The data product Price Spreads from Farm
to Consumer compares prices for food paid by consumers with
prices for corresponding agricultural products received by farmers.
These comparisons are reported for a variety of foods sold through
retail food stores such as supermarkets and supercenters. Foods
with different levels of processing are included-minimally
processed products like whole milk typically have a higher farm
share than do foods such as Cheddar cheese that require more
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ERS also groups individual foods into market baskets. These
baskets contain a collection of foods that represent what an
American household may buy at retail in one year's time. The costs
of the market baskets at retail are then compared with the prices
received by farmers for a corresponding basket of agricultural
commodities. Grouping foods into baskets yields not only data on
particular foods such as whole milk but also a composite estimate
of the value added to farm milk by the food marketing system for
all dairy products.
ERS calculates market basket statistics for fresh fruit, fresh
vegetables, and dairy products.
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Farm share changes from year-to-year partially reflect
volatility in farm prices. For example, if the farm value of a
gallon of whole milk were $2 and the retail price were $4, then the
farm share would be 50 percent. If the farm value subsequently fell
by 50 cents (a 25-percent decline) and if all of the decline were
passed through as a retail price decline, then the new retail price
would be $3.50 (a 12.5-percent decline). The new farm share would
be 43 percent ($1.50 divided by $3.50).
Farm-to-consumer price spreads also may increase or decrease
over time with changes in the mix and prices of services required
to transform raw agricultural commodities into consumer food
products. Long-run trends therefore reflect a variety of
underlying economic conditions, including changes in the technology
used to process and distribute food as well as changes in the price
of inputs, such as labor and energy.