Iowa Farmers Markets Contribute $59.4 Million into State’s Economy, According to Economic Impact Study
Posted On: October 13, 2010
Statewide economic impact can be a powerful education and advocacy tool for farmers markets at the local, state, and national level, and inspire other states to find the resources for comprehensive analysis.
The Iowa Farmers Market Economic Impact Study, published in 2010 based on customer and vendor surveys conducted in 2009. In May of 2009, the Iowa Department of Agriculture and Land Stewardship (IDALS) entered into cooperative agreements with the USDA National Agricultural Statistics Service ‐ Iowa Field Office (NASS IFO), and Strategic Economics Group, Incorporated. NASS IFO conducted surveys at farmers markets throughout the state to measure the economic impact of this industry in Iowa.
This research built upon a similar study conducted in 2004, in which farmers markets were found to generate approximately $20 million in sales. Using similar methodology, the 2009 consumer estimate was $38.2 million, representing 92% growth in the five‐year period. Mike Bevins, Bureau Chief of Horticulture and Farmers Markets at the Iowa Department of Agriculture and Land Stewardship, said “my biggest concern was that the growth of farmers markets in Iowa over the last five years was just a segmenting of the sales at farmers markets documented in 2004. I was greatly relieved to see the continued expansion of the number of farmers markets in Iowa was supported by the huge increase in sales as well.”
According to the consumer reports, farmers markets in Iowa’s five largest urban areas generated approximately 72 percent of all sales. Evidence that Iowa farmers markets are largely an urban phenomenon is further provided through maps which indicate that within Iowa, as within other states, these markets are an important place for rural producers and urban consumers to come together to exchange goods and information.
The analysis estimates approximately $38.4 million in sales occurring in 2009 based on what the consumer reported, while the vendors reported a more conservative estimate of $11.2 million in 2009. The $38.4 million estimate was based on a larger sample and is taken as the more accurate estimate of the two, because the authors noted “a greater motivation for vendors to underestimate sales information, possibly to reduce their sales tax liability.”
Mallory Smith, Coordinator of Buy Fresh Buy Local Iowa and Market Manager of the Columbus Junction Farmers Market, noted the challenge that such a discrepancy represents, saying ” I imagine that the truth of what gets spent at farmers markets lies somewhere in between.”
Applying the Input‐Output (I-O) model to the $38.4 million figure yielded an estimated $59.4 million of gross sales in the Iowa economy as a result of the indirect and induced effects. In addition, $12.2 million of personal income effects were directly or indirectly related to farmers market activity, according to the I‐O model. Based on these estimates, the calculated multipliers were 1.55 and 1.59, respectively. In addition to the 374 direct jobs attributed to farmers markets, researchers found more than 200 jobs within the economy were indirectly attributed to the activity.
On average, approximately 99,000 consumers and 1,500 vendors gathered for at least one weekly market session. The typical market consumer was 51‐65 years of age, buying mostly fruits, vegetables, and baked goods. Evidence suggested that consumers patronizing the largest markets were slightly younger, traveled farther, and spent more. Markets benefited from repeat business with the average consumer making approximately 11 market visits per season. The average vendor was also 51‐65 years of age and received the most revenue from the sale of produce and baked goods.
Brad Parks, Deputy Director of USDA’s National Agricultural Statistics Office, Iowa Field Office, noted that customers spent more per visit, though they reported visiting less frequently. “I found it interesting that fewer people made 20+ visits to the farmers market in 2009 (5%) compared to 2004 (25%).” However, as the report points out, nearly 40% of customers surveyed said that they spent $21 or more, compared with 26% in 2004.
Daniel Otto, author of the study and Professor of Economics at Iowa State University, said that, since 2004, they shortened the survey somewhat, eliminating questions about whether consumers did other errands and purchases in conjunction with a farmers market visit. “I was impressed with the very solid growth in the volume of sales going on at these farmers markets,” Otto said. “As a frequent shopper myself, I could sense that growth was happening in the Ames market, so I wasn’t totally surprised with the statewide numbers. I was initially surprised by the large share of sales occurring in the urban markets, but then that’s where the people are.”
Smith, Coordinator of Buy Fresh Buy Local Iowa and Market Manager of the Columbus Junction Farmers Market, agreed that “It’s challenging but very important to track the financial impact of farmers market so that they can be measured against other economic activity. There are many reasons that communities are made better by having a successful farmers market, increasing value the local economy is one of them.”
The Iowa Economic Impact Study summary can be downloaded at https://www.iowaagriculture.gov/Horticulture_and_FarmersMarkets/pdfs/FarmersMarketEIS2009.pdf