Bob Dylan and Contract Theory

As excited as many are about an American folk/rock singer composer winning the Nobel Prize for Literature, the economic prize is also worthy of mention here. First though, my favorite song lyrics of Mr. Dylan:

I ain’t gonna work on Maggie’s farm no more
No, I ain’t gonna work on Maggie’s farm no more
Well, I wake in the morning
Fold my hands and pray for rain
I got a head full of ideas
That are drivin’ me insane
It’s a shame the way she makes me scrub the floor
I ain’t gonna work on Maggie’s farm no more

I ain’t gonna work for Maggie’s brother no more
No, I ain’t gonna work for Maggie’s brother no more
Well, he hands you a nickel
He hands you a dime
He asks you with a grin
If you’re havin’ a good time
Then he fines you every time you slam the door
I ain’t gonna work for Maggie’s brother no more

I ain’t gonna work for Maggie’s pa no more
No, I ain’t gonna work for Maggie’s pa no more
Well, he puts his cigar
Out in your face just for kicks
His bedroom window
It is made out of bricks
The National Guard stands around his door
Ah, I ain’t gonna work for Maggie’s pa no more

I ain’t gonna work for Maggie’s ma no more
No, I ain’t gonna work for Maggie’s ma no more
Well, she talks to all the servants
About man and God and law
Everybody says
She’s the brains behind Pa
She’s sixty eight, but she says she’s fifty four
I ain’t gonna work for Maggie’s ma no more

Many interpretations of this song ascribe this to a criticism of capitalism or of the military industrial complex. Those lyrics actually lead us to a chat about the economic prize this year, given to Oliver Hart and Bengt Holmström for their contributions to contract theory. (Disclaimer: not only am I not a economist or a lawyer, my understanding of these theories is very casual and centered on my community organizing work. I may over or understate many of these theories and will edit when better information comes my way. Feel free to add to my knowledge via email as needed.)

Contract theory focuses on the relationship between the parties in a contract, including those which are asymmetrical in terms of information. The truth is the industrial system contains scads of examples of information asymmetry: media, police or military, employers, technology providers etc. When one party has access to more information than the other, the fairness of the contract can be questioned. The other issue that is relevant here is what are called incomplete contracts which cover the likelihood that a contract in present time cannot always cover every possible outcome and so must be renegotiated at some time; in that case it is possible that renegotiation can be held up because of lack of trust or because of the need to address added external factors in possible new scenarios.

In many ways, this describes much of our alternative food and farming movement impetus. I have long known that my own community organizing fire can be summed up in the concern over the unequal distribution of resources, and chiefly that in terms of information distribution. Once we at least share information democratically and situationally, people can act in their own and in their community’s best interests to add balance in other systems that matter to them too.

Certainly, the desire for fairness and trust for producers and for eaters has led to transparency as one our chief indicators, yet this does not always play out in the systems we create. Direct marketing,  at the heart of our movement, offers straightforward ways to attempt to create fairness between its agents. But even within those models, there can be an information asymmetry which leads to an unfair contract. For example, some farmers markets have created systems where information only flows from vendor to market and not the other way around. One way to gauge whether this is an unequal contract is when the agreement is changed by the market starting to ask for sales data or to request changes in other rules over time. The difficulty in getting agreement around those changes may indicate that a contract is seen as unfair or at best, incomplete.

Still, the very nature of the mutual dependency and face to face nature of farmers markets and their vendors can right this easily. Same goes for other type of direct marketing contracts, especially CSAs which began as a elegantly simple contractual relationship between producers and eaters in a single season. Now,  when there is an imbalance it often benefits the shopper and not the farmer because many CSA farmers move outside of the implied contract agreement in the desire to build consecutive-season relationships. An example of this is when a farmer offers a credit for lost crops, even when the contract in a CSA explicitly agrees that the shopper loses their investment if the crop fails. Or, when a CSA farmer begins to morph into an aggregator of goods from nearby farms and even cottage industry producers without creating a updated contract with their shoppers that outlines the new rules of that relationship. Both agents can lose their investment or find themselves outside of the explicit agreement in that situation which can lead to a lack of trust.

However, the concern over contracts really “scales up” for me when systems move into intermediate (back door or bin sales) and wholesale (middle-man or pallet sales) contracts. We hope that restaurant owners and wholesale buyers will build contracts with our producers with the same transparency and information sharing as those in the direct marketing sector, but often that has not been the case.  Information asymmetry is definitely at play and yet negotiation tactics are rarely undertaken to attempt to smooth them out.

The key to mutually beneficial agreements on all levels of our food work relies on building contextual contracts and incentivizing them for all  involved. What are the main benefits for a producer to sell at a  lower cost to a chef? Well, two might be consecutive sales and the ease in delivery, and yet rarely are these described in agreements for most of our producers when they sell at these levels. What is the main benefit for the buyer? Often it is either the quality of the product or the name recognition of the producer attached to the goods and yet rarely are those benefits understood and outlined in these agreements.

One way to incentivize the fairness of the contract in these situation may be to create a shared asset owned by all of the parties. Another way to make them contextual might be to have an external party monitoring the agreement. Maybe this is where farmers market leaders can grow their influence?

And of course, markets managing transactions through card technology has led  to lopsided contracts with processors. Markets scramble to understand these complex agreements which exist over different eras of management and open markets  to many new layers of liability.  Another issue is that the energy that markets must reserve for reaching and encouraging benefit program shoppers is often wasted by the lack of good information about the client lists from local or federal government authorities. Too many markets I talk to have no idea how and where to reach these shoppers in their area and when you take in the short time that the majority of these shoppers remain on these programs at any one time (also not shared by most government entities), successful outreach becomes even more unlikely. The vendor in this situation is also underrepresented in a fair contract, as most markets – or the processors working directly with farmers – use boilerplate agreements about card processing with their vendors.

So, one can see from just these few examples that center around direct marketing and intermediate farmers how many contract issues arise. So maybe before the alternative food system becomes another one of Maggie’s farms, let’s spend some time on increasing transparency and incentives for everyone’s benefit.




Economic Assessment Toolkit-USDA

I recently attended a two day workshop on the new toolkit, conveniently held in New Orleans during the Food Distribution Research Society’s  2016 Conference: Exploring Linkages in Food Market Innovations. FDRS has a very sensible membership rate for anyone interested in research on food systems, which should be just about everyone reading my blog.

The first part of the workshop provided a general overview of the purpose and the layout of the online toolkit with time for a round of introductions from the attendees.  The gathered group (SRO by the way!) was a wonderful cross section of municipal projects, regional assessments and some feasibility/benchmark needs for newly emerging initiatives. 32 states were represented among the attendees which meant lots of networking happened in the hallways.



Day 1 breakout, facilitated by toolkit team member Dr. Todd Schmit of Cornell University



Day 1 breakout, facilitated by Dr. Dawn Thilmany the coordinator of the toolkit project.


The next day, one could choose either of the tracks to learn more detailed information. True to my usual m.o., I traveled between  both rooms depending on the topic being discussed.

Track A: Advanced Economic Impact Assessment

  • Review of Economic Development Principles
  • Modelling Issues to Consider in Economic Impact Analyses
  • Hands-on Customization of IMPLAN data for Analysis
  • Assessing your Community’s Efforts

Track B: Integrating Benchmarks into Your Local Food Assessment

  • Food System Typology
  • Economic Benchmarks across the Typology
  • Mapping the Range of Economic Multipliers



The two days contained amazing detail on unpacking data for analysis when using secondary dbs such as the Ag Census. The researchers also did a great job discussing (in layperson terms)  how to think about economics within the food system as a whole and across connected sectors as well as frank discussions on sorting out long-held assumptions that one might have about data ( I find markets need this reality check as much if not more than other project leaders so do take note).

If this workshop comes to your town, I’d recommend that you invite your Extension partners and any market planning on conducting in-depth research on their own. They may even be offering some travel scholarships as they did to this one.

I am gratified to see that the work the FMC team has done for the last 5 years or so to research and adapt existing tools into the still-in-development Farmers Market Metrics training and pilot materials closely follow the same framework used by this very smart group. I think FMM will be the market-focused portion of data collection and data use that toolkits like this rely on existing in local communities that make their work easier.

With all of this attention being paid to collecting and discussing data, it is becoming more evident that practioners and researchers will have many ways to share dynamic and disciplined ideas on the impacts that local and regional food systems have on their communities. Join in, won’t you?

In case you haven’t heard of this yet, I urge you to check it out online:

USDA-AMS’ The Economics of Local Food Systems: A Toolkit to Guide Community Discussions, Assessments and Choices

DIY vendor cart

JD Farms in Mississippi has innovated another direct marketing idea while vending at the Crescent City Farmers Market. They have built free-standing carts to better present their goods and offer some flexibility in how they set up their stall. They have two of these with a third fixture being the yellow plant stand that can be just seen to the right in the picture.

What I like about this cart is how they incorporate customer needs like the waist-level display area, the middle shelf seen to the right of the shopper in the pic (which folds down), and the chalkboards on the bottom. The vendor side has recessed spaces for bags and a place for the cash box. Obviously, the umbrella slots into the middle of the display.

They can use a pallet jack to load these into their van and will be continuing to update the design of these.I have encouraged Don and Jeff to build then for others, or at least sell plans for making them. Feel free to join me in urging this side business for this talented duo.

vendor cart.jpg


Motion Card newest card technology to stem fraud

Motion Code to the rescue

At first glance these cards don’t look any different from the ones you carry around today, but they’re hiding some technological wizardry.

The three digits on the back of this card will change, every hour, for three years.ezgif-com-crop

Trader Joes shoppers and farmers markets: will they come?

As my colleagues wished me a happy birthday last week, they asked me what fun thing I had to do on my birthday: I told them that one of them was to go to the opening of the Trader Joe’s which opened in the suburbs of New Orleans that very day. I am sure some that the choice of viewing a retail store was odd, but not only is grocery store obsession a very New Orleans thing, it is most certainly one of my favorite “busman’s holidays.” (I also went to the inaugural fried chicken festival on Sunday so don’t worry about me too much.) This was not my first visit to Trader Joe’s. Some years ago, I had tagged along with my sister to the one near to her suburb, out in one of the outlying suburbs of Cleveland.  I was a bit confounded by it. I have since made it to another, but as they were nowhere near me I didn’t think of them too often. Now, New Orleans has one. Here is my FB post about it:

Whew- made it to and back from Metairie to experience the opening weekend energy of Trader Joe’s.  As others have said, if you like packaged nuts or healthier freezer dinners or basic wines you will find some items here that you like. Honestly, I think this chain (in terms of regular shoppers) is for those who don’t love to shop for food or even want to think too much about food. If that’s you, this store will appeal.
Fruits and vegetables are not what they do well, but you’ll find a sale item once in a while, although having bananas priced as each (19 cents or 29 cents for organic) could be confusing to many, even though their thinking is sound: scales take up space, and lots of people only want a few at a time. That is a good price (as it comes to around 50-75 cents per pound) but not an amazing price as I think Circle Foods had them at 39 cents a pound last time I was there.
I didn’t think the prices beat the NOLa Whole Foods on most items or when they did, by much. This seems especially true since the Broad Street WF is essentially a prototype of the emerging 365 WF store that is designed to try to beat TJ’s. TJ is prolly not going to become your only store and it’s not laid out to wander around in to get inspired….I’m glad it’s here, mostly cuz more healthy choices are now available and I don’t like it when one chain has a stranglehold over shoppers. I’ll pop in a while, but this chain still strikes me as odd and a pale version of stores like Jungle Jim’s in Cincinnati…/jungle-jims-grocery-store-ohio-…

Now, speaking as a farmers market consultant…

I think knowing who the core shoppers are for the stores around a market is very helpful. In many cases, research is available on the chains or a visit to the local store at both its peak and at its slow time can usually tell you about that store’s demographic.

To give an illustration, I have included some global demographic info from Whole Foods and Trader Joes as well as a few market shopper personas. Forgive the errors and the oversimplifications. The data on the stores comes from retail research available online.The market data comes from the many surveys and data collection reports I have either participated on or read. Do be aware that there are many subgroups within each of these to be explored.

Grocery store shoppers

Whole Paycheckers

  • Whole Foods focuses on the per capita population that has college degrees. The key customer for the average Whole Foods location is a working parent that is between the age of 30 and 50.
  • From the Yougov site: The typical Whole Foods customer is a female between the ages of 25 and 39 with more than $1,000 in discretionary monthly income. She likely works in architecture or interior design. She doesn’t mind paying more for organic food and she tries to buy fair-trade products where available. Her interests include writing, exercising, and cooking. She would describe herself as ethical, sensitive, and communicative, but also admits to occasionally acting like a self-absorbed and demanding daydreamer. Her favorite foods are sushi and tea and she probably drives a Mercedes-Benz.
  • “Decentralized” systems: regional management, store team approach and “localized” inventory management

Packaged Good (Enough) aka Trader Joe’s:

  • Most research shows that the TJ shopper is the most likely chain in the U.S.  to be brand loyal and to recommend the store to others.
  • TJ Culture dips into the health food movement, the gourmet food, wine and booze craze, and the ever-popular discount ideal. But all in moderation. “Our favorite customers are out-of-work college professors,” says Tony Hales, captain of the store in Silver Lake. “Well-read, well-traveled, appreciates a good value.” The chain focuses on singles, small families looking for small package sizes.
  • 50% have college degrees. Almost half have an household income of 100,000.
  • Stores carry 2-3,000 SKUS versus 30,000 -50,000 in a normal supermarket. 80% of their items are private label.
  • Centralized: Secretive inventory management, mostly direct from manufacturers and a detailed screening process for hiring.


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Celebrity crusade for online food stamp use

Shailene Woodley, Rosario Dawson, Will Smith and Kristen Bell are just a few of the big name stars teaming up with Thrive Market, a digital marketplace where individuals can purchase affordable, healthy food. They’re petitioning lawmakers and retailers to allow the use of food stamps online.

Thrive Marketplace