You're standing at a farmers market, eyeing a basket of tomatoes. They're beautiful—deep red, still warm from the morning sun. Then you see the price: $5 a pound. At the supermarket down the road, tomatoes go for $2. Same vegetable, same basic nutrition. So what gives?

It's tempting to assume someone's gouging you, or that 'local' is just a marketing gimmick for charging more. But the price difference isn't random or greedy. It's economics at work—specifically, the hidden math of how things get grown, moved, and sold. Understanding this math changes how you see those $5 tomatoes.

Industrial agriculture operates on a principle economists call economies of scale. When you grow a million tomatoes, the cost of each individual tomato drops dramatically. You can afford specialized harvesting equipment that picks thousands of pounds per hour. You negotiate bulk rates on seeds, fertilizer, and transportation. Your fixed costs—land, machinery, administrative overhead—get spread across an enormous output.

A small farm growing tomatoes for your local market can't access any of this. They might hand-pick their harvest, which means more labor hours per tomato. They buy supplies in smaller quantities at higher prices. Their tractor serves fifty acres instead of five thousand, so its cost per tomato is much steeper. Even their insurance and permits cost roughly the same whether they're farming five acres or five hundred.

This isn't inefficiency—it's just math. The small farmer isn't doing anything wrong. They're simply operating at a scale where per-unit costs are structurally higher. That $3 difference between farmers market and supermarket tomatoes? A significant chunk of it exists before anyone even thinks about profit margins.

Takeaway

Per-unit costs drop as production scales up. When you buy from small producers, you're paying for the mathematics of limited scale, not just the product itself.

Here's something counterintuitive: the higher price at a farmers market isn't just a necessary evil—it's actually doing work. Economists call this price signaling. The price itself communicates information about the product.

When you see tomatoes for $5 a pound, your brain registers that something must justify that premium. You expect better flavor, fresher picking, fewer chemicals, more careful handling. The farmer knows this too. Charging less might actually hurt sales because it signals 'nothing special here.' The price announces: this is worth paying attention to.

This signaling works because the farmers market context supports it. You can see the farmer, ask questions, observe the imperfect shapes that suggest hand-harvested care. The price and the setting reinforce each other. At a supermarket, the same $5 tomatoes would just seem overpriced because the context doesn't support the premium story. But at the market, surrounded by local producers and handwritten signs, the higher price fits—it's part of how the product communicates its difference.

Takeaway

Price isn't just what you pay—it's information. Higher prices can signal quality, and in the right context, they make the product more believable, not less.

Economists distinguish between search goods and experience goods. Search goods can be evaluated before purchase—you can compare specifications, read labels, measure dimensions. Experience goods reveal their value only through consumption and context. Farmers market produce leans heavily toward the experience side.

You're not just buying tomatoes. You're buying the conversation with the person who grew them. You're buying the Saturday morning ritual, the canvas bags, the knowledge of exactly which field your food came from. You're buying a story you can tell at dinner: 'I got these from a farm twenty miles from here.' These experiences have real value to many buyers—value that supermarket tomatoes simply cannot provide regardless of price.

This explains why farmers markets thrive despite the price premium. Customers aren't failing to notice the cost difference; they're purchasing something the supermarket doesn't sell. The tomato is almost incidental—it's the vessel for an experience of connection, locality, and intention. Farmers who understand this focus as much on the story as the produce. The economics reward them for it.

Takeaway

Some purchases are about more than the physical product. When you pay extra for experience goods, you're buying meaning and connection that can't be replicated at a lower price point.

Those $5 tomatoes suddenly make more sense. The farmer faces higher costs per tomato because they can't access industrial scale. The price signals quality in a context designed to support that message. And you're buying an experience that includes—but exceeds—the vegetable itself.

Next time you're comparing prices, ask yourself: what am I actually buying? Sometimes the supermarket tomato is the right choice. But sometimes you're after something the price tag at the farmers market honestly reflects.