They are, in many ways, deeply unnatural places - an uncomfortable, ideological no-man's-land, a weird, mock-agricultural suburbia where town and country are supposed to meet. In a pedestrianised shopping precinct in Bromley, Kent, fruit growers wearing rustic aprons sell small, imperfectly formed apples which, though they were declared 'pesticide-free' that morning, have since been sprayed with an emulsion of traffic fumes and smog.

In Islington, north London, urban foodies on their way back from Sainsbury's stop off at the farmers' market to buy white courgettes or striped beetroot. Even away from the cities, the mingling of town and country folk seems incongruous. In Oakham, Rutland, where a farmers' market takes place in the movie-set castle grounds on the fourth Friday of every month, there are occasional signs of acrimony. 'That Tony Blair doesn't know what he's doing,' says Alan Scott, purveyor of traditional jams, when I mention fox-hunting. 'There is no respect for rural life - and I'd never sell to a supermarket. They are the biggest swindler - they'd batter me down to get the lowest price.'

As I stroll around the 20 or so stalls, I enter an unfamiliar world of gamey carcasses, Haslet ('a pork-based product'), freshly eviscerated chickens and ostrich-breeding colonies, a world where rape is a crop, not a headline, and veal calves are heartlessly described as 'a by-product of the dairy industry'. For a townie, it is an eye-opener - and more so if you are a child. 'We have parties of school kids,' says Jan Sewell, a farmer's wife selling home-made cakes and pastries, 'and there might be the odd foster child who grew up in a town. Some think a sheep is the same size as a cow, because they've never seen one!' Smiling a thin smile of embarrassment, I accept a guinea fowl from organiser Pat Taylor's stall - Rutland Organic Poultry - without fully understanding what it is.

Since their conception in America 30 years ago, farmers' markets have been addressing precisely these problems. Dispelling urban ignorance and providing traceable, naturally-reared, ethically-farmed food in a society that is bracing itself for the next BSE or E-coli crisis, they have been enormously popular. There are almost 3,000 farmers' markets in the US - and some, such as Greenmarkets in New York City, have become not just an institution but a mainstream shopping venue. In Greater Washington DC (which has roughly half the population of London), there are no fewer than 30 weekly markets selling local produce - defined as coming from within a 125-mile radius of the city. By comparison, our own capital supports just 18 weekly markets at a push, while the nationwide total is 240.

What the American experience tells us is that farmers' markets are big business. The annual turnover of those Stateside farms is estimated at $1 billion, while the United Kingdom's outlets manage just £65 million ($93m). Hopes of passing the £100m mark in 2001 were dashed by the foot-and-mouth epidemic. Nevertheless, farmers' markets have been something of a food phenomenon in Britain. Ever since the first pilot was launched in Bath in 1997, they have been borne along on a bouquet of chargrilled ostrich, oak-smoked Bressingham duck, aromatic fennel and media hype. In particular, Nina Planck's affiliation of London Farmers' Markets and the stupendously popular Borough Market, in south London, have put farm-fresh produce and naturally-reared rare breeds of meat on the gastronomic menu. However, the real success story has been in the West Country - where towns such as Bath and Bristol have pulled in the tourists as well as local epicureans. This year, Winchester is the farmers' market everyone is talking about. With 85 stalls, it is by far the largest - a scale attributed as much to topography and demographics as to management acumen. 'It is a very fertile landscape,' says James Pavitt, co-ordinator of the National Association of Farmers' Markets (NAFM), 'so you have an incredibly diverse range of producers of about the right size. There are some very good, attractive venues spread out through the town centre. A lot of people are in the kind of income bracket that farmers' markets attract.'

Research by the NAFM shows that the typical customer falls into the AB (upper/middle class) or C1 (lower middle class) socio-economic group - working people with high disposable incomes, the kind who know a good cut of Dexter beef when they see one. The typical 'spend' at a farmers' market is £6 to £10 (36 per cent of visitors) while almost as many (33 per cent) part with £5 or less. What stallholders are depending on is a steady throughput of customers to make their presence worthwhile (they are, after all, farmers during the week and market traders only at weekends) - and this is where most venues are failing. 'In the South-east,' says James Pavitt, 'the average turnover for each stall is £500 per market. Exclude their time, exclude their outgoings, and that gives them a reasonable income for a morning's work. In Wales, the north of England and parts of the Midlands, the turnover is much less. Many farmers see this as a way of promoting their main business. They're getting customer feedback - but it isn't a money-spinner.'

