The Marketing margin is defined as a farm-retail price spread. A high marketing margin of agricultural products in Korea has been regarded as a serious problem by farmers, consumers, government, and the press. There has long been a allegation that the high marketing margin is due to excess profits made by wholesalers` market power. However, marketing is a process to transfer ownership, physical and economical risk involved throughout the marketing channel. For this, it is possible that a marketing margin includes not only wholesaler`s excess profit, but also risk premium that farmers are willing to pay to wholesalers to transfer their price risk. The objective of this study is to examine if risk premium exists in the marketing margin. The results show that neither price risk nor excess profit variable are statistically significant to explain the wholesalers` profit. This can be interpreted such that there is no excess profit sought by wholesalers. At the same time the results indicate risk is not paid. However, these may result from the inconsistent data. It seems safer to hold the results until we have more appropriate data for the analysis.
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