Order Code RS21652
October 29, 2003
CRS Report for Congress
Received through the CRS Web
Farmers’ Markets: The USDA Role
Geoffrey S. Becker
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Summary
Congress and the U.S. Department of Agriculture (USDA) have created a number
of programs aimed at promoting farmers’ markets (and other forms of direct marketing).
Policy issues include the extent to which these programs contribute to the markets’
success, and whether or not additional governmental support is needed. This report will
be updated if events warrant.
Farmers’ markets are among several forms of direct farmer marketing — which also
include roadside stands, Community Supported Agriculture (CSA), pick-your-own farms,
and direct sales to schools — becoming increasingly popular with small producers and
consumers alike, according to USDA. Farmers’ markets in the United States increased
by 79% from 1994 to 2002, to more than 3,100. In an August 2000 study, USDA found
that 66,700 farmers were selling at farmers’ markets; 19,000 of them were relying on such
markets as their sole outlet. The study found that annual retail sales totaled $888 million,
with 2,760,000 customers spending, on average, $17.30 per week at farmers’ markets.1
USDA Programs2
The Marketing Services Branch (MSB) at the Agricultural Marketing Service
(AMS), USDA’s lead agency on farmers’ markets, provides primarily technical assistance
and information, focusing on feasibility studies, research, and other non-grant assistance
for farm marketing activities. AMS often arranges $10,000 to $50,000 in cooperative
agreements with states and other agencies, farm cooperatives, educational institutions, and
1 USDA, Agricultural Marketing Service (AMS), Farmer Direct Marketing Bibliography —
2001, March 2001; U.S. Farmers’ Markets — 2000: A Study of Emerging Trends, May 2002.
2 Sources include the Resources for Farmers’ Markets (RFM) website at [http://www.nemw.org],
USDA materials, and interviews with government and private farm marketing experts. In January
1998, the National Commission on Small Farms, in A Time to Act, described the status and needs
of U.S. small farmers. Several of its 146 recommendations focused on ways to improve USDA
support for direct marketing, including farmers’ markets. USDA says it has adopted a number
of the recommendations. See the Small Farms website at [http://www.usda.gov/oce/smallfarm/].
Congressional Research Service ˜ The Library of Congress

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private nonprofit organizations. The legal authority for MSB is primarily the Agricultural
Marketing Act of 1946 (7 U.S.C. 1621 et seq.). MSB has an annual budget of about $2
million and staff of 15. Its website is at [http://www.ams.usda.gov/farmersmarkets/].
Using its authority under the 1946 act, AMS operates the Federal-State Marketing
Improvement Program (FSMIP) to provide matching funds to state agencies, primarily
for studies and research on innovative approaches to agricultural marketing. A number
of projects have focused on direct marketing, including farmers’ markets. About 25 to
35 projects are funded annually, with grants averaging from $45,000 to $50,000 each, for
a total of about $1.3 million. The program’s website is at [http://www.ams.usda.gov/
tmd/fsmip.htm].
The Farmers’ Market Promotion Program, authorized by Section 10605 of the
2002 farm bill (7 U.S.C. 3005), requires USDA to provide grants to establish, improve,
and promote farmers’ markets and other direct marketing activities.3 Authorized funding
is at such sums as necessary through FY2007. However, Congress has not yet provided
money, and USDA has neither designated a lead agency nor issued guidelines. Eligible
grantees are farm cooperatives, nonprofit and public benefit corporations, local
governments, economic development corporations, regional farmers’ market authorities,
and others designated by USDA. Funds cannot be used for buildings. USDA also is
required to annually survey direct marketing activities; work with states to train farmers’
market managers; promote information-sharing; and work with Extension agents and
producers. See also [http://www.nemw.org/farmersmarkets/farmers.html].
The WIC Farmers’ Market Nutrition Program (FMNP) was established by
Congress in 1992 under the special supplemental nutrition program for women, infants
and children (WIC; 42 U.S.C. 1786(m)) to provide fresh, locally grown produce to low-
income WIC applicants and recipients and to expand their use of farmers’ markets. In
2002, 1,911 farmers’ markets were authorized to accept FMNP coupons, according to
USDA. The program is administered by USDA’s Food and Nutrition Service (FNS)
through state and tribal agencies (a 30% agency match is required).
