The purpose of this Series is to create a picture of the competitiveness and profitability of the entire agri-food value chain to support a more informal discussion on changes in the agri-food value chain, and the challenges and opportunities it faces in the future. [...] Thus, there is no defined point at which the level of profitability is too high and therefore the result of market power.6 The objective of this paper is to provide a baseline of the profitability in the food retailing sector, which could then be used to gain a better understanding of the sector and to provide a guide to interpreting changes in profitability due to changes in market structure. [...] Performance in the Food Retailing Sector of the Agri-Food Chain C H A P T E R. 4 M E T H O D O L O G YThis paper uses the operating rate of return on long-term capital to compare the performance of the food retailing sector with the non-food retailing sector and the general economy. [...] By calculating the operating rate of return as the sum of the operating income of all firms divided by the sum of the long-term capital, the rate of return obtained is a more accurate representation of the rate of return on the broad base of assets of the industry or class size. [...] However, without knowing the share of the profit from the wholesaling divisions, one cannot determine the size or the direc- tion of the bias.