Cost Shifting and Farmer’s Markets

Recently, we’ve had lots of discussions about food deserts  in class and how we can help to change the availability of healthy, sustainable food for lower income demographics. Recently, some North Carolina Farmer’s Markets have started accepting food stamps as a way to reach out to low income people. FarmMarket

That won’t be enough. People in poverty obviously have a limited amount of resources, and food stamps are one of those resources. Because the resources are limited, they try and use them in the most efficient way possible. Unfortunately, the most cost-efficient foods are typically the ones that aren’t sustainably produced because their cheapness is born through those unsustainable processes. There could still be a solution.

In health insurance, the people who need health insurance can’t afford it because of pre-existing conditions, etc. and those who don’t necessarily need it can get it very cheap because they are low risk. To help with this insurance companies “cost shift” from the low risk people to the high to subsidize their premium cost. They charge the low risk people more than they need to to cover the expected payout in order to help the more needy high-risk people. This principle could easily be applied to Farmer’s Markets. If vendors charged a little bit more at high income locations, then they could have secondary locations in low-income areas where lower margins could be covered by the people who are willing to pay more. It would probably take some government help, because it would cut into Farmer’s Markets profits, but it could still be more efficient than a straight subsidy and a good way to get rid of excess or lower quality product.