In 2002,
approximately 2 million clients in 44 states received FMNP coupons (in addition to
regular WIC benefits). The law limits each recipient’s federal FMNP benefit to no more
than $20 annually (states can supplement this). The program was funded by Congress at
$25 million in FY2003. Recent administrations have proposed, unsuccessfully, to
separate this money from the WIC program. To access information for this and the senior
program (below), see [http://www.fns.usda.gov/wic/DEFAULT.HTM].
The Senior Farmers’ Market Nutrition Program was authorized permanently by
Section 4402 of the 2002 farm bill (7 U.S.C. 3007). With $15 million annually in
mandatory Commodity Credit Corporation (CCC) funding, the program uses state and
tribal agencies to provide low-income seniors with coupons to exchange for fresh produce
at more than 1,500 farmers’ markets, 900 roadside stands, and 50 community-supported
agriculture programs in 35 states (FY2003). In 2002, approximately 500,000 people
received benefits valued at a minimum of $10 (there is no statutory benefit cap).
3 Section 10605 revives and amends the Farmer-to-Consumer Direct Marketing Act of 1976 (7
U.S.C. 3001 et seq.), which had expired at the end of FY1978.

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Community Food Projects Competitive Grants are one-time matching grants of
$10,000 to $300,000 to eligible nonprofit organizations for various community food
projects; those linking low-income populations to fresher foods through farmers’ markets
have qualified as activities. The program is administered by USDA’s Cooperative State
Research, Education and Extension Service (CSREES). The grants were first authorized
(through an amendment to the Food Stamp Act of 1977; 7. U.S.C. 2034) by the 1996 farm
bill and were extended through 2007 by the 2002 farm bill, with up to $5 million annually
authorized. USDA has awarded $4.6 million in FY2004 grants. The program’s website
is at [http://www.reeusda.gov/crgam/cfp/community.htm].
Under Section 4403 of the 2002 farm bill (7 U.S.C. 7131 note), USDA is permitted
to operate a Nutrition Information and Awareness Pilot Program, in cooperation with
states, to increase consumption of fresh fruits and vegetables. The pilot could operate in
up to five states for up to 4 years. The federal match is limited to 50%. States would use
funds to assist public and private entities in conducting demonstration projects, possibly
including farmers’ markets. Although Congress authorized $10 million annually for the
program, no funds have been appropriated yet. A more detailed description is available
at [http://www.nemw.org/farmersmarkets/nutrition.html].
Value-added producer grants offer another potential resource for farmers’ markets
that sell value-added products (for example, organically grown produce or preserves from
locally grown fruits). Matching funds of up to $500,000 can help producers, cooperatives
and commodity groups earn more from farm products; grants may be used for feasibility
studies, business or marketing plans, and/or obtaining capital for a value-added venture.
Administered though USDA’s Rural Business-Cooperative Service, the value-added
program was established under the Agricultural Risk Protection Act of 2000 (7 U.S.C.
1621 note). Section 6401 of the 2002 farm bill now requires USDA to spend $40 million
annually ($33 million for grants; the balance for other value-added activities). The
Administration’s FY2004 budget, pending in Congress in October 2003, instead proposes
$2 million in discretionary funds under the Rural Cooperative Development Grants
program. For more information, see [http://www.rurdev.usda.gov/rbs/coops/vadg.html].
The Outreach and Assistance for Socially Disadvantaged Farmers and
Ranchers Program was first authorized by Section 2501 of the Food, Agriculture,
Conservation, and Trade Act of 1990 (7 U.S.C. 2279). The program requires USDA to
provide outreach and technical assistance to socially disadvantaged producers, defined as
members of a group that has been subjected to racial or ethnic prejudice. Section 2501
includes competitive grants of up to $100,000 per year to community-based and tribal
organizations and universities to help such producers successfully acquire, operate, and
retain farms and ranches through the delivery of outreach and technical assistance; help
with direct marketing would qualify, a USDA official said. In 2003, CSREES awarded
$6.4 million to 34 groups. See [http://www.usda.gov/agency/outreach/2501prj.htm].
Certain USDA research programs conceivably could fund direct marketing
research, although recent examples of grants relating to farmers’ markets are not apparent.
These activities include the CSREES National Research Initiative (NRI), competitive
grants supporting high-priority research in specified areas, including in markets and
human nutrition, and grants through four regional centers that have USDA’s Sustainable
Agriculture Research and Education program. See [http://www.reeusda.gov/nri/].

