Farm Gate Price vs. Market Index
Ratio of the price received by the producer to the benchmark market price for the commodity
What is Farm Gate Price vs. Market Index?
Farm gate price versus market index compares the price a farmer actually receives with a benchmark market price. It shows how well producers are doing compared with the wider market.
Being below the benchmark can point to weak bargaining power, poor quality or timing, while being above it suggests good marketing.
How this KPI is measured
- Function
- Finance
- Sub-function
- Revenue Management
- Industry
- Agriculture & Food
- Type
- Lagging
- Impact
- Revenue
- Unit
- %
- Measurement frequency
- Monthly / Per season
- Formula
- (Actual farm gate price / Benchmark market price) × 100
How to calculate it
Divide the actual farm gate price by the benchmark market price, and multiply by 100.
For example, if a farmer received 210 per tonne and the benchmark price was 200, the result is 105%.
Choose a relevant benchmark for the product, grade and time, and compare over a season rather than a single sale.
Where it is used
Judging marketing performance
Compare with the market.
Improving sales decisions
Time and choose buyers.
Negotiating
Use data with buyers.
How to improve it
Tips and common mistakes
- Quality and specification affect the price you can compare.
- Compare over a full season.
- Consider storage cost when timing sales.
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