Fiscal Research Division
Justification Review
Natural & Economic Resources
May 1, 2012
Executive Summary
In FY 2011-12, Fiscal Research Division staff conducted a justification review of the Department of Agriculture & Consumer Services’ (DACS) Southeastern North Carolina Agricultural Center & Farmers Market (SENCAC). Staff found that while SENCAC provides a hospitable place for meetings and events, visitation and revenue are low relative to DACS’ other facilities. SENCAC requires the largest General Fund subsidy as a percentage of total expenditures, 77 percent. The Charlotte and Asheville farmers markets each require a subsidy of about 25 percent; the Agricultural Center in Williamston requires a 62 percent subsidy. Facilities in Raleigh, Colfax, and Fletcher are self-supporting.
In FY 2011-12, SENCAC requires $362,230 in General Fund appropriation. With the opening of the multi-purpose pavilion, DACS is requesting an additional $392,200 from the General Fund for operations and lists over $2.1 million in outstanding pavilion needs. Given SENCAC’s expansion, staff is concerned that DACS has no business plan or performance measures that can be compared to other facilities for SENCAC.
From a broader perspective, all of DACS’ farmers markets and agricultural centers are enterprise-type operations that compete with public and/or private facilities. It is reasonable to expect that these facilities should operate like businesses, with thoughtful planning and evaluation and the goal of being self-supporting.
To address these concerns, staff recommends that the General Assembly:
1. Cease General Fund support for SENCAC’s current business model;
2. Provide nonrecurring support in FY 2012-13 and require DACS to evaluate SENCAC’s operations and recommend an alternative operating model or plans for closing the facility; and
3. Require DACS to develop business plans for each farmers market and agricultural center as well as a system-wide strategic plan.
Scope and Methodology
This report on the Department of Agriculture & Consumer Services’ (DACS) Southeastern North Carolina Agricultural Center & Farmers Market (SENCAC) is one of four “justification reviews” of State government programs required by S.L. 2011-145, Sec. 6.6. The Fiscal Research Division’s (FRD) objectives for each justification review are to:
 Provide a description of each program;
 Identify major policy issues that the General Assembly should address;
 Explore means to achieve program objectives more efficiently;
 Characterize the likely results of alternative funding levels and opportunities to save taxpayer dollars; and
 Identify performance measures that have been established by the agency and the usefulness of those performance measures as well as the agency's progress toward meeting their established measures.
To accomplish these objectives, FRD visited SENCAC as well as two other State farmers markets (Asheville and Raleigh) and one agricultural center (Asheville). Staff conducted interviews with SENCAC personnel,
DACS officials, and officials from the Departments of
Agriculture in Virginia, Tennessee, Georgia, and South
Carolina. Fiscal Research staff also reviewed relevant
studies, reports, and fiscal data. The results of this study
are laid out as findings and recommendations in this
report.
Map 1: North Carolina’s Farmers Markets and Agricultural Centers
History and Mission
North Carolina operates five farmers markets and four
agricultural centers. The farmers markets are located in
Asheville, Charlotte, Colfax (Piedmont-Triad),
Lumberton, and Raleigh. The agricultural centers are
located in Fletcher, Lumberton, Raleigh,1 and
Williamston. SENCAC is home to the only combined
farmers market and agricultural center, the Southeastern
Agricultural Center & Farmers Market (SENCAC). The
Justification Review focuses on this facility. Map 1
shows the location of North Carolina’s farmers markets
and agricultural centers.
According to DACS, SENCAC is designed to meet the
needs of the agricultural community in the southeastern
region of the state. The farmers market provides local
growers with a direct sales opportunity and the
agricultural center provides meeting space for regional
events.2 SENCAC has a long history that begins in 1985
when the North Carolina General Assembly (NCGA)
established the Southeastern North Carolina Farmers
Market Commission and first appropriated funds.
During the subsequent 26 years, two consultants have
studied proposals for a facility in southeastern North
Carolina; both studies found demand for services but
little revenue potential. Nevertheless, since 1985, the
NCGA has appropriated over $12.8 million for the
development of a facility in this area, $11.15 million of
which has been used to purchase and construct
SENCAC. The most recent appropriation in FY 2008-
09 provided DACS $3.7 million to build a multi-purpose
pavilion. 3
With these funds, DACS has purchased the 84 acre site
east of the intersection of I-95 and US-74 and
constructed:
 A 39,309 square foot, 84 space farmers market
facility, which opened in 1999;
 An 16,840 square foot meeting center, which
opened in 2000; and
 A new multi-purpose pavilion opened in April
2012.4
Appendix 1 provides the funding history of the State’s
facility in Southeastern North Carolina from conception
as a shipping point facility in Roseboro through
construction of the multipurpose pavilion. Appendix 1
includes both State appropriations and non-State funds
awarded to DACS for the development of SENCAC.
Budget Information
In FY 2011-12, SENCAC is budgeted to receive
$362,230 in General Fund appropriation. Table 1
provides a five year budget history for SENCAC.
Table 1 Five year budget history for SENCAC*
FY 2007-08
Actual
FY 2008-09
Actual
FY 2009-10
Actual
FY 2010-11
Actual
FY 2011-12
Certified
Expenditures 472,640 457,059 410,742 427,584 473,330
Less Receipts 132,366 113,098 114,301 119,686 111,100
Appropriation $ 340,274 $ 343,960 $ 296,441 $ 307,898 $ 362,230
* FY 2011-12 shows budgeted not actual data. Depending upon reversion requirements and other factors, SENCAC may
not expend the full $362k in FY 2011-12
Three of the State’s seven farmers markets and
agricultural centers – the Raleigh Farmers Market, the
Piedmont Farmers Market, and the Western NC
Agricultural Center (Western NC Ag. Center) – are self-supporting,
requiring no General Fund appropriation.
