Drawing on the definitions and dynamics attributed to nested markets, this section aims to analyse two distinct cases of food markets and verify to what extent these cases can be interpreted in the light of the perspective used here.
The first case refers to the rural tourism market of Caminhos de Pedra Route, in Bento Gonçalves, a city located in the mountain region of Rio Grande do Sul (RS), in Brazil. The second case relates to the Farmers’ Market located in the city of Passo Fundo, located in the northern region of Rio Grande do Sul. These two local markets were chosen on the grounds of the differences between them. While rural tourism can be considered a recent market activity, resulting from both the transformations occurred in contemporary rural environment and the development of non-agricultural activities and services, the direct sales market constitutes a traditional method of food trade used by farmers to sell their products. Despite these differences, these two markets share some characteristics—especially those related to social embeddedness of economic activities in social rules and norms—that allow them to be analysed as examples of nested markets, as described below.
3.1. Landscape and Rural Life: The Case of Rural Tourism of Caminhos de Pedra Route—Bento Gonçalves/RS
In a context where an increasing number of rural families are developing activities other than agriculture as a means of income diversification, new notions of rurality have attracted attention to the rural space not only for its agri-food productive character, but above all as a space for sociocultural integration where various activities can be developed, including educational, manufacturing, political, environmental preservation, services provision, and even entertainment. In this sense, rural tourism has become a reality in Brazil and stands out as a potential market in terms of both services provision and commercialization of local food products, given the growing demand by people seeking rural amenities.
Data presented in this section were collected from 14 to 22 June 2013 [30
] for research in the field of rural development. Applying a qualitative approach and the method of case study, the research resorted to semi-structured interviews with owners of houses engaged in the local tourist route, as well as with visitors of the route and one representative of a relevant organization. In total, nine interviews were carried out with owners of the houses included in the route, 63 with tourists visiting the route, and one in-depth interview was conducted with a representative of the organization that connects local small entrepreneurs and farmers. All interviews were open for allowing more autonomy to the researcher and enabling new insights and information from the interviewees. The interviews aimed primarily to analyse the marketing strategies applied in the route, from the perspective of the producers, and to understand the profile and motivations of the visitors of the route.
Caminhos de Pedra is a rural tourism route developed in the district of São Pedro, in the city of Bento Gonçalves (RS), located 109 kilometres away from Porto Alegre, the capital of Rio Grande do Sul state. In the 1970s, a local economic downturn imposed hardships on small-scale farming, which specialized in growing grapes and producing artisanal wine. The entry of large companies into the winery sector, with the purchase of small businesses and cooperatives, disrupted the production system of artisanal wineries and set up an oligopolistic structure in the region’s winemaking sector [31
]. Such circumstances were triggered by the project of agriculture modernization in Brazil, strongly supported by the state, which aimed to produce more food at lower prices, turning the countryside into a supplier of raw materials and workforce to the cities.
Within this context, grape prices have dropped significantly (the so-called squeeze), making farmers increasingly vulnerable and dependent on credit to purchase inputs and machinery. In the case of São Pedro district, the construction of a new highway that isolated the village from the economic route, and a series of ground frosts that nearly annihilated grape production, resulted in a major depression in the local economy, leading to decreased purchasing power and loss of self-esteem by locals.
Thereupon, a tourist project was launched to preserve São Pedro district’s architectural heritage. The project was conceived by Tarcisio Michelon (an engineer) and Júlio Posenato (an architect). Michelon, who was born in Bento Gonçalves, ran the hotel Dall’Onder, which belonged to his family, and believed that both architecture and local culture had potential for attracting tourists. Posenato, in turn, who used to write about the Italian immigration architecture in the state, was an enthusiastic advocate for the preservation of this heritage, but was faced with the failure of the state to develop such projects. The meeting of these two external agents, on their own initiative, resulted in the Caminhos de Pedra Project, which sought a good rationale for getting funds to enable the preservation of this heritage: tourism promotion was the answer.
At first, there was scarce public support for the development of tourism in São Pedro. The first step was conducting a historical heritage survey, which found a large collection of historic houses (made of stone, wood, and masonry) that offered easy access and interesting tourist potential, but which were significantly deteriorated due to lack of maintenance over time. At this stage, it was necessary to persuade local farmers, weakened by the economic circumstances at the time, to believe in the possibility of generating income through rural tourism and to work together to achieve this goal.
