Pay-What-You-Can Markets Provide Produce for the Common Good

This story was originally published on Civil Eats.

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Every day, Marc James sees blatant income inequality in the LeDroit Park neighborhood of Washington, D.C. “To the north, you have the Kelly Miller housing projects, where about 94 percent of residents are below the federal poverty limit and most are unemployed,” says James, who worked as the farm programs manager at Common Good City Farm until early January. “To the south, you have people who had the chance to get their master’s degrees or are captains of industry and can afford million-dollar homes.”

The half-acre nonprofit farm is caught in the middle of these two economically divergent communities and offers a “pay-what-you-can” farm stand for residents in both neighborhoods with the hope that one group will help pitch in to feed the other.

“Some people have the means and some don’t,” James admits. “I started looking around, and I said, ‘What can I do to get the south side of the park to help support the people that live on the north side?’”

D.C. isn’t the only place where this kind of model is proving useful. People from all walks of life have been impacted by the pandemic and recent record-high inflation, which peaked at 10.4 percent for food prices last summer — the largest increase since 1981. And increased SNAP benefits just dropped at the end of February, leaving households to receive at least $95 less in benefits each month. As a result, sliding scale produce is playing an increasingly important role in keeping communities around the country healthy. But it hasn’t been an easy few years for farms using the pay-what-you-can model.

Produce for the ‘Common Good’

For nearly a decade, Produce Plus, an enrollment-based assistance program funded by D.C.’s health department, began providing low-income residents with $40 each month to spend at farmers’ markets and farm stands from June to September. It’s meant to buttress food budgets for families and individuals while compensating local growers, particularly first generation and BIPOC farmers.

Yet more than an estimated one-third of all D.C. area residents are still food insecure. Ward 1, where Common Good City Farm is located, houses an estimated 88,800 residents, or more than a tenth of the total D.C. population.

Among them, 11 percent fall below the federal poverty line. A fifth of all households earn less than $49,999 annually, an economic problem intensified by race. White households, on average, earn $155,497 compared to $66,506 among Black households.

The sliding scale business model is a response to this inequality. Shoppers are told the full price of the food and given the opportunity to pay 25, 50, 75, or 100 percent of that price for a maximum of $30 off their total purchase. Roughly 35 to 40 percent of all the farm’s customers now accept a discount, and that’s twice the number that did during the market’s first pay-what-you-can season in 2021. That year, Common Good City Farm received $255,600 in foundation and government grants, according to Josephine Chu, the farm’s interim executive director.

It has taken a while for the farm’s managers to arrive at this approach. When Common Good first launched the model, James says the math equation at the heart of the farm was changing week to week. At one time, more people were getting food at zero-cost than actually paying for it, forcing the nonprofit to start asking for donations at the register, he says.

“We definitely felt [the impact of inflation], but I had to keep my finger on the pulse of the market and adjust from week to week,” says James.

Although the urban farm grew 3,800 pounds of produce last season, James still had to purchase fresh food from outside vendors to properly stock the stand. It also meant that he never hesitated to accept free produce — even when the calls from his charitable network of farms would take him hours away to pick it up.

“I remember picking up a thousand heads of lettuce, 600 dozen eggs, whatever it takes to keep it going,” adds James. “I care about my community, so I made that drive — [I was] probably a little overcommitted sometimes.”

Last year, Common Good City Farm spent more than $40,000 on food from outside vendors, slightly less than the previous year, says Chu. And some varieties were more available than others on any given week, depending on the season and the purchasing costs.

“Imagine if I had to pay my salary, cover the cost of the assistants and of all the program materials and do a pay-what-you-can market. I’d be filing for bankruptcy within three months,” says James. “We have support from a lot of our community that helps us keep things going.”

‘Pe’ah-What-You-Can’

Just north of San Diego, the 17-acre Coastal Roots Farm attracts traveling Californians from near and far to access one of the first pay-what-you-can farm stands and the inspiration for Common Good City Farm.

The operation was part of a larger nonprofit, the Leichtag Foundation, in 2014, before it splintered off to become its own nonprofit two years later. Backed by community grants, it donates three-quarters of its annual harvest directly to a plethora of strategic local partners combating food insecurity. The stand also provides a way for the public to purchase their regeneratively grown produce twice a week.

Kesha Dorsey Spoor, director of philanthropy, program strategy, and communications at Coastal Roots Farm, says the stand had sold more than 57,000 pounds of food this past season alone, with the revenue from those sales contributing about 5 percent of the organization’s overall annual budget.

“We’re not a religious organization, but there are values that inspired the founding of Coastal Roots Farm and the way that we conduct our business,” says Spoor. “For us, it was truly about caring for our neighbors.”

