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Re-injecting market forces into Community Supported Agriculture

This past year I’ve been lucky enough to have a share in a local Community Supported Agricultural (CSA) farm in Bozeman, MT. Not only has the food been great, but it has also been fascinating to think about the whole CSA structure from an economic perspective. It illustrates in clear detail where a market based system is superior and where it falls flat. Moreover, it illuminates these things economists call “externalities”, which are just side effects (positive and negative) that are not accounted for by either the farmer and the consumer.

CSA’s are a great innovation that have a huge number of benefits:

  • Encourages small scale, local farming
  • Reduces risk to the farmer
  • Provides the consumer to with a fresh source of produce
  • Strengthens the connection between consumers and producers
  • Lowers the cost high-quality produce

If there is one issue I’ve had it’s that I can’t eat all of it fast enough. The solution immediately seems to be to get a half share or share the box each week with someone. However, this actually would mean that I’d be out of food in 3 or 4 days. And on the flip side, the farmer would only get half the money I want to spend on produce. That’d mean heading back to the store early and leaving all the benefits on the CSA on the table (pun intended).

Tossing that moldy tomato into the compost is actually a real-life demonstration of market inefficiency.

For example, this year there was a 5 week stretch where I received a massive head of Napa Cabbage in each delivery. Maybe the farm produced way too much cabbage? Maybe a Kim-Chi maker always needed more Nappa cabbage (since it was all in my fridge…uneaten).

By overlaying a market system on top of the CSA we remedy this problem. The fact that markets solve distribution is one of their beautiful features.

Instead of buying a share in one farm, you purchase credit in a farm collective. This credit would be split by all the farms in the collective. Next the farms would pay a servicing fee to a distributor (likely a local food coop), who’d extend to you a line of credit for produce purchases. Then as the farms deliver their harvest to the coop, you use your credit to purchase produce (likely at a discount to the posted price).

This setup actually has several benefits over the current CSA system. First, farmers have clear signals for the demand of their crops. The farmers no longer need to guess if all the beets are being eaten or if they are being tossed in the trash. Second, using this pseudo-market system, the produce is distributed more efficiently. The Kim-chi maker and myself would be much happier.

The benefits that CSAs provide are still maintained even with an overlay like this. Importantly, the consumer’s pre-purchase of the produce still reduces the farmer’s crop risk.

Ultimately, I’m a huge advocate for the farm to table movement and think that expanding it is a really positive goal. By increasing consumer choice and adapting to inter-week demand, it helps the system resemble the familiar grocery-store experience, which for many consumers would be welcome.