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Section 32 of the Act of August 24, 1935 (7 U.S.C. 612c) is a USDA permanent
appropriation equal to 30% of annual U.S. customs receipts. This money, plus up to $500
million in any unobligated prior-year carryover funds, must be used for encouraging
agricultural exports and/or domestic consumption of farm products, or for reestablishing
farmers’ purchasing power. Most Section 32 funds are transferred to USDA’s child
nutrition account (in FY2002, about $5 billion of the total of more than $6 billion
available); much of the rest of the money is used for direct purchases of U.S. perishable
agricultural commodities, which then are diverted to domestic food programs. USDA has
much discretion in deciding how to achieve Section 32 objectives, and therefore can, and
periodically does, use portions of the available funds each year for other purposes (notably
amounts totaling several hundred million dollars in a “contingency reserve”). Although
Section 32 has not been used to fund farmers’ markets, it conceivably could be. However,
traditionally the contingency reserve has been viewed as the key source of support for
buying unanticipated surpluses of meat, fruits, and vegetables during a fiscal year. (See
CRS Report RS20235, Farm and Food Support under USDA’s Section 32 Program.)
USDA’s Commodity Credit Corporation is a government-owned corporation that
can borrow up to $30 billion at any one time from the U.S. Treasury. The CCC mainly
finances ongoing programs such as commodity price and income supports, agricultural
conservation, export subsidy programs, and other mandated authorizations. However,
Congress assigned a variety of standing powers to the CCC (15 U.S.C. 714 et seq.),
including powers to “make available materials and facilities required in connection with
the production and marketing of agricultural commodities” and to increase domestic
commodity consumption “by expanding or aiding in the development of new and
additional markets, marketing facilities, and uses for such commodities.” Farmers’
markets traditionally have not been a CCC-funded activity but conceivably might be. For
a CCC fact sheet, see [http://www.fsa.usda.gov/pas/publications/facts/html/ccc99.htm].
The Agricultural Management Assistance (AMA) program requires CCC spending
of $20 million annually through FY2007 to help develop new risk management
approaches for producers in 15 states traditionally underserved by federal crop insurance.
Currently authorized under the conservation title of the 2002 farm law (7 U.S.C. 1524),
AMA might be a source of support for direct marketing, as market diversification, value-
added, and organic farming activities are (along with conservation) among the types of
eligible uses. USDA’s Risk Management Agency in October 2003 awarded $24.7 million
in various partnership agreements for risk management outreach and education. See
[http://www.usda.gov/news/releases/2003/10/0348.htm].
Non-USDA Resources
The Health and Human Services (HHS) Department funds programs through
states ($4.1 million total in FY2002) that coordinate food assistance resources and help
low-income communities with child nutrition and with other food needs. HHS says that
farmers’ market promotion is a good candidate for such grants. Other potentially helpful
programs are in the Department of Housing and Urban Development; the Commerce
Department’s Economic Development Administration; and the Small Business
Administration. See: [http://www.nemw.org/farmersmarkets/federalprograms.html].

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Most states, usually through their departments of agriculture, are active in direct
marketing including farmers’ markets. The AMS and other farmers’ market websites
have links to the states. See also the National Association of State Departments of
Agriculture website at [http://www.nasda.org/nasda/nasda/index1.htm].
The North American Farmers’ Direct Marketing Association (NAFDMA) offers
conferences, farm tours, workshops, newsletters, publications and a website for farmers,
Extension agents, and market managers (see [http://www.nafdma.com/]). At its February
2003 conference in North Carolina, NAFDMA launched the Farmers’ Market Coalition
(FMC), “to take farmers’ market development to the next level,” according to FMC (see
[http://www.nafdma.com/FMC/]).
The National Association of Farmers’ Market Nutrition Programs represents
groups in the 37 states, plus territories and tribal organizations, that operate the WIC or
senior farmers’ market nutrition programs. See [http://www.nafmnp.org/].
Resources for Farmers’ Markets is a website to “support the development and
expansion of farmers’ markets across the United States.” Hosted by the Northeast-
Midwest Institute, a Washington-based nonprofit that covers economic, environmental
quality, and regional issues for Northeast and Midwest states, the website is located at
[http://www.nemw.org/farmersmarkets/].
The Sustainable Agriculture Coalition has been among the small farm advocacy
organizations that have lobbied Congress to expand and fund farmers’ markets. It is
located at 110 Maryland Ave., NE, Ste. 211, Washington, DC 20002.
