The document discusses adding value to farm products through approaches like starting a food processing business. It describes the differences between capturing value, such as through producer alliances, and creating value with unique products. Challenges of food businesses include regulations, labeling, liability, and competition. Opportunities exist in niche markets like organic, gluten-free, or ethnic specialty foods.

1. Adding Value to Farm Products:
ATTRA An Overview
A Publication of ATTRA - National Sustainable Agriculture Information Service • 1-800-346-9140 • www.attra.ncat.org
By Holly Born and This publication discusses the concept of adding value to farm products, the differences between creat-
Janet Bachmann ing and capturing value, and the implications for value-added enterprises. It describes some different
NCAT Agriculture approaches to adding value, including starting a food processing business, with a brief look at non-
Specialists food products. Resources to learn more about value-added agriculture and planning a value-added
©2006 NCAT enterprise are included.
Contents
Introduction ..................... 1
Capturing Value and
Creating Value ................ 2
Starting a Food
Business ............................. 3
Farm and Food Business
Profile: Persimmon Hill
Berry Farm ........................ 6
Non-Food Options ........ 7
Keys to Success ............... 9
References ...................... 10
Further Resources ........ 11
Resources for Starting a
Food Business................ 11
Oats, barley, and some products made from them.
Photo by Peggy Greb. Courtesy of USDA/ARS.
Introduction Because of the many regulations involved
A
with food processing, some people may
s farmers struggle to find ways to choose to add value in other ways. On a
increase farm income, interest in “add- larger scale, producer-controlled process-
ing value” to raw agricultural products ing for energy, fiber, and other non-food
has grown tremendously. The value of farm uses are options. On a smaller scale, items
products can be increased in endless ways: such as flower arrangements, garlic braids,
by cleaning and cooling, packaging, process- grapevine wreaths, willow baskets, wheat
ATTRA — National Sustainable
Agriculture Information Service
ing, distributing, cooking, combining, churn- straw weavings, sheep and goat milk soaps,
is managed by the National Cen- ing, culturing, grinding, hulling, extracting, and wool mulch are a few examples. In
ter for Appropriate Technology
(NCAT) and is funded under a drying, smoking, handcrafting, spinning, addition, ideas for providing entertainment,
grant from the United States
weaving, labeling, or packaging. (1) Today, information, and other services associated
Department of Agriculture’s
Rural Business-Cooperative Ser- more than ever, adding value means “selling with direct marketing are abundant.
vice. Visit the NCAT Web site
(www.ncat.org/agri. the sizzle, not the steak.” The “sizzle” comes Besides offering a higher return, value-
html) for more informa-
tion on our sustainable
from information, education, entertainment, added products can open new markets,
agriculture projects. ���� image, and other intangible attributes. create recognition for a farm, expand the

2. market season, and make a positive con- alliances can offer a way to pool resources
tribution to the community. However, and manage risks. In some cases, produc-
adding value is not a panacea for all the ers lose marketing or processing facilities
problems rural America is facing. It is a when corporate agribusinesses close local
long-term approach, not a “quick fix.” It facilities. For example, when Iowa turkey
requires the willingness and ability to take farmers lost an Oscar Mayer processing
on risk, as well as adequate capital, man- plant and feed mill, the producers formed
agement skills, and personal skills—such Iowa Turkey Growers Cooperative and
as the ability to interact with the public— purchased the facility in 1996. (5) The
to succeed. Iowa Turkey Growers Cooperative contin-
ues to produce and market whole and fur-
Capturing Value and ther-processed turkey products year round.
Research from Purdue University (5) shows
Creating Value that producers do stand to benefit from
Brees et al. (2) make the distinction between diversifying into a value-added business
a strategy to capture value and a strategy related to the producer’s product, when the
to create value. This distinction is impor- product is characterized by volatile prices
tant to understand, because each strategy at the farm-gate level but relatively steady
Direct Marketing offers specific opportunities and risks that
Publications from prices at the wholesale or retail level. The
influence the success or failure of the value- turkey industry is such an example, and
ATTRA
added venture. turkey producers benefited from diversify-
Direct Marketing
For producers, capturing value usually ing into processing. In many cases, such as
Farmers’ Markets means capturing some of the value added livestock processing, economies of scale can
Community by processing and marketing. For exam- make it impractical for producer alliances
Supported ple, the producer’s share of the food dollar to own the entire processing plant, if the
Agriculture (CSA) has seen a steady decline since 1900. (3) alliance is not able to support an operation
Selling to In 2005, the average farmer’s share of the large enough to achieve those economies.
