Should Your Farm Make a Value-Added Product?

Making value-added products such as pickled vegetables, jam or even wine from what you already produce could improve business. First, ask some questions.

by Jesse Frost
PHOTO: Anna Armbrust/Pixabay

Many agricultural agencies have encouraged farmers over the past decade or so to invest in “value-adding,” that is, creating value-added products by taking something you already produce and turning it into a different, and presumably more valuable, product.

So a berry farm, for example, might start producing jams or even wine as value-added products. For a vegetable farm, it could be pickles or soups. A dairy farm could look into soaps, or a hog farm could produce its own charcuterie. There’s a lot of potential here, but when it comes to your farm, does it make sense to join the value-added marketplace? Would it actually add value to what you do? Let’s give it a look.

Consider Regulations

To the credit of the U.S. Department of Agriculture and similar agencies, the regulatory framework that oversees commercial production of a farm products has remained fairly accessible to small producers (for non-meat products, at least). Many states even allow producers to generate some amount of salable product in their own kitchens with “home processing” licenses. This might require some amount of training, testing and inspection. However, there is a threshold for how much one can produce in a home kitchen, and once a certain amount of edible product is reached, the agencies require the product to be made in a commercial kitchen, and that can be an expensive endeavor.

Consider the Best Use of Your Time

Your time as a grower or producer is valuable, and any time you spend working on another product might take away from that. Producing any secondary goods will require your attention for at least the period of time you spend producing it. This can be managed in blocks, where perhaps you are producing the value-added product only during slower times of the year, but that might also be difficult if your product relies on a bounty of, say, tomatoes in the middle of the summer when you are already very busy harvesting said tomatoes.

Prepare to Start Another Business

Whenever you consider a value-added product, you as the producer should first ask yourself whether you really enjoy making it. Granola, soup, soap––is it something you are passionate about? That’s important, because it could become a full-time gig if it goes well. It might take time, as mentioned above, away from what you already do, and in many ways you might have to manage it like a separate business—accounting, inventory, startup capital and so on.

Calculate the Initial Investment

You should also examine the money needed up-front to buy, for instance, labels and jars and or additional fees that come along with the processing of a value-added product. Some grants and agencies might help with those costs, but if you want to continue producing, it will probably require reinvestment.

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Think About Storage and Transportation

Whatever product you choose will need to be stored and moved. This might be fine in the case of products that do not need to be chilled. That said, perishable, frozen or refrigerated items all require some amount of space and something in which to move them. This might be just a cooler, but certainly consider it in your costs.

Add It All Up

Creating value-added products can absolutely add revenue to an operation, though you should weigh all of the above considerations as well as marketing and distribution before moving forward. Can you take what you’re already doing and make it more profitable first? Would it be easier to add another crop rather than to add a prepared food? It depends on your operation as well as your market. Nonetheless, there might be a niche out there just asking to be filled, and value-added products could help you be the one to fill it.

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