Afterwards, initiatives were developed aimed at the restoration and renovation of architectural heritage, and farmers were provided with assistance to develop a basic infrastructure for receiving visitors. On 30 May 1992, the first group of tourists from São Paulo was received there by the first four families engaged in the project. The subsequent development of the tourist route led to the foundation of the Caminhos de Pedra Association. Tourism has been the main argument for raising support for this project, in view of the prospect of income generation based on architectural heritage.
Caminhos de Pedra Association was founded in 1997 with the support of Serviço Brasileiro de Apoio às Micro e Pequenas Empresas (SEBRAE) (Brazilian Technical Support for Micro and Small Enterprises), drawing on the success of the project’s early ventures. The Association is a non-profit institution aimed at gathering people for carrying out common goals.
The association brings together local entrepreneurs and other members of the tourism trade and seeks to promote the cultural heritage of Italian immigrants, settled in the area since 1875, with regard to both historical buildings and the intangible heritage composed by dialects, arts, practices, folklore, etc. The project is currently supported by funds made available through a national law on cultural promotion (Lei de Incentivo à Cultura) by the Department of Culture of the Rio Grande do Sul State [32
], as well as by the symbolic contributions of its associate members. In 2009, the Caminhos de Pedra Route was granted with the recognition as Historical and Cultural Heritage of RS, by means of the State Law 13177/09.
Thus, the emergence of Caminhos de Pedra Route as a rural tourist enterprise was marked by a strong presence of external and private agents. Only later did it gain legitimacy in the local community, as local farmers began to get involved through the establishment of the association, and the government, especially local public administration, decided to support the initiative by providing infrastructure (improvements on the road, access, signposting). Further support was provided by the Tourism Department and by national and regional tourism bodies, through marketing, communication and planning; and by Sebrae and Senar (Serviço Nacional de Aprendizagem Rural, a Brazilian technical support for rural learning), through tourism qualification and training courses. Other relevant actors in this trajectory are urban consumers (tourists and excursionists) as well as travel agents, tour operators, and the Caminhos de Pedra Association.
The route currently has 24 spots for visitation, including restaurants, a lodging, and historical houses for guided tours. The so-called visitation spots are private enterprises that serve tourists offering some kind of product or service, such as food, guided tours, tasting, and shops with local products and handicrafts, among others. Some of these places charge an entrance fee.
As for the owners, most are family farmers who share their time and work between farming and tourism activities. However, it was observed that the route’s success and consolidation has attracted some urban entrepreneurs who acquired properties in São Pedro and developed their tourism enterprises. These enterprises represent a more conventional segment of tourism within the route. Therefore, these actors interact and compete in the same scenario with the family farmers, thus ascribing a hybrid and multiple character to the rural tourism market, which encompasses interactions between alternative and conventional types of exchange.
Most products marketed in Caminhos de Pedra Route are produced either at the properties on the route or by producers from this same district and region, which allows them to advance the local economy also outside the tourism route. It is worth noting that some properties also offer manufactured products, either food or souvenirs. This is also an indication of interaction and hybridization between alternative and conventional markets, and should be regarded carefully by both researchers and farmers. In addition, depending on the availability and seasonality, other products may be included at the outlets. This is the case with pecan nuts, as observed during fieldwork in 2013 [30
]. One of the farmers, realizing that tourists gathered the nuts fallen on the ground during the tour and demanded that product, decided to pack the nuts and sell them at the shop located on the property.
Some aspects of the tourism market are essential for discussing its distinctiveness and embeddedness in social networks. As a channel that sells products and services through direct contact between producers and consumers, rural tourism is part of a large social network that promotes the exchange of experiences, information, feedback, and symbolic exchanges based on reputation and trust [12
]. These latter are crucial elements both for food trade and distinctiveness and for assuring the return of the tourist to that route. The relationships established during exchanges will determine visitors’ satisfaction and their willingness to come again and recommend the place to family and friends. The field research conducted at Caminhos de Pedra route revealed that “word of mouth”, i.e., the suggestion by tourists to others, is the main and most effective way to make the route known, according to the interviewed owners [30
]. This significantly reduces the costs of marketing and advertising, which are often unaffordable.
Moreover, being in touch with visitors allows farmers to get their opinions and suggestions for improvements and further demands, thus fostering the development of new products and services (e.g., pecan nuts) and feeding a virtuous circle of the development of common-pool resources.