Restaurants food dollar was 22 cents, down from about With a captured-value strategy, producers
33 cents in the 1970s. (4) The rest of the may face lower production risks, because
Bringing Local Food
to Local Institutions
food dollar goes to processing, distribution, production processes are well known and
and marketing. More and more, produc- often linked to traditional agricultural pro-
Marketing Strategies ers are attempting to increase their share
for Farmers and duction. Even when producers themselves
of that food dollar by engaging in activi- are not familiar with processing, expertise
Ranchers
ties such as direct marketing to consumers, in those areas can be hired. Captured-
turning farm products into food products, value ventures face an extremely competi-
and joining producer alliances and coop- tive marketing environment, where demand
eratives that invest in facilities to process is high, cost and efficiency considerations
their farm products on a larger scale. are paramount, and high volumes of prod-
Marketing directly to the consumer can ucts must be processed in order to gain effi-
be done on a small or large scale and in ciencies of scale. These ventures are often
a variety of ways. Options for the pro- turning commodities into different commod-
ducer who enjoys direct contact with con- ities and, while value is added, it may not
sumers include selling at farmers’ markets actually be captured by the producer.
and through community supported agricul-
For example, producer-owned coopera-
ture systems. Other options include sales
tives have attempted to enter the wet corn
directly to restaurants and local institutions,
milling industry. However, this industry is
as well as mail order and Internet sales.
extremely concentrated, with the top three
Large scale processing through producer firms having more than 80 percent of the
alliances, such as agricultural co-ops market share for corn sweetener, one of
or limited liability companies, has seen the most important wet milling products,
growing interest among producers. These and similar market shares for the other wet
Page 2 ATTRA Adding Value to Farm Products: An Overview

3. milling products. In this case, one com- two different approaches to adding value to
modity, corn, is being turned into another soybeans—a cooperative venture in a crush-
commodity, corn sweetener, and the pro- ing plant, using a captured-value strategy,
ducer cooperative faces a marketing envi- and producing a new “soy nut” product,
ronment in which it is almost impossible to using a created-value strategy. The crush-
compete successfully. Indeed, two of the ing plant in their example added about $1
most recent producer-owned cooperatives per bushel from the meal and oil produced.
that attempted to enter the wet milling mar- The crushing plant faced narrow profit
ket, American Crystal Sugar’s ProGold facil- margins and stiff competition, common
ity and Minnesota Corn Processors, could challenges for captured-value ventures,
not compete and ended up being acquired where the processing and marketing risks
by the top three firms. (5) For more infor- are relatively low.
mation on getting off the commodity tread-
Producing soy nuts that retailed for $3.95
mill, request Moving Beyond Conventional
Cash Cropping from ATTRA. per 9-ounce package, on the other hand,
added almost $420 of value per bushel.
A created-value strategy, on the other hand, While the markets for soybean meal and
relies on products or services that are oil are very large, the market for soy nuts,
unique or different from the mainstream and thus the total amount of value added, is Food Processing
equivalent. These often include a real or Publications from
very limited. Product and market develop-
ATTRA
perceived quality attribute such as organic ment and compliance with food safety and
certification, a brand image, identification packaging laws all require time and money. Grain Processing:
with a specific geographic region and/or pro- However, for the small-volume producer Adding Value to
ducer, identity preservation, environmental Farm Products
who cannot compete with the large-volume
stewardship, and so on. Creating value can producers on price, targeting niche markets Oilseed Processing
pose higher production risks than capturing with a created-value strategy offers the high- for Small-Scale
value. It usually requires learning new pro- est likelihood of success. Producers
duction and marketing skills, dealing with Edible Soybean
food safety, labeling, and other regulations, Many producers combine aspects of both
Production
and coping with liability issues and insur- capturing and creating value in their ven- and Marketing
ance. Demand for the innovative product tures. A producer may create an unusual
food product, such as local specialty bread, Food Dehydration
or service must usually be created through Options
advertising, promotion, and consumer edu- and sell it at the farmers’ market, capturing
cation, and this is a lengthy, expensive pro- more of the food marketing dollar. Food Sorghum Syrup
cess. Marketing risks may be lower with processors may use organic or unusual Value-Added Dairy
a created-value strategy, for if this demand ingredients, and so on. Options
can be established, there is potential for
higher, stable prices and little direct com- Starting a Food Business
petition. Contract agreements for iden- The food business is extremely competitive
tity-preserved products such as high-lysine and dominated by a few large companies
corn reduce competition from other pro- that are driven by cost and price consid-
ducers, for example. On-farm events and erations. Food is considered a “mature”
activities offer a unique setting that cannot industry, which means very little growth in
be copied by other producers. However, demand. Food manufacturing continues
producers will need to learn new market- to face narrowing margins and decreasing
ing skills, carefully assess feasibility, and profits. Retailers are wielding more and
develop marketing plans for created-value more power over food wholesalers and man-
products or services without established
ufacturers, and requiring manufacturers to
marketing channels.
pay more for shelf space (“slotting fees”),
The amount of value that can be added is bear more of the product development risk,
affected by whether the enterprise is captur- and provide product uniformity and qual-
ing or creating value. Brees et al. (2) cite ity. Smaller processors could have trouble
www.attra.ncat.org ATTRA Page 3

4. For more information and resources on the
Case History: specialty foods industry, visit the National
Value-Added Agriculture Association for the Specialty Food Trade’s
From Our Future’s on the Table (6)
Web site at www.specialtyfood.com.
