Now that you have answered the questions of what, why, where, when and who, you can ask about how. To begin with, find out about permits, insurance, incorporation and food stamps. This section will touch on those issues and point you toward other sources of information which will be more specific to your town or city.
The need for permits will vary from place to place. Check with your Chamber of Commerce, planning office, and other relevant community services to find out what permits you need. You may have to attend a public hearing to get a special permit for outdoor sales. You may also need unofficial permits. Here good community relations can result in special favors. For example, the police may waive parking regulations on market day.
In most states, farmers are allowed to sell home grown fruits and vegetables without a license. Purchasing products for resale often requires a Hawkers license. Processed foods usually require a special permit from the Health Department. Meat must be federally inspected and stamped to be sold. If you have questions about the regulations, contact your local Board of Health.
To use scales, they must be tested and sealed. Contact the Bureau of Standards to find out who will test the scales, how often inspections are made, and what the fees are. If a scale is tested in one town, but is also used in other towns, it must only be tested and sealed once.
Find out whether you are required to have insurance to operate on the site you have chosen. Even if not, in these days of runaway claims it is wise to review basic liability policies. Who will be liable if an umbrella falls off its stand and hits some~ body, or a banner collapses on a passing car? Will your market be able to pay the damages?
Few suits have been filed against farmers markets, but it is increasingly difficult to obtain insurance coverage. Outdoor, public activities are seen by insurance companies as being risky. Research the matter to find out who will cover you, what they will cover, if they have any special requirements, and how much it will cost. Some companies require you to incorporate to receive coverage.
Insurance coverage is not the only reason to incorporate. Incorporating also relieves the directors of the farmers' market from legal and financial liability for the market as a whole. Some cities require incorporation to conduct business publicly.
Before you decide on incorporating, contact your Secretary of State's office. Have them send you basic information on types of corporate status, fees, taxes, laws, Articles of Incorporation and Bylaws. You may want to consult a lawyer. If you are worried about the cost of legal fees, see if you can find a supportive attorney who would be willing to donate a few hours of time to help you. Because paper work and waiting are involved, leave plenty of time to file the appropriate papers before your market opens.
Most farmers markets are loose associations and may not need to incorporate. Often a strong marketing committee is a perfectly adequate governing body, as long as it follows a predetermined decision-making process, and sets down clear objectives and rules. If you have doubts, remember it is better to incorporate before an issue of liability comes up than after! In considering the issue of incorporation, there are questions to be answered:
- What type of association do you want to form?
- Will incorporating make a difference?
- Do you have legal or insurance reasons for incorporating?
- Do you want for profit, nonprofit or cooperative status?
- How much will it cost to file for each type of status?
- If you operate on a for profit basis, what will your minimum taxes be?
- What other costs are involved?
States levy a minimum tax on for-profit corporations even if no profits are made. Tax exempt status is cheaper to obtain and register for than profit status and most non-profits are eligible to receive tax-deductible donations. Many farmers markets operate on a nonprofit basis anyway since they are set up to serve consumers, farmers, and communities rather than themselves. Therefore, filing for nonprofit status may be more practical and economical for you.
Nonprofit organizations are usually set up for religious, educational or community purposes. However, you do not have to incorporate to obtain tax-exempt status. Read the materials from your Secretary of State's office carefully so you know how to file.
If a group of farmers is planning to be the primary legal entity involved in managing the market, you may want to consider incorporating as an agricultural cooperative. Farmer cooperatives offer many advantages to growers, but must be controlled by farmers. Marketing cooperatives can be set up on a profit or nonprofit basis. They may offer farmers education, services, storage, processing and of course, marketing of farm products.
For more information about agricultural cooperatives, write to:
United States Department of Agriculture
Agricultural Cooperative Service
Washington, D.C. 20250
Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps)
SNAP is used by low-income people to assist with food purchases. Farmers markets can become certified retailers and accept SNAP benefits as a way to draw in more customers and increase sales. Especially if your market serves a low-income population, consider becoming certified.
In order to accept SNAP benefits your market will need an Electronic Benefits Transfer (EBT) machine. The same machine can also be used to accept debit and credit card transactions. Since most markets do not have access to phone lines a wireless terminal is typically the preferred option. These machines range from $600-$1200 in cost. However, sometimes markets can access grants to help cover this upfront expense. If your market does have access to a land line you can receive an EBT machine free of cost from the US Department of Agriculture. These machines are unable to accept debit and credit cards.
