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UNDERSTANDING MARKETING COSTS
Drs. Irsan Yanuar, MBA


An understanding of costs and margins is essential for all those involved with agricultural marketing. Farmers seeking to produce new crops need to be aware not only of their likely production costs but also of the costs of marketing these crops. Wholesale and retail traders must, of course, be fully aware of their costs if they are to trade profitably. Finally, government officials need to have a full understanding of marketing costs and margins and need to be able to monitor these on a regular basis if they are to propose viable improvements, such as new markets.

The intention of this course is to explain basic concepts of agricultural marketing costs and marketing margins. It identifies the main types of marketing costs, provides brief advice on how to calculate them and discusses the interpretation of marketing margins.

In part, the aim of this course is to correct some of the widely held misunderstandings over marketing costs. Traders’ margins are often looked upon as being excessive; frequently this is because the observer lacks a full appreciation of all the costs involved.