Local food can be purchased through intermediated marketing channels, such as grocery stores, or through direct-to-consumer marketing channels, for instance, farmers markets. While the number of farms that utilize direct-to-consumer outlets keeps growing, the value of direct-to-consumer sales has reached a plateau. At the same time, intermediated sales continue to rise. If consumers prefer to purchase local food through intermediated channels, then policies designed to support direct channels may be misguided. Using an online choice experiment, this paper investigates consumers’ willingness to pay for local food differentiated by marketing channel. We find that, on average, consumers are willing to pay a premium for local food. However, they are not willing to pay premiums for local food that is sold at farmers markets, and discount it when it is purchased directly from an urban farm. Our findings can be used by farmers, marketers and policy makers to develop a better understanding of consumers’ motivation for buying local through various channels.

Introduction

The popularity of direct-to-consumer marketing channels, such as, farmers markets, continues to grow (McGarry-Wolf et al., 2005; Zepeda, 2009; Landis et al., 2010). According to the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS), the national count of farmers markets tripled between 2000 and 2018 from 2863 to 8718 (AMS, 2018). Similarly, the number of community-supported agriculture (CSA) venues, one of the most common forms of urban farming where consumers subscribe to the harvest of a certain farm or group of farms by investing in and sharing the risks and benefits of food production, have increased dramatically from 761 in 2001 (Adam, 2006) to 7398 in 2015 (NASS, 2016). Yet, direct-to-consumer channels for local food are not the most important in terms of sales volume. U.S. grocery retailers are aggressively seeking out partnerships with local growers and producers to source seasonal, locally grown produce and products made out of local ingredients (Guptill and Wilkins, 2002; Dunne et al., 2011).1 As a result of these trends, sales of local food rose from $6.1 billion in 2012 to $8.75 billion in 2015, and are projected to reach $20 billion by 2019 (NASS, 2016; USDA, 2016), with most of the growth occurring through intermediated channels, such as grocery stores and restaurants. Sales through direct-to-consumer channels, such as farmers markets and CSAs, are growing at a much slower rate (Low and Vogel, 2011; Thilmany-McFadden, 2015; Low et al., 2015; Richards et al., 2017). In this research, we aim to disentangle consumers’ preferences for marketing channels and the “local” attribute in their food purchases. In 2015, local food sales of the farms that sell only through intermediated marketing channels reached $5.75 billion, while the sales of the farms that only utilize direct-to-consumer channels were $3 billion (NASS, 2016). Nevertheless, the USDA AMS continues to support directto-consumer channels as a means of growing the demand for not just local food, but local food distributed in a particular way (Martinez et al., 2010; Low et al., 2015). For example, the Farmers Market and Local Foods Promotion Programs (2014 Farm Bill) sets aside up to $30 million in grants annually specifically for improvement, development, and expansion of farmers markets and other direct-to-consumer outlets (FMPP, 2016; NSAC, 2016). While there may be other goals that drive this policy besides simply growing local food sales, if the positive social impacts from local food are accrued regardless of channel, then we should better understand the relative effectiveness of direct and intermediated channels in growing local food sales. There is mixed evidence on preferences for local food through different points of sale. For instance, Onken et al. (2011) find that consumers are willing to pay a price premium for strawberry preserves sold at farmers markets relative to conventional supermarkets.