Economic Research Report No. (ERR-24) 23 pp

August 2006

How Low has the Farm Share of Retail Food Prices Really Fallen?

For the commodities they sell, farmers have been receiving a decreasing share of what consumers pay for food at retail stores for some time,but the extent of this decrease has been overstated for at least a few commodity groups. Current estimates of farm share are based on baskets of foods representative of what households bought between 1982 and 1984. Using updated baskets based on what American households bought for at-home consumption between 1999 and 2003, this report estimates farm share for two major commodity groups-fresh fruits and fresh vegetables. Using this approach, this report found that farmers are capturing more of the consumer's food dollar than current estimates suggest. The methodology behind the market basket data series is also detailed.

Keywords: marketing margin, farm share, farm-retail price spread, food prices, fruits, vegetables

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