Pay-What-You-Can Pricing Can Be Good for Farmers Too

Flexible pricing on fruits and vegetables is proving to be good business for small farms.
Coastal Roots’ farm stand. (Photo: Courtesy Coastal Roots Farm)
Sep 30, 2016· 2 MIN READ
Sarah McColl has written for Yahoo Food, Bon Appétit, and other publications. She's based in Brooklyn, New York.

A few minutes into my conversation with Daron “Farmer D” Joffe, the executive director of Coastal Roots Farm in Encinitas, California, the background noise quiets, and he assures me there will be fewer distractions. He’s in the car delivering Rosh Hashanah gift boxes of eggplant, beans, summer squash, beets, herb bouquets, and a cookbook—Gefilteria.

“One of the big drags on farmers is delivery. Typically it’s not the best use of a farmer’s time,” he said. “Ironically, here I am, doing them right now,” he deadpanned.

In theory, the farm stand Coastal Roots Farm opened on its property in August should free Joffe and his staff from some driving hours. But perhaps a bigger benefit to the community is a pay-what-you-can price model used at the farm stand, which also accepts electronic benefit transfer cards.

“We wanted our produce to be accessible to everybody,” Joffe said. “We didn’t want to set ourselves up where the food that we’re growing is only available to people who are able to pay a premium.” When the stand opened, Joffe reached out to nonprofits that work with low-income and vulnerable community members, as well as to farmworkers on other area farms, to let them know the price was right for everybody.

Shoppers on both ends of the sliding scale—those who can’t afford to pay the suggested price and those who can pay more—have expressed appreciation for the model, Joffe said. In the nearly two months since the stand opened, he reported, the general trend is that more dollars are given in discounts than are “paid forward”—but more people pay above asking price than below.

Making it clear that extra dollars spent will be paid forward may be key to this kind of model. Pay-what-you-can and pay-it-forward models work the same way but have different outcomes. In a paper published in the Journal of Personality and Social Psychology, the authors examined the relationship between social perceptions of kindness and generosity. A pay-it-forward frame changes the transactional relationship between the buyer and seller to “a symbolically social relationship with other customers: the receiver and giver of a gift,” they wrote. Similarly, an experiment at a theme park that coupled a pay-what-you-wish model with charitable giving led to “significant” profits; customers who are motivated by a cause and a desire for a product “will pay for both.”

In Colorado, Candice Orlando of Groundwork Denver manages three pay-what-you-can farm stands that have been operating for five years. Beginning with a vacant lot in a low-income neighborhood, residents decided to run the urban farm together rather than divide it into individual plots in a traditional community garden. Produce would be available to everyone at the farm stand using a pay-what-you-can model inspired by local restaurant SAME Café. (SAME is an acronym for So All May Eat.)

In the 2015 growing season, 75 percent of customers paid the suggested price, which was about $1 per pound, or less. So far this year, the farm stands have seen more people who were not able to pay anything, Orlando said. She sees the farm stands as a hyper-local neighborhood solution to issues of food access.

“I grow food; I know how hard people work to grow food. We’re not trying to take customers away from people at the farmers market,” she said. “But there are people who can’t go to those farmers markets. They can’t financially go there and can’t even get there” if they lack transportation.

The majority of Colorado farm stand shoppers are from the immediate areas and come on foot or bicycle. Once they arrive, they are physically on the farm, among the rows.

“People who might not normally mingle come together,” Orlando said. One person asks what to do with a tomatillo; another has a recipe. “There are conversations that wouldn’t normally happen. There’s a lot of magic that happens at the farm stand.”

Both farms have several streams of income, so neither is reliant on grants or the cash flow from the stands to keep them afloat. Both sell vegetables to restaurants (“Our heirloom tomatoes were off the charts this year,” Orlando said) and are integrated with schools in educational programs. Coastal Roots Farm has its next nonprofit social enterprise in the works: a food truck–centered workplace development program for youths and veterans.

Joffe said the farm is ambitious about “trying to become more self-sustaining and modeling social enterprise as a tool for sustainability in the nonprofit farming world.”

Yet Joffe, like any idealistic farmer, recognizes that his yields go beyond selling eggplants.

“I have a deep commitment and appreciation for trying to make small sustainable farming work as a business and integral part of society,” he said, “and I also have like a really strong belief that the real impact goes so far beyond the food itself.”