A Melbourne peri-urban council has eased restrictions on farmgate sales regulations, embedded in the city's Green Wedge laws.
Under the Green Wedge planning rules, farmgate stores are only permitted to sell produce from their own, or an adjacent, property.
The Mornington Peninsula Shire Council was set to take Torello Farm, Dromana, to the Victorian Civil and Administrative Tribunal.
It claimed the Torello farmgate store had breached its primary produce sales permit.
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But Torello director Sophie O'Neill said the shire had worked with her to find a solution before VCAT heard the matter.
She said she was now allowed to offer locally grown Mornington Peninsula produce alongside what she produced on her own farms.
"We have always said that if local producers have a genuine and viable outlet for their produce, they will be inclined to grow more," Ms O'Neill said.
"That plays a significant role in protecting the Green Wedge land and provides the community with access to locally grown food.
"With our new permit, we can sell Mornington Peninsula produce at our farm gate, which is a massive step for the local food economy.
"Currently, we have over 60 producers who supply us over 12 months, some big, like Hawkes and Peninsula Fresh Organics, and some very small.
Ms O'Neill said the Peninsula was made up of a patchwork of producers, most too small to run their farm gate, supply supermarkets or Melbourne Wholesale Market, or even attend farmers' markets.
"Without businesses like ours they simply would not have an outlet for their produce."
She said she believed the decision marked a significant shift in the shire's culture.
"We believe Torello Farm's model has become an agricultural business incubator for local food production. Locals grow more because we provide a viable outlet for their produce.
"And, if more people are using their land to grow food, this helps preserve the Green Wedge."
Other farmgate operators said it was pleasing a common-sense approach was now being taken.
The council's Draft Food Economy and Agroecology Strategy also recognised the restrictions imposed by the tight planning rules.
The strategy aims to promote agroecology, farming practices that mitigate climate change, reduce emissions, promote recycling and local supply chains.
The strategy authors said farmgate sales and the production of value-added products - which may provide important diversification opportunities - were subject to tight planning controls.
"Gaining council and relevant government authorities' approvals for some forms of farming, food production and related activities such as farmgate sales can be time consuming, complicated and uncertain," the report authors found.
Peninsula Fresh Organics, Baxter, co-owner Wayne Shields said before council compliance officers started enforcing the Green Wedge regulations, farmgates were "running smoothly and momentum was building."
"At some point, for whatever reason, the council's compliance department was asked to come in and there was a year of turmoil."
He said he was shutting the company's farmgate shop and opening a retail business in nearby township.
"Other places have shut down, so it hasn't done anyone any good, or the council's reputation any good."
Prominent vegetable grower and farm gate operator Richard Hawkes, Hawkes Farm, Boneo, proposed a tiered system for farmgate shops.
That could be gold, silver or bronze, depending on the amount of local produce being sold.
"If council was concerned there was going to be a flurry of farm gates, they should have put in place some rules."
He suggested the shops selling most local produce to the least should be rated.
"If you want to be a top tier, you have to show you are ridgy dodge.
"It's farm first, farmgate second - if you want to run a farmgate, run a farm first."
It appeared there was a conflict in council, with the economic development section encouraging businesses, while compliance was "putting the brakes on".
During the pandemic, the farm shop provided the biggest proportion of Hawke's business
Coronavirus saw a considerable downturn in the farms wholesale operations, due to the closure of hospitality venues.
"It's around 25-30 per cent value of our overall growing business.
'The farm gate enables us to ride out the bad times, the hard patches, where there are significant issues with wholesaling.
"If we didn't have the farmgate now, we would have the for sale sign, out the front."