Producer price

Producer price is the amount a farmer, mine, or well operator receives for a commodity before it is processed, transported, or marked up by intermediaries.

Producer price is what the farmer, mine, or well operator actually receives for a commodity, before it passes through the further stages of transport, processing, and marketing that separate a farm gate or mine mouth from an export terminal or a retail shelf. It is usually well below the price quoted on an exchange or reported for a country’s exports.

The gap between producer price and a market benchmark reflects transport cost, processing margins, and the basis or differential between the local grade and location and the reference point the benchmark represents. Tracking producer prices matters for understanding how much of a commodity boom actually reaches the people producing it, as opposed to being captured by intermediaries, processors, or the state through taxes and royalties.