Farm-gate price
Topic: Agricultural Marketing, MSP, Buffer Stocks and PDS · NCERT: Beyond NCERT
Meaning
The farm-gate price is what the farmer receives for produce at or near the farm, before any transport and marketing costs are added. It is the starting point of the supply chain. The gap between the farm-gate price and the final retail price is called the price spread. The spread is taken up by transport, storage, losses and the margins of traders (intermediaries).
Example
Suppose a Kolar farmer sells tomatoes at ₹10 per kg at the farm, and the same tomatoes sell for ₹30 per kg in a city shop (figures for illustration only). The farm-gate price is ₹10, and the price spread is ₹20.
Don't confuse with
- Minimum support price (MSP): MSP is a price the government announces before sowing for notified crops. The farm-gate price is whatever the farmer actually gets in the market, and it can be below MSP.
Related concepts
- Agricultural marketing
- Agri-value chain
- Middlemen
- Distress sale
- Marketable surplus
- Marketed surplus
- Farmer's share in consumer rupee