The document discusses the price spread between what consumers pay and what farmers receive for agricultural products. It notes several difficulties in accurately measuring and comparing prices at different stages of marketing. The producer's price is defined as the net price the farmer receives at first sale, which is the wholesale price minus marketing costs incurred by the farmer. Factors that affect marketing costs include perishability, storage needs, volume handled, packaging, grading, advertising, bulkiness, retail needs, storage needs, risk, and dealer facilities provided. Marketing costs are generally higher for agricultural products than manufactured goods due to dispersed farms, small outputs, bulkiness, grading challenges, irregular supply, storage and processing needs, multiple middlemen, and risk.

1. • Price spread – difference b/w price paid
consumer and price received by the farmer
• Producers' share in the consumer's rupee

2. Difficulties
• Representative and comparable series of prices for the
same quality of successive stages of marketing are not
readily available for all the products
• Adjustment for a loss in the quality of the product at
various stages of marketing due to wastage and
spoilage in processing and handling is difficult
• The price quotation may not cover the price of a
product of a comparable quality
• The time lag between the performance of various
marketing operations is not properly accounted for

3. Producer’s price
• Net price received by farmer at the time of
first sale
PF = PA-CF
PF - Producer’s price
PA - Wholesale price in the primary assembling
market
CF - Marketing cost incurred by the farmer

4. The factors which affect marketing costs
• Perishability of the Product
• Extent of loss in storage and transportation
• Volume of the product handled
• Regularity in the supply of the product
• Extent of packaging
• Extent of adoption of grading
• Necessity of demand creation/ Advertisement

5. Contd.
• Bulkiness of the Product
• Need for retailing
• Necessity of storage
• Extent of risk
• Facilities extended by the dealers to the
consumers:

6. Agriculture products Vs other products
• Generally, the cost of marketing of agricultural commodities is
higher than that of manufactured products
• Widely dispersed farms and small output per farm
• Bulkiness of agricultural products
• Difficulty in grading
• Irregular supply
• Need for storage and processing
• Large number of middlemen
• Risk involved