Radiance Dairy, Francis and Susan Thicke, owners, Fairfield, Iowa Consumers with special dietary needs—
both for specific health conditions and the
Former Minnesota dairy producers Francis and Susan Thicke have oper-
general health concerns of our aging pop-
ated Radiance Dairy in Fairfield, Iowa, since 1992. When they took over
the herd of Jersey cows—a breed that produces high-butterfat, high- ulation—offer more opportunities for new
protein milk that receives a premium price—the Thickes added more products. For example, there are more than
value by turning the dairy into an organic operation. two million Americans with life-long, incur-
able celiac disease, who must avoid all glu-
Today, 99 percent of their organic whole, skim, and two-percent milk,
as well as cream, yogurt, and a soft cheese called Panir, are sold under ten (from wheat, rye, and barley) in their
the Radiance Dairy label by three local grocery retailers. Chocolate- and diets. Gluten-free foods have been difficult
vanilla-flavored soft-serve ice cream is sold in restaurants. Other prod- to find and remain expensive, but for celiac
ucts such as new yogurts and cheeses are in development. disease sufferers, they are well worth the
What does value-added mean to the Thickes? According to Francis: effort and expense. (9) For more informa-
“Value-added products have features that go beyond what is gener- tion on health conditions requiring special
ally found in the conventional market. Most people think value-added diets, and the companies supplying these
means processing raw materials into a finished product. That’s true, special foods, visit www.specialdiets.org.
but value-added can be more than that. We believe organic products
are value-added because of the extra care that goes into making the Other specialty foods options that have
product. Radiance Dairy products really have two value-added features: paid off for producers include produc-
they’re organic, and they’ve been processed to deliver additional value tion and marketing of unusually colored
to our customers.” or shaped, “heirloom,” and “ethnic” crop
varieties (request the ATTRA publication
finding outlets for their products, if they Specialty Vegetables for more information).
cannot meet scale requirements by the large Livestock can also be marketed as a spe-
retail operations that dominate the indus- cialty food, often in conjunction with reli-
try. In this mature industry, the only real gious or cultural celebrations and festivals
growth is in niche food markets, where pro- or events, to use in traditional recipes. For
ducers create value by adding special ser- example, meat goat and sheep produc-
vices for consumers, offering quality attri- ers have the options of serving many eth-
butes like organic certification, specialized nic markets and providing special products
health products, and so on. They are able such as sheep for the Muslim Ramadan
to charge prices 30 percent or more over holidays and cabrito (young goat) for the
mainline markets. Industry analysts agree Hispanic Easter market. Some produc-
that these markets are likely to continue ers even offer buyers facilities on farm
to grow. (7) to slaughter according to Halal or other
religious requirements.
The National Association for the Specialty
Some of the main challenges in food pro-
Food Trade (NASFT) defines “specialty
cessing include developing formulations
foods” as follows:
and preparation schedules, dealing with
Foods, beverages, or confections meant for regulations and regulatory agencies, prod-
human use that are of the highest grade, uct coding and labeling, and product liabil-
style, and/or quality in their category. Their ity insurance. (10) Researching the market
specialty nature derives from a combination potential for food products is a crucial first
of some or all of the following qualities: their
uniqueness, exotic origin, particular process-
step. You will need to have a good idea of
ing, design, limited supply, unusual applica- who will buy your product in the amounts
tion or use, extraordinary packaging or chan- and prices that will generate a profit for you.
nel of distribution, the common denominator For more information on market research,
of which is their unusually high quality. (8) v isit www.agmrc.org/agmrc/business/
Page 4 ATTRA Adding Value to Farm Products: An Overview

5. startingbusiness/marketresearch.htm, and will give you an opportunity to revise and
see the Business Planning Resources adjust your formula so that your final prod-
section below. uct is exactly the way you want it. Most pri-
vate-label manufacturers can also provide
Once you have an idea for a food product
formulation assistance. The county health
that you believe will appeal to consumers
department may be able to help you with
in the marketplace, you need to develop a
information about such facilities located in
detailed description of your product. This
your county.
description should include where you will
get all ingredients, a formulation (recipe), A key point to remember is that adding
a method of preparation, processing pro- value by processing food products increases
A
cedures, and packaging. Revealing the safety risks. Therefore, rules and regula- dding value
amount of each ingredient or the spices in tions are established to protect the public
your formulation is not necessary. This health. Each state has its own regulations by process-
should remain secret and be revealed only about processing kitchens, and some local ing food
to federal or state regulatory agencies. governments have building codes that also products increases
Reliable suppliers for equipment, ingredi- apply. If there is any possibility that you safety risks.
