I’m devoting the newsletter these first few weeks of the year to documenting in detail just how ALG works. I’ll spend some time next week talking about how growers get allowed in the market, and what standards they have to meet. But this week, I’ll get into the details of how the market sustains itself financially. Many of you ask about that from time to time, and I’m happy to oblige.
First off, we’re legally a sole proprietorship, and the market is owned and operated by me. Years ago, it was rolled into my farm, and reported on my Schedule F in addition to my regular tax forms. For now, while my gardens have dwindled, it’s an item on my Schedule A, like many other small home businesses. When the market started in 2002, it was named “Locally Grown Cooperative”, but it was never legally organized as a co-op. Dan & Kris Miller, the founders from Heirloom Organics farm in Watkinsville, were always sure to run things in a cooperative spirit, and since they handed the business to me in 2004 (I’ve sold as a grower since day one), I’ve tried to do the same thing. I’ve since renamed it to “Athens Locally Grown”, but you’ll still hear a number of people refer to us as “the co-op”.
We’re not a non-profit, either, but we’ve structured things so that over time the market can just barely cover its own expenses. Just like all of our member farms are sustainable growers, the market itself needs to be sustainable. So how do we cover its expenses? One small way is through the memberships you pay. The $20 a year you give to the market is enough to cover the costs of having customers: banking fees from maintaining accounts, paper and ink for printing, web hosting fees, and that sort of thing. What’s left over goes to helping fund farm events, food donations to like-minded area groups and events, etc. We currently have a couple hundred paid members and several thousand active accounts receiving these mailings.
By far the bulk of our funding comes from the growers themselves. They generally pay a 10% commission on their sales through the site. This money covers the many coolers we use, the tables and shelves used to spread out and organize your orders, the truck we currently use to store things in, gasoline, the food allowance we offer our volunteers, rent and utilities at Ben’s Bikes, etc. During the slow parts of the year, the sales are usually not enough to cover our weekly costs, but in the busy times (late fall and early spring, for us) there is extra. If I plan things out well, it pretty much all evens out in the end.
Last year, the total sales and memberships combined through the market amounted to well over $100,000. About 90% of those sales went straight to our growers, and the rest went to a food allowance for our volunteers ($200 a week), rent ($350/month), and web hosting. The “profit” gets counted as personal income or loss on my tax forms, and almost always comes out even.
The growers get paid out of the shared cashbox for their previous week’s sales when they drop off their items, during the hour before we open the market. Then, you arrive and pay into the cashbox for your order. We used to then rush to the bank to deposit the money to cover the checks we just wrote to the growers, but now the growers get paid the following week (money you pay via credit cards takes up to a week to reach our account). As explained elsewhere on the website, you are really ordering directly from and paying the growers yourself, but our shared cashbox system makes things convenient for you and them. (Imagine if you ordered from ten growers having to write ten checks when you picked up your items!) This shared cashbox system has so far satisfied the tax man, but it does mean that if you place an order and then never arrive to pick it up, we’re left holding the bag. For that reason, you are responsible for paying for orders not picked up, and that amount is automatically added on to your next order for your convenience. On the books right now (going back to 2007) is about $4000 of produce ordered but never picked up and so far never paid for at all (or picked up but paid for with bad checks). That might seem like a lot, but considering that the market’s sales total, that’s not so bad. In fact, it’s about a sixth of the US retail industry’s “shrinkage” rate, and almost all of it is owed by only ten people. On the flip side, almost exactly that same amount has been pre-paid into the cash box by people who pay online via credit card or who write large checks in person, and then draw down on that balance over time.
The average order each week runs to just over $40. There are no good studies on this number, but I’ve seen a few surveys conducted by the USDA indicate that the average customer spends $25 per trip to a farmers market. We continue to far exceed that average, which I think says a lot about the advantages ALG offers over the traditional market. And to your dedication to supporting our growers.
So, in probably far too much detail, that’s how we operate financially. Our market might be more expensive to run than a traditional “booths and tables” farmers market, but that price buys a system that’s simple, time-saving, flexible, and in my opinion, just better. There’s no money in the bank, but the market is paying for itself and that’s my primary financial goal. If you’d like to talk with me in person about this or any other aspects of ALG, I’d love to do so. Just pull me aside when you come by to pick up your order.
Thank you so much for your support of Athens Locally Grown, all of our growers, local food, and our rights to eat it. You all are part of what makes Athens such a great area in which to live. We’ll see you on Thursday at Ben’s Bikes at the corner of Pope and Broad Streets from 4:30 to 8pm!