Value-added production is when you take raw agricultural goods and process them into consumer-ready goods that have a higher market value. Value added goods include but are not limited to:
There are also non-food value-added products, such as soaps made with goat milk or crafts made of dried herbs.
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If you are already a producer of raw agricultural products, value added production can increase your profit margins and extend the shelf life of your products. If you are interested in starting a food related business and purchasing the raw ingredients you need, value added production is still a great business to pursue.
This is a great question to ask before you begin your entrepreneurial efforts in value-added production. Most people have a specific product in mind when they consider value-added production, so your first step is to research and evaluate the market for that product. Ask around town, see what value-added products are sold at farmers markets and grocery stores, conduct online research, and/or seek entrepreneurial advice from organizations such as Accion New Mexico, WESST, The Loan Fund, or Albuquerque SCORE. Once you have determined that there is in fact a market for your product, you can then begin working on your business plan.
Processed food products to be sold for human consumption must be produced in a commercial kitchen. In New Mexico there are 4 regulatory authorities that certify commercial kitchens/permit food processors. If you are processing food in a commercial kitchen located in:
The New Mexico Farmers Marketing Association offers a listing of community commercial kitchens in New Mexico. Also, you may choose to find an existing private commercial kitchen and rent the space when it is not in use. Some processors may choose to have their very own commercial kitchen, however this can be a costly option due to up front equipment and kitchen costs.
Whether you grow it yourself or purchase from a local grower, using locally grown ingredients can translate into a better tasting product. By sourcing local ingredients you can also enter into the "local food" niche market, which means increased market potential and higher sales. Some value added producers choose to source many locally grown ingredients, while others may use a few and expand as more locally grown ingredients become available.
The best way to sell at a farmers market is to find one near you and contact the market manager. The market manager can give you more information about their market as well as an application form. If there are a variety of markets in your area, visit each one to find the market/s that fit your schedule and business needs.
There are a variety of other places to sell your value-added product, such as retail grocery stores and specialty shops. To get started selling your product in retail locations, think small and local. Many processors have success selling to stores such as Kellers, John Brooks, and La Montanita Co-op, as these retail locations can generally accommodate smaller scale processors. As your business and production expands, you can then look into larger retail operations or national chains, such as Sprouts and Whole Foods. A variety of tourist-style retail stores also sell value added food products, especially those made with traditional New Mexico crops such as chiles or prickly pear fruits.
Absolutely. Even if you don't intend to sell your products online, having an online presence for your business is great advertising and can increase your market potential.
Find out how to increase your profits. Also, if you are selling at a farmers market, the New Mexico Farmers Marketing Association has some great tips for increasing your sales.
The Agriculture Collaborative hosts monthly meetings on a variety of topics, many of which are of interest to crop and livestock producers. Sign up today for our e-newsletter and learn about upcoming meetings and workshops or view our past meeting topics online. Our local food blog and our events calendar can help keep you up to date on what is happening locally and nationally with local foods and agriculture. Be sure to also see the food processors resource listing.