Beruflich Dokumente
Kultur Dokumente
ATTRA "O0WFSWJFX
"1VCMJDBUJPOPG"553"/BUJPOBM4VTUBJOBCMF"HSJDVMUVSF*OGPSNBUJPO4FSWJDFttXXXBUUSBODBUPSH
$POUFOUT
*OUSPEVDUJPO
$BQUVSJOH7BMVFBOE
$SFBUJOH7BMVF
4UBSUJOHB'PPE
#VTJOFTT
'BSNBOE'PPE#VTJOFTT
1SPmMF1FSTJNNPO)JMM
#FSSZ'BSN
/PO'PPE0QUJPOT
,FZTUP4VDDFTT
3FGFSFODFT
'VSUIFS3FTPVSDFT
3FTPVSDFTGPS4UBSUJOHB
'PPE#VTJOFTT
A
s farmers struggle to find ways to choose to add value in other ways. On a
increase farm income, interest in “add- larger scale, producer-controlled process-
ing value” to raw agricultural products ing for energy, fiber, and other non-food
has grown tremendously. The value of farm uses are options. On a smaller scale, items
products can be increased in endless ways: such as flower arrangements, garlic braids,
by cleaning and cooling, packaging, process- grapevine wreaths, willow baskets, wheat
"553"/BUJPOBM4VTUBJOBCMF
"HSJDVMUVSF*OGPSNBUJPO4FSWJDF
ing, distributing, cooking, combining, churn- straw weavings, sheep and goat milk soaps,
JTNBOBHFECZUIF/BUJPOBM$FO ing, culturing, grinding, hulling, extracting, and wool mulch are a few examples. In
UFSGPS"QQSPQSJBUF5FDIOPMPHZ
/$"5
BOEJTGVOEFEVOEFSB drying, smoking, handcrafting, spinning, addition, ideas for providing entertainment,
HSBOU GSPN UIF 6OJUFE 4UBUFT
weaving, labeling, or packaging. (1) Today, information, and other services associated
%FQBSUNFOU PG "HSJDVMUVSFT
3VSBM#VTJOFTT$PPQFSBUJWF4FS more than ever, adding value means “selling with direct marketing are abundant.
WJDF 7JTJU UIF /$"5 8FC TJUF
XXXODBUPSHBHSJ the sizzle, not the steak.” The “sizzle” comes Besides offering a higher return, value-
IUNM
GPSNPSFJOGPSNB from information, education, entertainment,
UJPOPOPVSTVTUBJOBCMF
added products can open new markets,
BHSJDVMUVSFQSPKFDUT /$"5 image, and other intangible attributes. create recognition for a farm, expand the
market season, and make a positive con- alliances can offer a way to pool resources
tribution to the community. However, and manage risks. In some cases, produc-
adding value is not a panacea for all the ers lose marketing or processing facilities
problems rural America is facing. It is a when corporate agribusinesses close local
long-term approach, not a “quick fix.” It facilities. For example, when Iowa turkey
requires the willingness and ability to take farmers lost an Oscar Mayer processing
on risk, as well as adequate capital, man- plant and feed mill, the producers formed
agement skills, and personal skills—such Iowa Turkey Growers Cooperative and
as the ability to interact with the public— purchased the facility in 1996. (5) The
to succeed. Iowa Turkey Growers Cooperative contin-
ues to produce and market whole and fur-
$BQUVSJOH7BMVFBOE ther-processed turkey products year round.
Research from Purdue University (5) shows
$SFBUJOH7BMVF that producers do stand to benefit from
Brees et al. (2) make the distinction between diversifying into a value-added business
a strategy to capture value and a strategy related to the producer’s product, when the
to create value. This distinction is impor- product is characterized by volatile prices
tant to understand, because each strategy at the farm-gate level but relatively steady
%JSFDU.BSLFUJOH offers specific opportunities and risks that
1VCMJDBUJPOTGSPN prices at the wholesale or retail level. The
influence the success or failure of the value- turkey industry is such an example, and
"553"
added venture. turkey producers benefited from diversify-
%JSFDU.BSLFUJOH
For producers, capturing value usually ing into processing. In many cases, such as
'BSNFST.BSLFUT means capturing some of the value added livestock processing, economies of scale can
$PNNVOJUZ by processing and marketing. For exam- make it impractical for producer alliances
4VQQPSUFE ple, the producer’s share of the food dollar to own the entire processing plant, if the
"HSJDVMUVSF $4"
has seen a steady decline since 1900. (3) alliance is not able to support an operation
4FMMJOHUP In 2005, the average farmer’s share of the large enough to achieve those economies.