There are regulations involved with SNAP transactions. Some of the most important ones are:
- SNAP benefits may only be used to buy food or seeds with which to grow food.
- They cannot be used to buy flowers or ready to eat prepared foods.
- Food bought with SNAP benefits must be sold at the same price as if payment were in cash.
- The SNAP customers cannot exchange benefits for cash.
If you choose to redeem SNAP decide whether the market will apply for the license, or whether farmers will be encouraged to do so on an individual basis.
To apply for the retail redemption license, contact your nearest United States Department of Agriculture, Food and Nutrition Service (USDA, FNS). Ask for a retailer's application form to authorize your participation in the program. You will receive an informational brochure with the application. Be sure to read the pamphlet carefully.
There are many aspects of market management which will have to be attended find volunteers to accomplish them. To keep things simple, let us assume that you have decided to hire a Market Manager.
The primary things for the Market Manager to attend to are: recruiting farmers, promotion and advertising, and day-to-day operation. Daily operation includes pricing, space allocation, and if your market is purely a retail market for fresh, local farm products, that only those are sold. Since disputes are likely to arise, set up an independent appeals committee before the market opens. This committee could be composed of vendors, directors, and the Market Manager.
To have a farmers market you have to have farmers. If no farmers are already in your midst, notify them several months before opening day. Farmers plan their markets when they order seeds. For best results, contact them then.
Your market research should have helped you identify potential vendors. Get in touch with them and find out if they will come. If you are having trouble locating farmers, contact your state or county Cooperative Extension Service, Farm Bureau, or Department of Agriculture. These agencies usually have newsletters. Ask them to put in a "call for farmers." Other grower associations in your state should also be willing to help you identify appropriate farmers to contact. If you have a farmers' market organization, work with them
Getting in touch with agricultural groups and advertising through newsletters are effective ways to encourage growers to participate in your market. However, the best way is personal contact with the farmers themselves. Find our names of likely vendors and call them up. If there are other farmers' markets, talk to the farmers there. If not, visit local roadside stands or Pick-Your-Own operations and talk with them at home. Perhaps they would like to try a new direct market. Word of mouth is the best publicity; start a chain reaction!
Consumers like markets which offer variety; they like to have plenty to choose from. Therefore, try to set it up so that you have a core nucleus of at least three farmers who can supply adequate diversity from the outset, as well as other farmers with smaller supplies. Try to make sure your market is competitive from the start. This will prevent territorial problems in years to come.
There are two main issues to consider with pricing: making sure it is adequate for farmers to make a profit, and making sure it is fair. Fairness is something the Market Manager can monitor. Profitability is more difficult. Even if farmers think they are covering costs, make sure they evaluate all their expenses and price accordingly.
Some farmers use the four-time multiple rule to arrive at their prices. Using this formula, 1/4 of the price covers production costs; 1/4 packaging and transportation; 1/4 selling and advertising, including hiring extra help on market day, giving away free samples, and waste; and the final 1/4 is profit. Because of the laws of the competitive market, farmers may not be able to apply this rule to each product they sell. For example, if there is a glut of sweet corn, the price will naturally fall. However, farmers should follow this rule in principle, using value, adding techniques and creative marketing so the formula applies to the load they bring to market, if not each product sold.
Pricing is often a sticky area and there is no easy solution to it. The Market Manager should make sure the growers are informed of weekly wholesale market prices and local retail prices. Some state departments of agriculture publish weekly price reports. With this information, farmers have a fair sense of what the market will bear. One way to avoid problems over pricing is to make a rule that all prices must be clearly displayed. The Market Manager should enforce this rule. Customers prefer to know how much things cost, and farmers will be less suspicious of each other if prices are posted.
Let the appeals committee review cases as disputes arise. The Market Manager will find it easier to enforce rules if the committee is active.
Another potentially troublesome area is space allocation. Set policies and rules determining who gets which space when before the market opens. You may allocate on a first come, first served basis, drawing straws, or on a seasonal, monthly, or daily fee basis. Whatever rules you make, adhere to them strictly. If problems still arise, let the appeals committee handle them.
