An Economic Analysis of Community Supported Agriculture Consumers

Final Report for LNE95-053

Project Type: Research and Education
Funds awarded in 1995: $2,960.00
Projected End Date: 12/31/1996
Matching Non-Federal Funds: $4,160.00
Region: Northeast
State: Vermont
Project Leader:
Jane Kolodinsky
University of Vermont
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Project Information

Summary:

The current U.S. food system has negatively impacted society. Problems we face include environmental degradation, dependence on fossil fuels in all stages of food production and marketing, increasing consumption of highly processed food (high in salt, sugar, and fat), and an increased emotional, informational, and physical distance between people and the source of their food supply. More locally-based food systems can ameliorate these problems by decreasing the amount of energy used in food production and marketing, providing fresher food, enhancing the interaction between consumers and producers, and supporting the local economy. Community supported agriculture (CSA) is a form of direct marketing of agricultural products which could be an important facet of a more sustainable, locally-based food system.

This thesis uses data collected through phone interviews with members, ex-members, and non-members of 3 CSAs in Vermont during October of 1995. Information gathered includes how members first found out about the CSA, why they decided to join, and how satisfied they have been with the experience. All respondents answered questions about their food-shopping habits, demographics, and other aspects of their lives.

The first set of analyses use analysis of variance and chi-squared tests to compare various characteristics between the three member groups. The second analysis attempts to test whether time spent picking up one’s CSA share and putting it away at home are simply aspects of household production time, or whether some members actually obtain utility (or satisfaction) from the experience of spending time at the farm during pickup and putting away the share at home. Potential sample selection bias led to the use of the probit procedure to test a model which describes the decision to join, and creates the inverse Mill’s ratio. The dependent variable indicates whether the respondent is a member or not (ex-members are excluded), and the independent variables represent household productivity, the price of time, price of a CSA share, and preferences. Two ordinary least squares ordinary least squares (OLS) regressions were performed with time spent in pickup as one dependent variable and time spent putting away the share as the other, and independent variables which reflect general productivity, income, household efficiency, and the inverse Mill’s ratio.

These analyses indicate that members of CSAs tend to be younger, more educated, and more likely to live in-town than non-members and ex-members. People who end their membership often do so because they are less satisfied than continuing members with the variety of produce and with the pickup system. The probit regression showed that income does not have a significant impact on likelihood of being a member, but education does have a positive and significant effect, and several of the productivity variables did not have the impact predicted by a household production model. Food shoppers who buy organic are likely to join a CSA. Few of the independent variables in the OLS regression had a significant impact on time spent in share pickup or put away time, but parameters derived from the OLS coefficients indicated that members do derive utility directly from pickup time, while putaway time creates disutility.

Project Objectives:

1. To identify major factors influencing consumers’ decision to become (or not) a member of a CSA farm, and to estimate the impact of each factor on the decision.

2. To describe members and nonmembers of CSAs based on socioeconomic characteristics, attitudes, and motivations.

3. To determine whether consumers are satisfied with the product they receive from CSAs and whether the package of goods and services is what they want and need.

4. To determine whether CSA members derive utility directly from the time spent in share pickup, and time spent putting away the share.

Research

Research results and discussion:

Objectives 1 and 2

• Word of mouth is the most successful form of advertising.
• Members can be characterized as younger, well-educated people who are more likely to compost and recycle compared to ex-members and non-members.
• Non-members who are more likely to have heard of CSA tend to have young children, be more likely to compost, and are well-educated, whereas those who are not aware of CSA are likely to be convenience eaters who see meal time as an opportunity to save time and energy.
• People who end their membership tend to do so for reasons related to the types and quantities of produce provided and the inconvenience of the pickup system.
• Income is not a significant determinant of membership status when other variables are held constant, but education level is – people with higher levels of education are more likely to be members.
• Membership status is very sensitive to cost – if the per person cost a potential member faces is high, there is less chance that that person will be a member.
• People who already choose to buy organic produce and those who feel that political, economic, or social issues are important in their choice of where to shop for food are more likely to be members.

Objective 3

• Overall, members are very satisfied with their CSA experience.
• Members who do not plan to rejoin the following year are somewhat less satisfied with the mix and quantity of produce.
• Members who do not plan to rejoin the following year are somewhat less satisfied with pickup times or days offered.
• Members who do not plan to rejoin the following year are somewhat less satisfied with the variety of products offered beyond vegetables and fruit.
• Members whose criteria for choosing where to shop for produce in the winter is “political, economic, social, community-related” are more likely to be very satisfied with their CSA experience than members whose foci are convenience and quality.

Objective 4

• Members may obtain utility/satisfaction directly from time spent in picking up their share, but time spent putting away their share does not provide utility.

