As farmers endeavour to find ways to increase farm income, interest in "adding value" to farm products has grown. Some believe that local value-added agricultural food production where farmers assume more processing steps and sell through direct marketing techniques is a critical strategy to sustain smaller farm operations and their communities. Adding value offers farmers the potential to recapture a larger share of the food dollar.
To take advantage of value-added agricultural potential, farmers and agri-entrepreneurs must be aware of opportunities, as well as informed about the feasibility, planning and market development associated with a value-added business. There is a delicate balance between what it costs to add value to an agricultural commodity ad what price the market will bear for the product. A venture will only be profitable if the price received is greater than the total cost of production, packaging, transportation, and marketing.
Keys to a Successful Value-Added Venture:
(by Keith Richards and Debra Wechsler, Appropriate Technology Transfer for Rural Areas)
1. Choose something you love to do. It's hard work under the best of circumstances. If you are doing it just for the money, it's unlikely the energy, creativity, and satisfaction necessary for success will be present.
2. Create a high quality product. Quality is the single most important element that will differentiate your product from mass-produced alternatives. More and more consumers want fresher, better tasting, healthier products than those available from large retailers.
3. Start small and grow naturally. Invest your ingenuity first, labor second and money third. If you start small, the effort you put in and the income you generate are more likely to be matched. Let the market demand dictate your growth.
4. Make decisions based on good records. Base business decisions on what is, not on what you hope or guess the situation to be. Even if everything else is right, poor financial management and decision-making can still kill your business.
5. Follow demand-driven production. Produce what your customers want. Get to know your customers. Keep adjusting your products according to their tastes and purchases.
6. Establish a loyal customer base, preferably local. In addition to high quality and meeting customer demand, focus on your niche. Personal contact, exceeding expectations, providing steady supply, and community involvement will help secure a strong base of repeat customers.
7. Provide more than just food or a product. People are hungry for a connection to the rhythms of the earth and for a sense of community. Provide your customers with an experience of the satisfactions and spiritual rewards of your farm life. Provide them with some fun, peace, and relaxation.
8. Get the whole family or partners involved. Value-added processing takes additional energy and skills. When several family members are involved, each person can contribute his or her unique talents and specialize for efficiency.
9. Keep informed. It is important to keep informed about your customers, your competition, the laws concerning your business, and other producers like yourself.
10. Plan for the future. To be successful, you have to know where you are headed. Each path requires different courses of action. Set goals for your business and a plan of action to achieve them.
A key point to remember is that adding value by processing food products increases safety risks. Therefore, rules and regulations are established to protect the public health. The Ontario Ministry of Agriculture and Food (OMAF) has published a resource binder "Food Processor's Reference Manual", intended to provide food processors with a basic understanding of applicable rules, business responsibilities, and marketing options. The binder can be purchased by contacting OMAF @ 1-888-466-2372.
For more information on developing or expanding your business contact OMAF's Regional Economic Development Team in Belleville at 613-962-6181.