Middleman margins: who profits from your food?

Between the farm and your table, the price of food can more than double. It is rarely abuse: it is what a long chain costs. Understanding how that price is formed helps producers and neighbors make better decisions.

The typical chain

A farm product usually travels this path:

1. The farm, where it is produced.
2. The collector, who buys from several farms and builds volume.
3. The wholesaler, for example at CENADA, the wholesale supply center in Heredia.
4. The retailer: the greengrocer, the corner store or the supermarket.
5. You, the buyer.

What each link pays for

Each step has real costs:

• Transport, from the farm to the city and from there to each store.
• Spoilage: what gets bruised, overripens or doesn't sell.
• Storage and refrigeration, so the product lasts.
• Credit, when goods are bought today and paid for weeks later.
• Risk, because prices go up and down from one week to the next.
• Staff, rent and taxes, like any business.

That is why each link needs a margin to keep going.

The gap between the farm price and the shelf price

Public figures show that the gap can be large:

• In November 2020, Costa Rica's Ministry of Economy, Industry and Commerce (MEIC) analyzed how potato and onion prices are formed. According to that study, margins along the potato chain add up to 151.7% on average.
• In the last week of May 2023, producers were paid ₡956 per kilo of potatoes, while supermarkets charged up to ₡2,500: a 161% difference. With data from the National Production Council (CNP), the difference from the producer price was 11.6% at CENADA and 47.9% at farmers' markets.

These figures are from 2020 and 2023, and prices change every week. The pattern holds: the more steps there are, the further what the producer receives drifts from what the buyer pays.

An example to understand it

Imagine a kilo of a product for which the producer receives ₡1,000:

The final price is more than double what the producer received, and none of the steps did anything wrong.

Illustrative example: the amounts are not data from any real product or from BarrioMercados.

When a middleman adds value and when it only adds cost

A middleman adds value when they gather the harvest of many small farms, carry it far, keep it cold, give the producer credit or take on the risk of the price falling.

They only add cost when the product is bought and resold without changing place, form or timing, when steps are repeated, or when nobody can see the price and there is nothing to compare it with.

How the chain gets shorter

• Farmers' markets. Law 8533 regulates the ferias del agricultor, where producers sell directly to the public.
• Buying from producers you know, by order or at the farm.
• Pooled demand by area. When a neighborhood pools its orders, a producer can deliver many of them in a single trip.
• Middlemen with fair prices. Distributors who already have a route and know their suppliers are part of the solution when their prices are clear.

At BarrioMercados we work with that idea: we pool each area's demand and bring it to nearby producers in one step. We explain it in how BarrioMercados works.

If you produce or distribute in the area and want to supply our offers, tell us what you do.

Sources

• Gustavo Ortega Campos, “Precio de la papa se cocina en cadena de intermediarios con márgenes superiores al 100%”, La Nación, June 4, 2023 (in Spanish). It cites MEIC's study Análisis de la formación de precios en productos agrícolas: el caso de la papa y cebolla (November 2020) and CNP data from May 2023. Accessed October 31, 2026.
• Ley 8533, Regulación de las Ferias del Agricultor (in Spanish). Accessed October 31, 2026.