Participation Summary

Education

Educational approach:

The findings described above were published in the Summer 1996 issue of Cultivating Connections, the UVM Center for Sustainable Agriculture Newsletter under the title “The Consumer Experience of the CSA Partnership,” as well as in The Grower, the Vermont Small Fruit and Vegetable Newsletter. More and less extensive versions of the results were made available by request. One economic paper was accepted for publication by the Journal of Sustainable Agriculture under the title “Factors Influencing the Decision to Join a Community Supported Agriculture Farm (CSA).” A notice was put out on the Sustainable Agriculture Network Internet discussion group (SANET) about this research, and several requests for more information were received.

Project Outcomes

Impacts of Results/Outcomes

The key weakness of the current food system is the distance between consumers and the source of their food in both physical distance and conceptual terms. The economic concept of “consumer sovereignty” (and the implications that a free-market system will naturally reflect the values of society), can only be a reality if consumers have nearly full information and can hold producers, processors and retailers responsible for their actions.

A shift towards more locally based food systems would help to foster an awareness of the connection between actions and consequences. When consumers are aware of how their food consumption habits affect their water supply, their local economy, and their neighbors, farmers can be held more accountable for their effects on the environment and consumer health, and government can be held accountable for how its economic policies reflect the values of society. Externalities such as the environmental and social effects of fossil fuel, use of chemicals, and low-wage labor would be internalized to reflect the true costs of all choices.
Policies which subsidize wastefulness or environmental degradation would be abolished, and policies which support the development of a local food system would be implemented. A suggestion made by Kloppenburg et al. (1995) is the (re-)creation of a “moral economy” which would allow “the obligations of mutuality, reciprocity, and equity” to infuse the currently contradictory drives of the free-market with motivations such as long-term sustainability (which includes future profit), and community, rather than just short-term profit and self-interest (Kloppenburg et al., 1995).

CSA’s Role in a Sustainable Food System

CSA results in an economic relationship which includes values other than just cheap food and profit maximization. It affords farmers a security which is not often achievable without large-scale operations, and offers consumers greater contact with the producers of their food, and with the process itself. As one tool to be used in an attempt to address the negative aspects of our current food system, CSA seems to have promise.

In addition to the specific benefits of CSA, there are numerous benefits to the direct marketing of agricultural products in general:
a. Products can be harvested at peak eating quality
b. Farmers can select varieties with better eating and nutritional qualities rather than transport qualities.
c. Perhaps lower prices (in season)
d. Farmers receive higher prices than those paid by conventional market buyers but consumers often pay lower prices than those found in retail outlets.
e. Farmers can reduce production and marketing costs by reducing or eliminating packing crates, shipping containers, and transport charges.
f. Small and part-time farmers don’t have to meet volume and other requirements of wholesale buyers.
g. Farmers can sell products which don’t meet standards for wholesale buyers but are good for immediate consumption. (Henderson and Linstrom, 1980)

CSA operations are often organic, in which case the benefit to the environment is a reduction in herbicide, pesticide, and fertilizer runoff, as well as increasing soil health and reduced topsoil loss. Direct marketing of produce also has the added benefit of supporting local production and consumption, which retains food buying dollars in the local economy, and lessens the environmental impact of food production due to transport (Cummings, 1992). An analysis of CSA will help producers, consumers, and policy makers understand its potential role in the food marketing system, and how to maximize its potential.

Farmer Adoption

Farmer Adoption: Operational Recommendations

The information gleaned from these analyses can be used in several ways depending on what stage a CSA is at in the growth process. A farm which is desperately trying to increase its membership in order to attain a critical mass of members might choose to focus on the potential members who are very likely to join, and might choose to use advertising methods that seem to be working well. A CSA which has attained that critical mass and wishes to diversify its membership might choose to reach out to people who are less likely to join, or may want to take advantage of advertising methods that reach a wider array of potential members. Most of the following marketing suggestions have aspects of each goal:

• Use word of mouth advertising to the fullest extent possible, reward members who bring in new members, ask members to invite friends to a CSA social/educational event; try to bring the strength of word of mouth to other advertising media – personal statements on posters, have member or core members go to stores,
co-ops, events to give face to face information about the experience.
• Focus on young families who live in town and are highly educated when targeting advertising efforts; educate and empower shoppers who don’t fit the description of likely members, address their needs and lifestyles.
• Make information about CSA available in places where young professionals work and play; provide information about the food system and CSA to people who might not be likely to seek it out, and explain why they should consider choosing a less convenient option.
• Keep share prices low – even if it means smaller shares.
• Consider delivery or convenient drop off sites, flexibility in what people take home as their share each week, or make shares easy to pick up, perhaps prepackaged, provide lots of fast and easy recipes for fresh produce.
• Emphasize pickup time as a fun time, make it convenient so that members have time to enjoy it, but reduce the amount of time members must spending putting their share away once they bring it home by reducing the amount of processing/ separating they have to do.

Areas needing additional study

New Hypothesis

Farms that allow members to choose how much time they spend in pickup (ranging from a very quick and easy pickup to a slower, more social, hands-on, or educational experience) will have lower turnover rates, controlling for age of the CSA.

The main need is to perform a similar study on a larger, national scale. It would be useful to control for size of CSA, region, rural or urban, and age of CSA.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.