Another key feature regarding cost reduction is the fact that sales through tourism are carried out in-house, i.e., farmers do not need to leave their properties to sell their products in the city—which would mean transportation and food expenses, for example—or to deliver them to third parties. The tourists themselves travel to the spot, in this case, the countryside, for leisure and consumption activities, thus helping to reduce producers’ costs and allowing, in addition, greater autonomy to producers, despite the intensive work on weekends and holidays and, depending on the property and the kind of service offered, the possible costs of hiring employees.
Regarding distinctiveness aspects, foodstuff marketed through this channel—jams, sausages, cheeses, wines, juices, breads, and pastries—can be considered differentiated at the state and national levels, but they are quite common in the region of Serra Gaúcha. However, the tourist product that is offered has a special appeal that distinguishes it from other competitors in the region and conventional forms of tourism: the stone houses, along with the culture and way of life of their residents. The distinctiveness and attractiveness of rural tourism, as a special kind of market, will rely on the rural aspect of the places [12
The analysis of the motivation of tourists for visiting Caminho de Pedra Route [30
] showed that the most valued aspects of the route are: the community’s cultural-historical features, mainly related to the landscape—materialized in stone houses and natural heritage; the local culture of Italian immigrants’ descendants; the rural life aspects, such as local cuisine, climate, and rural environment; and the possibility of breaking up one’s routine. In this context, such aspects are the main attraction of the tour and can be considered common-pool resources [12
] since they can be used by locals for attracting tourists, adding quality and differentiation to products, producing collective multiplier effects, and reducing transaction costs. Thus, they constitute the basis for tourism development while contributing to their own conservation.
It is worth noting that the common-pool resources can be both tangible—such as the natural landscape, stone houses, and local food offered—and intangible, as in the rural way of life—more peaceful and harmonious; and the culture, crafts, and the own reputation of Caminhos de Pedra’s brand in the region. Tourism, while contributing to a diversification of community activities and to generating employment and income, can help preserve these resources that are essential for local development, contributing to their maintenance and appreciation by the local population and public administration. However, one cannot deny the risks posed to these common pool resources by possible uncontrolled growth of tourism. In this route, we could observe the arrival of tourist buses of large travel agencies, which can be seen both as the inclusion of conventional tourism in this market and as a threat to heritage.
Therefore, the dynamics of the construction of a rural tourism market in Caminhos de Pedra Route was triggered by the crisis of small farming in the 1970s, characterized by the squeeze of grape and wine prices, which created favourable conditions for the development of multifunctionality as a way to seek new sources of income for the local population. Thus, the dynamics of the conventional market and its local impacts created the context for the construction of new forms of income generation and social reproduction in this locality. By means of the joint efforts of multiple actors (external private sector, local governments, farmers, local association, tourism agencies and tour operators, urban consumers, and tourists), a new market for local family farms has been created through the development of tourist activity in the rural area, which is distinguished from conventional tourism for being mainly based on lifestyle, products quality, culture, and heritage, and directly linked to agricultural production.
The creation of a socio-material infrastructure, i.e., a set of rules and standards put in place by the involved actors, allows the establishment of these flows and the development of common-pool resources, which may bring collective benefits to this community and allow the continuation of this dynamic. The partnerships and the norms and standards that allow local training courses on tourism and agroindustry promoted by organizations like Sebrae and Senar; the construction of tourism infrastructure by the municipal government; the efforts to get the support of federal government through the legislation for promoting culture; and the exchange of information and experience with the tourists—all these can be seen as examples of socio-material structures.
Lastly, we can observe that conventional markets are always intertwined with the dynamics of the rural tourism market in the Caminhos de Pedra route. Since the construction of this new market—starting with the wine and grape markets’ failures that created the conditions for multifunctionality—until the consolidation of the route with the subsequent entrance of external actors and constant hybridization of products and practices, the coexistence of different logics of exchange has shown that this nested market also has permeable boundaries that allow for flexibility and innovation.
