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How Much Does a Farmers Market Make Yearly? [Profit Margin]

Farmers Market Business

Do you want to know how much money farmers market make yearly? If YES, here are 6 factors that determine the income & profit margin for farmers market owners.

The primary duty of a farmer’s market owner or manager is to create an environment where growers and producers of local farm-related food and non-food products can sell to the health-conscious public. The duties of a farmer’s market owner also include finding sellers, renting stalls and delivering a customer base in a convenient location for buyer traffic.

Most farmers markets in the United States operate as nonprofits. For instance, in the state of California, food markets can only get certified if they’re run by a government, a non- profit or a farmer. And since the market will only generate revenue from vendor fees, there’s not usually a large revenue stream or adequate profit margin.

In addition, it’s only a seasonal business in most parts of the country. The ideal customer profile for farmer’s market can vary depending on the audience the owner hopes to attract.

For instance, if you open for business in an inner city food desert, your customers will be area residents shopping for affordable groceries. If you’re opening an organic food market, you might appeal to “foodies” who are concerned about nutrition and locally grown produce.

And if you open in a tourist location, you might most appeal to out-of-town visitors. Most farmers’ market income is generated from the fees the owner or manager charge vendors for a place in the market.

Vendors might only pay $10 to $20 per day, and the owner might only be open on seasonal Saturdays. The profit a Farmer’s market owner can make will depend on the number of vendors they can recruit and the foot traffic they can generate.

Once vendors see continued value in selling in that space, they’ll come back. Below are few factors that will ultimately affect the amount of money a farmer’s market can generate.

6 Factors That Determine How Much a Farmers Market Make Yearly

1. Recruitment of Producers and Vendors

Recruitment of farmers is vital to the survival and profitability of farmers’ markets since the success of this direct marketing channel lies in the farmers’ willingness to participate. Consumers often become very loyal to farmers and their products, thus the farmers’ commitments are very important for the continuity.

A market with insufficient vendors or produce is not appealing to prospective customers. In this business, it is the mix of vendors that will attract and retain customers.

That is why most successful owners in this business ensure that all of the basics are covered, including the fruits and vegetables that shoppers expect to find at the location. Some even recruit vendors who can sell related but unanticipated products. For instance, the sellers of coffees, spices, flowers, soaps, candles, or arts and crafts could generate additional interest.

2. Location and Marketplace

Majority of farmers’ markets tend to be located in suburban areas, although its proximity to urban areas allows them to serve both populations. The makeup of the location and people who will likely visit the market will go a long way to attract vendors, and the more vendors a market has, the more profit an owner can make.

Among other factors taken into account in terms of farmer’s market profitability are growing season dates, friendliness of vendors, proximity of farmers to market locations, number of producers that could be attracted, truck sizes as well as variety of produce and value added items.

3. Marketing Strategies Used by Owners and Vendors

In terms of marketing, attractiveness of each display, advertisement, publications, use of signs and the coordination of special events to draw people to town and markets, will directly affect the bottom-line of a farmers market. Setup and cleanup activities are also factors that tend to play a role when the markets are organized.

In addition, the availability of volunteers and the input from the town and residents can also have an effect on profit of the market.

Consumers are drawn to farmers’ markets not only to purchase fresh, locally grown produce but also because this type of retail outlet gives them the opportunity to socialize and become acquainted with those who produce their food. Word-of-mouth is one method that is leveraged by most successful managers and coordinators in the industry.

The spread of positive experiences associated with visits to farmers’ markets exerts a greater impact on prospective customers and can be considerably more persuasive than any other marketing tool.

4. Market Season and Time

The season and time a market chooses to open will ultimately affect the amount of sales and income the market can generate. The period of operation for most markets range from the beginning of June to mid – November. However, some tend to wait until the end of June to start their activities and close by the end of October.

With regard to days of operation, Monday remains one of the worst days to open a farmers’ market. Friday remains the most popular day with Wednesday and Tuesday the next ideal days to generate more profit.

Some markets also open twice a week too. The busiest time of the day for the operation of the farmers’ markets tend to be between 9 – 12 a.m. and between 3 – 6 p.m. The 9 – 12 p.m. period remains the busiest time for all the markets that opened on weekends.

5. Fees

There is no uniformity with regard to the fees a vendor is charged. Most markets ask for a registration fee which range from $50 to $100 and in some cases, farmers have to pay $40 to cover the Health Department license fee, which is required if markets allow cheeses, bakery items, etc.

In addition to the registration or Health Department fee, some markets charge a daily, weekly or monthly fee. Some markets do not collect registration fees but charge only daily, weekly or monthly fees or per season. On average, the weekly fee is $17. For owners and managers, the expenses covered with these fees may include:

  • Advertisement
  • Promotional efforts such as T – shirts and food demo expenses
  • Banners, signs, brochures, flyers and business cards
  • Purchase of needed items: tent for market volunteer, furniture for Customers
  • Staff: salaries of market managers and traffic patrol personnel
  • Site insurance (liability)
  • Port – a – potty for farmers
  • License, council and registration fees
  • Cleanup expenses

6. Employees and Farmer Structure

Because there are so many parties involved in the organization of farmers’ markets, identifying the right manager who can act as a liaison among municipalities, producers and local retailers is one key to success. In today’s competitive marketplace, farmers can greatly benefit if expert managers promote and advertise the commodities they grow, thus allowing producers to channel all their resources into farming and producing good produce.

With the popularity of cable food channels, the locally grown food movements, the appeal of organic food and other factors, food markets have seen the addition of more than 2,000 farmers markets nationwide since the mid – 1990s. However, several obstacles like the ones mentioned above can impede success and the profitability of a farmer’s market.

Estimated Profit Margin for a Farmer’s Market

Farmers’ markets have the potential to offer growers a greater profit margin than other marketing outlets, but the profit margin for owners or managers of these markets are not so encouraging. Many obstacles still hinder the continuity and efficiency of these markets.

Among the most important are the difficulty in attracting farmers to these markets, rivalry among the producers already participating in the market, not enough support from the municipalities where the markets are located, and drawing customers to downtown areas.

Gross profit margins for farmer’s market vendors can reach around 75 – 80 percent, but that of owners can barely touch 10 percent.

Nonetheless, the amount a farmer’s market owner can make will depend on the vendors’ number, the foot traffic, and the fees they charge. The low profit margin in this business is the sole reason why most farmers’ market owners consider opening stalls themselves.