Tuesday, February 18, 2014

Evaluating the Economic Impact of Farmers’ Markets Using an Opportunity Cost Framework

Hughes, David W, Cheryl Brown, Stacy Miller, and Tom McConnell. “Evaluating the Economic Impact of Farmers’ Markets Using an Opportunity Cost Framework” Journal of Agricultural and Applied Economics, 40,1,(2008): 253-265

The popularity of farmers' markets and buying local have been on the rise in the past ten years. There is a greater population of the United States that actively search for the best local products. A team of investigators, David W. Hughes, Cheryl Brown, Stacy Miller, and Tom McConnell wanted to evaluate this trend in West Virginia. 

Hughes et al. examined the net impact of farmers' markets on the West Virginia economy by using a form of opportunity cost. The team believed that by because farmers' markets are a form of direct marketing, the base economy of the area would increase since there's no middle man. They believed that farmers' markets would provide a positive economic impact on the state.

To investigate, the team first used a combination of vendor survey data and IMPLAN-based input-output model of the West Virginia economy. Next, they used estimates on the consumer spending of food products in a traditional food market vendor (like an H-E-B) and calculated the economic impact of spending that is lost to West Virginia because of the farmers' markets .

The results were that, despite there being a positive effect, the opportunity cost reduced the impact of the farmers' market on the economy. They concluded that in-state business support services may become concerned about the growth of farmers' markets if their popularity would swell.

Admittedly, Hughes et al stated that further analysis would need to be done or study of this trend to see the lasting economic impacts. What would interesting to see if the data that was collected in West Virginia could be compared to neighboring states or states across the country with similar economic backgrounds.

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