Case
Teaching Notes
Supplementary Resources
Abstract
Shortly before the Carlisle Central Farmers Market (CCFM) Board of Directors convened on Thursday evening, February 12, 2009, Eric Kleindinst, a founding member and one of the six remaining (CCFM) directors, met a close friend and business partner for dinner at a local tavern. As they sat around the table of the dimly lit establishment, their conversation soon turned to the rise and fall of the farmers’ market. Eric pondered the board choices and actions during a three-year period that led to the troubled status of the community farmers’ market. A final decision on the future of the CCFM was planned for the board meeting that evening. Could the current failing state of the market enterprise be traced to an overreach by market promoters? Is it possible to balance economic, social, and environmental goals within an enterprise? What actions and decisions are necessary for a community organization representing all three sectors to collaborate for overall community good? Chastened but not defeated, Eric knew there were valuable lessons to be learned from this experience regardless of the final decision on the CCFM operations. This decision-based case documents the history of a failing tri-sector social enterprise. The complex processes associated with enterprise development detailed in the case provide students with insights into the challenges of securing the commitment of multi-sector stakeholders; organizing stakeholders; and, finally, implementing a venture grounded in a multifaceted vision and mission aimed at increasing and sustaining overall community benefit.
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
Resources
Appendix 1: Market Location and Facility Design
There are several factors to consider when selecting the location and design of a market. Ideally, the market should reside in a city or town center. The site should provide adequate space for current operations as well as any planned growth. The market should be easily accessible to public transit systems. Adequate parking should be available for customers and vendors. The market should have entrance and exit points and good internal traffic flow to maximize both vendor efficiency and the customer experience.
The initial decision in this process is the selection of either a permanent or temporary market location. Hand in hand with this decision is the selection of a market design. There are four distinct designs—open-air seasonal; market sheds; market houses; and market districts. A brief description of each of the market designs, including site considerations, is provided below.
Ultimately, the market mission will determine market site selection and facility design. This decision, however, will be strongly influenced by the availability of financial resources for investment and ongoing maintenance.
Seasonal Open-Air Design
This is the most widely used market design. At the designated market location, vendors provide their own structure or shelter or use structures already in place to protect and display their product offerings. The location may be publicly or privately owned. In either case, the market needs to secure an agreement with the owner or owner’s representative for the use of the property. Typically, the owner requires a release from liability. The owner may also require the market to purchase additional liability insurance. The market site may be temporary or permanent in nature. Temporary sites require little initial investment and minimal maintenance expenses. Temporary site possibilities include, but are not limited to, empty city lots, city streets and sidewalks, city parking lots, city parks, churchyards, and schoolyards. The advantage of temporary sites is the limited expenditure of financial resources required to start and run the market. Disadvantages include the possible need to share space with other activities, the constant concern about relocation, and the lost benefits from site investment when relocation is required. Permanent sites may be acquired through long-term leasing or purchase. Although the initial investment is significantly larger than the acquisition of a temporary site, control of a permanent site offsets all of the disadvantages of a temporary site and, more importantly, customers can become familiar with, and learn to rely upon, the permanent location.
Market Shed Design
This design is incrementally more complex than the seasonal open-air market. Market shed models are located on permanent sites. A permanent structure is erected on the location. This structure (shed) provides minimal protection from the elements yet allows easy access from all sides. There are several advantages associated with this design. The shed permits vendors to leave their stalls in place and decreases set up and break down time. Dependent on security, vendors may temporarily leave inventory at the shed. Market operations may be extended beyond the growing season given the added protection provided from the elements. The combination of a permanent location and facility generate greater community visibility, thus enhancing marketing opportunities. The probability of vandalism remains a real concern given that these are part-time operations.
Market House Design
Market house designs are located on permanent sites. These fully enclosed facilities offer complete shelter from weather elements and facilitate year-round market operations. This design enhances the advantages of the market shed design.
Market District Design
Market district designs are located on expansive permanent sites. Market districts are the most complex design form. Market districts combine elements of the seasonal open-air, market shed, and market house designs integrated with other facilities, services, and related businesses.
