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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http://images.google.com/images?svnum=10&hl=en&gbv=2&client=firefox-a&channel=s&rls=org.mozilla%3Aen-US
%3Aofficial&q=Tyson+Chicken&btnG=Search+Images

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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