ACS Distance Education UK
By processing farm produce, partially or fully, before it is sold, a farmer can increase the price which that produce is sold for. This is an increasingly important way to increase the profitability of a farm.
Typical examples of value added products include:
Value adding may make you subject to regulations which otherwise might not have applied. This is particularly the case with food products, where the production, packaging and sale of foodstuffs is governed by health and other regulations.
Value adding can involve many extra costs; including such things as processing equipment, extra water and power, licences & permits, packaging and labelling, and storage facilities; so you need to thoroughly investigate what is involved, and try to weigh up the potential benefits before making any significant investment.
In some instances the value adding operation might be best tackled as a joint venture or cooperative effort between several farms (eg. canning fruit, production of fruit juices, etc). This approach can offer many economies of scale (ie. It might not be economically viable for one farm to set up a processing plant because they would not use the facility enough, to achieve a pay back on the investment. Several farms though would share the cost of establishing the plant). A cooperative effort can also offer marketing advantages, for example, because there is a greater amount of produce, it can be more viable to make a significant marketing effort.
In summary, value adding is becoming an increasingly important aspect of agriculture.
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