Buying directly from farmers has outsized impact on local economy, UC Davis study finds

As a past board member at the Davis farmers market, Shermain Hardesty knows that people who buy fruits and vegetables directly from producers show up week after week and voice support for local businesses.

Now, the UC Davis agricultural economics professor can tell those customers exactly how much farther their money goes in their community when they buy directly from a farmer. 

She and a team of researchers this week released a study that shows a dollar of sales for a direct-market fruit or vegetable grower has about twice the local economic impact as a dollar of sales at one of the Sacramento region’s larger wholesale farms.

By far, the lion’s share of farm-related revenue in the Sacramento region goes to large growers who supply grocery stores and processors. The four counties she studied rang up $962.1 million in agricultural revenue four years ago, and the direct-market farms Hardesty highlighted represent just 4 percent of that industry.

But she argues that those smaller outfits should not be discounted when policymakers set rules that affect land use.

The team found that direct-market farmers spend a greater share of their revenue buying supplies from local companies and hiring local labor than their counterparts in the wholesale market.

As a result, $1 million in revenue from direct-market farms generates almost 32 local jobs whereas the same amount of revenue from the larger growers creates 10.5 jobs locally.

“I’m hoping this type of a study can provide some evidence that when they’re converting farmland, they’re losing part of what’s happening in the economy,” Hardesty said.

Her team’s conclusions are based on extensive, face-to-face interviews carried out over six months with almost 90 direct-market farmers in the Sacramento region. They looked at farms in El Dorado, Placer, Sacramento and Yolo counties.

They then compared their survey results with data about the earnings and expenses of Sacramento-area wholesale farms gleaned from the U.S. Department of Agriculture’s agricultural census.

Their report accounts for direct-to-consumer sales at farmers markets, farm stands and community supported agriculture programs. The study is one of very few in the country that explores the economic ripple effects of direct-to-consumer farm sales in a regional market.

Researchers found:

▪  Direct-market farmers buy 89 percent of their supplies from local sources, compared with 45 percent by the larger wholesale farms.

▪  Those local supply purchases were the primary reason sales at a direct-market farm had a greater economic multiplier effect than sales at a wholesale farm. The difference was about 44 cents of additional local economic activity for every dollar spent at a direct-market farm.

▪  Direct-market producers often sell to wholesale markets, too. They earn about 44 percent of their sales selling produce themselves, while 55 percent of their revenue comes from wholesale markets.

▪  Annual sales for direct-market farmers average about $164,631 per producer compared to $568,105 at wholesale farms.

▪  Hardesty was surprised to find that Sacramento’s direct-market farmers will travel for their customers. They generated about 65 percent of their direct-to-consumer revenue from sales in the Bay Area. About 30 percent comes from the Sacramento region, and 5 percent from other counties.

Ann Evans, a former Davis mayor and advocate for farmers markets, said the study could remind people to buy food more often from a farmer.

Hardesty “has devoted a lot of her research to actually showing some of what people think of as intuitive, like the economic multiplier of local farms,” Evans said. “People go (to farmers markets) for all different reasons. They probably go because they love the community aspect and they love the fresh food. They know they’re supporting farmers directly.”


Tagged on: