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 of Dylan’s interpreters suggest this is a criticism of capitalism or of the military industrial complex. That actually leads 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 an 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 always 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, especially those which are asymmetrical in terms of how much information each side has access. The world contains scads of examples of information asymmetry: citizens and media, citizens and police or the military, employees-employers, consumers and technology providers etc. When one party has access to more information than the other, the fairness of the contract should be questioned. The other contract issue relevant to markets and farmers is what are called incomplete contracts. This covers the likelihood that a contract in present time cannot always cover every possible outcome and so often must be renegotiated at some time; in th, t case it is possible that renegotiation can go off the rails because of lack of trust.

In many ways, these scenarios describe much of what drove farmers and their advocates to the creation of the alternative food and farming movement.  The desire for fairness and trust for both producers and for eaters led to transparency being one our chief indicators of success and in keeping the heart of our movement in direct marketing channels which offer simple ways to create fairness. But even within those models, there can be an information asymmetry. For example, some farmers markets have created systems where information only flows from vendor to market and not the other way around. In others, vendors cling to systems that ask little of them as far as information sharing with the market. One way to gauge whether this is an unequal contract is at the time that the agreement is being changed.

Still, the very nature of the mutual dependency and face to face nature of farmers markets and their vendors can usually correct these small imbalances. Same goes for other type of direct marketing contracts, especially CSAs which began as simple contractual relationships between producers and eaters for a single season and a single farm. More recently, some CSA relationships have become imbalanced: like when a farmer offers a member a credit for a bad season, even though the contract in a CSA explicitly states 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 cottage industry producers without creating a updated contract with their shoppers that outlines the new rules of bringing those goods to the shopper.

However, the concern over unfair contracts really “scales up”  when systems move into intermediate (back door or bin sales) and wholesale (middle-man or pallet sales) contracts. Here, I’ll focus on intermediate sales, as wholesale sales are a whole other kettle of fish and in most cases, are beyond the capacity or interest of small family farms. (The reason for that is that few of those systems have really changed anything about their purchasing policies or their regulations for small farms, and so the costs and risk are all on the side of the farmer still.)

The hope is still that restaurant owners and wholesale buyers will build contracts with producers with the same transparency and information sharing as those in the direct marketing sector, but often that has not been the case. 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, consistent sales and the ease in delivery (meaning the farmer can deliver when most convenient to him or her and get quick payment), and yet rarely are these benefits 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 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, such as a mutually owned cold truck or even branding. 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 market 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.