Farmer's share in consumer rupee
Topic: Agricultural Marketing, MSP, Buffer Stocks and PDS · NCERT: Beyond NCERT
Meaning
This is the part of the final retail price that actually reaches the farmer. It shows how much of each rupee a consumer spends goes to the grower.
Farmer's share (%) = (Farm-gate price ÷ Retail price) × 100
The rest is the price spread: marketing costs plus the margins of intermediaries. The share is low when produce is perishable (it cannot wait), when sellers are many and small, and when there are many layers of traders.
Example
RBI working papers (2024) put the farmer's share at about one-third for tomato, onion and potato, and for fruits such as banana, grapes and mango. For pulses, milk and eggs, where there is organised procurement or cooperatives, it was about two-thirds to three-quarters. So a milk producer keeps far more of the consumer's rupee than a tomato grower does.
Don't confuse with
- Price spread: this is the rupee gap between the retail price and the farm-gate price, not the farmer's portion of the retail price.
Related concepts
- Agricultural marketing
- Agri-value chain
- Middlemen
- Distress sale
- Marketable surplus
- Marketed surplus
- Farm-gate price