Fuel price hikes squeeze farmers at local markets

Franca Tantillo puts rising fuel prices in the same category as the springtime hail storm that wiped out part of her strawberry crop. Both cut into the profit she can make at the farmers markets she sells at in New York City, about 135 miles south of her farm.

Like Tantillo, market farmers nationwide face exponentially rising costs for fuel, fertilizer and animal feed that could force them to hike prices that are already often higher than grocery stores.

It couldn't come at a worse time for farmers; their customers are also feeling squeezed by inflation.

Tantillo estimates about half the money she takes in on a given day at the market now goes to cover costs related to transportation. She drives a van that carries less but is more fuel efficient than her old panel truck. She even skipped an entire month of selling in the city, because she didn't think the returns would be worth the expense.

"I'm a small grower," she said recently, as she stood at her table laden with $4 quarts of strawberries and other produce from her "Berried Treasures" farm in Cooks Falls, N.Y. "And I'm trying not to raise prices."

While farmers markets have a long history in the U.S., the Department of Agriculture says the number across the country nearly doubled in the last decade - to nearly 4,400 in 2006 - as more consumers embraced buying locally produced food.

"It's definitely something that has always existed in urban areas, but it's really just in the last 20 years that now every little town has a farmers' market," said Lynn Byczynski, who publishes a newsletter and Web site called Growing for Market.

Sometimes housed in a historic downtown building, sometimes a collection of vendors gathered in a city park or parking lot, such markets typically feature seasonal produce, meats and handcrafted cheeses sold by small farmers directly to consumers. The markets often add baked goods and other prepared foods for sale.

The size varies from the half dozen who sell at the St. George Greenmarket on Staten Island, New York City's smallest borough, to the nearly 200 that line the streets surrounding the Capitol Square in Madison, Wis., each Saturday at the Dane County Farmers' Market, which bills itself as the country's largest.

Farmers have always faced an array of uncontrollable factors like pests and weather that can affect their income, but this year fuel prices have joined the list.

Rising oil and natural gas prices have hit farmers in myriad ways: dramatic cost increases for fertilizers and animal feed; higher charges for plastic supplies for greenhouses and irrigation systems for fields; larger energy bills for heating greenhouses and soaring prices for diesel used to fuel farm equipment and the trucks that carry their products to the markets. Even the plastic bags they put their products in are more expensive this year.

"To fill up a tractor now is like $300 or $400, it used to be $60," said Todd Griffith, owner of TG Farms in Newcastle, Okla.

Griffith cut the number of markets he sells at this year to two from four, eliminating drives of 25 miles and 40 miles because the return at the smaller markets was too low. He also used to drive about 200 miles to Dallas to pick up produce from other farmers to supplement his offerings. "I don't go down there anymore," he said. "If I don't grow it, I don't sell it."

Many farmers now have had no choice but to pass the rising costs on to their customers.

"They're business people, so they're going to be figuring out the dollars and cents of all of it," said Erin Barnett, director of Local Harvest, which operates a Web site with a national directory of local food programs.

But some are concerned they won't be able to compete with the large grocery chains, said Dave Stockdale, executive director of the Center for Urban Education about Sustainable Agriculture, which runs the Ferry Plaza Farmers Market in San Francisco.

"The way one explained it was, for large stores and supermarkets, they can cover some of these costs with very incremental raises," he said. "You can take something from $2.89 a pound to $2.99 a pound, the consumer doesn't even really notice."

But at farmers markets, where produce and other items are sold in smaller quantities and often to the same customers each week, "it doesn't really work that way," Stockdale continued.

Consumers who shop at farmers markets expect to pay extra for local produce they consider fresher and better tasting, according to Marvin Batte, a professor at Ohio State University and co-author of a study examining that issue in the American Journal of Agricultural Economics.

"A lot of these people just feel very strongly about supporting their local businesses and local economy," he said. "And some others consider it more environmentally conscious to buy locally."

But Batte noted those altruistic motives may soon come up against broader economic issues.

"The farmers at markets are retailers," he said. "They do have to keep prices competitive with local stores."

Kira Kinney, the owner of Evolutionary Organic farm in New Paltz, N.Y., about 90 miles north of Manhattan, was planning to keep her higher springtime prices, even at the height of the season, when she would typically reduce them.

Kinney has also cut back the number of days she spends at markets in New York City, and is substituting a community supported agriculture program. Customers sign up for weekly shares and pick their produce up at the farm, which eliminates her transportation costs.

But Elly Hushour said she can't go to the New York City markets fewer days; it's the only place she sells the goat cheese she makes at Patches of Star Farm in Nazareth, Pa. She's trying not to raise prices, she said, because she's concerned that wider economic woes will soon drive customers away.

"Local soon will not be that important," she said.