Figure 16 shows the average price difference between farm‐gate and wholesale markets by state and for all products, which are wheat, tur arhar, moong, gram, and masur, within each state. The distribution of these price differences for each state is shown by the bands around each bar, representing the 25<sup>th</sup> and 75<sup>th</sup> percentile of the distribution. The average farm‐gate to wholesale market price difference for most states is around 20 percent; however, the distribution of the differences varies by state. Maharashtra, Rajasthan and Andhra Pradesh exhibit smaller distributions in price differences, while Gujarat and Uttar Pradesh have larger variations in price differences.<sup>13</sup> These results reveal the different nature of interactions and market institutions between farmers and wholesalers in each state. Interestingly, the wide variation in the distribution of price differences across states does not seem to be correlated with the average state price difference. In other words, there is no clear correlation between having a large distribution of price differences and a higher average state price difference.

Figure 16: Average price difference between farm‐gate and wholesale markets <!-- Start of picture text --> 2.00<br>1.60<br>1.20<br>0.80<br>0.40<br>0.00<br>‐0.40<br>Punjab Haryana Gujarat Uttar Pradesh Maharashtra Rajasthan Jharkhand Madhya Pradesh Tamil Nadu Andhra Pradesh Karnataka West Bengal<br><!-- End of picture text --> Note: The band around each bar represents the distribution of price differences. Each band represents the 25th and 75th percentile of the distribution of price differences for each state Source: Author’s calculations Analogously, there are substantial variations in the average price difference by product across India (see Appendix to this section, Figure 29). For example, price differences exceed 80 percent for masur while differences are below 10 percent for tur arhar. Furthermore, price differences within product also vary. For example, price differences in Uttar Pradesh for masur are 35 percent while in West Bengal they are 131 percent. (See Appendix to this section, Table 18.) There are three salient features of price differences between wholesale and retail markets. First, the distribution of price differences between wholesale and retail is different from farm‐gate to wholesale **.** Figure 17 shows the average price difference between wholesale and retail markets by state and for all products, which are rice, masur, wheat, moong, gram, onion, potato, and tur arhar, within each state. Two patterns emerge when comparing price differences between wholesale to retail markets and farm‐gate to wholesale markets. First, the distribution of the average price differences by state across products between wholesale and retail markets seems to show a continuum of values, rather than a bi‐modal distribution. Second, unlike farm‐gate‐to‐wholesale, the distribution of price differences wholesale‐to‐retail differences appears to be associated with the average price difference by state, across all products considered, suggesting state‐specific factors play a role in the price gaps between the wholesale and retail stage of the value chain.

> 13 Nyman (2017) reports, for the case of onions in Maharashtra, that retailers and wholesalers have similar price‐cost margins, at around 12 percent over wholesale price and 10 percent over farm‐gate prices respectively, according to a static analysis of margins along the value chain.

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