ents, and other supplies are critical to the will be selling your food out of state, you
operation of a successful food processing must also comply with the federal regula-
business. Identification of reliable suppli- tions as stated in the Federal Food, Drug,
ers is an important step prior to beginning and Cosmetic Act and enforced by the Food
your business. and Drug Administration (FDA). The FDA
has what it calls Good Manufacturing Prac-
If you are uncertain about any of the details
tices (GMP), upon which state regulations
needed in this plan, check with your county
are based. GMPs include requirements
Extension office to see whether you can get
that walls, floors, and ceilings be wash-
help from your land-grant university. Most
able, and the kitchen must be ventilated
have a department of food science or food
so that drip or condensation from ceiling
technology, with staff who can help you in
or fixtures won’t fall into food. Food con-
the initial stages of product development. If
tact surfaces, tools, and equipment must
you work with a food technologist to develop
be resistant to corrosion and made of non-
your product or process, you will be asked
toxic materials. Seams on surfaces must
for your complete formula. This informa-
be smoothly bonded to prevent accumu-
tion will remain confidential.
lation of food particles, dirt, etc. The
Bring as many details about your product as room must be screened to keep out birds,
you have, including a sample. The product insects, and other pests. You must have
will be evaluated and classified regarding a bathroom, i f you have employ-
the type of processing needed. This classi- ees. You must have a hand-wash-
fication will be based on the product’s acid ing sink separate from sinks for wash-
and water contents. ing, rinsing, and sanitizing equipment
and utensils. Water must be from an
Transferring recipes for food products made
approved source.
in small batches or in a home kitchen to
commercial-size formulas that can be manu- If your food product contains more than
factured in larger batches using commercial five percent meat, you must have a USDA
equipment is not an easy task. Frequently, Food Safety and Inspection Service inspec-
simply multiplying ingredient amounts to get tor present during processing. You must
larger-size batches does not result in a prod- also comply with USDA regulations,
uct comparable to that made with smaller whether the product is sold in-state only or
recipes. Plan on contracting with a state- out of state. The full description of GMPs
approved facility, such as a private-label is printed in the Code of Federal Regula-
manufacturer, to manufacture a fairly large tions 21 CFR, Part 110, available on-line at
quantity of your best formulation(s). This www.access.gpo.gov/nara/cfr/index.html.
www.attra.ncat.org ATTRA Page 5

6. All products need to include a product code costly, product liability insurance is a must.
that shows where the product was packed, Many farmers’ markets and most retail out-
the date and year packed, and the prod- lets will require a minimum level (normally
uct and batch number. Individual con- $1 to 2 million) of product liability cover-
tainers and cases should be coded. The age before you can sell your products in
codes should be kept in records pertain- their markets. There are no standard rates
ing to the product and should be written on for liability coverage for food products,
your invoices to identify distribution. The because the premium depends on the spe-
codes provide a means of tracking a prod- cific characteristics of the product, the man-
uct, should there be complaints or a recall ufacturing process, and marketing plan.
be necessary. Organic processing involves Most insurance companies require a great
additional record-keeping and other deal of information—including submission
regulatory requirements. of production, distribution, and marketing
The label is the means by which consum- plans—even to provide a rate quote.
ers identify your product, so time and Product design and marketing tips
thought should be given to developing your are covered in more detail in Fresh to
Contact the FDA by label. Both the state and the FDA have
Processed: Adding Value for Specialty
mail, telephone, or very specific regulations concerning label-
Markets. (11) Created as a training and
Internet: ing requirements. Contact the appropri-
resource tool for value-added processors,
Food and Drug ate agency regarding information you must
with funding from the North Central Region
Administration include on the product label. The FDA
requires nutritional labeling if you do more SARE program, Fresh to Processed: Adding
5600 Fishers Lane
Rockville, MD 20857 than $50,000 in business annually. The Value for Specialty Markets provides an over-
1-888-INFO-FDA regulations for nutritional labeling are quite view of the main aspects of starting a food
(1-888-463-6332) extensive, with very specific requirements business. Contact ATTRA for a copy of
www.fda.gov about information to include and the for- this resource.
mat for presenting this information. Details
of these requirements can be obtained Farm and Food Business
from any FDA office or the FDA Small Profile: Persimmon Hill
Business representative.
Berry Farm
If you plan to sell your product through retail The story of Earnie and Martha Bohner’s
stores, you should plan to display a Uniform Persimmon Hill Berry Farm shows what
Product Code (UPC) on the label. This bar can happen when creative and persistent
code provides a means for automated iden- farmers team up with supporters from the
tification of your product. Brokers, whole- state university, state department of agricul-
salers, and retail buyers will not handle a ture, and many others.
product without a UPC. It is your responsi-
bility to obtain a UPC for each product you Although both Earnie and Martha trained
produce. Contact the Uniform Code Coun- and worked in other professions, the small-
cil to apply for a UPC assignment. The fee farm lifestyle of the southern Missouri
for assignment is based on the size of your Ozarks appealed to them, and in 1983—
business. Contact: starting with no buildings, no electric-
ity, and no running water—the Bohners
Uniform Code Council began developing their pastured hill land.