Wholesale activities in Raleigh and Colfax support
these markets while the Mountain State Fair subsidizes
operations at the Western NC Ag. Center. These self-supporting
facilities are not eligible for repair and
renovations funds.5 Therefore, DACS must use over-realized
receipts (i.e. receipts not expended on
operations) for repairs and renovations. SENCAC, the
Charlotte and Western NC Farmers Markets, and the
Senator Bob Martin Agricultural Center (SBMAC) all
receive a General Fund appropriation to support
operations. Table 2 provides a summary of the FY
2011-12 Certified Budget for DACS’ seven facilities.
Table 2: FY 2011-12 Certified Budget by Facility
Facility Location Expenditures Receipts
General Fund
Appropriation
Percent
General Fund
SENCAC Lumberton 473,330 111,100 362,230 77%
WNC FM Asheville 1,143,302 863,129 280,173 25%
Charlotte FM Charlotte 309,930 240,856 69,074 22%
SBMAC Williamston 1,257,942 473,927 784,015 62%
Self-supporting facilities +/- Fund Balance
Raleigh FM Raleigh 1,590,628 1,589,903 (725) 0%
Piedmont FM Colfax 864,738 864,738 - 0%
WNC Ag Center Fletcher 1,115,187 1,039,787 (75,400) 0%
Other States
Each of the states surrounding North Carolina uses a
slightly different model to operate its farmers markets.
The Departments of Agriculture in these states operate
no agricultural centers. Table 3 provides a summary of
the facilities and operating models used for facilities in
Virginia, South Carolina, Tennessee, and Georgia.
Table 3: Summary of Surrounding States Departments of Agriculture Facility Information
North
Carolina
South
Carolina Georgia Tennessee Virginia
Number of Markets 5 3 9 0 4
Number of Ag. Centers 3 0* 0* 0 0
State-owned? Yes Yes Yes N/A Yes
State-operated? Yes Varies Yes N/A No
Self-supporting? Varies Yes** Yes N/A Yes
Retail or Wholesale Both Both Both N/A Wholesale
* South Carolina and Georgia each have a State-run Agricultural Center; South Carolina’s is operated out of Clemson
University and Georgia’s is operated by a State authority.
** Historically, but asking for an appropriation in FY 2012-13.
South Carolina
The South Carolina Department of Agriculture (SCDA)
owns three farmers markets. Two of the markets are
owned and operated by SCDA while the third, in
Columbia, was recently converted to a public-private
partnership.6 Columbia is heavily dependent upon its
wholesale operations, but SCDA is trying to grow its
retail operations. South Carolina’s markets are not self-supporting
individually, but, historically, excess receipts
in Columbia have subsidized the other markets.
However, receipts in Columbia are down due to the
operating transition and a recent move. Consequently,
SCDA is planning to ask for a nonrecurring
appropriation from the State’s General Fund to support
operations in FY 2012-13.7
Georgia
The Georgia Department of Agriculture (GDA) fully
owns and operates nine farmers markets; four of GDA’s
facilities operate seasonally. Together, GDA’s markets
are self-supporting. However, individually, some of the
markets break even, others operate at a loss, and others
make a profit. GDA uses its markets primarily for
wholesale and packing opportunities, finding that renting
shed space for retail purposes is unprofitable. Georgia’s
General Fund pays for repairs and renovations and
capital improvements for the markets. GDA no longer
owns or operates any agricultural centers or fairgrounds
but a State Authority owns and operates the Georgia
National Fairgrounds in Perry, GA. 8 This center
receives General Fund support for its operations, repairs
and renovations, and capital improvements.9
Virginia
The Virginia Department of Agriculture and Consumer
Services (VDACS) owns but does not operate four
farmers markets. The farmers markets, which focus on
wholesale activities, were built with State funds, but
VDACS contracts with an outside vendor to operate
each facility. Operators depend entirely upon fees to
support operations and report quarterly to VDACS.
Currently, all four of the State’s farmers markets are
profitable.10
Tennessee
Tennessee’s Department of Agriculture (TNDA) has
never owned or operated farmers markets or agricultural
centers. TNDA finds it more effective to assist private
operators with funds and technical assistance, giving
annual grants to local operators through the Tennessee
Agricultural Enhancement Program. TNDA Marketing
Specialists help market operators develop, market, and
manage their markets.11
Findings
This report includes six findings: one finding related to
general farmers market operations; one related to the
budget and operations of North Carolina’s facilities; and
four findings specific to SENCAC.
Finding 1: Studies suggest that farmers markets &
agricultural centers provide economic benefit to
states, but, excluding one 1996 study, North Carolina
has not studied the impact of its facilities.
In conducting this review, FRD reviewed three external
studies on the economic impact of farmers markets.
These studies all found that the farmers markets
reviewed have a positive impact on the surrounding
economy.12 In addition, there have been several studies
of North Carolina’s farmers markets and agricultural
centers that indicate that these facilities were expected to
provide economic benefit to the State. Conclusions from
some of these studies are noted below:
 A 1991 study of the Piedmont Triad farmers
market estimated a $6.5 million direct
economic benefit.13
 A 1991 feasibility study of an equine facility
in Williamston concluded that in the first year
of operations the facility would create total
direct expenditures of $7 million and that “the
multiplier effect would double these
impacts.”14
 The 1994 Economic Research Associates
(ERA) feasibility study of SENCAC estimated
that equine events would result in direct
economic impacts of $3.8 million in the first
year increasing to over $4.5 million as the
facility matures.15 With the economic
multiplier, a total impact of $9 million
annually was predicted.
These conclusions are from feasibility studies conducted
prior to facility construction. To FRD’s knowledge,
only one study has been done on DACS’ facilities post
construction. This Farmers Market Special Review,
conducted by the Office of State Budget and
Management (OSBM), was undertaken in 1996 at the
behest of the 1995 NCGA. 16 OSBM found that “when
adding in economic impact of market operations…the
state receives a 305 percent return on annual
expenditures.” OSBM estimated that the four farmers
markets created tax revenue for the General Fund of $6.7
million.17 Since this study, neither the NCGA nor
DACS has commissioned a study of the economic
impact of the constructed State’s farmers markets and
agricultural centers.
Finding 2: The NCGA has expressed an interest in
requiring the State’s facilities to be self-supporting
yet many, including SENCAC, still require General
Fund support for operations.
