New Study Estimates Farmers' Share of Consumer Food Spending

A long-standing complaint among Indian farmers is that they receive only a small slice of what consumers pay for food, with most of the value captured by middlemen, processors, and retailers. Until recently, this claim was rarely measured systematically for India; it was usually inferred from anecdotal mandi-to-retail price gaps for individual commodities like onions or tomatoes. Agricultural markets in India have historically been structured around the Agricultural Produce Market Committee (APMC) Act, enacted by state governments, which channels most farm produce through regulated mandis before it reaches processors, wholesalers, and retailers. Every additional layer this produce passes through, transport, storage, processing, wholesale trade, and retail, absorbs part of the final consumer price, which is one structural reason why a farmer's share of the food rupee tends to shrink as supply chains lengthen.

To measure this systematically, researchers have adapted the 'Food Dollar series' method, originally developed by the US Department of Agriculture, to India using supply-use tables, the national accounts framework that maps transactions between different sectors of the economy such as agriculture, food processing, trade, and transport. This lets economists trace, for a given year, exactly how much of a rupee spent on food ultimately flows back to the farm sector versus how much is retained by non-farm links in the chain. Applying this to India for the period 2011-12 to 2023-24 gives the first rupee-level estimates of farm share for both food eaten at home and food eaten away from home.