July 4, 2008 / 12:22 AM / 9 years ago

Despite high prices, farmers' markets still thrive

WASHINGTON (Reuters) - Every year Chuck Geyer and his three children truck boxes upon boxes of their plump, juicy strawberries, raspberries and other produce to a bustling Saturday farmers market near Washington.

<p>Blueberries and blackberries for sale at the Westmoreland Berry Farm stand at the Arlington Farmers' Market in Arlington, Virginia in this picture taken June 28, 2008. REUTERS/Jonathan Ernst</p>

This year, the family has started bringing something else to the market -- higher prices.

But while price hikes are rippling through farmers’ markets across the United States, they are doing little to deter shoppers looking for local produce.

The 825-acre (334 hectare) Westmoreland Berry Farm in rural Oak Grove, Virginia, 83 miles south of Washington, is among the farms facing higher energy costs for everything from oil-based crop protectants to the gas they use to travel to the market.

The surge in fuel costs has prompted Geyer and his wife, Anne, to raise prices an average of 5 to 7 percent.

“We haven’t passed on 100 percent of those increases to customers because everyone else is dealing with the same crunch,” said Geyer, who has absorbed as much as a 15 percent shrinkage in profits to keep sales flowing.

“The volume of business is increasing because of this big push for local products,” said Geyer.

Fed by the new environmental trend to buy locally, the sites are a throwback to a more traditional style of commerce and the often makeshift, outdoor markets stand in great contrast to the big box stores and hyper markets that have come to dominate the U.S. food trade.

Farmers’ markets have risen in popularity every year since 1994 when the U.S. Agriculture Department first began collecting data on the operations. This year alone more than 4,500 farmers’ markets will be operating across the United States, an increase of 21 percent from just four years ago, with revenue topping $1 billion.

FRESH IS “BETTER”

The U.S. grocery giant Safeway Inc can top the annual sales from farmers’ markets just about every two weeks, but the rising trend could prove a thorn in the side for established chains as they battle runaway food inflation and concerns over food safety.

Touted as the safest in the world, the U.S. food supply has been hit by a series of safety incidents involving lettuce, peanut butter and spinach that have eroded public confidence. The current outbreak occurred after food tainted with a rare form of salmonella sickened 869 people in 36 states and Washington. Initially blamed on tomatoes, U.S. officials are still trying to find the source of the outbreak.

“I‘m trying to think of the last time I heard of salmonella coming out of a farmers’ market. It’s always a big chain thing,” said Marty Hayden, a vice president with environmental group Earthjustice. “The perception is fresh is better.”

The meteoric rise in farmers’ markets -- which peddle everything from fruits and vegetables to curios, soaps and candles -- are attracting often affluent consumers who want the freshness and safety of produce that hasn’t been hauled thousands of miles in a 18-wheel truck or by barge.

PRICES UP

Farmers’ markets are not immune to higher energy prices, according to Lloyd Day, administrator of the Agricultural Marketing Service, part of the Agriculture Department, but the fact that people are willing to pay a premium for local produce should minimize turbulence and allow for additional growth.

At the Abilene Area Farmers’ Market in Abilene, Texas, traffic has been unusually busy so far this year, according to manager Peggy Smith. It has benefited from consumers wanting tastier food and a surge in free publicity from local television, she said.

Smith, who has been overseeing the market since the early 1990s, said vendors have increased prices to $2 for a basket of produce from $1 to combat higher fertilizer and gas prices. An average basket contains about nine potatoes, for example.

“We have a couple people who have been around forever who cringe every time they see all those $2 signs that used to be $1,” she said.

Tracy DeBernard, who operates C&T Produce with her husband near Fredericksburg, Virginia, said she is hoping the growing popularity of farmers’ markets will attract more consumers to cover costs and keep her from raising prices again.

C&T Produce has increased prices at the farmers’ markets it sells produce at, but the jumps have been most severe at those locations further away from its farm.

“I don’t think it’s going to impact sales,” said DeBernard who has raised prices on some items, such as tomatoes, which are up 25 percent to $2.50 a pound. “The majority of people understand that fuel impacts everything.”

Visitors to farmers’ markets say the higher prices are something they’ve learn to accept.

“To me it balances out, for the quality and flavor. I want flavorful produce and I‘m just not getting it at the grocery store,” said Terri Anderson, who works at the USDA and is a frequent visitor to the department’s own farmers’ market, held on Fridays outside its Washington headquarters.

“It means I have to pay a little extra to come out here or any of the other farmers’ markets, but it’s worth it to me.”

But some shoppers said they may have to cut back on purchases at farmers’ markets if prices continue to climb. “Will I continue to buy? Yes, but maybe not quite as much,” said Yolanda Putman, a shopper at farmers’ markets in the Washington area.

While vendors are passing on higher costs to their customers, and dealing with smaller profit margins, the short-term bumps could benefit these markets in the future. Geyer said Westmoreland Berry Farm would not decrease prices even if gas costs declined.

Reporting by Christopher Doering; Editing by Russell Blinch and Eddie Evans

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