That is a bone of contention for Philip Robinson, a farmer from Bassingthorpe, Lincolnshire, who is running his Pastureland Meat stall at Oakham to dig himself 'out of a hole'. Even before foot-and-mouth, the market prices for livestock made him 'a bit fed-up' - so he started processing his own naturally reared meat and selling it direct at farmers' markets and a handful of agricultural shows (aided by the enticing sizzle of prime beef-burgers, which he cooks on site). 'Yesterday, I started at 5am and finished at 11pm,' he says, 'so the hours are horrendous. But after 18 months, we've built up a quite a customer base and the farmers' markets account for 50 per cent of our business. It's bloody hard work and I'm not making a fortune. All I'm doing is propping up my farm.'

The same applies to Jan Sewell, who says she has sold 'dozens of cakes and 30-odd pies' today, baked in her farm kitchen. 'Our main business is sheep farming,' she explains, 'and we're trying to hang on to the farm by doing this.' Cathy and Steve Brewin have diversified even further, building Bisbrooke Ostrich Farms from the ruins of their more conventional business. 'We grow potatoes for McCains,' says Cathy, 'and we have cattle and sheep - but the land we farm is down to 25 acres. We began breeding ostriches in 1995, and we've been retailing the meat for 20 months.' At farmers' markets from Uppingham, Oakham and Melton Mowbray to Ely, Cambridge and Northampton, they sell everything from prime fillet and rump to ostrich mince, sausages and burgers. 'Most of it is through the farmers' markets,' says Cathy, 'so they are a must. I'm working full-time as well - but every bit helps. It was definitely the crisis in farming that led us here.'

One way for these genuine farmers to make decent money is to charge realistic prices - but up to now they have been thwarted in this by 'middlemen' working the same markets. According to James Pavitt, 'these retail traders typically import produce that is not local and does not support the local economy. It may have been produced outside the area - or even outside the country - very cheaply. That will undercut the small farmers and growers who have got up at 4am to pick the produce or fill the ice van with meat, who have put in all the backbreaking work to sell direct.'

The NAFM's solution has been a new system of certification, which seeks to 'create a level playing field'. From this spring, all produce at NAFM-listed markets will be 'locally grown or produced' - typically within a 30-mile radius of the venue, though London will be governed by a 100-mile rule. Where there is competition, local farmers will be given preference. Secondly, stalls must be staffed by someone directly involved in the growing, raising or production of the goods on sale - in order to give full information to the customer. No bought-in produce may be resold (which rules out one farmer buying another's lamb and selling it from a kebab stall), and processed goods must - where possible - contain local ingredients. In addition, stallholders will follow strict guidelines on GM produce and ingredients, trading standards, insurance and environmental health.

One great irony is that stallholders at the acclaimed Borough Market (a massive money- spinner) fail to meet these criteria in almost every respect - which is why Borough is not officially a 'farmers' market', but merely a 'food market'. Many of the participants are co-operatives or consortia selling produce on behalf of local farmers - though 'local', here, means local to the producer's premises rather than the venue. Staff at Borough tend to talk eloquently about a neighbour's honey bees, a local farmer's Gloucester Old Spot pigs, the county's most fastidious cheese finisher or the chap down the road who does a nice line in organic asparagus - but under the new rules, this will be banned. The producers must come to the market themselves, singing for their supper as well as ours.

What has prompted this fierce regulation, at a time when farmers are reeling from foot-and-mouth and any extra income would be welcome? When I ask James Pavitt about violations at Borough that have short-changed the farmer or the consumer, he is unable to name any. 'We're not saying the experience of shopping at Borough is negative,' he says, 'because it is very positive. But the general good that comes out of a proper farmers' market - as defined by our terms - is environmental and social. It is beneficial because of the reduction in food miles, the reduction in packaging, the direct contact you have with the stallholder. You are contributing to the farmer's livelihood, rather than buying from a middleman - even if his product is excellent. It will allow small farmers and growers to exist profitably - and that will help preserve the countryside. Biodiversity helps protect the small and medium farmers from the onslaught of the barley barons.'

It's inspiring stuff - but, in the opinion of some, deeply flawed. 'The whole idea is a nonsense that will put some farmers out of business,' argues Richard Counsell of Somerset Organics, a partnership of West Country farmers which sells regional produce (organic meat, cheeses, apple juice, poultry, salmon, game) through a mail-order outlet near Cheddar. 'We used to do a lot of farmers' markets,' he adds, 'but now we only do Barnes [an affluent riverside suburb in south-west London].'