The 1995 NCGA required the State to review the
operations of the State’s farmers markets “to identify the
steps required to transform them into financially self-supporting
operations.”18 In conducting this review,
OSBM concluded that DACS should strive “to bring
market revenues more in line with market expenditures”
and that “the markets should strive to be self-supporting
operationally.”19 In recent years, the NCGA has taken
steps to decrease the facilities’ reliance on General Fund.
In the FY 2009-10 budget, the NCGA eliminated
$175,000 in General Fund support and directed the
farmers markets and agricultural centers to increase fees.
In the FY 2011-12 budget, at DACS’ recommendation,
the NCGA eliminated all funds for the Piedmont Triad
farmers market and directed that that facility be operated
as a self-supporting enterprise similar to the Raleigh
farmers market.
Despite these actions, the NCGA has never required
DACS to make all of its markets self-supporting.
Lumberton is not the only farmers market or agricultural
center that requires support from the General Fund to
cover its expenses; three of the seven complexes are self-supporting
(See Table 2). In terms of total dollars,
SBMAC requires more General Fund support
($784,015) than SENCAC ($362,230). However, 77
percent of SENCAC’s total expenditures come from
General Fund dollar while only 62 percent for SBMAC
total expenditures are from the General Fund.
It is unlikely that SENCAC would be able to continue to
operate in FY 2012-13 without General Fund support,
especially in light of the opening of the new multi-purpose
pavilion. DACS has requested nearly $400,000
per year to operate the new pavilion (See Finding 6). In
a national study of farmers markets, Tim Payne of the
US Department of Agriculture (USDA) found that 18
percent of farmers markets were not self-sustaining.
“These markets were primarily supported by various
government agencies (city, county, state, and federal),
business groups, nonprofit organizations, individual
donations, and grants.”20 USDA’s study did not
consider agricultural centers like North Carolina’s
facilities in Lumberton, Williamston, and Fletcher.
Finding 3: SENCAC underperforms relative to the
State’s other facilities.
SENCAC has very few users of or visitors to the farmers
market, and, despite relatively good performance as a
meeting center, the overall facility has far lower revenue
collections and visitation than the State’s other facilities.
Since the equestrian/ multipurpose complex is not yet
complete, comparable usage data is not available. More
detailed performance information for SENCAC’s
services is available in Appendix 2.
The Department notes that the performance information
provided for its farmers markets and agricultural centers
is self-reported and that not all facilities track and
calculate measures in the same way (See
Recommendation 4). Consequently, FRD has focused
on the most basic performance measures where
calculation method is less subjective: number of spaces
rented, events held, etc. Nevertheless, even simple
counts can be calculated differently. For example, does
a two-day rental for a single customer count as one
rental or two?
Farmers Market
In CY 2010, SENCAC staff counted 64 unique
individuals who used the facility, renting 923 of the
approximately 30,000 daily rental spaces available
throughout the year, an occupancy rate of about three
percent.21 The Charlotte market, which rented the next
fewest number of spaces, rented over 15,250 of more
than 52,500 available daily spaces, an occupancy rate of
29 percent. Similarly, SENCAC had 96,119 total
visitors in CY 2010 while Charlotte, the facility with the
next lowest visitation, had 676,295, over seven times as
many visitors. Raleigh, which had the highest visitation
in CY 2010, topped 3.3 million visitors.
Unlike the other State farmers markets, SENCAC has no
wholesale activity. According to the Department, they
are currently pursuing talks with a possible wholesale
tenant for the market; the results of these discussions are
not known at this time. Wholesale activity is an
important revenue source for the State’s farmers
markets. While the definition of wholesale is subjective,
DACS stated that Raleigh has seven wholesale tenants,
Asheville has five, and Greensboro and Charlotte each
have one. Other states have also indicated that
wholesale activity is vital to profitability.22
Meeting Center
As a meeting center, SENCAC matches or outperforms
the other agricultural centers in terms of bookings. In
CY 2010, SENCAC hosted 150 meetings, down from a
high of 193 in CY 2008. Bookings for the Western NC
and SBMAC peaked in CY 2007 at 97 and 154 bookings
respectively. Attendance of SENCAC’s meetings
approached 31,000 in CY 2010, far exceeding
attendance at the other agricultural centers – nearly
25,000 for SBMAC and 14,302 for events at the Western
NC Ag. Center.
Multipurpose Pavilion
Like the farmers market, usage of the SENCAC current
multi-purpose facility lags behind the State’s other
facilities. However, underperformance relative to the
SBMAC and the Western NC Ag. Center is expected
since SENCAC does not have comparable facilities.23
Until recently, SENCAC lacked an indoor/ enclosed
multipurpose building and still has no stalls to support
multi-day livestock activities. Despite these challenges,
SENCAC booked 15 events in CY 2010. This compares
to 39 events at SBMAC and 127 at the Western NC Ag.
Center. SENCAC does not track attendance for these
events.
The Department feels that “the failure to build the
exhibition complex…of the project has led to continuing
budget challenges” for SENCAC.24 Nevertheless,
DACS has taken steps to make SENCAC a viable
facility for events prior to completion of the indoor
pavilion. For example, DACS partnered with the
Eastern Border Belt Horse Association to build a 120’ x
246’ competitive outdoor ring with a warm-up ring in
2006. This ring will remain in use and complement the
multipurpose facility that opened in April 2012.
Finding 4: SENCAC suffers from a lack of operations
planning and performance reporting.
SENCAC has no specific planning documents or
measures – no strategic plan, business plan, consistent
performance measures, and goals and/or objectives.
DACS was able to produce a Business Plan for the
Multi-purpose that it developed as part of an application
for a US Department of Commerce grant.25
Each December, the Markets Division hosts a Manager’s
Meeting that includes the managers of all DACS
operated farmers markets and agricultural centers. At
this meeting, the managers review the following:
 Market operational guidelines;
 Market trends and budget needs;
 Current fees and fee structures; and
 Any operational business that needs to be
addressed.
Managers submit Monthly Performance Reports that the
Department uses to evaluate each facility. Neither the
performance measures nor the methodology for
calculating the measures are consistent across DACS’
facilities. However, the Department is now using
OSBM’s Program Inventory to track performance for the
farmers markets and agricultural centers. FRD did not
receive any information that indicated that the facilities
are using a consistent methodology to calculate
performance measures. Nevertheless, this performance
information will provide additional data for review when
allocating resources and making budget decisions.
Finding 5: Several external factors have hindered
SENCAC’s performance.
As noted previously, both studies evaluating the concept
of a facility in southeastern North Carolina indicated that
such a facility would struggle to be self-supporting.
Nevertheless, the NCGA decided to construct SENCAC.
Other factors hindering SENCAC’s operations include:
Economic Recession and Fee Increase
The weak economy and required fee increase have led
to reduced bookings. In FY 2009-10, the NCGA
directed DACS to increase fees at the State’s farmers
markets and agricultural centers. A list of current fees
for SENCAC is provided in Appendix 3. According to
the Department, the 2010 fee increase has had an
impact on bookings at all of its facilities. Based on the
information in Table 4, which shows a significant
decline in bookings between CY 2008 to CY 2009,
FRD maintains that the fee increase is only one factor
in declining demand, and that the economic recession
has had an impact as well. This hypothesis is
supported by the fact that demand for equine events
increased following the fee increase but remains below
the CY 2008 level. Booking data from the State’s
other facilities further supports this hypothesis: not all
bookings declined from CY 2009 to 2010. Receipt
collections at all seven facilities increased following
the fee change. Thus, despite the drop in demand,
revenues still increased.
Table 4: SENCAC Booking & Revenue Data
Phased Construction
The facility has been built in stages: the farmers market
and meeting center opened in 1999 and 2000
respectively; an outdoor equestrian ring was completed
in 2006; a multi-purpose building opened in April 2012;
and stalls, equipment, and supporting facilities are still
needed.
Interchange Redesign
The 2009 redesign of the Interstate 95 (I-95) and
Highway 74 interchange hinders access to and visibility
of SENCAC. When DACS purchased the SENCAC
property, it was located near the intersection of I-95 and
Highway 74. Due to the redesign, SENCAC is now one
mile east of the interchange, lacks direct access to I-95,
and cannot be seen from Highway 74 East until after
cars have passed the facility’s exit. Consequently,
SENCAC has fewer drop-by visitors, making it more
reliant upon destination visitors.
Local Government Partners
Until recently, local government support for SENCAC
appeared to have waned. The City of Lumberton was a
strong initial supporter of SENCAC, providing $485,000
for sewer and electrical services. Yet, in February 2010,
when Golden LEAF reserved $300,000 for the
construction of horse stalls contingent upon two
conditions: (1) an application from the Department and
(2) $50,000 in matching funds from both Lumberton and
Robeson County, neither local government acted upon
the offer. However, with the opening of the new multi-purpose
pavilion, local support has increased.
Lumberton voted to provide matching funds on April 16,
2012 while Robeson County voted in support January
27, 2012, paving the way for the Department to formally
apply for the funds.26 Upon receipt of an application, the
Golden LEAF Board will consider the application and
determine whether to award funds.
Competition
SENCAC faces a competitive environment. There are
several farmers markets and event facilities capable of
hosting meetings and livestock shows within 90 miles of
SENCAC. Appendix 4 provides a current list of
SENCAC’s nearby competition. FRD does not have rate
and booking information for SENCAC’s competitors.
Finding 6: DACS needs funding to equip and operate
the new multi-purpose pavilion.
SENCAC’s new multi-purpose pavilion opened April
17, 2012. DACS has no capital funds to (1) purchase
equipment (tractors, a water truck, etc.), tables, chairs, a
removable floor, or an HVAC system or to (2) build
stalls necessary for multi-day equine events. DACS
estimates that up to $2.1 million in additional funds are
needed to fully equip the facility, not including stalls.
According to SENCAC staff, event promoters have
expressed interest in the new pavilion but the lack of
stalls “kills the conversation.”27 Until stalls are built,
SENCAC’s complex will remain uncompetitive for
multi-day events, which bring in the most revenue and
create the largest multiplier effect in the surrounding
community.28 The Department estimates that a 100 stall
barn would cost between $550,000 and $650,000.29
Appendix 5 provides a full list of remaining direct and
complimentary needs.
DACS also has no operating reserve for the pavilion,
meaning there are no funds to pay for additional
employees, utilities, and other operating costs.
SENCAC staff is hesitant to book the facility without
knowing whether funds will be available for operations.
DACS needs $392,000 in additional recurring General
Fund support and three FTE to run the pavilion. This
would increase staffing to nine FTE and total
appropriation to just over $750,000. Nine FTE at
SENCAC will still be less than DACS has at any other
facility except the Charlotte farmers market (4 FTE),
despite the fact that SENCAC is the only facility that
operates three distinct programs – a meeting center, an
agricultural center, and a farmers market. SBMAC has
12 FTE and the Western NC facility has 14 FTE.
SBMAC and the Western NC Ag. Center each expend
over $1 million annually.
DACS projects that the new multipurpose facility will
add 12 new events and increase revenues by $7,800 in
FY 2012-13, increasing to over $14,000 per year by FY
2016-17. Even with the new pavilion, SENCAC is
CY 2008 CY 2009 CY 2010
Rentals & Bookings
Farmers Market 1,964 1,566 923
Meeting Center 193 161 150
Equine Event 16 7 15
Revenue
Farmers Market $20,321 $16,669 $17,869
Meeting Center &
Equine Events* $95,811 $83,596 $95,485
* Historically, SENCAC did not differentiate between Meeting
Center & Equine Event revenues.
expected to bring in less than $120,000 in total revenue.
This projection assumes no stalls are constructed; DACS
does not have an estimate of the increase in revenue if
stalls and other facilities were completed. SBMAC and
the Western NC Ag. Center had equine and non-equine
event revenue of just over $350,000 in FY 2009-10.
Even if SENCAC performs as well as these two
facilities, receipts would still not offset the additional
cost to operate the pavilion ($392,000). The Department
notes that, unlike SBMAC and the Western NC Ag.
Center, SENCAC’s new facility is designed to be a true
multi-purpose space, able to accommodate equine
events, trade shows, and other large exhibitor events.
Since the pavilion is more versatile, SENCAC should be
able to book events that the State’s other facilities cannot
accommodate, increasing the revenue potential of the
facility. Nevertheless, if additional funds are provided
as requested by the Department, 86 percent of
SENCAC’s operations would be supported by the
General Fund.
Recommendations
Based on the findings listed above, FRD presents the
following three recommendations for review:
Recommendation 1: Cease General Fund support for
SENCAC’s current business model.
Due to lack of demand, lack of planning, price sensitive
customers, access issues, nearby competition, and other
factors, SENCAC cannot be self-supporting in the short
term; FRD believes that, unless substantial operational
changes are made, it cannot be self-supporting even in
the longer-term. The Department is requesting
additional General Fund support and capital funding for
SENCAC but based on the proposed increase in events
and revenues provided in the expansion request (12
additional events, a 2 percent increase in visitation, and
$7,800 in new revenues for FY 2012-13), FRD feels that
the Department has not demonstrated the benefits
associated with SENCAC’s expansion. However, the
1994 study (See Finding 1) indicated that equine events
have a direct economic impact of “approximately $1,200
per horse shown.”30
Recommendation 2: Provide nonrecurring support in
FY 2012-13 and require DACS to evaluate
SENCAC’s operations and recommend an
alternative operating model or closure plans.
The NCGA could fund the facility on a nonrecurring
basis and request that DACS submit a plan for a new
operating model that includes becoming self-sufficient
or justifies why a continued subsidy is warranted. Using
nonrecurring funds for FY 2012-13 will require the NCGA to
consider SENCAC’s budget and DACS’ report next year.
However, it could also increase staff turnover, reduce
SENCAC’s ability to attract community partners, and limit the
Department’s ability to compete for grants.
There are many alternative operating models that could
be used. According to DACS, North Carolina has never
explored an alternative managing authority for SENCAC
or its other facilities. DACS has utilized an alternative
method of service delivery model once – DACS entered
into a lease-purchase agreement with the local Economic
Development Corporation to construct an additional
multipurpose barn at SBMAC.
At a minimum, in the study, DACS should consider:
 Closing the facility: There may be no operating
model under which SENCAC is viable. In the
report, DACS should assess options for the
property if closure is recommended.
 Changing the services provided: DACS should
consider changing the services provided by
SENCAC. For example, given the poor
performance of the farmers market, the
Department could end the retail farmers market
either, converting the covered farmers market
area to stalls31 or leasing out the facility to be
utilized as seen fit by the leasee.
 Pooling profits: DACS should consider the
effect of operating its facilities as a system –
sharing staff, resources, and profits. In this
model, which is used in South Carolina and
Georgia, more profitable facilities support less
profitable ones.
 Contracting out all operations: This is the model
used in Virginia. The State built the facilities
but contracts with private entities to operate
them.
 Contracting out part of the operations: This
model is used for the Columbia farmers market
in South Carolina, in which a private contractor
operates the wholesale portion of the farmers
market.
Recommendation 3: Require DACS to develop
business plans for each farmers market and
agricultural center as well as a system-wide strategic
plan.
SENCAC suffers from a lack of strategic planning,
business planning, and performance tracking. However,
lack of planning is not unique to SENCAC. None of
DACS’ farmers markets or agricultural centers has a
business plan, and there is no system-wide strategic
plan.32,33 The NCGA should require DACS to develop a
business plan for each of its facility as well as a system-wide
strategic plan. In the planning process, DACS
should:
 Justify the programs provided by each facility,
and eliminate unviable services;
 Update each facility’s site plan to reflect the
current configuration and any planned
expansions;
 Develop consistent performance measures to
enhance management decision-making and
inter-facility comparisons;
 Aim to increase partnerships with local
organizations; and
 Evaluate way to decrease costs and increase
revenue, such as an Eastern State Fair.
DACS should be required to submit these plans and any
progress toward implementing and achieving the
objectives described in the plans to the 2013-15 NCGA.
For additional information, please contact:
Lanier McRee
Fiscal Research Division
NC General Assembly
300 N. Salisbury St., Room 619
Raleigh, North Carolina 27603-5925
(919) 733-4910
http://www.ncleg.net/fiscalresearch
Lanier.McRee@ncleg.net
Endnotes
1 The Raleigh Fairgrounds (Agricultural Center) was excluded from the comparison data because its size and scope are
significantly different from the other agricultural centers.
2 North Carolina Department of Agriculture & Consumer Services. Response to FRD Request for Information. October 31,
2011.
3 In 1988, DACS and the Southeastern North Carolina Farmers Market Commission hired the Fantus Company to “objectively
research, analyze, and confirm the viability of establishing one or more farmers market facilities in eastern North Carolina.”
(Fanuts Group, pg. 1) Based on demographics, infrastructure, and surveys, the Fantus Company determined that neither a
wholesale facility nor a farmers market would be feasible in Eastern NC. The study then considered a shipping point facility and
concluded that, assuming a facility must ultimately be self-supporting, there was “insufficient revenue potential to warrant
constructing a shipping point facility at [this] time.” (Fantus Group, p. 59) Nevertheless, the NCGA continued to provide funding
for the development of a facility in Roseboro. By 1993, the Roseboro Shipping Point facility was put aside and replaced with a
plan to build a farmers market and agricultural center near Lumberton.
In 1994, the Department retained Economics Research Associates (ERA) to evaluate the feasibility of a facility with farmers
market, meeting center, and agricultural center components. While ERA’s final report documented demand for an equine facility,
retail farmers market, and meeting space, it also noted that the cost of operating these facilities would exceed expected revenues.
