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Price Spreads and Industry Margins Not the Same

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  • Economic Research Service

Abstract

Excerpts from the report: Farm-to-retail price spreads for meat and other food products have widened sharply in recent times, particularly in 1974. But, while meat spreads widened, some retailers and meatpackers say their gross margins for meat either shrank or didn't increase as much as price spreads. A contradiction? Not necessarily. Price spreads, gross margins, and net profit margins measure different aspects and components of the spread between what farmers receive and consumers pay. Though some people use these terms interchangeably, there are important differences among them. USDA estimates the farm-retail price spreads and related marketing costs for foods originating on U.S. farms. Price spreads measure differences between price levels at subsequent stages in the marketing channel. They also give insight into the distribution of the food dollar and how retail prices respond to changes in farm prices and consumer demand.

Suggested Citation

  • Economic Research Service, 1975. "Price Spreads and Industry Margins Not the Same," Miscellaneous Publications 329315, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersmp:329315
    DOI: 10.22004/ag.econ.329315
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