The problem is mainly one of economics. 'Say you are a sheep farmer with a couple of hundred acres in the West Country,' Counsell explains. 'At a farmers' market, you are literally going to sell only two lambs if you're lucky - so the most you will get back is £200. You can't sell a range of meats, you can't sell specialist cheeses. By the rules of the farmers' market, you can only sell your own product - and in my opinion, single-product sales just don't work.'

In the past few months, Counsell insists, some excellent producers have lost faith in farmers' markets 'because they can't get them going; they don't have the variety in what they sell'. The solution, he believes, is to follow America's lead - learnt from bitter experience - and set up 'micro-producers' groups' representing four or five local farmers. 'You would have, for example, a North Somerset stall selling a range of local produce,' he says. 'On market day, one farmer sells for all the others - and you do that on a rotation basis. That way, you don't lose valuable time at the farm; you always have a presence at the market. Each knows about the others' produce: they can talk about the farms, the food, the methods of production. To me, that seems like the best way forward.'

Counsell is similarly unimpressed by the proposed geographical limits, which to him seem arbitrary. 'The 100-mile rule for London is especially ludicrous,' he says, 'because it doesn't strike me as being any different from 200 miles. In market towns, people are more clued-up about the local environment - but London is so far removed from that. Frankly, they wouldn't care if the stuff came from Azerbaijan.' Add to this the odd 'local farmer' who is actually a large-scale, metropolitan baker or a suburban housewife baking quiches in her Aga, and certification is a travesty. 'With all that going on,' says Counsell, 'why persecute people who have set up a mini-producers' group and are helping the rural economy? We've now got small farms in Somerset with new barns, better stock, better hedges, putting money back into the land. Just because we have a viable business model, we shouldn't be excluded from passing on benefits to farmers.'

As we drive into the courtyard of Northfield Farm in Cold Overton, near Oakham, animals hurl themselves under the wheels from all directions: it is as if these cockerels, puppies and shaggy, straw-covered, farm-fresh dogs have a serious death wish. Apart from that, it is the archetypal English farm straight out of a toddler's picture book. Above the grain store, white clouds scud across a perfect blue sky; around the corner, a gargantuan sow has somehow scrambled over a waist-high fence into a pen intended for manure. She is trying to escape the incessant squealing of her brood, which drifts across the 250 acres of grassland where rare breeds of cattle, sheep and pigs graze.

'Our main interest is breeding livestock,' says Jan(pronounced Yan) McCourt, a former banker who turned to farming when he was made redundant in 1997. 'On the back of that, we have built a retail meat business, a very small wholesale side - supplying the likes of Hambleton Hall, a hotel listed in the The Good Food Guide - and a cooked-meals business, selling direct by mail-order, at Borough Market and through independent delis and farm shops.' His premium product is Dexter beef, from a rare breed of miniature cattle that was popular in Mrs Beeton's day but eclipsed by larger commercial breeds. 'The Dexter puts down a lot of fat,' says McCourt, 'which gives you better marbling through the meat. That's what gives it flavour. Alongside the Dexters, we've got White Park, Longhorn and Shetland cattle. On the pig front, we've got Gloucester Old Spots, Tamworths, Berkshires and even Middlewhites - wonderful beasts with squashed noses.'

As well as an encyclopedic knowledge of rare breeds, Jan McCourt has an entrepreneurial instinct honed by years of City trading. His main selling point is traceability - an exhaustive paper-trail telling customers where every animal was born and exactly how and when it was processed. 'At Borough,' he says, 'we sell burgers in a bun. If a person wanted to trace back where their beefburger was raised, they could do it - because we display all the animals' ear tags on a board behind us.'

Though some might consider this admirable, McCourt is nevertheless disqualified from selling at certified farmers' markets. 'Partly because it's something I believe in,' he says, 'partly because it makes good business sense, we work with 30 other farmers. Many have dabbled for years in rare breeds but never found an outlet.' What Northfield Farm provides is a distribution system, a way of getting exceptional meat to market - whether it is reared on McCourt's own land or bought from farmers in the Highlands who can't find a buyer in Scotland.

