Question

Question 2:

Calculating marketing margins.

Say that the buying price for a product from a farmer is K 20.00.

The weighted average wholesale selling price is K 28.00.

The weighted average retail price to the consumer is K 33.00.

Calculate:

1. The share of the margin for the producer.

2. The wholesale margin.

3. The retail margin.

4. The total margin.

Answer 1

Answer :

1. Share of margin for the producer = buying price for a product from a farmer

= K 20.00

2. Wholesale margin = weighted average wholesale selling price -  buying price for the product from farmer

= K 28.00 - 20.00

= K 8.00

3. Retail Margin = weighted average wholesale selling price - weighted average retail price to the consumer

= K 33.00 - K 28.00

= K 5.00

4. Total Margin = Wholesale margin + Retail Margin

= K 8.00 + K 5.00

= K 13.00

The marketing margin, characterized as some function of the difference between retail and farm price of a given farm product, is intended to measure the cost of providing marketing services. The margin is influenced primarily by shifts in retail demand, farm supply, and marketing input prices