3FTUBVSBOUT food dollar was 22 cents, down from about With a captured-value strategy, producers
33 cents in the 1970s. (4) The rest of the may face lower production risks, because
#SJOHJOH-PDBM'PPE
UP-PDBM*OTUJUVUJPOT
food dollar goes to processing, distribution, production processes are well known and
and marketing. More and more, produc- often linked to traditional agricultural pro-
.BSLFUJOH4USBUFHJFT ers are attempting to increase their share
GPS'BSNFSTBOE duction. Even when producers themselves
of that food dollar by engaging in activi- are not familiar with processing, expertise
3BODIFST
ties such as direct marketing to consumers, in those areas can be hired. Captured-
turning farm products into food products, value ventures face an extremely competi-
and joining producer alliances and coop- tive marketing environment, where demand
eratives that invest in facilities to process is high, cost and efficiency considerations
their farm products on a larger scale. are paramount, and high volumes of prod-
Marketing directly to the consumer can ucts must be processed in order to gain effi-
be done on a small or large scale and in ciencies of scale. These ventures are often
a variety of ways. Options for the pro- turning commodities into different commod-
ducer who enjoys direct contact with con- ities and, while value is added, it may not
sumers include selling at farmers’ markets actually be captured by the producer.
and through community supported agricul-
For example, producer-owned coopera-
ture systems. Other options include sales
tives have attempted to enter the wet corn
directly to restaurants and local institutions,
milling industry. However, this industry is
as well as mail order and Internet sales.
extremely concentrated, with the top three
Large scale processing through producer firms having more than 80 percent of the
alliances, such as agricultural co-ops market share for corn sweetener, one of
or limited liability companies, has seen the most important wet milling products,
growing interest among producers. These and similar market shares for the other wet
1BHF ATTRA "EEJOH7BMVFUP'BSN1SPEVDUT"O0WFSWJFX
milling products. In this case, one com- two different approaches to adding value to
modity, corn, is being turned into another soybeans—a cooperative venture in a crush-
commodity, corn sweetener, and the pro- ing plant, using a captured-value strategy,
ducer cooperative faces a marketing envi- and producing a new “soy nut” product,
ronment in which it is almost impossible to using a created-value strategy. The crush-
compete successfully. Indeed, two of the ing plant in their example added about $1
most recent producer-owned cooperatives per bushel from the meal and oil produced.
that attempted to enter the wet milling mar- The crushing plant faced narrow profit
ket, American Crystal Sugar’s ProGold facil- margins and stiff competition, common
ity and Minnesota Corn Processors, could challenges for captured-value ventures,
not compete and ended up being acquired where the processing and marketing risks
by the top three firms. (5) For more infor- are relatively low.
mation on getting off the commodity tread-
Producing soy nuts that retailed for $3.95
mill, request Moving Beyond Conventional
Cash Cropping from ATTRA. per 9-ounce package, on the other hand,
added almost $420 of value per bushel.
A created-value strategy, on the other hand, While the markets for soybean meal and
relies on products or services that are oil are very large, the market for soy nuts,
unique or different from the mainstream and thus the total amount of value added, is 'PPE1SPDFTTJOH
equivalent. These often include a real or 1VCMJDBUJPOTGSPN
very limited. Product and market develop-
"553"
perceived quality attribute such as organic ment and compliance with food safety and
certification, a brand image, identification packaging laws all require time and money. (SBJO1SPDFTTJOH
with a specific geographic region and/or pro- However, for the small-volume producer "EEJOH7BMVFUP
ducer, identity preservation, environmental 'BSN1SPEVDUT
who cannot compete with the large-volume
stewardship, and so on. Creating value can producers on price, targeting niche markets 0JMTFFE1SPDFTTJOH
pose higher production risks than capturing with a created-value strategy offers the high- GPS4NBMM4DBMF
value. It usually requires learning new pro- est likelihood of success. 1SPEVDFST
duction and marketing skills, dealing with &EJCMF4PZCFBO
food safety, labeling, and other regulations, Many producers combine aspects of both
1SPEVDUJPO
and coping with liability issues and insur- capturing and creating value in their ven- BOE.BSLFUJOH
ance. Demand for the innovative product tures. A producer may create an unusual
food product, such as local specialty bread, 'PPE%FIZESBUJPO
or service must usually be created through 0QUJPOT
advertising, promotion, and consumer edu- and sell it at the farmers’ market, capturing
cation, and this is a lengthy, expensive pro- more of the food marketing dollar. Food 4PSHIVN4ZSVQ
cess. Marketing risks may be lower with processors may use organic or unusual 7BMVF"EEFE%BJSZ
a created-value strategy, for if this demand ingredients, and so on. 0QUJPOT
can be established, there is potential for
higher, stable prices and little direct com- 4UBSUJOHB'PPE#VTJOFTT
petition. Contract agreements for iden- The food business is extremely competitive
tity-preserved products such as high-lysine and dominated by a few large companies
corn reduce competition from other pro- that are driven by cost and price consid-
ducers, for example. On-farm events and erations. Food is considered a “mature”
activities offer a unique setting that cannot industry, which means very little growth in
be copied by other producers. However, demand. Food manufacturing continues
producers will need to learn new market- to face narrowing margins and decreasing
ing skills, carefully assess feasibility, and profits. Retailers are wielding more and
develop marketing plans for created-value more power over food wholesalers and man-
products or services without established
ufacturers, and requiring manufacturers to
marketing channels.
