Agricultural marketing

 
 
PRICE SPREAD
Ø The difference between the price paid by the consumer and price received by the 
farmer.
Ø It involves various costs incurred by various intermediaries and their margins.
Ø Marketing costs are the actual expenses required in bringing goods and services 
from the producer to the consumer.
 
Price Spread in Groundnut Marketing
Marketing channel :
Producer – wholesaler – Decorticating unit – Oil miller – Retailer – Consumer :
 
S.No. 
 
Marketing channel
 
 
Amount 
(Rs 1 q) 
 
% 
1. 
Producers sale price 
Rs/g 
1119.50 
80 
2. 
Wholesaler
Purchase price
Marketing cost 
Margin 
1119.50 
3.5.25 
71.00 
2.51 
5.06 
3 
Decorticating unit
PP 
MC 
MM 
1225.75 
31.62 
40.0 
2.25 
2.85 
4 
Oil miller 
PP 
MC 
MC 
1297.35 
44.55 
32.50 
- 
3.17 
2.32 
5 
Retailer 
PP 
MC 
MM 
1374.40 
13.00 
16.80 
0.86 
1.20 
6 
Consumer’s purchase price
1404.20 
100 
Objectives of Studying Marketing Costs :
1. To ascertain which intermediaries are involved between producer and consumer.

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2. To ascertain the total cost of marketing process of commodity. 
3. To compare the price paid by the consumer with the price received by the 
producer.
4. To see whether there is any alternative to reduce the cost of marketing.
Reasons for High Marketing Costs :
1. High transportation costs 
2. Consumption pattern – Bulk transport to deficit areas.
3. Lack of storage facilities. 
4. Bulkiness of the produce. 
5. Volume of the products handled.
6. Absence of facilities for grading.
7. Perishable nature of the produce. 
8. Costly and inadequate finance. 
9. Seasonal supply. 
10. Unfair trade practices. 
11. Business losses.
12. Production in anticipation of demand and high prices.
13. Cost of risk.
14. Sales service.