Value Adding

​Value Adding

By Hannah St Ledger

What is Value Adding

Value-adding in agriculture means changing a raw product into a new product or improving it in a way that increases its market value. It can involve processing, packaging, branding, or creating new uses for agricultural goods.

 

Example: Turning milk into cheese or yogurt is value-adding. Another example is packaging tomatoes into a branded pasta sauce.

Types of Value-Adding

​There are several types of value-adding in agriculture:

​1. Processing Changing a raw product into another form (Wheat to flour, fruit to jam, cattle to packaged meat cuts)


2. Packaging and Branding Packaging products attractively and using marketing to tell a story about the product (Organic eggs in biodegradable cartons, locally branded honey with a regional story)

Types of Value-Adding

3. Differentiation

Creating a unique version of a product to appeal to a specific audience (Gluten-free baked goods, grass-fed beef, hand-made goat’s milk soap)

 

4. Vertical Integration

When farmers control more stages of production (Owning a processing facility or selling direct to consumers, a berry farm that also makes and sells berry smoothies on-site)

Why would we value-add

Benefits of value-adding

·       Higher profits per unit

·       Control over product quality and branding

·       Less reliance on bulk commodity markets

·       Less reliance on bulk commodity markets

·       More jobs opportunities in rural areas

Multiple Choice

A farmer can grow either wheat or canola. Wheat earns $500/ha with costs of $250/ha. Canola earns $700/ha with costs of $400/ha. Which option gives the farmer the highest profit per hectare?

• Wheat

• Canola

• Both are the same

Multiple Choice

If the demand for beef rises while supply remains the same, what is the most likely effect on beef prices?

• Prices fall

• Prices stay the same

• Prices rise