The report did not indicate that the facility would ever be self-sustaining but highlighted that the direct economic impacts to the
surrounding community would be expected to exceed $4.3 million, the bulk of which would be derived from multi-day equine
events. (ERA, p.II-1-II-3, IX-8)
The Fantus Company. Northeast and Southeast North Carolina Farmers’ Market Study. Report prepared for the North Carolina
Department of Agriculture, March 21, 1988.
Economic Research Associates. Feasibility Study for Southeastern North Carolina Equestrian/ Agricultural Center and Farmers
Market in Robeson County, North Carolina. Prepared for: North Carolina Department of Agriculture. April 1994.
4 At the time, the estimated cost of the building, fully equipped, was $6 million; this estimate has now increased to approximately
$7 million. In addition to the original $3.7 million in State funds, DACS secured a $1.29 million grant from Golden LEAF to
help cover part of the shortfall, leaving $2.1 million in needs. (See Appendix 5)
5 According to G.S. 143C-4-3(b), “funds in the Repairs and Renovations Reserve Account shall be used only for the repair and
renovation of State facilities and related infrastructure that are supported from the General Fund.”
6 GAO defines a Public Private Partnership as “a contractual arrangement…between public and private-sector partners.” Public-private
partnerships “differs from typical service contracting in that the private-sector partner usually makes a substantial cash, at-risk,
equity investment in the project, and the public sector gains access to new revenue or service delivery capacity without
having to pay the private-sector partner.” (GAO, p. 13, 14)
Government Accountability Office. Public-Private Partnerships: Terms related to Building and Facility Partnerships.
GAO/GGD-99-71 (Washington, D.C., 1999)
7 Tompkins, David. South Carolina Department of Agriculture. Telephone Interview. February 26, 2012.
8 Kulinski, Matthew. Georgia Department of Agriculture. Telephone Interview. March 8, 2012.
9 Shimp, Tonisha. Georgia National Fairgrounds and Agri-center. Telephone Interview. March 8, 2012.
10 Lewis, Kent. Virginia Department of Agriculture & Consumer Services. Telephone Interview. October 13, 2011.
11 Bartholomew, Pamela. Tennessee Department of Agriculture. Telephone Interview. September 22, 2011.
12 One study concluded that “farmers markets play a vital role in enabling farmers to gain direct access to customers. Without
this access the existence of many small- and medium-sized growers would be threatened.” Payne, Tim. “U.S. Farmers Markets
2000: A Study of Emerging Trends.” Journal of Food Distribution Research 33, no. 1. (March 2002): 173-175. p. 174.
A 2010 study found that the 26 seasonal farmers markets surveyed had “$948,640 in direct farmers market revenues” which
created “a total economic impact of $1.6 million in business revenues, 15.88 part-time jobs, $213,720 in wages, and $16,000 in
state and local taxes.” Myles, Albert and Ken Hood. “Economic Impact of Farmers’ Markets in Mississippi” Publication 2582,
Extension Service of Mississippi State University. (Starkville: Mississippi State University, 2010) p. 4.
The authors of a third study of the net impact of 34 farmers markets in West Virginia concluded that the net economic impact of
farmers markets was 82 part-time jobs (43 full-time) and a $653,000 increase in the gross state product. This impact is after
adjusting for direct revenue losses to competitors. Hughes, David W. et al. “Evaluating the Economic Impact of Farmers’
Markets Using an Opportunity Cost Framework.” Journal of Agricultural and Applied Economics 40, no.1 (April 2008): 253-
265. P. 261.
13 Vines, Donna. The Economic Impact of the Piedmont Agricultural Marketing and Processing Center. (Greensboro: UNC-Greensboro,
Dept. of Economics. April 1991). p. 15.
14 Economic Research Associates. Feasibility Study for Eastern Horse Complex Center in Martin County, North Carolina.
Prepared for: Martin County, North Carolina. August 1991. p. II-3
15 Economic Research Associates. Feasibility Study for Southeastern North Carolina. p. IX-8.
16 In 1996, the State had farmers markets in Raleigh, Asheville, Charlotte, and the Piedmont Triad.
17 Office of State Budget & Management. Farmers Market Special Review. Prepared for the North Carolina Department of
Agriculture, February 1996. p. 11.
18North Carolina Department of Agriculture & Consumer Services. State Farmers Market Operations Review: Legislative
Summary. Prepared for the North Carolina General Assembly, April 2, 1996. p. 1.
19 OSBM. p. 11.
20 Payne. p. 3.
21 The number of total daily spaces is calculated by taking the number of rental spaces available for daily rental and multiplying
by the number of days the farmers market is open.
22 Kulinski, Phone Interview.
23 The Department notes that the multi-purpose pavilion at SENCAC may never be fully comparable to SBMAC or
the Western NC Ag. Center since the facility is designed as a multi-purpose pavilion not an equine complex. The
pavilion will be able to host equine events but is designed so that the floor can easily be converted into a space
compatible with the needs of a trade show or other large exhibitor event. Meeting Notes, April 24, 2012.
24 North Carolina Department of Agriculture & Consumer Services. Response to FRD Request.
25 North Carolina Department of Agriculture & Consumer Services. Business Plan: Southeastern NC Agricultural Center and
Multipurpose Pavilion.” Prepared for a United States Department of Commerce Grant, April 2011.
26 Meeting Notes. April 24, 2012. Phone Interview, County Managers Office, Robeson County. April 24, 2012.
27 SENCAC Staff, Site Visit. November 15, 2011.
28 A 2009 study by the North Carolina Rural Economic Development Center determined that the total average spending per adult
visitor attending equine-related event in North Carolina to be $317.61. This average spending occurs in the areas surrounding
event facilities – on hotel rooms, restaurants, and other local businesses.
North Carolina Rural Economic Development Center. North Carolina’s Equine Industry: Findings & Recommendations.
Prepared for the North Carolina General Assembly, May 2009. p. 2-3
29 Meeting Notes, Site Visit. November 15, 2011.
30 Economic Research Associates. Feasibility Study for Southeastern North Carolina. p. IX-8.
31 This change could be temporary or permanent but would allow stalls to be built at less expense and be in place more quickly.
