Food processors, manufacturers, wholesalers, and retailers transform raw agricultural commodities into convenient food products for U.S. consumers. Value added to commodities through these companies’ marketing services and money paid to farmers for their commodities account for a substantial portion of retail food prices.
The farm share of the retail price of fresh potatoes—the ratio of what farmers receive to what consumers pay per pound in grocery stores—has fluctuated between 15 percent and 18 percent in recent years. The national monthly average price of fresh potatoes was $0.78 per pound at grocery stores in 2021, and the monthly average price received by farmers was $0.12 per pound. As part of the farm share calculation, the USDA, Economic Research Service (ERS) assumes that farmers supply a little more than 1.04 pounds of fresh potatoes for each pound sold at retail to account for the roughly 4 percent of fresh potatoes that is lost through spoilage or damage.
Therefore, at an average farm price of $0.12 per pound, the farm receipt was 12.5 cents for each pound of potatoes sold in 2021, about 16 percent of the retail price.
ERS researchers recently hosted a data training webinar on farm-to-retail price spreads and farm share statistics. More information on ERS’s farm share data can be found in the Price Spreads from Farm to Consumer data product, updated June 28, 2022.