COMMUNICATION FOUR to the COUNCIL MARKET COMMITTEE

from

FRIENDS of the MARKET August 29, 2005

INTRODUCTION This document discusses financial aspects of vendors at the Ann Arbor Farmers Market. There is relatively little data available on vendor income since information must be obtained voluntarily and vendors are reluctant to give information that they believe might be used to their disadvantage. Fortunately university researchers are interested in investigating farmers markets and their relation to family agriculture. VENDOR SALES DATA In the summer 2004, James Bingen and Susan Smalley of Michigan State University mailed survey forms to the managers of about 120 Farmers Markets in the state of Michigan. (1) The forms included self address stamped envelopes. They requested the market managers distribute the survey forms to the vendors. Their results are summarized in Table 1. Table 1 Market Leelenau Davison Hancock Tori Hastings Northville South Haven Chelsea Escanaba Meridian Midland Rochester Benton Harbor Traverse City Kalamazoo Fulton Street Average Median

Average No. of Average Customers/Day Sales/Customer

Average Daily Sales

83 52 18 23 30 52 14 52 121 87 85 73 49 100 78

$6.60 $4.90 $6.63 $3.47 $17.42 $3.94 $8.26 $4.23 $7.03 $7.08 $9.02 $4.88 $5.42 $4.69 $3.77

$550.00 $253.00 $122.00 $78.00 $523.00 $204.00 $112.00 $220.00 $850.00 $617.00 $767.00 $354.00 $267.00 $469.00 $293.00

61.13 52

$6.49 $5.42

$378.60 $267.00

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There were no responses directly from the Ann Arbor Farmers Market. Therefore a few tests are desirable to see if it is economically similar to the reported data. One observation from Table 1 is, with the exception of the Northville market, the reported average purchases ranged from about $4 to $9. Many items at the Ann Arbor market are priced between $2.00 and $10.00. Several vendors were asked to estimate their average sales/customer. One vendor commented that his average sale was $5.00 to $10. Another responded: “We sell at lot of items that are only $2.00. Our average sale is less than $5.00” It is reasonable to believe the average purchase at the market is close to either the average sale of $6.50 reported by Bingen and Smalley or to their average sale of $5.70, excluding the Northville data. Conclusion 1 The average sale at the Ann Arbor Farmers Market is about $6.00. Obviously this varies by vendor and season Table 1 also shows the average total daily sales/vendor from all 11 markets was about $400, the median was less than $300. However, the total average sales reported by the vendors of the different markets varied widely. Ann Arbor is closer in demographics to Kalamazoo, Rochester, Northville, and the Meridian Market in Okemos, than it is to the smaller town markets like Chelsea or Hastings. The larger markets tend to have higher sales and the Ann Arbor Market is probably in the range reported for these markets. The average reported sales/day from these 4 markets is approximately $650/day These markets, and the Ann Arbor Market, are considered to be good markets for the vendors. This is another reason to believe they are similar in sales. Conclusion 2 The average daily sales at the Ann Arbor Farmers Market is probably about $650/day. But the sales vary significantly by vendor and by season. In addition to the sales data, Bingen and Smalley investigated the amount of time spent preparing for the market and the distance vendors travel to reach the market. They report the average vendor spends about 12 hours preparing for market, and travels 25 to 50 miles to reach the market. 2