Portable stalls, which could be used in the farmers market shed, cost $80,000 for 42 stalls. During the site visit, the Department
provided this idea and indicated that it is an option that they are actively considering.
Meeting Notes, Site Visit. November 15, 2011.
32 According to the Small Business Administration (SBA), a business plan “outlines the route a company intends to take to reach,
maintain and grow revenues” and includes a market analysis, information on organizational structure, marketing, sales, and
finances. (SBA) A Strategic Plan takes a higher level view by defining the company’s purpose, strengths, weaknesses,
opportunities, and challenges and outlining the organization’s path to its desired position. (Policastro, p. 2)
U.S. Small Business Administration. How to Write a Business Plan. http://www.sba.gov/category/navigation-structure/starting-managing-
business/starting-business/writing-business-plan.
Policastro, Michael. Introduction to Strategic Planning. Prepared for the US Small Business Administration.
http://archive.sba.gov/idc/groups/public/documents/sba_homepage/pub_mp21.pdf
33 Meeting Notes, Site Visit. November 15, 2011.
Appendix 1: Capital and Operating Funding History for a DACS Facility in Southeastern NC, FY 1985-86 to 2010-11
Description Location Year Session Law Section Funding
Appropriations Appropriates $900k for capital development of a facility Roseb oro* 19 85 S.L. 1985-480 Sec. 4, Sec. 5.5 $ 900,000
Appropriates $1.85m for capital and Est. SE Commission Roseboro 1985 S.L. 1985-1014 Sec. 4 $ 1,850,000
Reallocates $25k of 1986 appropriation for operations if land
purchased Roseboro 1987 S.L. 1987-738 Sec. 137 -
Repeals $1.5 million Roseboro 1989 S.L. 1989-1074 Sec. 2 $ (1,500,000)
Reverts $137,676 of reserve for SE Center Roseboro 1991 S.L. 1991-689 Committee Report $ (137,676)
Reverts $92,841 of reserve for SE Center Roseboro 1991 S.L. 1991-689 Committee Report $ (92,841)
Appropriates $1m for SE Shipping Point facility Roseboro 1991 S.L. 1991-1044 Sec. 4 $ 1,000,000
Reallocates $1m from 1993 appropriation as grants - $90K to
Roseboro for water & sewer; $910k to Sampson County for a
Livestock Facility
Roseboro 1993 S.L. 1993-561 Sec. 96 $ (1,000,000)
Total Roseboro Appropriations* $ 1,019,483
Appropriates $2.5M for capital development SENCAC 1993 S.L. 1993-561 Sec.4 $ 2,500,000
Appropriates $3.6 M for capital development SENCAC 1993 S.L. 1993-769 Sec. 32 $ 3,600,000
Appropriates $1m for continued capital development SENCAC 1997 S.L. 1997-443 Sec. 2 $ 1,000,000
Est. Special Revenue Fund for SE Center SENCAC 1998 S.L. 1998-212 Sec. 13.2(b) -
Appropriates $500k for capital SENCAC 1998 S.L. 1998-212 Sec. 29 $ 500,000
Repeals SE Commission N/A 1999 S.L. 1999-44 Sec. 7 -
Appropriates $500k for capital SENCAC 1999 S.L. 1999-237 Sec. 29.1 $ 500,000
Reallocate $250k of FY 1998-99 funds for electronic signage SENCAC 1999 S.L. 1999-237 Sec. 29.4 -
Appropriates $3.7 million for a multi-purpose pavilion SENCAC 2008 S.L. 2008-107 Sec. 27.8 $ 3,700,000
Total SENCAC Appropriations $ 11,800,000
Required Reversions
Disaster Relief
2000
$ (634,313)
Budget Shortfall 2002 $ (11,424)
T otal State Funds Exp ended on SENCAC $ 11,154,263
Grants-in-Aid
City of Lumberton - Funds for sewer and electric services
1998
$ 485,000
Golden LEAF - Provided $1.29M to complete Pavilion project 2008 $ 1,290,000
Total Funds Exp ended on SENCAC $ 12,929,263
*Roseboro’s Appropriations were for land purchase and architectural services to develop a SE Shipping Point facility. No construction was ever completed.
Appendix 2: Performance Information
The Department notes that the performance information provided for the farmers markets and agricultural centers
is self-reported and that not all facilities track and calculate measures in the same way. For example, as you can
see in Table C, during Calendar Years (CY) 2007 and 2008 the Western NC farmers market tracked receipts
written to renters instead of actual number of spaces rented. DACS does not require standard performance
measures and methodologies for tracking the performance of these facilities. For attendance counts, the
Department tracks cars entering the facility and uses the standard multiplier of 2.5 individuals per car.
Meeting Center
SENCAC matches or outperforms the other agriculture centers in terms of meeting center bookings. Table 1
shows meeting center bookings and total attendance for SENCAC, SBMAC, and the WNC Ag. Center.
Table A: Meeting Center Bookings and Total Attendance by Calendar Year
CY 2007 CY 2008 CY 2009 CY 2010
Number of Bookings
SENCAC -* 193 161 150
SBMAC 154 146 131 152
WNC Ag. Center 97 73 73 75
Total Attendance
SENCAC -* 32,661 28,121 30,804
SBMAC 18,617 19,171 18,737 24,428
WNC Ag. Center 10,092 11,208 7,460 14,302
* Prior to CY 2008, all activities at SENCAC were tracked together with no differentiation between the meeting center,
equine activities, and the farmers market bookings and attendance.
Multipurpose Complex/ Equine Facility
Usage of the SENCAC multipurpose complex also lags behind the State’s facilities. However, this is to be
expected since SENCAC does not have an indoor/ enclosed multipurpose building or the facilities needed to
support livestock activities at the complex. Table 2 provides performance information on the number of events
hosted and attendance of those events for SENCAC, SBMAC, and the WNC Agriculture Center.