Source: Iowa Department of Agriculture and Land Stewardship; https://www.iowaagriculture.gov/
Appendix 2: Retail Market Classification
Market Classification
A market may be classified by first recognizing the stated purpose of the market followed by identifying a set of related key operational characteristics. These operational attributes include the variety and sources of products offered; the type of market facility employed; the length of the market’s operating cycle; and the market’s form of ownership. Three “ideal” classes are identified and defined below. Actual market differentiation, however, remains challenging. This is because for any one specific market the identified purpose routinely represents a weighted combination of economic, social, and environmental imperatives and correspondingly a related set of attributes that may span more than one market classification (Resources Table 1). Given market variations, successful and sustainable markets are not solely dependent on the selection of an “ideal,” or even hybrid, market classification but rather on three critically important underlying drivers: commitment to a shared purpose by key stakeholders; a sound business model that aligns with the market purpose; and, broad community support.
| Resources Table 1. Market Classifications | |||||
|---|---|---|---|---|---|
| Market classification | Purpose | Products | Facility | Seasonality | Form of ownership |
| Farmers | ECONOMIC social | Food products | Open air; market shed | Partial year | For-profit; NON-PROFIT |
| Producer- grower | ECONOMIC social ENVIRONMENTAL | Food products | Open air; market shed | Partial year | For-profit; NON-PROFIT |
| Public | ECONOMIC SOCIAL ENVIRONMENTAL | Food products and nonfood items | Market house; market district | Full year | Quasi-public |
Farmers’ Classification
A farmers’ market is generally defined as a place used by several farmers on a regular and recurring basis to sell farm and food products directly to consumers. The driver for market formation and ongoing operations is the expected realization of economic benefit by vendors. The purpose of the market, therefore, is to provide a profitable, well-organized, and operated retail market place that strikes a fair balance between all participants in the exchange. Both producer-growers (the farmer, rancher, grower, baker, or maker who produces and processes the products for sale) and resellers (a non-farming vendor who buys products at wholesale prices and resells them at retail prices) serve as market vendors. Vendors primarily offer food items directly to consumers. The market itself most often operates in an open-air setting. And, the annual operating cycle extends the length of the growing season. Finally, the market is typically, but not always, organized and operated by farmers. The form of ownership selected in most instances is that of a non-profit entity.
Producer-Grower
A producer-grower market mirrors many of the attributes of a farmers’ market. The economic benefit realized by vendors remains a market driver. But, support for environmental sustainability serves as a critical driver of market formation and maintenance as well. Producer-grower proponents advocate for the preservation of farmland, family farms, and food security; the preservation of agricultural genetic diversity; and, the reduction of greenhouse emissions associated with product transportation. To achieve its purpose, market rules only allow sales items that are produced by the vendor, members of his or her family, or by persons in his or her employment. These guides thus effectively eliminate the participation of resellers in the market. Producer-growers primarily offer food items directly to consumers. The market itself most often operates in an open-air setting. Also, the annual operating cycle extends the length of the growing season. Finally, the market is typically, but not always, organized and operated by farmers. The form of ownership selected in most instances is that of a non-profit entity.
Public
Three characteristics distinguish public markets from other types of markets: public markets have public goals (preserving local agriculture, revitalizing a commercial district, or increasing small business opportunities); public markets create public spaces (places to promote community interaction among a diverse grouping of people); and public markets contain locally owned, independent businesses (independent businesses offer unique consumer choices). The vendor mix typically includes grower-producers, resellers, and craft operations. Items for sale routinely include fresh food products; value-added food products; craft items and other miscellaneous non-food offerings. A public market is most likely housed in permanent indoor facility and may take the form of a market district. The market is open daily throughout the week and stays open throughout the year. A public market is often owned and/or operated by a municipality or a non-profit entity with a stake in the community it serves.
Source: Starting a seasonal open-air market in Kansas: A market organizer’s field guide. Kansas State University Agricultural Experiment Station and Cooperative Extension Service. Retrieved from http://www.ksre.k-state.edu/
Appendix 3: List of Local Markets (September 2007)
Carlisle Farmers Market Inc. (Mt. Holly)
- Year-round, 7 a.m. to 4 p.m. Friday; 7 a.m. to noon Saturday.
- Fruit, vegetables, meat, eggs, dairy, baked goods, plants, nursery and garden, maple syrup, jams/jelly, pumpkins, mushrooms, potatoes, flowers.
Mechanicsburg Farmers Market
- April through September, 8 a.m. to 1 p.m.
- Fruit, vegetables, herbs, baked goods, plants, jams/jelly, pumpkins, potatoes, flowers.
Old Pomfret Street Farmers Market
- May through October, 8 a.m. to noon Saturday.
- Fruit, vegetables, herbs, baked goods, meat, cheese, eggs, honey, flowers.
West Shore Farmers Market
- Year-round, 8 a.m. to 3 p.m. Tuesday, 8 a.m. to 7 p.m. Friday, 8 a.m. to 2 p.m. Saturday.
- Fruit, vegetables, meat, eggs, dairy, herbs, baked goods, plants, nursery/garden, honey, maple syrup, jams/jelly, pumpkins, mushrooms, potatoes, flowers, seafood, wine, prepared food, poultry.