If the average vendor spends about 12 hours preparing for market, 2 hours transit time, and about 8 hours at the market, they are spending an average of 22 hours for each day of sales. The 22 hours is the time directly related to preparation and sales, it does not include cultivation. If the vendor attends a market on Saturdays, during the entire summer season he/she will have approximately 18 sales days. At $650/day this is an annual gross income of only $11,700. This is gross income, it does not include any of the costs of fertilizer, fuel or greenhouse heat. It does not include the cost of crop loss or damage from insects or bad weather. It does not include the cost of any hired labor for cultivation, picking or sales. Conclusion 3 Most vendors at the Ann Arbor Farmers Market do not earn an adequate annual income from this market It should be noted that while the daily sales at the Ann Arbor Market may be higher than the average reported by Bingen and Smalley, the time a vendor spends for a market sales day may also be greater. Many of the vendors travel farther to attend the Ann Arbor market than the reported average distance. The early arrival time of the vendors illustrates how difficult market sales can be. One vendor stated she leaves her farm at 3:00am to come to Ann Arbor with her husband. After unloading the truck at the Ann Arbor market she returns to the farm for a second truckload which she takes to the Chelsea Market. These very early arrival times are the reason several vendors have commented that there is insufficient light at the market Surely something this simple to make things easier for the vendors can be provided. SIGNS OF WEAKNESS IN THE ANN ARBOR MARKET There are signs of weakness in the Ann Arbor Farmers Market. Several vendors have commented, we don't make the sales we did a few years ago. There is also some evidence that the number of vendors at the market may be decreasing. One reason for decreasing sales is that customers buy bushel quantities much less frequently today than in the past. It takes sixteen customers buying 1 quart quantities to equal the sale of a single bushel customer. 3

Another reason for declining sales is that there are a greater number of locations for customers to buy fresh produce today than ever before. There are many Ann Arbor specialty food stores, such as Fresh Seasons, Arbor Farms, The Produce Station, and Whole Foods, that have good fresh produce. The quality of produce in the supermarkets has also improved. Most food stores now sell Inexpensive cut flowers that used to be a specialty market product. The number of vendors at the market may be declining. This year 4 permanent annual vendors that were at the market in the fiscal 2004-2005 did not return as annual vendors or reduced the number of stalls they leased in 2005-2006. Two of the vendors retired from the market. One leased one less stall and another vendor lost their status as an annual vendor because they did not attend the market the required minimum number of times.(2) Thirteen daily vendors also did not return to the market in 2005-2006. The majority were producers. The loss of producer vendors annual or daily is a cause for concern. The producer vendor has sustained the market for 85 years. These are the vendors that have been willing to come to the market even in less favorable times. There are almost twice was many farmers Markets in Michigan now than there were 10 years ago. Many of the vendors at the Ann Arbor Market now attend other markets. Vendor survey data by Johnson Hill report almost one half of the vendors surveyed sell at more than one market.(3) Other vendors sell directly from their production location, others sell to restaurants, while some use the approach of community supported agriculture. These alternate sales compete with the Ann Arbor Market for the vendor's time and produce. If the alternate sales provide a better return, vendors will leave the Ann Arbor market. One vendor has commented that her sales at the Northville market are 25 percent higher than her sales at the Ann Arbor Market. This is particularly troubling since she was comparing the Thursday Northville market to the Ann Arbor Saturday market. The Ann Arbor Market must maintain sufficient profitability to retain vendors. Whatever the reason the vendors left the Ann Arbor Market this year, the experiences of the Toledo and Jackson Markets demonstrate it is very difficult to reverse a market decline once it begins(4). It is important the the Ann Arbor Market retain its existing vendors and encourage new vendors to come to the market INCREASING VENDOR SALES Sales are the most important element for the success of the vendors. The 4

