The established system of marketing potatoes in Sydney differs in many aspects from the methods of distributing other vegetables and fruit. An elaborate marketing system has grown up, comprising, in addition to the retail level, primary and secondary wholesale levels. This system is complemented by wholesalers in other States, so that, unlike the typical means of distributing other vegetables, where usually only one wholesaler (commission agent) is employed, in this case at least two, often three and sometimes even more wholesale levels are involved. In the first part of this article a demand relationship for potatoes is established with rather surprisingly high correlation coefficients on the wholesale levels. As could be expected, the elasticity of the curve increases as the potatoes move towards the consumer. From the calculated data, it would appear that when farmers increase the production of potatoes by 10 per cent the primary wholesale price declines by some 24 per cent. Provided that margins remain the same, this means that their gross income declines by roughly 16 per cent.