pay more for shelf space (“slotting fees”),
The amount of value that can be added is bear more of the product development risk,
affected by whether the enterprise is captur- and provide product uniformity and qual-
ing or creating value. Brees et al. (2) cite ity. Smaller processors could have trouble
XXXBUUSBODBUPSH ATTRA 1BHF
For more information and resources on the
$BTF)JTUPSZ specialty foods industry, visit the National
7BMVF"EEFE"HSJDVMUVSF Association for the Specialty Food Trade’s
'SPN0VS'VUVSFTPOUIF5BCMF
'BSN&OUFSUBJONFOU
.BOZGBSNNBDIJOFTBU According to Agriculture Specialist
"34#FMUTWJMMF"HSJDVM Katherine Adam, in Entertainment Farm-
UVSBM3FTFBSDI$FOUFS ing and Agri-Tourism, “While the popular-
SVOPOBNJYUVSFPGEJF ity of specific enterprises—such as pump-
TFMGVFMBOECJPEJFTFM
XIJDIJTNBEFGSPNTPZ
kin patches or U-pick orchards—may ebb
CFBOPJM and flow, the public’s desire for a ‘farm
1IPUPCZ#PC/JDIPMT experience’ remains.”
$PVSUFTZPG64%""34
Small diversified farms are ideally suited to
agri-entertainment. Unlike the mega-hog
facility or a corn/soybean operation producing
bulk commodities, the small farm can recre-
ate an earlier, simpler, human-scale vision of
#VTJOFTT1MBOOJOH3FTPVSDFT
"DPNQSFIFOTJWFCVTJOFTTQMBOUIBUJODMVEFTNBSLFUJOHBOEmOBODFTDBOIFMQEFUFSNJOFUIFGFBTJCJMJUZPGBWBMVFBEEFE
FOUFSQSJTF%FWFMPQJOHZPVSCVTJOFTTBOENBSLFUJOHQMBOIFMQTZPVEFmOFZPVSCVTJOFTT
DSFBUFTBSPBENBQUPPQFSBUFUIF
CVTJOFTT
TFUTUIFHPBMTZPVXJMMBJNGPS
BOETBUJTmFTPVUTJEFSTSFRVFTUTGPSBXSJUUFOFYQMBOBUJPO5IFCBTJDTPGBCVTJOFTT
QMBOJODMVEFUIFGPMMPXJOH
8IBU %FTDSJCFZPVSQSPEVDUPSTFSWJDF
8IZ %FTDSJCFUIFOFFEGPSZPVSQSPEVDUPSTFSWJDF
8IP %FTDSJCFUIFDVTUPNFS
8IFO %SBXBUJNFMJOFBOEMJTUBMMUIFUBTLTUIBUOFFEUPCFBDDPNQMJTIFE
8IFSF %FTDSJCFUIFMPDBUJPOPGZPVSCVTJOFTT
#VJMEJOHB4VTUBJOBCMF#VTJOFTTB(VJEFUP%FWFMPQJOHB#VTJOFTT1MBOGPS'BSNTBOE3VSBM#VTJOFTTFTIFMQTBMUFSOBUJWFBOETVT
UBJOBCMFBHSJDVMUVSFFOUSFQSFOFVSTEFWFMPQQSPmUBCMFFOUFSQSJTFT4BNQMFXPSLTIFFUTJMMVTUSBUFIPXSFBMGBSNGBNJMJFTTFU
HPBMT
SFTFBSDIFEQSPDFTTJOHBMUFSOBUJWFT
EFUFSNJOFEQPUFOUJBMNBSLFUT
BOEFWBMVBUFEmOBODJOHPQUJPOT#MBOLXPSLTIFFUT
IFMQQSPEVDFSTEFWFMPQEFUBJMFE
MFOEFSSFBEZCVTJOFTTQMBOTBOENBQPVUTUSBUFHJFTUPUBLFBEWBOUBHFPGOFXPQQPSUVOJ
UJFT*UJTBWBJMBCMFBUOPDIBSHFPOUIF*OUFSOFUBUXXXNJTBVNOFEVQVCMJDBUJPOTCJ[QMBOIUNM1SJOUDPQJFTBSFBWBJMBCMFGPS
QMVTTIJQQJOHBOEIBOEMJOHDIBSHF
5PPSEFSDPQJFT
DPOUBDU
4VTUBJOBCMF"HSJDVMUVSF1VCMJDBUJPOT
)JMMT#VJMEJOH
6OJWFSTJUZPG7FSNPOU
#VSMJOHUPO
75
'"9
TBOQVCT!VWNFEV
6TFGVMSFTPVSDFTGSPN"553"JODMVEF
"HSJDVMUVSBM#VTJOFTT1MBOOJOH5FNQMBUFTBOE3FTPVSDFT
4PVSDFTPGBHSJDVMUVSBMCVTJOFTTQMBOOJOHUFNQMBUFTBOEPUIFSSFTPVSDFT
&OUFSQSJTF#VEHFUTBOE1SPEVDUJPO$PTUTGPS0SHBOJD1SPEVDUJPO
4PVSDFTPGJOGPSNBUJPOPODPTUTBOESFUVSOTPGPSHBOJDQSPEVDUJPO
1BHF ATTRA