Feb 13, 2014

How to prevent fraud at farmers’ markets

You’re a farmers’ market manager. Your market has a rule: Vendors must grow everything they sell (not all markets require this, but yours does). You suspect, however, that not all of your vendors are following this rule. You think they might be selling food, including produce, they claim was grown on their farms but was actually grown somewhere else.

So, if one or more of your vendors are misrepresenting their products, what can you, as the manager, do about it?

Complicated problem

It’s hard to quantify how big the problem of fraud at farmers’ markets is, but it happens daily in markets across New York state, said Diane Eggert, executive director of the Farmers’ Market Federation of New York.

In New York state, it’s up to each farmers’ market (there are about 650) to decide if its vendors have to grow everything they sell. Typically, homegrown-only markets have some sort of farm inspection program to verify if vendors are following the rules. It’s easier for bigger markets to do that, Eggert said.

At smaller markets, vendors often end up policing each other. They usually know each other well, and can tell when another farmer is selling product he or she didn’t grow. There are times when it comes down to two farmers who don’t get along, though. You have to consider the relationship when looking into these things, she said.

Strict policies

New York City’s Greenmarket system, managed by the nonprofit GrowNYC, has one of the strictest producer-only policies in the country, said director Michael Hurwitz.

“The transparency and traceability of our marketplace is crucial to its integrity, and we believe that the public’s trust that they are buying locally grown products is fundamental to our success,” Hurwitz said.

There are 54 Greenmarkets spread throughout the city, with 240 producers who sell at them. Most of the producers are from New York state, but six other states are represented. The products they offer are extremely diverse, from dairy and livestock to fish and produce (about 150 of the vendors sell produce). GrowNYC has three inspectors on staff and contracts with numerous others to make sure the vendors are playing by the rules, he said.

Prior to joining the Greenmarket system, all producers must submit a letter of recommendation from a local county agriculture agent, as well as a crop plan, farm map and any required licenses. Greenmarket inspectors make on-farm visits, consult with state ag departments and other organizations, inventory regularly at markets to cross-reference the volume of sales with the crop plan – they’ve even used secret shoppers and satellite imaging, Hurwitz said.

Preventing vendor fraud should be a priority for all farmers’ market managers. Even if they don’t have the resources to hire a robust inspection department, a partner organization might, he said.

Hurwitz also recommended getting help from producer and consumer participants when creating market rules. Cooperation provides for greater buy-in, he said.

Crossing borders

In California, there are certified farmers’ markets and there are “swap meets,” said Korinne Bell, deputy agricultural commissioner for Ventura County.

According to state law, vendors who sell at a certified farmers’ market must be certified producers – that is, they must grow everything they sell. They sign up through their county agriculture commissioner’s office, then an inspector visits their farm and lists the crops they intend to sell on the certification form; inspectors also inspect the vendor’s stall to make sure what they’re selling matches up with what’s on their certification form, said Bell, who was an inspector for seven years.

Your certification has to be created in the county you grow in, but it’s good at any certified farmers’ market in California, she said.

Since county officials can’t be at the markets every week, they have to rely on market managers to make sure the vendors are following the rules. The manager is the eyes and ears of the operation, Bell said.

There are reasons cheating occurs. In certain coveted markets where vendors (and the markets themselves) are making a lot of money, there’s an incentive for them to bring something to sell every week. If the market collects stall fees based on the number of vendors, there’s an incentive for the manager to make sure the stalls stay filled. There’s pressure on both parties to make sure vendors come to the market every week, Bell said.

Most vendor cheating is what Bell referred to as “supplementing” – supplementing their homegrown crops with crops grown somewhere else. Supplementing can be difficult to prove, she said.

There’s a further complication. When certified producers sell in other counties, they tend to get a little careless. Ventura County, for example, borders Los Angeles County, which has about 130 farmers’ markets (and a huge population of consumers) but few growers of its own. As a result, many vendors who grow in Ventura County sell in Los Angeles County. And since Los Angeles County inspectors don’t inspect Ventura County farms, it’s easier for the vendor to hide something, Bell said.

“If someone’s going to cheat, they often will go to another county to cheat,” she said.

That’s why cooperation between market managers and county officials, and between counties, is essential. If a Los Angeles County inspector suspects a vendor from Ventura County, he or she will call Ventura officials and ask them to verify the vendor’s practices, Bell said.

Ventura County started tightening up its inspection process in the last few years, when it became obvious there was a lot of supplementing going on. Inspectors are paying more attention to specific varieties and harvest seasons now. But there are two inspectors covering 14 certified farmers’ markets in the county, and the inspectors have other duties. It’s tough to catch everything, she said.

The most serious county penalty for selling a product you don’t grow is a $1,000 fine and an 18-month suspension from the market. The suspension is the “real kicker,” Bell said.

Challenge

For vendor-to-vendor complaints, Fulton Street Farmers Market in Grand Rapids, Mich., came up with a solution called the “product challenge.” If you’re a vendor and you think another vendor is misrepresenting his or her product, you can approach market management, fill out a form and pay a $100 “challenge” fee. The market will then inspect the accused farm. If it’s found that the accused farm actually was misrepresenting its product, you’ll get your money back and the offending vendor will pay a $100 fine to the market (if it happens three times, the vendor will be kicked out of the market). If the accused farm was not misrepresenting its product, the market keeps your $100 challenge fee, said Melissa Harrington, the market’s executive director.

Though the product challenge has only been used once in four years (the challenge was upheld), the “put your money where your mouth is” approach has done a lot to separate the gossip from the valid complaints, Harrington said.

In 2007, Fulton Street Farmers Market started enforcing a rule that new vendors had to grow at least 80 percent of what they sold at the market. Existing vendors were exempted – though if the product is not from your farm, you have to label where it’s from. Fulton Street also has a “100 percent certified home grown” program. Vendors who qualify are given a special metal sign they can set up in their stall, a sign that lets customers know that everything the vendor sells is home-grown. Roughly a quarter of the market’s vendors have that designation, Harrington said.

– Matt Milkovich