What’s the scoop on “value-added”?

You may have heard the term ‘value-added’ before, and more recently, you might be hearing it a lot more than usual! While diversification (increasing the amount and type of products offered) has always been a strong tool for farm businesses, many are not just varying the amount of goods they grow or raise, but choosing to level up their offerings through value-added production. This form of diversification helps farm products to be more enticing to consumers, makes retail or wholesale more attainable, and provides the potential for boosted income. 

So, what actually is a value-added product? It involves processing a commodity into a product that sells for a higher price or has a higher perceived worth. In agriculture, this usually also means a change in physical state. For example, processing cucumbers into pickles, milk into cheese curds, or berries into jam. Although processing a variety of vegetables into a salad kit or arranging a basket of fall foods and marketing it as a ‘harvest gift basket’ could also be considered value-added. 

These types of products are usually considered more readily available for use and have certain qualities that increase their worth to make them more enticing. Instead of buying tomatoes, onions, and all the ingredients for a spaghetti sauce- then making it yourself- a jar of premade sauce that you can just open and pour may be more appealing. Not only does convenience play a huge role in our purchasing decisions, but perhaps a local producer has access to special ingredients or equipment to create something that you can’t, or maybe their recipe simply can’t be beat! Unique value-added products help farmers elevate their businesses, differentiate themselves in the market, and create items that keep customers wanting more. 

Value-added production also has the potential to unlock retail for many farmers. While some producers find success selling raw goods through wholesale, often stores look for unique products that will jump out at consumers. Bonus points if the item is shelf stable. Distinctive items that have a ‘crave-factor’ and don’t need to be rotated out of stock as quickly as fresh goods are more desirable to stores and consumers alike. Therefore, the creation of value-added products that draw more attention than standard produce and lean into the artisanal niche can open a gateway into retail. 

It’s no secret that farm businesses operate on notoriously low profit margins. Raw farm products require a lot of hard work and expensive inputs, yet the final good must match market prices and strict customer expectations or else it won’t sell. Value-added products; however, have an increased worth in the marketplace. Allowing them to sell for higher prices and good marketing combined with specialty goods can drive return on investment even higher. This is part of the reason why ‘value-added’ has been such a hot topic recently. Many farms are adapting against tough economic times and learning to diversify in ways that drives profit upwards and keeps the business running successfully.

Value-added products may be defined as processing a good in a way that increases its worth to the consumer, but the value these products provide to farm businesses shouldn’t be understated. Often seen as more desirable, allowing for higher return on investment, and opening up pathways to retail opportunities- it’s no surprise why many farms are choosing to venture into value-added. While the benefits are vast, the production is challenging and pricey. These items usually require new licensing, expensive equipment, and large upfront costs in order to produce. So next time you see a locally produced value-added product, take a moment to admire the hard work and consider supporting your community!