Supermarkets are stealing some local food demand from farmers markets, a new U.S. Department of Agriculture report indicates.

Called “Trends in U.S. local and regional food systems,” the 89-page USDA Economic Research Service report said inflation-adjusted sales through farmers markets did not increase between 2007 and 2012, while overall sales of local food increased by nearly 30% in roughly the same period.

While sales of food through direct-to-consumer outlets (farmers markets, roadside stands, you-pick operations) have leveled off, local food sales through intermediated marketing channels (distributors, food hubs and retailers) appear to be increasing, according to the report. “Growing consumer demand for local food may have been met by retailers rather than through direct to consumer sales,” according to the report.

The report does not define “local food,” and uses a mix of local and regional food definitions in the context of the study.

“I think everyone was a little surprised by the direct-to-consumer (farmers market) sales plateauing,” said Sarah Low, USDA economist and an author of the study. “My read on the data is that direct-to-consumer marketing is labor intensive and expensive for the producers.”

Not all growers like doing their own marketing, she said.

“I think farmers markets are a good way to introduce people to local food, but the reality is that grocery stores may be better marketing alternatives for the producers and may be more convenient for some consumers too,” she said.

While consumers may value face-to-face interaction with growers at farmers markets, Ed Odron, owner of Ed Odron Produce Marketing Consulting in Stockton, Calif., said shoppers also respond to local food marketed at supermarkets. While local and regional tomato, melon or fruit deals have always had appeal, retailers have paid more attention to promoting local fruits and vegetables in the last five years or so, he said.

Rising numbers of farmers markets over the past 20 years helped spur retail interest in promoting locally grown, Odron said.

“I don’t think it has peaked yet.”

The Washington, D.C.-based Food Marketing Institute reported that 77.6% of retailers in 2014 reported adding more stock-keeping units for local food compared to their 2012 SKUs.

Farmers markets level off

The number of farms with direct-to-consumer sales (farmers markets) increased just 5% between 2007 and 2012, and the USDA reported no change in those sales during that period. That contrasts with the 2002 to 2007 period, when direct-to-consumer sales grew 32% and the number of farms with direct sales jumped 17%.

The USDA estimates total local food sales in 2012 at $6.1 billion, up from $4.8 billion in 2008.

The number of farmers markets in the U.S. was estimated at 8,268 in 2014, up about 1.5% from 8,144 farmers markets in 2013.

But other intermediated (food hubs, foodservice and retailers) outlets for growers are increasing even faster, with the number of food hubs growing by 288% from 2006 to 2012, according to the USDA. Selling local food to school districts has also increased, with the USDA reporting that 4,322 schools have farm-to-school programs in 2012, a 430% increase since 2006

Source: The Packer by Tom Karst