Direct Farm Marketing: Liability Exposures for Roadside Stands, Farmers Markets, and Community-Supported Agriculture

As of June 2024, liability coverage for Raw Milk is not readily available through standard or surplus Farm Insurance markets.

Consumers want to know the source of their food and how it is grown and produced. The term “local” has a “healthier” and “cleaner/purer” ring to it. If you are the farmer/producer, there can be positive financial opportunities to tap into this growing consumer marketplace with direct farm marketing. What was a niche has become a large food source for the general public.

For you, the marketer, there are many things to consider depending on if you grow your own products, buy the products from a wholesaler, or a combination of the two. In many circumstances, it is the combination so you can maintain a sufficient offering of items for a longer sales period. It is critical for you to be aware of what exposures are related to the quality and cleanliness of your products.

Three of the most common arrangements are the roadside stand, the farmers’ market, and community-supported agriculture, commonly referred to as “CSA.” The common objective of these three is to get your product into the hands of the consumer, but each has its own nuances to be considered. When it comes to direct farm marketing, there is an increased liability exposure for roadside stands, farmers’ markets, and community-supported agriculture. Here’s what you need to know:

1. Roadside Stands

First, let’s consider the roadside stand. This typically is found on the farm where you grow the produce. It may be at the end of your driveway, or it may be in the farm buildings, which requires your customers to drive in the farm lane.

Equipment to Run the Stand

Your presentation could be as simple as a table under a big oak tree with a cash box, or as sophisticated as a special-built sales shed with refrigerators, scales, a cash register, and a credit card machine.

Product Quality and Safety

You are selling what is in season. Your concern is the quality and safety of your produce. Some items require refrigeration; others do not. Some produce is susceptible to contamination, whereas other items, not so much. For example, if you are selling fresh-cut greens or farm-fresh pasture eggs, there may be the risk of E.coli or salmonella.

You may be purchasing items for resale such as jellies, pies, honey, or beeswax products. All of these different products and scenarios bring unique exposures to your market. If you are making soaps, cheeses, etc. or selling milk, you may need additional insurance for milk products.

People on the Property

There is also the premises exposure. People are now on your farm and if they are injured in any way while at the stand, you may be responsible for their injuries.

Examples may be an overturned ankle due to uneven ground or the farm dog biting a toddler or tripping a client causing a fall. Whether you are negligent or not, you may still be required to defend yourself and the farm, even if you have put measures in place to avoid frivolous liability claims.

2. Farmers Market

The second situation is the farmer’s market. This is where you rent commercial space at a location, usually in town, where you are one of many vendors selling your products.

Product Quality, Safety, and Transport

You would have the same exposures as you have with on-farm sales with regard to the products. The product liability issues would be nearly the same. There could be additional considerations related to the care of the items for sale as it relates to transport, etc.

Proof of Liability Insurance

Your premises liability would differ slightly in that you do not own the premise but are a tenant. The owner or organization that manages the farmers market will require you to provide a “Certificate of Insurance” showing what liability insurance you have in place and, in most cases, indicating that they are an “additional insured” on your policy.

3. Community-Supported Agriculture

Our third direct farm marketing option is community-supported agriculture (CSA). These are popular closer to cities and metropolitan areas. With CSA, the consumer purchases a seasonal membership to receive products on a scheduled basis.

Product Quality, Safety, Packaging, and Transport

A CSA can take on different looks. The simplest is the one where the consumer buys a membership for the season and then is provided a “box” of produce on a regularly scheduled basis.

The items may all be from the farm, or they may include items purchased in to supplement what you produce. The boxes may be picked up on the farm or at a drop-off location.

People Participating in Production on the Property

In other situations, members of the CSA are invited to be part of the production process and provide labor for different aspects of the production cycle. This may include planting, weeding, and harvesting.

The more the members are involved in hands-on operations, the more risk for a situation that may lead to a potential liability claim against the producer. This can also create unique workers’ compensation scenarios around the farm that you need to address. It is very important to evaluate the risk/benefit of offering this increased involvement opportunity.

Get the Right Insurance Protection for Your Direct Farm Marketing

Now that we have identified these three situations, it is imperative that you have a conversation with a knowledgeable insurance professional as to what is needed to protect you sufficiently from a liability perspective.

If you have a simple homeowner’s policy, it does not protect you. Many unendorsed farmowners’ policies have gaps in coverage that will let you exposed from a liability standpoint. This is something to consider when evaluating an agribusiness policy vs farmowners policy. If you accept payments by a credit card, you have a cyber exposure. As you can see, there are more things to think about than just getting a quality product into the hands of the consumer.

If you would like to discuss it more, please give one of our knowledgeable insurance professionals here at Ruhl Insurance a call at 717-665-2283 or toll-free at 800-537-6880. We will be honored to discuss your unique situation and help you get the right insurance for your direct farm marketing situation.

Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.