Farmers Markets: Why people are willing to pay high prices

By Patrick Emerson
Oregon Economics Blog
A recent Oregonian article on the high prices at Farmers Markets raises an interesting question: just what are you paying for? The Oregonian article focuses on the high prices charged at the market and how this compares to CSAs and supermarkets. There is a long discussion of what the prices actually reflect, yet, interestingly, the discussion fails to mention (or at least explicitly couch it in terms of) the basic economic concept of supply and demand.

The demand for farmer’s markets comes from people who want to consume the food that can be purchased there, but it also comes from the desire to attend an enjoyable open air market, to interact with the people responsible for growing the food, to be able to select the best possible quality and to support local agriculture.

On the supply side, the cost of providing produce to a farmer’s market can be higher because of a lack of effectively taking advantage of scale efficiencies, cost of time and transport to attend the market and the extra cost of selecting the highest quality from among your crops.

Put these two together and there is little mystery why farmer’s market prices are higher in equilibrium than in a supermarket, and nothing sinister either: What we pay for as consumers is a lot more than just a commodity.

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