Bingen and Smalley data show the average sale/customer is consistent across many markets. Therefore the most probable way a vendor will increase sales is by increasing the number of customers. To maintain or increase the number of customers at the market we must consider: Why do current customers come to the market? What additional products do customers want at the market? Why do current customers come to the market? The Farmers market was voted “Best Place to Buy Produce” by Ann Arbor News readers! (5) Customers expect high quality locally grown produce. The Johnson-Hill survey of the Ann Arbor Market customers reported 86% of the current customers come to the market for plants or produce. Only 8 percent reported they came for craft, the remaining 6% described their reason for coming as other, presumably for items such as the baked goods.(6) Similar results were reported by Lev & Stephenson in their survey of the Ashland, Oregon - Rogue Valley Growers and Crafters Market.(7) Of the people surveyed, 54% reported they came for the farmers products, 40% reported they came because of the products and the atmosphere of the market. Only 5% reported the atmosphere was the most important reason they came to the market, and 0% commented they came for the crafts. Recommendation 1 To maintain the customer base the market must emphasize farm produce. This was the main topic of the Second Communication to the Council Market Committee, March 18, 2005. The market must be very careful to protect its reputation for quality. There are two areas where this reputation is occasionally challenged. The first is whether all produce offered for sale is really grown by the vendor, the second is whether all the vendors selling 'organic' produce are really organic growers. The complaints that produce is being purchased and resold at the market are usually from vendors that believe other vendors are selling fruits or berries earlier or later than the normal Michigan season. If the complaints were promptly made, it would be easy to visit the grower and photograph or video tape the 5

plants. This does not require a horticultural expert, anyone can ask the question “show me the producing plants.” The photographs and a brief report of the visit should be given to the Market Commission for resolution. If the complaint is found valid, the offending grower should be sanctioned. Recommendation 2 The Market Manager and the Market Commission should demand and enforce the Market rule that products sold at the market be produced by the vendors. What additional products do customers want at the market? What additional products do customers want at the market? In response to the question: “What change would you like to see?” the respondents in the Johnson-Hill survey that mentioned the market products most often commented “more produce or more organic produce.” (8) To maintain the quality of the market a customer should have confidence that 'organic' means the same at the market as at the local food stores. Retail stores such as the Peoples Food Coop and Fresh Seasons will not accept produce from a grower or wholesaler as organic unless it is supported by a certificate from a certifying organization that the producer is an valid organic grower. The market manager should require all vendors using organic in their signage maintain a copy of a document from a US Department of Agricultural recognized organic certifying organization, verifying the producer is a current certified organic producer, on file in the Market Office. Vendors that advertise 'organic' but are not certified organic producers should be sanctioned. Vendors that do not wish to be certified could still advertise 'no sprays' but the customer would know that this was a statement by the vendor and not supported by an independent organization. Recommendation 3 Growers that are not certified organic producers should be prohibited from using the term 'organic' in their signage. Vendors on the State of Michigan certified organic growers list should be encouraged to display a distinctive sign at their stalls.

MARKET FACILITIES 6

Space is the most important aspect of the market facility for the economic success of the vendor. Kathy Melmoth stated in her interview for the CTN program Preserve the Farmers Market: “You need a certain amount of space to sell to be economically viable. At this market you have to produce everything yourself. So if you are going to produce everything yourself and make enough money to live you need space.” Some markets allow vendors more stalls than the present Ann Arbor limit of three. (Three vendors are grandfathered at 4 stalls each). Other markets limit vendors to two stalls. However, it must be noted that the Ann Arbor Market stalls are 8ft x 4 ft or 8ft x 6 ft. The current 'standard' stall in most markets, conventions etc is 10ft x10 ft. A vendor at the Ann Arbor market with 3 stalls has only about 120 sqft. A vendor having two 10 ft x 10 ft stalls has 200 sqft of merchandise space. Even a vendor at the Ann Arbor market with 4 stalls has only 128 to 192 sqft. Consider the economics of the 8ft x 5 ft stall in the spring plant season. If an aisle, 2 feet wide is left to access the produce, the usable sales area is 30 sqft. per stall. Plant flats measure about 1 1/3 sqft per flat. Therefor the vendor can display about 23 flats per stall. A flat sells for about $10. Since it would be unlikely a vendor would sell every single flat on display, the maximum probable sales/stall would be about $200/day. Most vendors at the market have one, two, or three stalls. If limited to the official stall space the average sales would not be as high as the estimated average of $650/day. Several photographs, Figures 1, 2 , and 3 illustrate how some of the vendors have resolved the limited space resource. Many vendors expand onto the sidewalk or the parking area behind their stalls. If vehicle availability is restricted some vendors bring racks for restocking. This flexibility is particularly evident for the vendors on the Detroit Street aisle. Long term parking is not allowed on Detroit Street. Therefore the vendors on the street side of the aisle do not have ready access to restock merchandise from their trucks. Vendors on the other side of the aisle have limited available parking because of the restricted parking space where the aisles intersect. The vendors near ends of the short center aisle and near the market office also use the parking areas behind some of their stalls for display. Preserving parking spaces was one of the arguments made by the Parks Department in their proposal for the circular market layout. But, vendors are willing to use parking spaces for produce when it is profitable.

