Adding marketability means more returns come sale time
The term “value-added agriculture” has been popular in the industry lately. It can be applied to most agricultural commodities, such as produce, crops, livestock, meats, fiber and dairy products.
It sounds like a good way to increase profits, but to utilize the concept well, understanding what value-added agriculture is and how to incorporate it into a business plan is key.
According to the USDA, Rural Business Development, value-added agriculture is defined as:
• A change in the physical state or form of the product (such as milling wheat into flour or making strawberries into jam).
• The production of a product in a manner that enhances its value, as demonstrated through a business plan (such as organically produced products).
• The physical segregation of an agricultural commodity or product in a manner that results in the enhancement of the value of that commodity or product (such as an identity preserved marketing system).
As a result of the change in physical state or the manner in which the agricultural commodity or product is produced and segregated, the customer base for the commodity or product is expanded and a greater portion of revenue derived from the marketing, processing or physical segregation is made available to the producer of the commodity or product.’
If a producer is interested in creating a value-added product, they need to understand how such a product fits into their business plan.
According to the Agricultural Marketing Resource Center, the bottom line is that producers get paid for providing value. If your business venture does not provide value to the system, there is no reason to expect a return. So, the process of creating a successful business involves the search for providing value. Providing value can be in the form of marketing a unique product, filling a market niche, simplifying the supply chain, providing a service, lowering costs, and many other ways. The more value you provide, the more return you can extract from the marketplace.
Funding is available for producers who are pursuing adding value to their commodities and products. The Missouri Department of Agriculture offers a Missouri Value-Added Agriculture Grant Program. Applications will be considered for value-added agricultural business concepts that lead to and result in development, processing, and marketing of new or expanded uses or technologies for agricultural products and foster agricultural economic development in Missouri’s rural communities. The Oklahoma Agriculture Enhancement and Diversification Program provides funds in the form no-interest loans or grants for the purpose of expanding the state’s value-added processing sector and to encourage farm diversification.
On the federal side, the USDA Rural Development offers farmers the opportunity to apply for a Value-Added Producer Grant, which helps agricultural producers enter into value-added activities related to the processing and marketing of new products.
The goals of this program, according to the USDA, is to generate new products, create and expand marketing opportunities and increase producer income.
