Farm Gate Price

In February 2011, the Punjab and Haryana had asked the government to declare a minimum farmgate price for the Pusa 1121
variety of basmati in order to protect farmers from price fluctuations. This was for the first time that such a demand was made for basmati.

The basic question is what farm gate price is and how it would be different from Wholesale price, Maximum Retail Price or Minimum Support Price?

Farmgate Price received by a farmer for an agricultural commodity produced by him has been defined as the average (notional or actual) price measured at his farm gate at which he disposes of the commodity.

So, farmgate price is the net price of the product when it leaves the farm, after marketing costs have been subtracted. Since many farms do not have significant marketing costs, it is often understood as the price of the product at which it is sold by the farm (the farm gate price). Please note that the farm gate value is typically lower than the maximum retail price consumers pay in a store as it does not include costs for shipping, handling, storage, marketing, and profit margins of the involved companies.

If sales do not take place at the farm-gate, the notional price is estimated by subtracting from the wholesale or retail price, as the case may be, those costs included in that price such as the transportation expenses, marketing charges and taxes, etc., paid by the farmer for activities which take place after the product has left the farm-gate.

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