Developments in Marketing Spreads for Food Products in 1977

Overall food prices rose 6.3 percent in 1977 over 1976. Grocery store prices climbed 6.0 percent while away-from-home eating prices rose 7.6 percent. Fish and imported foods, particularly coffee, accounted for two-thirds of the 6-per cent increase In grocery store prices. Higher processing and distribution costs accounted for most of the other third. The price rise for domestically produced farm foods was much lower. The retail cost of a market basket of farm foods averaged 2.2 percent higher than in 1976. Nearly all of the increase was accounted for by an increase of 3.3 percent in the farm-retail price spread representing charges for processing and distribution. However, the spread rose much less than prices of marketing inputs, such as labor and food containers, probably due to gains in productivity, greater increases in margins on other products to offset rising costs, and a decline in profit rates of food manufacturers. Returns to farmers for food products averaged about 0.4 percent higher than in 1977, mainly due to higher returns for fresh fruits and vegetables. Farmers received an average of 38.8 cents of each dollar spent by consumers for farm foods in 1977--fractionally lower than in 1976, and 3 cents less than in 1975.