Developments in Marketing Spreads for Agricultural Products

Reflecting strong inflationary forces in the economy, charges for processing and distributing food products rose an extraordinary amount in 1974 and accounted for most of the rise in retail food prices. These food marketing charges, as measured by the spread between the retail cost and farm value of a market basket of farm foods, rose 20 percent in 1974, three times greater than any previous annual rise. Returns to farmers for commodities equivalent to market basket foods averaged 6 percent higher than in 1973. The retail cost of the market basket rose 14 percent. Estimates of cost and profit components of margins for 22 foods reveal that labor and packaging account for the largest share of the processing and retailing margins for most products