1. Introduction

1. Prices are an important economic variable in a market economy. From the economic analysis point of view prices are the means of aggregation for providing an overview of the performance taking various products with large number of variation in their quality. Basic price data enter into the calculation of price index numbers, index number of agricultural production at country level and the calculation of international dollar prices to compare production across countries. Prices of agricultural products and by-products have a significant influence on formulation of production plans and policy decisions relating to taxes levied on agricultural income and subsidies provided to farmers on agricultural inputs. In many countries type and volume of agricultural production activity very much depend on the current market prices of various products. The relative changes in prices received by the farmers for the produce and paid by them for meeting input requirements and consumer demands influence his economic activities.

2. Price data for agricultural products and by-products in a country may be available in the form of retail prices, wholesale prices, farm-gate prices (or producer prices). Some countries also compile data on export/import prices. For making various policy measures for welfare of farmers some of the countries also have a system of declaring procurement prices and support prices. Countries may also adopt a dual price system for basic agricultural commodities by maintaining controlled prices for a group of consumers to affect their levels of living.

3. Whilst the purpose of agricultural price indices is to reveal trends in the prices of individual agricultural products or groups of products, the purpose of statistics of absolute agricultural prices is a dual one, for comparisons across countries or for converting a set of quantity data (measured in different weight-measures) to support economic analysis. These objectives are not necessarily compatible and some compromise may be necessary in any situation. To carry out economic analyses the economic relevance is also important along with the comparability aspect.

4. This paper brings together basic concepts and definitions of price statistics, adoption of these concepts for national/economic accounts and economic analysis and final uses of price related indicators. The purpose of the paper is to improve the collection of price data and make the conceptual framework more transparent.