937-435-3870 They chose the name Persimmon Hill
937-435-7317 FAX because the farm was covered with young
info@uc-council.org persimmon trees. Within 10 years they were
www.uc-council.org/ cultivating three acres of blueberries, an
ean_ucc_system/index.cfm acre of blackberries, 2,000 hardwood logs
While it can be difficult to find a liability for growing shiitake mushrooms, and 120
insurance provider, and insurance may be apple trees. (12)
Page 6 ATTRA Adding Value to Farm Products: An Overview

7. The berries were initially marketed to pick- muffins carry the farm through the unprof-
your-own customers. The added value is itable winter months. (13)
the experience of a day on a farm with a
Direct marketing is another way to add
friendly and helpful host. “We create a
value. In addition to U-pick and farm stand
place where people can enjoy themselves,”
sales, the Bohners have created a Christmas
Earnie says. Clean restrooms, a picnic
gift mail-order market. Previous custom-
table, and shade trees provide for the com-
ers and gift recipients receive a mail-order
fort of visitors to the farm. Keeping the
folder describing packages that will be sent
field edges mowed and trimmed contributes
directly to them. The cover of the flyer
to the clean image needed to attract visitors.
features the farm’s black Labs shown watch-
“People don’t come all the way out here to
ing St. Nick’s sleigh heading off into the
get cheap food. They come because it’s fun,
Ozark night.
and the berries are absolutely fresh. As
much as we can, we give them contact with Business planning has been critical to
‘the farmers.’ The more we can do that, the the development of Persimmon Hill Berry
“P
more people go away with that memory.” Farm. Earnie tries to reorganize each Jan- eople
uary, after he reviews production and mar- don’t
In 1986 the Bohners began adding value
keting records for the previous season. He come
through processing. “After considerable
adjusts long-range plans, sets goals for the
study, we decided to turn ripe berries into all the way out here
next 12 months, and then breaks down
full-fruit jams, although it would take more to get cheap food.
jobs by two-week periods. Earnie says,
work than the U-pick operation and spread They come because
“In an ideal situation, I would look at these
our management thinner,” says Martha.
goals monthly. On a daily basis, I have a it’s fun.”
“From the first, we were committed to qual-
list that I carry with me that supports the
ity, and quality entails a lot of time and
overall plan.” He is always looking for
cost. Our recipe is simple: fresh, ripe fruit;
ideas for new products, niches, and ser-
sugar; natural pectin; a bit of lemon juice,
vices. In regard to finding help for busi-
and nothing else. We want our product to
ness planning, Earnie says, “SCORE has
have a distinctive, berry taste.” Earnie
been really helpful.” (SCORE, the Ser-
and Martha worked with a chef to perfect
vice Corps of Retired Executives, is a Small
recipes for other products such as shiitake
Business Administration program. For
mushroom sauce. The first products were
more information on SCORE, request the
prepared in rented kitchens, a good way
ATTRA publication Agricultural Business
to make the step without the cost of build-
Planning Templates and Resources.) “We
ing your own kitchen. The Bohners now
also have had graduate students from a uni-
have their own processing kitchen on the
versity business department out here. It is
farm, just a few steps from the blueberry
a useful experience for them, and they can
patch. The business office and storage
give a business owner another perspective.
space are in the same two-story building.
And we get lots of ideas from Ron Macher’s
Processed products (their famous blue-
Small Farm Today magazine.” Beyond the
berry Thunder Muffins, a range of jams,
financial aspects of the business, a visit to
shiitake mushroom sauce, blueberry and
the farm will show anyone that a vision for
other barbecue sauces, dried shiitake spe-
a beautiful place in the country and love for
cialties, a refreshing blueberry slush, and a
life are driving forces. To pay a virtual visit
cookbook) now account for a large share of
to the farm, visit www.persimmonhill.com.
the farm’s gross income. Processing fruits
and shiitake mushrooms allows them to use
produce that isn’t sold fresh, to extend the Non-Food Options
marketing season and to diversify their The difficulty of coping with regula-
marketing outlets. The Bohners have sold tory requirements, as well as the highly
as many as 1,400 Thunder Muffins in a competitive nature and the relatively
single day, and Martha Bohner says the low margins of the food industry, have
www.attra.ncat.org ATTRA Page 7

8. led many producers to consider non- Fiber
food options for adding value to their farm
Organic cotton fiber is enjoying a develop-
products. Some of these non-food options
ing market (14); however, these markets
are discussed below. Your options for add-
are still limited and subject to competi-
ing value with non-food products and ser-
tion from imported cotton. For more infor-
vices are limited only by your resources
mation on organic cotton, request Organic
and your imagination.