“One [value] is called Pe’ah, which is kind of funny. We teach pe’ah-what-you-can, a similar-sounding word,” Spoor elaborates. “Pe’ah is a Jewish ancient law that instructed to leave the corners and the edges of one’s fields unharvested for those in need.”

Off-site food distribution partners have requested additional food for low-income seniors and Indigenous families in the San Diego area. And Spoor says the rising costs associated with these services, including gas, time, and labor, “impact their ability to source food” since there’s finite funding and financial resources at their disposal.

“Since COVID [began], the demand for and use of our pay-what-you-can model increased,” says Spoor. “We know that our customers and beneficiaries were impacted by inflation, adding additional barriers to meeting basic needs.”

Prior to the pandemic, one in five people in San Diego were food insecure, and that number more than doubled to one in three in the early days of the pandemic. The sliding scale model allowed the farm to adapt during these ups and downs: Spoor says a third of their roughly 37,000 annual customers were paying a discounted rate before COVID hit, and now it’s more than two-thirds. The remaining third are either paying full-price or in some cases donating above the listed value.

“I think the trust is there; people are paying what they can,” says Spoor, “and their needs change from week to week. It’s creating a culture of trust and dignity.”

‘A Fun, Social Experiment’

Two years ago, Margaret Gerker contacted Coastal Roots for tips on how to get a new pay-what-you-can farm stand off the ground at EarthDance Organic Farm School in Ferguson, Missouri. At the time, the farm’s operations manager says she hoped to make the food they grew as accessible as possible.

“The pandemic really made us realize now is the time to do something and kickstart this idea,” says Gerker. “The model we realized would work the best is pay-what-you-can, not a sliding scale, so nobody is turned away from our produce.”

It wasn’t easy though, especially with inflation. “We have seen a large increase in prices for everything that we use on the farm. Shipping prices have also gone up, from seeds to irrigation tape to plastic for our high tunnels,” says Gerker. “We held off for as long as we could, but it made sense to increase prices a bit this year since everything has gone up.”

EarthDance soft-launched the model in July 2021 and learned immediately that many shoppers needed to pay less than the retail value for the vegetables the farm produces on its historic 14-acre property, which is said to be the oldest operational organic farm west of the Mississippi. The 2022 season, which wrapped up in November, saw 36 percent of all customers paying less than the full price.

The majority of EarthDance’s customers are people of color, predominantly over age 60, but the group also includes university students and residents from more affluent areas like St. Louis, about 15 miles away.

“Last year, our donations were higher than our discounts, but this year, it has been the opposite,” says Gerker. “We live in a [place shaped by] food apartheid and want to spread the word about our farm to people in the community, because for a lot of people it’s off the beaten path.”

The Logic Behind Warm-Glow Economics

The model is built on social interactions. David Just, a behavioral economist who specializes in food and agriculture research at Cornell University’s S.C. Johnson College of Business, has closely studied charitable food operations, and sliding pay scales in particular.

He found that consumers “recognize some fairness in having a different level of pay or cost” depending on how much income they earn. But he adds that even economically disadvantaged shoppers “prefer to pay something rather than nothing.”

While flexibility is attractive, Just explains that the model needs to be simple since it “becomes somewhat paralyzing” for shoppers to navigate complex discount structures while standing at the checkout counter. He also added that well-heeled, generous customers are also key.

Just refers to the “warm glow,” a theory economists use to describe the emotional reward of giving to others. At the same time, inflation pressures can also put a damper on the conditions that make the warm glow effect work. Just points to the brief rise of pay-what-you-can restaurants in the early 2000s, right before the 2008 recession, for instance.

“If you hit some sort of financial crisis or something that gives people a moral out, then this becomes unsustainable,” according to Just.

So far, that hasn’t happened for any of the three operations in this story. James, Spoor, and Gerker say they have all been met with skepticism, but they’re all still making it work.

“I don’t know that we could keep our doors open if our only source of revenue was the pay-what-you-can farm stand,” says Spoor. “We are very lucky that we’re structured the way that we are, supporting our sustainability [through] other sources of earned revenue from programs and whatnot.”

In D.C., James says their full-price customers want to see the stand continue just as badly as the ones who take the discount, like a gentleman named Gary, who frequents the farm and has been described by James as a chemically dependent, brilliant chess player.

“One day I didn’t see him anymore. Come to find out, Gary had robbed somebody because he was hungry. That story always stuck with me, tugged on my heartstrings. People who don’t have food will do anything to [get it],” says James. “This is a program we designed to make sure people have access to fresh fruits and vegetables, no matter what they’re going through.”

Gerker has seen a similar loyalty arise in her customers. “It has reinstated my faith in humans; people will show up when they need to and use the service if they can’t,” she says. “Given our first two years, I’m very hopeful for the future.”

• Pay-What-You-Can Farm Stands Feed Communities Against Tough Odds [Civil Eats]