3.2. Farmers’ Markets Framed by Rural Background, Social Trust, and Friendship: The Case of Passo Fundo/RS
Data presented and analysed in this section stem from a broader study in the area of rural sociology [33
], based on a case study focusing the Farmers’ Market of the municipality of Passo Fundo, state of Rio Grande do Sul. Data collection was carried out through 25 semi-structured in-depth interviews, 12 of them with stallholders, seven with consumers, and three with representatives of municipal institutions related to rural issues. In addition to the interviews, 45 semi-structured questionnaires were applied to consumers at the farmers’ market and another 25 to stallholders [33
The use of these two strategies for data collection was aimed, on the one hand, at characterising the socioeconomic profile of the main participants of the Farmers’ Market (consumers and producers). On the other hand, it sought to understand the interests and strategies of the producers in the construction of this market, as well as the motivations and values that move consumers. This allowed us to find some of the main characteristics of nested markets [26
] in the Farmers’ Market of Passo Fundo, such as distinctiveness of products through quality construction; development of a socio-material base by mobilizing specific values; and the construction and definition of common-pool resources in that area. These characteristics will be analysed in this section.
The Farmers’ Market of Passo Fundo, in Rio Grande do Sul, is a market outlet created in the mid-1970s by farmers who saw an opportunity to increase their income by selling their products directly to consumers. At first, sales were made at a town square, but over the years, and with the support of several institutions, the municipal administration provided an indoor space, with better infrastructure for keeping and selling the products.
It is worth noting that this process developed from an almost individual move by producers, who saw in the creation of a direct sales channel a possibility for productive and commercial innovation, which has gradually developed.
Following this beginning, the development of the market was fostered through the establishment of a network of institutions and actors that teamed up in order to provide the city’s inhabitants with access to local and quality food. This network comprises, besides the Stallholders Association (created in 1996 and now responsible for the management of the farmers’ market), the support of the Rural Workers Union—which has been engaged since the beginning of the producers’ market and is responsible for providing farmers with services and guidance (credit, financing, inclusion in government programs); the municipal branch of EMATER (rural extension agency)—which provides support on technical aspects of production and marketing guidance; and the municipal administration, through the Home Affairs Department (SECRINT), which until 1996 was responsible for managing the producers market and, after the establishment of the Stallholders Association, remained in charge of monitoring the prices and quality of the supplied products. This network is an example of how individual and collective interests may be articulated to build new markets, and also exemplifies the construction of a socio-material structure that supports a new market.
Today, the market gathers 66 stallholders, who are small farmers from the rural areas of the municipality. These farmers produce food and traditional varieties of the region, observing production seasonality and using traditional techniques and knowledge related to the local culture and ethnic origins. The market provides access to fresh produce, which furthermore represents the social and cultural features of the territory.
The search for such products—considered to be of higher quality—is the main reason why consumers attend this market. For consumers, the main concerns when purchasing products here are acquiring products of rural origin, and valuing both small farmers’ way of life and the traditional techniques used in preparing the food products.
In this sense, by analysing the Farmers’ Market using the fundamentals of the nested markets perspective as proposed by Ploeg [12
], we note that the distinctiveness of the products is related to two main elements: the prices charged and their rural origins.
In view of the presence in this market of stallholders that are not producers (called fruit sellers), there was an agreement between the participants of the market to make the sales relationships and the prices charged more fair. As these fruit sellers operate as small traders, buying local and exogenous products from farmers and warehouses, they do not suffer from the climatic hazards (drought, frost, etc.) that may affect local produce, and thus face no major difficulties in meeting consumer demand and keeping prices reasonable. That is, due to the coexistence of conventional and alternative practices within the farmers’ market, it was necessary to create social regulatory mechanisms in order to guarantee fairness in economic transactions among all stallholders.
Therefore, given these asymmetries regarding farmer stallholders (who often do have not many products to offer, especially during winter) a fixed price system was created, which is mediated by the Municipal Home Affairs Department (SECRINT) responsible for the agricultural policies. To this end, every month a survey is conducted by an agent designated by SECRINT on the prices of the main products traded at the farmers’ market, at about 10 grocery stores in the city. Following this survey, an average price is calculated for each product and tabulated. Stallholders sell their products at prices 20% lower than those of the table. Hence, the prices charged at the producers’ market become a distinctive factor, attracting a considerable number of consumers, since, on average, these prices are lower than those charged in other markets [33
Another factor that distinguishes the products of the Farmers’ Market is the quality associated with their rural origins. As highlighted by Ploeg [12
], quality generally stems from a historical and cultural process of embeddedness, observed in certain regions, which ascribes distinction to products or to the ways they are produced. In the case of the Farmers’ Market, quality construction is closely linked to the rural origins of the products and to the fact that they were produced by small farmers, which, in the consumers’ view, indicates greater care and traditional production. As explained by one consumer:
“(I buy at the Market) because, usually, their salad …, you always get a good salad ... at the grocery store it is usually wilted ... at other markets than that of the producers—greengrocers, you know?, you get there and their salad is already wilting. So, for me, quality is buying this fresh product that even tastes different (...) so people identify with it and buy, because they know the product is homemade, is made with care ... for example, I know that their pasta is homemade, so I always buy it” [33
This statement makes clear that the quality attributed to the products of the Farmers’ Market is associated with intangible aspects related to the possibility of buying “fresh”, “homemade” food, produced right there, near the city, and which differs in its taste and the way it is made.