Cotton Production from ATTRA. There
are also small niche markets for natu-
Energy rally colored cotton. The increasing con-
Energy production from agricultural prod- sumer interest in hand spinning, knitting,
ucts is on the rise. It includes producing and weaving has led to increased mar-
biofuels, such as ethanol and biodiesel, and keting opportunities for sheep and goat
electricity from crops, wastes, and wind. producers for organic, naturally colored,
hand-made wool, yarns, and other products,
Producers may be interested only in reduc-
as well as finished goods such as blankets
ing on-farm fuel costs by producing biofuels and clothing.
for their own use. Many producer groups,
on the other hand, have invested in biofu-
Wood
els manufacturing as a way to add value
Woodlot enterprises, both timber and non-
to agricultural products such as corn and
timber, may offer another option. Request
soybeans. The viability of many of these a copy of Woodlot Enterprises from ATTRA
investments, such as corn producers invest- for more information. Another good place
ing in ethanol production, depends on gov- to start investigating woodlot enterprises
ernment subsidies and programs. (5) The is the WoodWeb at www.woodweb.com/
Agricultural Utilization Research Institute’s KnowledgeBase/KBIndex.html.
Center for Producer-Owned Energy offers
useful information on many biofuels options Personal Care Products
on their Web site at www.mncpoe.org. The Adding value to products such as milk,
ATTRA publication Biodiesel: a Primer honey, and wax by producing soaps,
not only describes the process of making lotions, and other personal care products is
biodiesel on-farm but also provides further a popular option. The market for “natural”
resources on many aspects of renewable personal care products reached $5 billion
energy. For more information on energy in 2004, increasing by more than 50 per-
and agriculture, visit ATTRA’S Energy cent since 2000, and should continue to
and Agriculture section at www.attra.org/ grow. (15) Learn more about natural per-
energy.html. sonal care products at www.soap-wire.com.
Farm Entertainment
Many farm machines at According to Agriculture Specialist
ARS’ Beltsville Agricul- Katherine Adam, in Entertainment Farm-
tural Research Center ing and Agri-Tourism, “While the popular-
run on a mixture of die- ity of specific enterprises—such as pump-
sel fuel and biodiesel,
which is made from soy-
kin patches or U-pick orchards—may ebb
bean oil. and flow, the public’s desire for a ‘farm
Photo by Bob Nichols. experience’ remains.”
Courtesy of USDA/ARS.
Small diversified farms are ideally suited to
agri-entertainment. Unlike the mega-hog
facility or a corn/soybean operation producing
bulk commodities, the small farm can recre-
ate an earlier, simpler, human-scale vision of
Page 8 ATTRA Adding Value to Farm Products: An Overview

9. farming. The chief qualification for the rural end up adding value to your farm products,
landowner who expects to make a living from these principles apply.
the land through agri-tourism is the desire
and the ability to cater to tourists and meet • Start small and grow naturally.
their expectations of a farm visit.
• Make decisions based on good
Request a copy of Entertainment Farm- records.
ing and Agri-Tourism from ATTR A • Create a high-quality product.
for more information on many dif-
• Follow demand-driven production.
ferent options to add entertainment
and educational value to your farm and • Get the whole family or partners
farm products. involved.
• Keep informed.
Keys to Success • Plan for the future.
Although no simple blueprint for success • Evaluate continuously.
exists when you’re trying to add value to
• Persevere.
your farm products, a few general prac-
tices emerge from interviews with a number • Capitalize adequately.
of southern farmers. No matter how you • Focus.
Business Planning Resources
A comprehensive business plan that includes marketing and finances can help determine the feasibility of a value-added
enterprise. Developing your business and marketing plan helps you define your business, creates a road map to operate the
business, sets the goals you will aim for, and satisfies outsiders’ requests for a written explanation. The basics of a business
plan include the following.
What? Describe your product or service.
Why? Describe the need for your product or service.
Who? Describe the customer.
When? Draw a timeline and list all the tasks that need to be accomplished.
Where? Describe the location of your business.
Building a Sustainable Business: a Guide to Developing a Business Plan for Farms and Rural Businesses helps alternative and sus-
tainable agriculture entrepreneurs develop profitable enterprises. Sample worksheets illustrate how real farm families set
goals, researched processing alternatives, determined potential markets, and evaluated financing options. Blank worksheets
help producers develop detailed, lender-ready business plans and map out strategies to take advantage of new opportuni-
ties. It is available at no charge on the Internet at www.misa.umn.edu/publications/bizplan.html. Print copies are available for
$14 (plus $3.95 shipping and handling charge).