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Figure 1

Figure 2 8

Figure 3

Recommendation 4 Vendors should be encouraged to use vendor parking space as merchandise display space whenever practical. This increases the effective size of the market and its potential sales. Vendors should be encouraged to use alternate parking whenever possible. On the morning of May 28, 2005 parking near the market very crowded, but the surface lot near the Asley-Ann Parking Structure had few vehicles. Many vendors are using the County lot at the corner of Fourth and Catherine, but this reduces customer parking in the market vicinity. Recommendation 5 Vendors should be encouraged to use alternate parking outside the immediate vicinity of the market whenever practical. This would increase available customer parking.

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CONCLUSION - PRESERVE THE MARKET / PRESERVE THE FARM The information from the Bingen and Smalley study is very useful for understanding the Ann Arbor Market. The studies like this are conducted is to assist the small farm survive. The US Department of Agriculture also provides opportunities for grants to construct or improve market facilities, again as a program to help preserve the small family farm. The vendors at the Ann Arbor Market are small family farms. Many of the farms have been in family for several generations. Some of the vendors are second or third generation vendors at the market. Ironically, some of the vendors that are inaccurately called 'large growers' have small acreage. The vendors at the Ann Arbor Market represent a total of over 3,200 agricultural acres in Washtenaw country.(9) The first section of this communication illustrates how difficult it is to make a living as a vendor at public markets. If this land is to remain agricultural it is essential that the Ann Arbor Market encourage the economic success of the farmer vendor. It is especially important to retain the established vendors. The seniority of these vendors demonstrate they have both the will and ability to produce desired products, or sufficient product diversity, for long term economic success. But the market must also attract new vendors and demonstrate it is possible to earn a living in agriculture if we are to retain the Michigan Family farm.

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REFERENCES 1) 2005 Michigan Farmers' Market Roundtable, Discussions hosted and facilitated by Susan Smalley, MSU Extension and Jim Bingen, Department of Community, Agriculture, Recreation and Resource Studies (CARRS) at Michigan State University. Novi Michigan, March 29. 2005 2) Analysis of 2004-2005 and 2005-2006Market vendor lists from Jessica Black, manager of the Ann Arbor Farmers Market. 3) City of Ann Arbor, Farmers Market Master Plan, November 2004 City of Ann Arbor Parks and Recreation Department and Johnson-Hill consultants 4) City of Ann Arbor web site, Farmers Market web page. http://www.a2gov.org/CommunityServices/Parks/Farmers% 20Market/farmers_main.html 5) Friends of the Market, Communication Three to the Ann Arbor City Council Market Committee, April 29, 2005 6) City of Ann Arbor, Farmers Market Master Plan, November 2004 City of Ann Arbor Parks and Recreation Department and Johnson-Hill consultants 7) Lev, Larry & Stephenson, Garry; Rapid Assessment of Five Oregon Farmers Markets: Quantitative Results for 2001. Oregon Small Farms technical Report Number 3, March 2001; Oregon State University Extension Service 8) Analysis of the survey data from the Johnson-Hill website. Data and the analysis are available from the Friends of the Market 9) Michigan Land Use Institute, Farmers Markets Bloom With Shoppers Seeking Fresh Food, Patty Cantrell, January 30, 2003

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