The value addition of agricultural products brings a lot of money into the Kenyan economy each year. In fact, adding value beyond the farm has a bigger economic footprint than the normal farm production. Farmers usually perform poorly when it comes to cash flow margins as compared to food processors who sell items through brand names (e.g Brookside, Honey Care).
Reigning in the extra money by adding value to farm products is a goal for many enlightened farmers.
So, what is value addition?
“Value Addition” means adding value to a raw product by taking it to at least the next stage of production. Value can be added through membership in a cooperative that processes your products, such as milk and yogurt packaging.
What are the main benefits of value addition?
Value addition can bring these benefits to your enterprise;
- Increased Cash Flow – Adding value to your farm produce automatically increases the financial value of your product and income.
- Brand and Identification- Branding enables customers to brand with your product and farm. This gives you an edge when it comes to pushing products and making sales. If your product is good, customers will refer you to more people by mentioning your brand in their networks.
- Consumer Loyalty- Customers relate well to producers who add value and still maintain quality. By maintaining quality, customers will always identify with your product and create a loyalty base around it.
- Better Prices – Longer shelf life of products means farmers can better pricing at the right time. E.g UHT Milk, Yoghurt, Juice, etc.
How to be Successful in Value Addition
Building a new business is difficult and takes hard work (nothing new for farmers and ranchers). But, for all the uncertainty, there are ways to craft a successful value-added business strategy. The key factors in a detailed business plan are:
- Operations plan – This is how the business flows, it’s quality and cost control.
- Team and Management- You need a team that has the right skills and training to run your business.
- Sales Plan – Develop a thorough sales plan that will enable you to sell your products consistently.
- Investment Plan- Plan and use your money wisely so that your business grows naturally and without unnecessary burdens.
Examples of Value Added Farm Products
- Milk can give you Packaged fresh milk, Cheese, Yogurt, Ghee and Ice cream.
- Passion Fruits can give you Juice, Soda.
- Potatoes – Crisps, Fries, Potato flour
- Strawberry- Jam, Packaged fresh strawberry in plastic tins.
- Honey- Honey peanut snacks, Honey in jars.
- Peanuts- Packaged peanuts, roasted peanuts.
- Managu- Dried managu.
- Tomato- Sauce