Factors Influencing Tomato Prices at Tennessee Farmers' Markets

The number of farmers’ markets in the United States continue increasing but at a decreasing rate. Additionally, although the number of farms with direct to consumer (DTC) sales, including farmers’ markets, increased by about 6% between 2007 and 2012, DTC sales did not change in this same time period. For those vendors using farmers’ markets as their main marketing channel, a better understanding on how to price their products could influence their likelihood of survival under a more competitive environment. The main purpose of this study is to identify the factors influencing prices at farmers’ markets, particularly Tennessee farmers’ markets tomato prices. We evaluated how factors such as competition, weather, location, and consumer characteristics influence tomato prices at Tennessee farmers’ markets. First price formation at farmers’ markets is framed using various microeconomic models from perfect to imperfect competition. Specifically, some of the models explored could help explain the impact of vendor interaction on farmers’ markets prices. Then, a robust random effects panel data regression is used to evaluate the factors influencing tomato prices at Tennessee farmers’ markets. The midrange of weekly per pound tomato prices at Tennessee farmers’ markets between 2013 and 2015, household characteristics, and weather information were used for this analysis. Results from the regression analysis suggest the factors influencing tomato prices at Tennessee farmers’ markets were potential customers’ age and household income, and seasonality.