To order copies, contact:
Sustainable Agriculture Publications
210 Hills Building
University of Vermont
Burlington, VT 05405-0082
802-656-0484
802-656-9091 FAX
sanpubs@uvm.edu
Useful resources from ATTRA include:
Agricultural Business Planning Templates and Resources
Sources of agricultural business planning templates and other resources.
Enterprise Budgets and Production Costs for Organic Production
Sources of information on costs and returns of organic production.
www.attra.ncat.org ATTRA Page 9

10. • Establish a loyal customer base. 5. Fulton, Joan. Value-Added Business Ventures
• Choose something you love to do and something Through Producer Alliances. 2003. Purdue
that fits your personality and goals. University Cooperative Extension Service Pub-
lication ID-318.
These points are described in detail in the ATTRA www.ces.purdue.edu/extmedia/ID/ID-318.pdf
publication Keys to Success in Value-Added Agriculture.
Call ATTRA to request a copy. The publication also 6. Our Future’s on the Table.
provides farmer profiles and information about the The Web site of an Iowa consortium seeking
resources that they found useful. to increase the value of Iowa farm products
includes links to a number of case histories.
Adding value to your farm products can be a great way Contact can also be made through the address
to increase farm income, diversify production, and enter below.
new markets. Understanding the risks and rewards of
different approaches to adding value, investigating the Ag Initiative 2000 Consortium
wide range of options for adding value, and thoughtful 200 East Grand Ave
business planning are all important to success. Des Moines, IA 50309
515-242-4805
References 515-242-4832 FAX
1. Richards, Keith, and Deborah S. Wechsler.
7. Sparks Companies, Inc. 2003. Top-Down Com-
1996. Making It On the Farm: Increasing
petition in the Food Industry: Trends and
Sustainability Through Value-added Process-
Implications. Strategic Forum Discussion
ing and Marketing. Southern Sustainable
Paper. Sept. 23. 46 p.
Agriculture Working Group. 40 p.
www.mda.state.mn.us/ams/whitepapers/
Compiled from interviews with southern farm-
topdown.pdf
ers and ranchers who are adding value to their
products, it describes some of their practices, dis- 8. Food Industry Resources & Worksheets. Prod-
cusses 10 keys to success, and includes a list of uct Development: Identifying Your Market Seg-
resources. Available for $12 (includes shipping ment. Appalachian Center for Economic Net-
and handling) from: works (ACEnet) Food Ventures Web site.
www.acenetworks.org/frames/
Southern SAWG Publications framesfoodventures.htm
P.O. Box 324
9. Choi, Candice. 2005. Gluten-Free Market Goes
Elkins, AR 72727
Mainstream. Associated Press. July 27.
501-587-0888
ssfarm@lynks.com 10. Brady, Pamela, et al. 1997. Starting a Food
Business. Institute of Food Science and Engi-
2. Brees, Melvin, Joe Parcell, and Nancy Giddens.
neering. University of Arkansas, Fayetteville,
No date. Capturing vs. Creating Value. MU
AR. 6 p.
Agricultural Guide, University of Missouri
Cooperative Extension. 11. Durham, Deni. 1996. Fresh to Processed:
www.agmrc.org/agmrc/business/gettingstarted/ Adding Value for Specialty Markets. Missouri
capturingvscreatingvalue.htm Organic Association, Ashland, MO. 33 p.
3. Smith, Stewart. 1991. Is There Farming in 12. Bohner, Earnie. 1998. Personal communication
Agriculture’s Future? Presentation to College with Janet Bachmann.
of Agriculture and Life Sciences. University of
13. Anon. 2003. True blue: Loyal berry fans line
Vermont. November 14.
up across Missouri to get a taste of summer’s
4. Anon. 2005. Retail Food Prices Rise Slightly. sweetest treat. Columbia (MO) Daily Tribune.
Pork magazine. April 4. June 29.
