size markets were three times more than at smaller markets and about 130 percent higher than large markets in Mississippi. Sales at large markets were only 77 percent of sales at medium markets but 216 percent of sales at small markets.

The average sales per farmers’ market by size in Mississippi were $15,740 for small, $73,976 for medium, and $257,000 for large. Sales per vendor at these facilities were $1,859 for small, $3,216 for medium, and $459 for large (Figure 3). These findings suggest that consumers patronize farmers markets more in small- and medium-size communities than in large communities in Mississippi; although sales per vendor were higher among larger markets in the state. This was not too surprising because, in general, larger communities have more outlets for consumers to purchase fresh produce.

Results from the survey confirm the authors’ opinions that farmers’ markets in small- and medium-size communities produce greater economic returns for vendors while filling a void in the demand for fresh produce in the area. Farmers’ markets provide major benefits to local communities engaged in economic development. Both vendors and consumers will spend part of their weekly incomes in the immediate area before or after the farmers’ market closes. Other businesses in the local community benefit because of increased customer traffic in the trade area.

Adjusting Gross Income
Gross income to farmers’ market vendors ($1,414,881) was adjusted to account for state income-only taxes ($350 + 5 percent of income over $10,000; no deductions). This produced a disposable income of $1,259,781. Spending by farmers’ market vendors was estimated at $944,836, based on an assumed marginal propensity to consume of .75. Because vendors’ disposable income has been adjusted to reflect local spending, the local purchase coefficients were set to 100 percent for the impact scenarios.

Benefits of Farmers’ Markets
Farmers’ markets provide consumers an opportunity to purchase fresh produce, which is about as close to growing it themselves as they can get. Most produce is grown within 25 miles of the market, and many growerscharts harvest their produce the day before or the morning of the farmers’ market. The money spent at a farmers’ market stays in the community, helping both producers and consumers.

Farmers’ markets can give producers the option of selling directly to consumers at retail prices rather than wholesale prices if they are properly set up and managed. Though similar to grocery store produce in price, foods bought at farmers’ markets have the advantage of freshness. Everyone—producers, consumers, and the local economy—benefits where farmers’ markets operate. Producers can make money and have an alternative to row cropping, consumers can get a better product, and farmers’ markets can foster a sense of community. They also are beneficial to the local economy.

Since most producers work full time off the farm, farmers’ markets give them an alternative to row cropping and an opportunity to sell their produce directly to consumers. Farmers’ markets are ideal for growers who can’t produce enough to meet the large demands of supermarkets that want to buy at least 40,000 pounds at once.

Methodology
A quantitative analysis of the potential economic impacts of farmers’ markets in Mississippi was calculated using the IMPLAN 2.0 Input-Output model. The latest statewide dataset available for this modeling framework is the 2007 Mississippi dataset. After creating a state-level model for 26 farmers’ markets in Mississippi, the impact scenario was created to assess the impact of $948,640 of vendors’ spending on the state’s economy. The basic input-output model can be represented as:
X = (I –A)1 × Y
where: A = matrix of aij
 I = identity matrix
X = vector of industry outputs
Y = vector of final demand
(I – A)1 is called Leontief Inverse.

The equation shows that output is equal to Leontief Inverse multiplied by final demands. This relationship is also held in the form of changes:

ΔX = (I –A)1 × ΔY

Input data on the economic returns (i.e., income, sales, or revenues) from farmers’ markets were used to model the economic impact of these facilities in Mississippi. By examining revenues generated by vendors at farmer’ markets, spillover impacts on sales, employment, income, and local taxes can be determined.

Results
As Table 1 illustrates, $948,640 in adjusted direct farmers’ market revenues will create additional jobs, business revenues, state and local taxes, and valueadded effects on the economies in which these facilities operate in Mississippi.

Table 1. Economic Impact of 26 Farmers! Markets on Host Communities in Mississippi, 2009
Source
Direct
Indirect
Total
Multiplier
Business Sales
$948,640
$668,251
$1,616,891
1.700
Employment*
9.58
6.3
15.88
1.660
Wages and Salaries
$165,111
$48,601
$213,720
1.294
Tax Revenues
$16,080

* Employment is in terms of full-time and part-time jobs. However, these estimates are seasonal jobs based on operating schedules of selected farmers! markets in the study.

 

Sales
The direct spending of $948,640 in farmers’ market revenues generated a sizeable effect on the communities in which these facilities operate. Each dollar of direct sales added another 41.33 cents in secondary effects (mainly induced effects), yielding a total sales effect of more than $1.6 million in the 26 communities in Mississippi.

Employment
The impact on employment was marginal. Because farmers’ markets operate seasonally, the jobs created are expected to be seasonal and based on the success of the farmers’ markets. The results in Table 1 suggest that about 9.58 jobs were created as a direct result of farmers’ market vendors spending $948,640 in the communities in which these facilities operate. An additional 6.3 jobs were created as business spending increased revenues. Combined, about 15.88 seasonal jobs were created during the times these farmers’ markets operated in the state.

