Value-added agriculture involves processing raw agricultural commodities to enhance their value. This can be accomplished by changing the physical form of products, differentiating products, bundling products together, or owning assets along the supply chain. Examples include milling wheat into flour, making jam from strawberries, or branding and marketing beef under a specific label. The global market for value-added agricultural products is growing as consumers have increasing demands around health, nutrition and convenience.

1. Value-added
Agriculture
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2. 04/26/14 ITFT COLLEGE 2

3. What is –
Value-Added Agriculture?
• Adding Value – Process of changing or
transforming a product from its original state to a
more valuable state
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Add value to wheat
By processing it
into a product
(flour)
Desired by
customers –
(bread bakers)

4. BUT – Raw Commodities already
have value?!
• Many raw commodities have value in their original state.
• They are raised by an agricultural producer; then sold by that
producer for further processing
• Corn, wheat, weaned calves, market lambs, watermelons
etc. all HAVE value. They are worth something.
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5. $$Money, Money, Money$$
Could producers get MORE $$$ for their
products if they –
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•Grew products differently
•Physically changed their
products before selling them
•Coordinated with an
agribusiness to change the
way their product was
www.acclaimimages.com

6. Adding Value in a Changing
Agricultural World
• It’s important to identify value-added activities that support
investment in research, processing & marketing
• Additional opportunities for adding value include:
• Applying biotechnology
• Food engineering (raw product to consumable forms)
• Restructuring food distribution systems.
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7. • Take out a blank piece of
paper
• Everyone write ONE ‘why’
question that relates to the
information we just copied
into our notes.
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http://www.beaverandsteve.com/wiki/index.php?
title=Sir_Isaac_Newton

8. • Adding value to products can be accomplished in a number
of different ways, but generally falls into one of two main
types:
• Creating Value
• Innovation
• Industrial Innovation
• Capturing Value
• Coordination
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9. • Creating Value – occurs with actual or perceived value to a
customer for a superior product or service
• Innovative new products
• Enhance a product’s characteristics
• Enhance services
• Create brand names
• Develop unique customer experiences
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10. • Creating Value through - Innovation: Improving existing
processes, procedures, products and services or creating
new ones
• Market unique or branded products
• Produce identity-preserved or specialty crops
• Combine family activities or recreation associated with direct
on-farm marketing
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11. • Creating Value through - Industrial Innovation: Processing
traditional crops into nonfood end uses
• Ethanol from corn
• Biodiesel from soybeans
• Particleboard from straw
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12. • Capturing Value: Changing the distribution of value in the
food/fiber production chain.
• Meant to ‘capture’ more of the consumer dollar through:
• Direct Marketing
• Vertical Integration
• Cooperative Efforts
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13. • Direct Marketing
• Selling products directly to the
consumer
• Selling beef animals ‘on the hoof’
• Selling homemade soaps &
lotions to the general public
• Think – eBay!
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14. • Vertical Integration – One producer or business owns the
product from beginning to end. This producer or business
doesn’t sell the product until the consumer purchases it:
• Tyson Chicken -
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15. • Cooperative Efforts: Individuals or companies
pool their products in order to increase bargaining
power.
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16. • Minimizing Costs:
• Before producers can explore value-added processing and
marketing they MUST minimize production costs
• Only low cost and efficient producers will survive
• Adding value cannot take the place of good management
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17. 4 Key Strategies for Adding Value
• Changing physical state of products
• Differentiating products
• Bundling products
• Owning assets up the supply chain
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18. • Changing the
physical state /
form of products
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• Milling wheat into
flour
• Making
strawberries into
jam
• ‘Feeding’ alfalfa
into a biomass
generator

19. • Differentiating
agricultural products in
order to enhance their
value
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• Selling beef under
a branded beef
label
• Marketing ‘heat &
eat’ pot roasts
• Selling pre-
seasoned corn on
the cob

20. • Agriculture is moving towards a global economy
• The international market for value-added products is
growing
• Consumers have increasing health, nutrition, and
convenience needs
• Food processors want to improve productivity
• Technology enables producers to produce what consumers
WANT!
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