'Here, it does become contentious,' says McCourt, 'because those animals have come a hell of a long way - but it's crazy not to work with these farmers and market their produce, wherever they are. They supply the animals, but everything else is done here - the hanging, the butchery - yet we are not allowed into Oakham farmers' market because we don't rear all the livestock ourselves. It's not a point of contention with Oakham; what I object to is the principle. Was there anyone there today selling bread and cakes? If so, where did their flour come from? Strictly, they should grow all the wheat themselves.'

As McCourt points out, the NAFM criteria are geared more towards protecting farmers than providing consumers with what they want. 'If someone had gone along to Oakham today,' he says, 'and wanted a serious cheeseboard for dinner tomorrow night, they couldn't have created that from the farmers' market. They would have to go to a supermarket or specialist deli. The one cheese there was, Lincolnshire Poacher, is fantastic - but it is unrealistic not to be able to buy wonderful French and Italian cheese as well. In an ideal world, everything would be British - but life isn't like that. My feeling is that, over time, these rules will work against the commercial viability of the markets.'

In the centre of Melton Mowbray, the epicentre of English fox-hunting (the place where, quite literally, a troupe of drunken huntsmen first 'painted the town red'), I step inside Ye Olde Pork Pie Shoppe and consume the best Melton Mowbray pie I have ever tasted. A short stroll away, the vast, high-tech cattle market and the newly built sheep market rise like twin football stadia among the otherwise low-rise provincial sprawl. Today, however, the livestock pens are empty and the area is cordoned off, its crush barriers hung with No Entry signs and placards saying 'Collection Centre Staff Only'. Though the foot-and-mouth crisis closed down the markets for months, these are merely stark reminders of the need for continuing vigilance and stringent health and hygiene checks. Happily, the epidemic has passed and the markets thrive every Tuesday.

'In the school holidays,' says Matthew O'Callaghan, a Labour councillor and chairman of the Melton Mowbray Food Partnership, 'we get families coming from Grantham and Leicester to see the livestock market. It's a visitors' attraction as well as a genuine part of the food economy.' With a £350,000 grant (half from the East Midlands Development Agency, half from the local council), the refreshment rooms once reserved for farmers and auctioneers are being refurbished for the general public. Retail bays are being added for the sale of local produce. 'On Tuesdays we get the browsers,' O'Callaghan remarks, 'people who come for the cattle market, the bric-a-brac and the antiques, and think, "Oh, we might as well get some bread". They can buy it from units in the covered market, they can eat it in the refreshment rooms. Every Friday, come rain or shine, we have a dedicated farmers' market. I think we are the only place that runs them twice a week.' Though listed on the NAFM website, the Melton Mowbray farmers' market is something of a maverick. Not only is it part of a broader tourism concept - a living agricultural showcase - but it openly flouts some of the rules. 'We're pretty relaxed here,' says O'Callaghan, 'and I'm divided on certification. For us, the farmers' market is about selling produce - full stop. As to where it comes from, if people feel it is worthwhile coming to Melton, why not? At this time, when farmers are so hard-hit, any restriction on them selling their goods is, I believe, detrimental. Once the markets are well-established, once we are through this crisis, that might be the time to regulate.'

Who knows what the future holds? If the Melton Mowbray blueprint is anything to go by, the next generation of farmers' markets may be part of an animated agricultural theme park, a popular tourist attraction that is self-sustaining rather than relying on passing trade or a handful of dedicated foodies. Perhaps families will even stay there, tilling the land themselves, watching the grain transformed into flour and baking it in a cake that evening. Admittedly, some of the charm will be lost - but at least the farmers' markets will survive. Sadly, even this Disneyfied version might not appeal to our sedentary, TV-dinner offspring.

Arriving home from Oakham, I unpack my farm-fresh guinea fowl and marvel at what I know about it. The original egg came from France and was hatched in Wisbech, Cambridgeshire. From one day old, the chick roamed freely around Cuckoo Farm, enjoying an organic, cereal-based diet. Guinea fowl are marvellous to watch, apparently, because they run around in gangs - like Mexican waves of birds. Recounting this to my children, I can see they are unimpressed. As I remove the bag of giblets, they don't even bother to ask me what it is. Finally, Rosie - aged 12 - looks the trussed bird squarely in the (severed) neck and says, 'Ugh, gross! The legs are all black and scaly. Why are they stuck up its bum?' I reach into the fridge for the sanitised Safeway chicken breasts - sans legs, sans wings, sans fat, sans everything.