Wages
Personal income (wage) is a measure of the income benefit to residents of the 26 farmers’ markets in the study. The direct and indirect effects of revenues generated by farmers’ markets produced a total impact on wages of more than $213,720 in the surveyed communities. Of this total, $165,111 is direct wages associated with the spending by farmers’ market vendors and $48,601 is indirect wages. Although these impacts also are seasonal, the impacts on workers may last long after the farmers’ markets have closed.

State and Local Revenues
The impact of vendors spending $948,640 reaches far beyond the increases in employment, sales, and wages; it affects the local and state tax bases, as well. Table 2 contains the tax impacts associated with the 26 farmers’ markets surveyed in the study. The results show that retail spending by farmers’ market vendors produced $16,000 in tax revenues for local and state officials. About $5,152 of this was sales taxes, $2,668 was property taxes, and $8,260 consisted of other charges such as fees, licenses, and others. These added revenues no doubt helped support existing facilities and services and promote farmers’ market development in the state.

Summary
Rural areas, in general, continue to experience tough economic times and lag behind their urban counterparts in poverty levels, income, employment, education, and other indicators of well-being. Farmers’ markets offer a community economic development tool to help close those gaps. The initial impact of $948,640 in direct farmers’ market revenues created a total economic impact of $1.6 million in business revenues, 15.88 part-time jobs, $213,720 in wages, and $16,000 in state and local taxes on the economies in which these farmers’ markets operated in Mississippi in 2009.

Table 2. Economic Impact of 26 Farmers! Markets on Local and State Government Finances in Mississippi, 2009

Source
Total
Sales Taxes
$ 7,689
Property taxes
3,892
    Subtotal
11,671
Other taxes
12,329
Total
$24,000

Note: Total tax estimates represent the direct and indirect effects of vendors! spending on local and state government finances.

 

While farmers’ markets are not the only source for economic growth, local development officials can play a major part in supporting these facilities. For example, economic developers can set up networks and marketing strategies, communicate with chambers of commerce, and explain the economic benefits of farmers’ markets to others in the community.

Economic and government officials can help to develop farmers’ markets by giving a rent-free period during initial start-up and seek funds (donations and grants) to help defray the costs for air conditioning and refrigeration equipment to help reduce spoilage of farm products at the facility. Such assistance from local officials can improve the economic and social plight of rural communities in Mississippi.


Table 3. Survey Results of 26 Farmers! Markets in Mississippi, 2009

Business

Location

County

Vendors

Income

Class

Charles R Hedgewood FM

Biloxi

Harrison

40

$460,000

Large

Corinth FM

Corinth

Alcorn

72

54,000

Large

Adams Country FM

Natchez

Adams

20

70,000

Medium

Choctaw FM

Choctaw

Choctaw

30

41,781

Medium

Crystal Springs FM

Crystal Springs

Copiah

18

 

Medium

Forrest County FM

Hattiesburg

Forrest

18

 

Medium

McComb FM

McComb

Pike

30

17,500

Medium

Seventy-four (74)

Oxford

Lafayette

17

74,000

Medium

Mississippi FM

Jackson

Hinds

28

450,000

Medium

Tupelo FM

Tupelo

Lee

26

 

Medium

Tylertown FM

Tylertown

Tylertown

20

12,500

Medium

City of Gulfport FM

Gulfport

Harrison

15

 

Small

Clarksdale FM

Clarksdale

Coahoma

8

 

Small

Cleveland FM

Cleveland

Bolivar

7

 

Small

Courtstreet FM/New Albany FM

New Albany

Union

5

 

Small

D’Iberville FM

D’Iberville

Harrison

6

 

Small

Greenwood FM

Greenwood

Leflore

11

55,000

Small

Jackson County FM

Pascagoula

Jackson

10

3,000

Small

Neshoba Co FM

Philadelphia

Neshoba

14

90,000

Small

Pass Christian Mkt Itp

Pass Christian

Hancock

12

6,400

Small

Pine Belt F&A Mkt

Hattiesburg

Forrest

9

56,700

Small

Saucier FM

Saucier

Harrison

8

" ≤ 0

Small

Southaven FM

Southaven

Desoto

8

20,000

Small

Vaden FM

Vaden

Carroll

5

5,000

Small

Old Towne Mkt

Clinton

Hinds

5

 

Small

Waveland FM

Waveland

Hancock

4

 

Small


Copyright 2010 by Mississippi State University. All rights reserved. This publication may be copied and distributed without alteration for nonprofit educational purposes provided that credit is given to the Mississippi State University Extension Service.

By Dr. Albert Myles, Extension Professor, and Dr. Ken Hood, Extension Professor, Agricultural Economics.

Discrimination based upon race, color, religion, sex, national origin, age, disability, or veteran’s status is a violation of federal and state law and MSU policy and will not be tolerated. Discrimination based upon sexual orientation or group affiliation is a violation of MSU policy and will not be tolerated.

Publication 2582
Extension Service of Mississippi State University, cooperating with U.S. Department of Agriculture. Published in furtherance of Acts of Congress, May 8 and June 30, 1914. MELISSA J. MIXON, Interim Director (POD-03-10)