Many agricultural producers have been advised to consider value-added activities to offset declining farm incomes and a competitive global economy. Such activities may increase net farm incomes, but producers should first assess if the value-added activity is the right choice for them.

A value-added activity is an activity traditionally performed at another stage in the supply chain, or one that has never been performed. For example, a farmer could sell produce directly to restaurants or host festivals at the farm.

Should You Start A Value-Added Initiative?

Agricultural producers should carefully plan before committing to a new added-value activity. A producer should consider the following questions before starting value-added operations:

• Is the nature of the value-added initiative easily explained in plain and simple language?
• Are people willing to pay for what you intend to offer?
• Is the potential payoff of the enterprise big compared to its costs?
• Does the initiative have staying power and growth potential?
• Do you have access to the required resources?
• Is the value-added activity something you will enjoy doing?
• Will you be able to cope if the initiative doesn’t work?

Producers who can answer “yes” to these questions can begin writing a business plan. The business plan should help you fully research the initiative, so you know what to do and how to manage the associated financial risks.

There are many ways to add value to agriculture and increase net farm income. Starting a new enterprise has risks, so producers should carefully assess alternatives.

Adapted and excerpted from:

E. Evans, “Value Added Agriculture: Is It Right for Me? (FE638),” UF/IFAS Food and Resource Economics Department (rev. 08/2015).

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