Ashcombe Farm & Greenhouse
- Year-round, 9 a.m. to 8 p.m. Monday through Saturday. Reduced hours in January and February.
- Fruit, vegetables, eggs, herbs, baked goods, plants, nursery stock, honey, jams/jelly, maple syrup, pumpkins, flowers.
Bates Farm Market
- April through October, 9 a.m. to 7 p.m. Monday, Tuesday, Thursday, Friday; 9 a.m. to 6 p.m. Wednesday, Saturday.
- Fruit, vegetables, flowers, baked goods, plants, pumpkins.
Deitch’s Farm Market
- May through October, Monday–Friday, 9 a.m. to 6 p.m., Saturday, 9 a.m. to 5 p.m., Sunday, 11 a.m. to 4 p.m.
- Fruit, vegetables, plants, jams/jelly, baked goods, pumpkins, flowers. Pick your own strawberries on Red Tank Road.
Derick Orchards
- May through October, 8 a.m. to 5 p.m. daily.
- Fruit, vegetables, baked goods, honey, jams/jellies, maple syrup.
Mountain Lakes Farm Market
- April through December, 9 a.m. to 8 p.m. Monday through Friday, 9 a.m. to 5 p.m. Saturday, 11 a.m. to 5 p.m. Sunday.
- Fruit, vegetables, eggs, herbs, dairy, baked goods, plants, nursery stock, honey, jam, jelly, preserves, pumpkins, mushrooms, potatoes, flowers.
Mountain View Nursery
- July through September, 8 a.m. to 8 p.m. Monday through Friday, 8 a.m. to 5 p.m. Saturday.
- Vegetables, plants, nursery stock, honey, jam, jelly, preserves, potatoes, sweet corn, melons.
Myer’s Farm Market
- June through October, 9 a.m. to 7 p.m. Monday through Saturday, noon to 6 p.m. Sunday.
- Fruit, vegetables, pumpkins, sweet corn, cider.
Paulus Farm Market
- April through December, 9 a.m. to 7 p.m. Monday through Friday, 9 a.m. to 5 p.m. Saturday, 11 a.m. to 4 p.m. Sunday.
- Fruit, vegetables, eggs, dairy, baked goods, plants, honey, jam, jelly, preserves, potatoes, flowers; pick your own flowers.
Spring Haven
- Mid-March through October, 8 a.m. to dark.
- Plants, nursery stock/garden supplies, native woodland plants.
Strock’s Farm Fresh Meats
- Meat; phone orders.
The Lloyds’
- Mid-August through October. Dawn to dusk, Monday through Saturday.
- Pumpkins, flowers, chrysanthemums.
Toigo Orchards
- May through November, 8 a.m. to 6 p.m., Thursday through Saturday.
- Fruit, vegetables, herbs, honey, jam, jelly, preserves, pumpkins; pick your own pumpkins, strawberries.
Produce Auctions
Cumberland Valley Produce Auction
- March through November.
- Fruit, vegetables, plants, nursery stock/garden supplies, pumpkins, potatoes, flowers.
Shippensburg Produce Auction
- Open year-round Tuesdays and Saturdays and additional days seasonally.
- Fruit, vegetables, flowers, plants, nursery stock, pumpkins, hay.
Source: Compiled by author.
Appendix 4: The New Market Home: The Building at 117 North Hanover
Prior to the formation of the non-profit organization CCFM, Eric, along with Nancy Grim, searched Carlisle and adjacent communities throughout 2006 for the “ideal” permanent home for the new market. Both Nancy and Eric believed their search met with success when the owners of a vacant building located near the center of Carlisle expressed interest in transferring the property to the yet unformed farmer market organization. The 117 North Hanover Street building located within two downtown blocks of the “The Old Market House” served over the years as a JC Penney’s store and a community health center, the Sadler Caring Center, administered by Carlisle Hospital and Health Services. The building was now owned by Health Management Associates (HMA). And, the building itself had been vacant since February 2004 when the community health center relocated across the street from the 117 North Hanover site.1
Eric initially believed that HMA offered the vacant building as a contribution to the community. Seeking expert support and guidance for this possible transaction, Eric reached out to CCHRA Executive Director, Chris Gulotta. Reflecting on this event, Eric later reflected “I didn’t know anything about that and I felt like I was over my head at that point … so that’s when I really pushed for [help from CCHRA].” With the support of Eric and Nancy, Chris Gulotta entered discussions with HMA representatives. In the end, the building transfer did not turn out to be a contribution but rather a structured, multi-step financial transaction. On November 3, 2006, Chris Gulotta publicly announced that Hometown Development Corporation, a non-profit affiliate of the CCRA made an offer to buy a building located at 117 North Hanover Street from the owners of Carlisle Regional Medical Center, HMA. This announcement was followed on December 1, 2006, by news that Hometown Development Corporation (HDC) signed an agreement to buy the 117 North Hanover Building for USD 475,000. HDC assigned the “agreement of sale” to a private developer, 3T Investors LLC, who then planned to lease a significant portion of the building to a not-for-profit entity (CCFM, yet to be formed at the time of the sale) responsible for oversight of the planned farmers’ market operations. At the end of five years, the plan was to sell the building to the not-for-profit entity (CCFM) at a predetermined agreed upon price of USD 1,184,871 (see calculation). To secure the final sales agreement between 3T Investors, LLC and CCFM, CCHRA agreed to serve as the guarantor of the building purchase in the event of a CCFM default.2