Table B: Multipurpose Complex Events and Total Attendance
CY 2007 CY 2008 CY 2009 CY 2010
Number of Equine & Non-equine Events
SENCAC n/a 16 7 15
SBMAC 47 48 52 39
WNC Ag. Center 82 103 91 127
Total Attendance - Events
SENCAC * - - - -
SBMAC 36,734 34,589 35,350 27,655
WNC Ag. Center 138,018 185,347 124,665 141,551
* Prior to CY 2008, all activities at SENCAC were tracked together with no differentiation between the meeting center,
equine activities, and the farmers market bookings and attendance.
Farmers Market
Usage of the SENCAC farmers market lags behind the State’s other farmers markets. Table 3 provides
performance information on spaces rented and the number of visitors for the five State-owned and operated
farmers markets.
Table C: Farmers Market Space Rentals and Total Visitors
Number of Rental Spaces Available Days Open Per Year
SENCAC 84/ day 30,492/ year 363
Charlotte 189/day 52,353/ year 277
Piedmont Triad 154/day 55,902/ year 363
Raleigh 184/day 66,792/ year 363
Western NC 270/ day 98,010/ year 363
* This number excludes optional and uncovered spaces
CY 2007 CY 2008 CY 2009 CY 2010
No. of Spaces Rented - Farmers Market
SENCAC 939 1,964 1,566 923
Charlotte 14,096 13,614 14,467 15,267
Piedmont Triad 55,160 52,656 55,656 44,493
Raleigh 80,668 81,203 94,488 62,622
Western NC 9,020* 9,608* 39,687 68,243
* This number is the number of receipts written for spaces, not the actual number of daily spaces rented.
Number of Visitors - Farmers Market
SENCAC 185,643 157,399 101,178 96,119
Charlotte 606,913 578,895 741,902 676,295
Piedmont Triad 1,548,156 1,570,173 1,790,015 1,677,509
Raleigh 3,499,365 3,632,856 3,420,580 3,334,955
Western NC 1,981,141 1,872,553 1,729,224 1,611,508
Additional performance information is available upon request.
Appendix 3: Rental Rates for SENCAC
Service Provided Pre-2010 Fee Current Fee
Meeting Center
Kitchen $ 150 $ 150
No Kitchen Use, Bring in Food 100 100
Whole Meeting Center Building (whole day) 700 800
Whole Meeting Center Building (less than 6 hours) 400 Eliminated
Meeting Center, Area 3 (whole day) 400 300
Meeting Center, Area 3 (less than 6 hours) 250 Eliminated
Meeting Center, Areas 1,2,4,5 (whole day) 200 150
Meeting Center, Areas 1,2,4,5 (less than 6 hours) 125 Eliminated
Meeting Center, Conference Room 3 or more hrs. 75 75
Building Overtime Rate 35/hour 40/ hour
Farmers Market
Farmers Shed, Retail & Wholesale Spaces $ 10 $ 15
Out-of-State Farmers Shed, Retail, Wholesale 12 25
Enclosed Retail Plaza 10 15
Out-of State Enclosed Retail Plaza 10 25
Wholesale Plaza 10 15
Out-of State Wholesale Plaza 10 25
Retail Room in Farmers Area 200 200
Storage N/A 5 per 200 sq ft/ day
Delivery Fee – less than 50 packages 3/ delivery 3/ delivery
Delivery Fee – 51 to 100 packages 5/ delivery 6/ delivery
Delivery Fee – more than 100 packages 5/ delivery 10/ delivery
Restocking Fee 5/ delivery 6/ delivery
Out-of-State Restocking Fee 5/ delivery 12/ delivery
Multi-purpose Facility
Outdoor Horse Ring $ 250 $ 250
Outdoor Grounds Rental 100 minimum 150 minimum
Pavilion – Equine N/A $500/ day
Pavilion – Non-equine N/A $800/ day
Rates for the State’s other farmers markets and agricultural centers are available upon request.
Appendix 4: Competition within 90 miles of SENCAC
Facility Owner/Operator Distance from SENCAC
Robeson Co. Farmers Market Robeson County 5 miles
Carolina Horse Park Carolina Horse Park Foundation 30 mile
Crown Center & Convention Hall Complex City of Fayetteville 35 miles
Exhibition Center at Lake Waccamaw Boys & Girls Homes of NC 40 miles
Duplin Co. Events Center Duplin County 82 miles
South Carolina Equine Park Kershaw County, SC/ SC Equine Promotion Foundation 90 miles
Certified Roadside Farmers Markets Eight certified operators
Throughout
Robeson Co.
Appendix 5: Remaining Needs SENCAC Multi-purpose Building
Multi-purpose Building Needs
Portable flooring 315,735
Air conditioning 1,450,000
Scoreboards and bleachers 65,850
Arena cord reel power system and road show switches 80,580
Arena sound system 90,070
Upgrade from fabric mechanical ducts to rigid galvanized rigid duct painted 106,600
Subtotal Multi-purpose Building Needs $ 2,108,835
Complementary Needs
Maintenance building and all related work, including fence and site work 302,850
Secondary entrance drive and related elements 143,750
Landscaping plantings 33,000
Electronic marque LED 60,000
RV campsite 410,000
100 stall horse barn
A. Open-sided pre-engineered metal building with portable stable 500,000
B. Modular Stall Barn 650,000
C. "Williamston" style Stall Barn 1,500,000
Subtotal Complementary Needs (Modular Barn) $ 1,599,600
Total with Open-sided Barn $ 3,558,435
Total with Modular Barn $ 3,708,435
Total with "Williamston" style Barn $ 4,558,435
Note: SENCAC’s Multi-purpose Pavilion differs from the facilities in Williamston and Fletcher in that it is
envisioned and designed to be truly multi-purpose not just a livestock facility. Consequently, outstanding needs
include a portable floor and an air conditioning system, neither of which are used at SBMAC or the WNC Ag.
Center.
Department of Agriculture &
Consumer Services Response
The Fiscal Research Division solicited input from the Department of
Agriculture & Consumer Services on a draft of this Justification
Review. The following document is the Department of Agriculture &
Consumer Service’s response. It has not been altered or edited in
any way by the Fiscal Research Division.