Observations on Farmers’ Market Support
USDA and farmers’ market advocates believe that direct marketing provides
agricultural producers with improved profit-making opportunities. They offer other
benefits as well. The Resources for Farmers’ Markets website asserts, “Farmers’ markets
provide communities with fresh, nutritious, affordable, and local farm products and
enable farmers to increase profits by selling directly to consumers. Consumers enjoy the
opportunity to buy high-quality, fresh products directly from the farmers at competitive
prices. Such markets also foster community and food linkages by bringing neighbors
together, helping children to learn where their food comes from, and allowing families to
talk directly with the farmers and ranchers who grow their food.” Also, advocates assert,
the WIC and senior farmers’ market programs put more fresh fruits and vegetables into
low-income diets. Farmers’ markets sometimes are planned as an integral element of an
overall community redevelopment project, as a way of drawing shoppers back to
declining downtown areas, for example.
Some contend that many farmers have difficulty starting or joining a market, at least
partly because public support has been inadequate. For example, advocates contend that,
although AMS is involved in direct marketing, much of its work is reactive and not well
coordinated. They add that AMS has a relatively short history with farmers’ markets;
until fairly recently, it has emphasized wholesale markets. AMS and other agencies lack
a coherent strategic plan for assisting localities with planning and establishing markets,
or for helping farmers learn about, access, or start markets, these advocates contend.

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Advocates argue that little if any money is available to finance needed infrastructure
for markets (such as buildings, parking, marketing space, etc.) Another lack is money for
the local staffing which is needed to organize, promote, and operate successful markets,
they believe. Advocates also assert that access to markets by low-income consumers has
been hampered by inadequate financial support for programs that use WIC and food
stamps as vehicles. They note, for example, that many local markets are unequipped for
food stamp EBT transactions (which have replaced virtually all paper coupon issuance).
Although supportive of farmers’ markets, some governmental and private marketing
experts question whether additional federal intervention is needed. They note, for
example, that even with arguably limited federal programs and funding, the number of
farmers’ markets increased by 79% from 1994 to 2002. They contend that farmers’
markets have succeeded precisely because they have been conceived, planned, and
launched locally by producers themselves, often with the assistance of local public and/or
private agencies. USDA noted in its 2000 study that markets have become more popular
mostly due to growing consumer interest in obtaining fresh products directly from the
farm. Skeptics of expanded government intervention say this is evidence that the private
market (i.e., consumer demand) can create the most auspicious conditions for new
farmers’ markets and that, in fact, is what is occurring. AMS’s 2000 survey also
documented that most markets were self-sustaining (fees charged covered all expenses),
skeptics note, adding that only 18% were not self-sustaining; they were primarily
supported by various government agencies (city, county, state, and federal), business
groups, nonprofit organizations, individual donations, and grants.
If Congress or the Administration were to increase the amount of funds devoted to
farmers’ markets, the money would have to be redirected from other priorities, analysts
note. For example, using more Section 32 dollars would leave less money available for
emergency surplus buys of produce, meats, and other commodities; setting aside some
section 2501 grants would be at the expense of other 2501 activities. Providing new
money (possibly through an annual appropriation) to fund the Farmers’ Market Promotion
Program would increase the federal deficit unless an offsetting cut or revenue increase
were approved. Further, some policymakers and anti-hunger advocates have questioned
whether the administrative costs of operating farmers’ market nutrition programs are
justified by the relatively low level of benefits low-income persons receive through these
programs; they have suggested that the money might be better spent by improving
traditional food assistance program benefits under food stamps and WIC. Put another
way, should the emphasis of added resources, if any, be on developing market
infrastructure or on providing improved benefits for those who shop there?
It might be argued that the level of support for farmers’ markets is modest relative
to the annual spending Congress devotes to traditional food assistance programs and to
farm commodity support. Moreover, the farmers’ market nutrition programs have broader
goals than simply feeding low-income people, supporters point out. Proponents believe
that a relatively small amount of additional funding for these programs, and for promoting
farmers’ markets generally, could constitute a valuable public investment in smaller-sized
farm businesses. Nonetheless, skeptics argue, no compelling case has been made that
more legislative authority, new Administration initiatives, or additional money would
significantly improve the progress that already is being made in direct marketing. Such
skeptics say they are concerned that more federal intervention might instead undermine
the local and market dynamics that have fueled the markets’ success.

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