| Resources Table 2. CCFM Purchase Price Calculation for Hanover Street Property (Prepared August 2007) | |
|---|---|
| Description of Purchase | Purchase Price (USD) |
| Purchase price and closing costs by 3-T LLP from HMA | 493,120.84 |
| Legal fees (zoning approvals and real estate transactions) | 6,300.00 |
| Carrying cost3 | 21,000.00 |
| Base purchase price | 520,420.84 |
| Annual adjuster4 | 260,210.42 |
| Construction build out5 | 398,000.00 |
| Installation of gas and electric meters | 6,240.00 |
| Grand total | 1,184,871.20 |
Notes
1. The Sadler Caring Center was established in the early 1980s and evolved as part of the charitable mission of the Carlisle Hospital and Health Services (CHHS). CHHS sold its assets to Health Management Association in 2001, which agreed to maintain the Caring Center as a health clinic for the uninsured in downtown Carlisle, but only for two years. The task force recommended that a new non-profit corporation be formed to assume the operations of the Sadler Caring Center. A community-based Board of Trustees assumed responsibility for the Sadler Health Center, officially incorporated on October 25, 2002, and commenced operations in June 19, 2003. In February 2004, the center moved to a newly designed facility at 100 N. Hanover St. Designated as a Federally Qualified Health Center Look-Alike in 2005.
2. The specific board actions that led to the finalization of both a lease agreement and building purchase agreement are provided below: December 13, 2006—CCFM Board approves non-binding letter of intent to enter into a lease agreement and building sales agreement with 3T Investors LLC; June 13, 2007—CCFM board approves “substantive terms” of lease agreement and building sales agreement with 3T Investors LLC; June 27, 2007—CCFM board approves lease agreement and building sales agreement with modifications reviewed during the meeting with 3T Investors LLC; Building sales agreement executed on August 31, 2007, between CCFM and 3T Investors LLC. Later amended Fall, 2007 with awarding of DCED funds.
3. Carrying costs incurred by Seller (3T, LLP) on interim financing until Seller receives loan disbursement from CCRA (through the Cumberland Business First Program).
4. Adjuster represents a 10% base purchase price increase per year. The total figure is predicated on a sale occurring five years from the anniversary date of the lease agreement.
5. Represents construction costs submitted by Tuckey Restoration, Inc. to renovate the building to meet CCFM requirements. In August 2008, when the sale agreement was executed, the parties agreed to credit CCFM against the purchase price dollar for dollar for funds successfully obtained by CCRA and applied to the construction build out. Following August 2008, an addendum to the sales agreement was executed to reduce the sales price by USD 212,000. This resulted from CCRA success in obtaining USD 212,000 from The Pennsylvania Department of Community and Economic Development (DECD) to be used toward the facility renovation.
Appendix 5: Reseller Exhibit
Produce Reseller
The produce reseller would operate year-round to ensure a supply and variety of fresh fruits and vegetables, regardless of the season. It may be advisable for the CCFM to be the produce reseller. This will require that CCFM prepare a business plan specifically for this enterprise. It is highly recommended that this operation be a separate cost center and not subsidized in any way by the market. In an ideal world, the produce reseller enterprise would generate profits that could be used to supplement the market’s operating budget.
For the eight core vendors, best efforts should be made to stock locally produced products. All core vendor businesses will be local; no franchise will be permitted.
The balance of the vendors (inside and out) will be wall stands and farm stands that will feature locally grown and produced seasonal fruit and produce, flowers, honey, eggs, meats, seasonal specialties (Christmas roping and wreaths, pumpkins) and value-added products. Only if stalls and stands are vacant will consideration be given to leasing to a non-grower producer. However, in all cases, a food product would be sold by the vendor.
Core Vendor Stalls (8):
USD 550 per month
Wall Stands (9):
USD 350 per month
Farm Stands Inside (10):
USD 160 per month
Farm Stands Outside (10):
USD 48 per month
Source: Page 10 of the CCFM Business Plan.
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