www.porkmag.com/ http://archive.columbiatribune.com/2003/jun/
directories.asp?pgID=678&ed_id=3305 20030629feat004.asp
Page 10 ATTRA Adding Value to Farm Products: An Overview

11. 14. Dimitri, Carolyn, and Catherine Greene. 2002. One great source of innovative, farm-tested ideas for
Recent Growth Patterns in the U.S. Organic adding value and generating more income is
Foods Market. U.S. Department of Agricul- FARM SHOW magazine. For more
ture, Economic Research Service, Market and information, contact:
Trade Economics Division and Resource Eco-
nomics Division. Agriculture Information Bul- Circulation Department
letin Number 777. 42 pp. FARM SHOW
www.ers.usda.gov/publications/aib777/ P.O. Box 1029
Lakeville, MN 55044
15. Anon. 2005. Three Years of Double-Digit 800-834-9665
Growth Powers the Natural Personal Care Mar- 952-469-5575 FAX
ket to $5 Billion. Soap Wire Online. June 22. circulation@farmshow.com
www.soap-wire.com/2005/06/ www.farmshow.com
three_years_of _.html
Another source of ideas is Small Farm Today
Further Resources magazine. For more information, contact:
General Value-Added Small Farm Today
3903 W Ridge Trail Rd
The Ag Marketing Resource Center (AgMRC) Clark, MO 65243-9525
(www.agmrc.org) is an excellent electronic, 573-687-3525
national resource for producers interested in 573-687-3148 FAX
value-added agriculture. This comprehen- 800-633-2535
sive Web site offers information on value-added smallfarm@socket.net
opportunities for agricultural commodities and www.smallfarmtoday.com
products, market and industry trends, learning
how to create and operate a business, research USDA Rural Business-Cooperative Services
results of value-added markets and businesses, offers two grant programs for value-added proj-
and how to locate national, state, and local ect development. The Section 9006 Renewable
value-added resources. A comprehensive set Energy System and Energy Efficiency Improve-
of directories, including agricultural innova- ment Grants provide grants and guaranteed
tion centers, consultants, service providers, and loan funds to farmers, ranchers, and rural
value-added businesses that can be contacted by small businesses looking to finance a renewable
individuals with similar interests, and specific energy or energy efficiency project. Visit http://
resources for all 50 states, is available at www. attra.ncat.org/guide/n_z/renewable.html for
agmrc.org/agmrc/directories/. more information. The Value-Added Producer
Grant program makes grants available to inde-
Hamilton, Neil. 2000. The Legal Guide for Direct pendent producers and producer groups for plan-
Farm Marketing. Drake University Law ning activities to establish a viable value-added
School. Des Moines, IA. 235 p. marketing opportunity for an agricultural prod-
This book is an excellent resource to help you uct or for acquiring working capital to operate a
begin the process of learning about the rules and value-added business venture. Visit http://
regulations that may affect you. Prepared under attra.ncat.org/guide/n_z/value_added.html for
a grant from the USDA Sustainable Agriculture more information.
Research and Education Program, it is
available from:
Resources for Starting a Food
Agricultural Law Center Business
Drake University Law School In addition to the directories available at the AgMRC
507 University Ave. Web site mentioned above, there are some other
Des Moines, IA 50311 resources that are especially helpful for starting a
www.law.drake.edu food business.
www.attra.ncat.org ATTRA Page 11

12. Appalachian Center for Economic Networks Publishing, Chicago. 190 pp. ISBN-0-
(ACEnet) runs the Food Ventures program, 926894-34-2.
which works with entrepreneurs in their service A good resource to determine whether your food
area in the southeastern Ohio area to create product has potential.
and grow specialty food businesses. ACEnet
Exploring the Potential for New Food Products
also offers excellent advice and information on
http://msucares.com/pubs/publications/
their Web site at www.acenetworks.org/frames/
p2170.html
framesfoodventures.htm for anyone interested
in the specialty foods business. Starting a Value Added Farm-Food Business
www.uwex.edu/ces/agmarkets/
Better Process Control School (BPC) is required
by federal regulations for any supervisors of
low-acid food thermal processing systems and
container closure operations. It is strongly rec-
ommended that anyone involved in any phase
of food processing who is not familiar with the
principles of food preservation attend this school.
Several universities hold a BPC school at vari-
ous times during the year. To locate a BPC
school near you and learn about the many other
training resources available, contact:
Food Processors Institute
1350 I Street, NW
Suite 300
Washington, DC 20005-3305
202-639-5945
800-355-0983 (toll-free)
202-639-5932 FAX
fpi@fpa-food.org
www.fpi-food.org
The Fooddude’s Food Marketing 101 at
http://www.fooddude.com/foodmarketing101.
htm is an on-line resource designed primarily for
potential manufacturers or marketers of specialty
food products. The purpose is to pose questions
(and provide some answers) for those interested
in producing food products for sale. Included is
information about retail trade channels; distri-
bution channels; product positioning, branding, Adding Value to Farm Products: An Overview
By Holly Born and Janet Bachmann
packaging, and pricing; packaged food sales;
NCAT Agriculture Specialists
marketing and promotion; customer service and ©2006 NCAT
data use; as well as links to general resources
Paul Driscoll, Editor
and food industry associations.
Cynthia Arnold, Production
Getting Started in the Food Specialty Business This publication is available on the Web at:
www.efsonline.uga.edu/EFS_NFB/ www.attra.ncat.org/attra-pub/valueovr.html
New%20Food%20Business%20Packet/ and
Getting%20Started%20in%20the%20Food% www.attra.ncat.org/attra-pub/PDF/valueovr.pdf
20Specialty%20Business.pdf IP141
Slot 136
Hall, Stephen F. 1992. From Kitchen to Market: Version 032206
Selling Your Gourmet Food Specialty. Upstart
Page 12 ATTRA