UPA on an informal or small-scale basis, is relatively easy to enter for participants. Farmers can start with a few and inexpensive inputs and limited technical knowledge, probably on land with little or no rent. Productivity is low at this stage but can improve over time with small investments. In the North, market entry on a commercial scale may be hard to achieve due to the cost of land, machinery, labour, and other inputs, which can be significant barriers to entry.
Other barriers to entry to UPA found either in the North or South, or familiar to both, include access to and security of land, relative labour scarcity and undeveloped labour skills, underdevelopment of downstream activities (processing, storage, markets, etc.), and competition from food imports. The cost of transportation of produce to markets can also be a major factor in determining economic viability.
The demand for food is unlikely to change very much with changes in price and other aspects – that is, it has a fairly inelastic demand. This would suggest that, even with a downturn in the city economy, urban farmers can still find markets for their goods. However, there may be a high degree of substitutability between foods producing an elastic demand for specific products. Hence, with a downturn in the economy, this would suggest the cheaper, perhaps bulkier produce such as potatoes and cereals from more rural districts, will see an increase in demand, whilst the demand for higher value crops grown in urban and peri-urban regions, such as salad vegetables and fresh herbs may be static or fall.
In the South, markets for both urban and rural producers are often well established, although their size and variety of produce vary tremendously with the seasons and they are generally sensitive to many other factors. In the UK, the growth of ‘out-oftown’ supermarkets has led to a decline in the number of urban markets for city producers. Exceptions to this are the markets which still exist in traditional markets towns, the 500 or so Women’s Institute markets which sell home produced goods, and now farmers’ markets which have seen a dramatic rise in their number and size in the last few years. This perhaps reflects consumers’ desire to support local economies and farmers, and is a reaction to food scares and the globalisation of the food economy.
Prices of produce in urban markets will be determined by the usual interaction of the supply and demand for produce. During the year, there are often fluctuations in price due to the seasonality of supply to markets. Other supply factors affecting price include the relative yields from year to year, the urban infrastructure, and level of agricultural development and support. The determinants of demand influencing price will include the relative price of rural and imported produce, household incomes, and consumer tastes.