Add value to farm produce and
double your profit
Farmers who add value to farm produce usually make a bigger profit from the value adding operation than they do from growing the produce. This is how they double their profit.
Adding value involves increasing the worth of the produce to your consumer.
But what your consumer considers valuable may be quite different from what you consider valuable.
For example, a bunch of tomatoes with the stems attached is considered to be worth more by most city consumers. It "must" have been ripened on the vine.
The green stems indicate this to the consumer, even if the tomato is no more ripe than a tomato that doesn't have a green stem and costs less in the next bin.
The presence of the green material degrades the eating and keeping quality of the tomato.
However, it doesn't degrade the price. "Vine-ripened" tomatoes with the stems attached as proof generally sell for at least ten percent extra and sometimes as much as one hundred percent (double the price) in my region.
The more benefits the customer perceives in your product, the more the value increases. The value is determined by the price the customer pays for the product or service and the benefits they receive in return.
You don't need to double the price to double your profit. A big chunk of your selling price is made up of costs -- the cost of growing the produce and the cost of getting it to the wholesaler.
Doubling your profit often only requires a price increase of around one tenth. So by making a change that leads to a ten percent increase in price, you can add value to produce and double your farm profit
If most farmers knew the full cost of their produce, they might charge more to make sure that they covered all the unseen costs. Farmers who sell their produce for less than it costs to grow it are subsidizing the customer. And even if the customer pays all the visible costs, there are still the costs of preventing and repairing acidity, salinity, erosion, nutrient decline and so on.
Many farmers and consumers don't appreciate that there will be no sustainable agriculture until there is a marketing system that factors in sustainability.
One one simple step towards a more sustainable way to farm is to add value and thus retain or keep that value on the farm. The more value you retain, the more income you get. If this increase in income returns you more than it costs you, you have increased your profit.
It is worth adding value because
- by processing you can extend your selling season rather than having to sell perishable goods before they deteriorate
- by processing you can extend shelf life and that makes it more appealing to the consumer
- processed goods lead to greater flexibility in marketing and storing - you can decide how long you want to store them and this makes any day a good day to sell them
- by adding value you make the product more appealing to the consumer And as a result it is potentially more profitable
- adding value gives you more chance to set your price instead of being given it on a "take it or leave it" basis. This is particularly so where you have a shorter marketing chain and a direct connection with your consumer
- and finally, a lot of farm produce has very little value unless you add value.
Add value to farm produce and double your profit
- Decide whether adding value might be worthwhile for you
- Work out how you can add value to many types of agricultural produce
- Develop ways that you can add value to farm produce without needing to change the form of your produce - that is without processing it
- Get a grip on many of the things that might mean extra value to a customer
- Know where to go next if you decide to add value.
If you are thinking of adding value, are already adding value or are just starting out, you can use this overview and introduction to value adding as a starting point. It links you to a range of information including:
- WHY adding value to farm produce might be worthwhile for you
- WHAT is involved in adding value
- WHY adding value may be necessary for you the survival of your farm in the future
- HOW you can add value to farm produce of almost any type
- WHERE to go next for information about adding value.
There are many ways to add value to farm produce. Many of these will lead to at least doubling your profit -surely a worthwhile investment in these tight times.