4 min readSep 23, 2026 07:04 AM IST
First published on: Sep 23, 2026 at 06:20 AM IST
A widespread concern for farmers in India is that they get only a fraction of the rupee that a consumer spends on food. But so far there has been virtually no systematic effort to measure the share of a rupee a consumer spends on all food that accrues to the farmer. Using the supply-use tables that map linkages and transactions between the different sectors in the economy, we use a technique called the “Food Dollar series” to trace how much of a rupee spent on food by consumers goes to the farm for the period 2011-12 to 2023-24. We estimate this for both food consumed at home and away from home.
When a consumer spends a rupee on food at home, as much as 57.8 per cent accrued to the farm in 2023-24 and just 8.4 per cent of food expenditures away from home. Three issues are worth highlighting. First, this difference between the farm share for food consumed at and away from home is expected. Food consumed away from home passes through longer chains, with restaurant preparation, service and associated trade absorbing value that would otherwise reach the farm. Second, the farm share for India is markedly higher than comparable estimates for most countries. Estimates for 61 countries over 2005-15 suggest that farms receive about 27 per cent of at-home food expenditure. Farm share of the amount spent on food away from home, too, is higher for India; for the United States of America, for example, it is just 4 per cent. Third, our estimates suggest that while farm share for food at-home expenditure has been increasing in recent years (from 51.8 per cent in 2011-12), that on food away from home has been declining, from about 10 per cent in the 2010s.
Indian food habits are changing rapidly; yet household food purchases continue to be dominated by unprocessed or minimally processed, perishable, high-value items. The share of households consuming any PPF rose from 82.2 per cent to 96.6 per cent between 2011-12 and 2022-23, but over the period, as a share of total monthly consumption expenditure, PPF expenditures barely rose. Further, the processing industry is still dominated by low-margin milling, mostly unorganised and low in value addition. This implies that off-farm shares remain low. Eating out in India is growing, too, but accounts for an estimated 13 per cent of total food consumption, much lower than in the US and China. We can expect the farm share overall to decline as some of these trends become more prominent.
A low farm share in the consumer spending on food is often cited as evidence that Indian food supply chains are inefficient or unfair to the farmers; just as a high farm share is celebrated. However, farm share estimates deserve cautious interpretation. First, as food travels longer distances, passes through more hands or transforms more, the farm share is reduced. Sometimes long and complex value chains may reflect in a lower farm share but may also leave the farmer with higher net returns. For example, farmers earn just 3-5 per cent of the retail price for gherkins but make higher returns than for, say, tomatoes, for which they may get a higher share of the retail price. Second, even with a high share, farmers may not be making profits. Cooperative dairy farmers such as Amul have historically received more than 60 per cent of the retail price, but the increasing costs of inputs such as feed may nevertheless leave them with lower incomes if these costs are not passed on in the form of higher prices.
That said, a low farm share underscores the need to ensure that farmers can capture a higher share of the value added by post-harvest activities — via farmer ownership of downstream food, beverages and logistics enterprises and by expanding farmer participation in post-harvest activities. These mid- and downstream sectors are where future jobs and better-paying jobs are likely to emerge.
Narayanan and Pal are with IFPRI, India, and Gautam is with Michigan State University, East Lansing. Views are personal
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