Quality, Home Grown Products
One more area where disputes can arise is over quality and whether or not all farmers at the market are selling their own crops. In most farmers markets the rule is that farmers may only sell their own and sometimes their neighbors' products. The issue is most troublesome if farmers are buying fruits and vegetables from a wholesale market terminal and presenting them as locally grown.
Why is this a problem? In the first place, shoppers at farmers markets like to know where their food is coming from. They trust their contact with the farmers. Because of the personal interaction, the producer is more accountable to the consumer. Many people shop at farmers markets because the produce is picked so close to the time it is sold. Thus, it is fresher, tastes better, last longer and may be more nutritious than produce sold at stores. To preserve the integrity of the market and the reputation of the other growers selling, it is important that all the farmers follow the rules. Furthermore, since licenses are usually required to resell purchased products, neglecting to obtain the proper permits is breaking the law.
How does a Market Manager recognize a problem? Usually other farmers will complain. Certainly a knowledgeable Market Manager has an advantage over someone unfamiliar with production agriculture. Keep a close watch on when crops are available locally. If a farmer brings in tomatoes three weeks before they are ripe on the vine, find out if they have been grown in a greenhouse. If so, you might ask to have that information posted on a sign. If not, the tomatoes were probably purchased from out of state.
What can you do about it? In the first place, make sure your rules are very specific about what is allowed. If cooperative arrangements are permissible, have the growers sign a formal agreement indicating the nature of their relationship. If a farmer is suspected of breaking the rules, bring the dispute to the appeals committee. You may want to institute a system where the farmer is first given a warning. If the problem persists, after three warnings the farmer is no longer allowed to sell. If reselling is allowed in your market, have the vendor display a sign indicating that products have been purchased, from where and from whom. Also, be sure that any necessary permits have been obtained. Truth in advertising must be the rule.
Promotion and Advertising
There are many ways to attract people to your market. Some of them are free; others are expensive. You will have to gauge your budget for publicity based on parameters of your total budget. Although promotion is very important, it can be done effectively at a fairly low cost. It is especially helpful to have access to reduced rate Xeroxing or to have a volunteer with graphics skills help you out.
Often the best advertising is free advertising. A feature story in your local newspaper will be far more effective than ads. Television coverage attracts a lot of attention. However, you must seek this type of publicity out. You will only get coverage if there is a news story. Think of creative ways to interest the press. You might want to plan a gala Grand Opening celebration and invite the mayor. If you invite the media, make sure there will be plenty of activity when they come. If you are not certain you will have a large turn out of farmers and shoppers on your first market day, plan such an event for the second or third market. Finally, you may to try Public Service Announcements on local television or radio stations. PSAs free and can reach large audiences.
Since you cannot count on free press coverage, there are other inexpensive ways to promote your market. For example, if your local newspaper has a community calendar, put a notice in of opening day. Posters, fliers, balloons and bumper stickers are also effective.
There are more expensive techniques which you may want to invest in. Bright, colorful banners call attention to the marketplace. People often notice a farmers market for the first time when they see a banner. Many markets use more than one so they can be displayed at several key visual locations to draw consumers in. Sandwich boards also work. You may want to use a combination of both, depending upon budget, access routes to the site, and where you are allowed to put up banners and. signs. Find out about zoning ordinances and if you need insurance to hang a banner.
Newspaper ads are frequently used to publicize markets. If you choose to advertise this way, remember it is most effective when done consistently. Placing weekly ads may be expensive, so choose a paper with circulation to your target consumer groups.
Communications research has shown that the more times people hear or see a message, the more effective it will be. Find the least cost methods to reinforce the that your farmers market is the community place to be! Well-designed and cheerful posters and banners conjure up the image of your market in an unforgettable way. Consistent newspaper ads remind people that the market is happening and when. Feature stories and press coverage of special newsworthy events reach large audiences. Finally, offering coupons or two-for-one specials, or sponsoring promotional activities like apple dunking or pumpkin carving contests may also draw new crowds into your market.
In all of this, what is most important is to think ahead, draw up a budget, plan a publicity campaign which is varied in approach but consistently attended to, and foster contacts among the media, community organizations, local businesses and the whole array of potentially supportive people who can help you get the word out. And remember, you do not need Madison Avenue to get your message across!