The second dimension of nested markets described by Ploeg [12
] relates to the development of a socio-material basis that enables goods and services to flow through alternative marketing mechanisms. This socio-material base is nothing more than a specific and differentiated set of rules, standards, and conventions that are mobilized to confer distinctiveness to such markets. As already mentioned, the creation of the farmers’ market Feira do Pequeno Produtor is a result of the construction of a network that connects institutions related to the rural areas, which are concerned with making local and quality food available to the people of the municipality. This network supervises the products offered at the farmers’ market and also contributes to creating the norms and standards that guide the operation of the market and the transaction flows, thus developing a socio-material structure that distinguishes the farmers’ market from other markets (e.g., by means of pricing).
Furthermore, this socio-material structure can be observed among the residents of the city, in a shared representation regarding the rural origins of the products and an appreciation of the way of life of small farmers. In particular, the inhabitants of the city share a common rural past, which is seen as positive, thus attributing a superior quality to products offered at the market that are made “as my mother used to do” or in a traditional way.
This rural origin of the products is associated with food products being quality and natural, and, because they were produced by family farmers, it is believed that the food is more healthy and tasty. This is also reflected in the appreciation of local ways of life and products. According to one respondent:
“Well, the main reason was ... acquiring products generally produced here in our region ... by small producers ... products from our countryside ... so to give preference to our producer. People who grew up in the countryside have to cherish it” [33
Finally, the last dimension that characterises nested markets concerns the development of common-pool resources. According to Ploeg [12
], common-pool resources are key to the development of new markets for products and services, and constitute a set of shared values that connect the various actors (producers, consumers, mediators) that take part in these markets. Furthermore, these resources account for the social legitimation of the distinctiveness of products sold through nested markets.
In this sense, common-pool resources can be deemed as values on which exchanges and trade are based. In other words, these resources are responsible for building the processes of social embeddedness of economic transactions.
At the Farmers’ Market of Passo Fundo, economic transactions are nested in relationships of trust associated with values of friendship, interknowledge, and local varieties of products. While traditional practices and knowledge related to food production and processing confer credibility to products sold at this market, the prospect of interacting directly and creating social bonds with stallholders generates friendship among the actors, which is reinforced by the interknowledge assigned to the rural. Besides strengthening friendships, interknowledge provides social legitimacy for small farming ways of life and production.
This produces a cycle of legitimacy and positive evaluation around the Farmers’ Market, since the agents attend it because they trust the products’ quality—attributed to their rural origin and to the ways they were produced—and because they appreciate the friendships and mutual interknowledge. Thus, both traditional knowledge and techniques used in food production and social relationships contribute to a shared set of social conventions, which culminates in generating trust and consolidating the Farmers’ Market.
These friendly relationships are also responsible for expanding the social networks that constitute the market, since the stallholders rely on friendly relationships to sell their products to restaurants and small grocery stores, as well as to acquire the products to be sold at the market (in the case of fruit sellers). In other words, the friendly relationships allow sellers to extend their commercial links beyond the market space, thus connecting this nested market with wider ones. However, it is important to note that the relationships with broader markets, although mediated by friendly relations, are usually based on conventional social norms. In the case of small farmers, sales to other markets imply price appreciation (higher than those charged at the farmers’ market) and pricing based on the amount of products sold. In other words, the market of the small farmers is connected with other markets.
Therefore, the food market represented by the Farmers’ Market of Passo Fundo can be deemed an example of a nested market, since it is possible to identify within it the features and dimensions that define these spaces [12
]. Moreover, it was observed that this market is based on an established and shared specific set of rules, values, and norms, which eventually brings together concrete actors who will interact, which ensures its uniqueness and distinction when compared to other spaces of food trade.