BMK 201 Chapter Notes - Chapter 1: Cobweb Model, Tunxis Community College, Consumer Spending
6 Jan 2021
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Document Summary
Some argue that farm prices are determined at the farm level. Prices are set first based on production costs, and then marketing costs are added to arrive at retail prices. This is reinforced if and when the retail prices casually follow farm prices. Others may believe that farm commodity buyers (processors, wholesalers and retailers) set" the food product prices, and then farm prices are determined accordingly. This idea is emphasised by the fact prices are more easily discovered at points of product concentration closer to consumers in the marketing system. The difference between what the consumer pays and what the farmer receives. In a way it is the price of all utilities added by food marketing firms. A small margin denotes greater marketing efficiency. A large margin reflects too many middlemen. A large margin causes low farm prices. Marketing margin denotes profits to be gained by farmers and consumers if middlemen are eliminated.
