The profitability of Processing and Value Addition
Food and agriculture Organisation deduced that over 50% of farm produce waste due to lack of storage, post-harvest losses now claim almost all the significant profit of farmers day by day. Local Nigeria farmers that contribute to over 80% of our food production now harvest their farm produce and they are forced to sell at ridiculous prices because they don’t have the facility to store or transport their farm produce from one place to the other. Processing has been the trending topics this days especially for youth interested in agriculture, processing still stands as one of the posh arena for youth and the youth are really disrupting this area diligently. Processing is one of the most evangelized chain in the agricultural sector, the rich and the poor wants to get involved with processing, no one want to keep selling raw because of the losses recorded over time. Fish farmers now convert their harvested fish to smoked fish and get it well packed for the mall, cassava farmers now convert their cassava to flakes, chips, flour for larger consumption which result to higher profit, poultry farmers now have risky joint at the front of their farms to make sure their eggs is not sold to retailers at ridiculous prices, vegetables farmers now dice their vegetables and even deliver to customers at their door step.
Value addition seems simple to a lot of people in and outside the sector and it serve as the most fancy part of agribusiness and farming, you get to package your produce after being produced from the farm and even get to add more money which leads to better profitability, all of this can’t be overemphasized but are farmers really getting enough profit? Are processors getting enough profit? Are the value being added paid for? Are values seen on Nigerian farm produce worthy of more Naira? Are processed food critically produced?
Value addition is seen to describe the economic modification a company gives its products, goods or services before offering them to customers. Value-addition helps to explain why companies are able to sell their goods, products or services for more than what cost them to produce. Adding value to products and services is very important as it provides consumers with an incentive to make purchases, thus increasing a company’s revenue and bottom line.
Value-addition could thus apply to instances when a firm takes a product that may be considered homogeneous with few differences from that of a competitor and provides potential customers with a feature or add-on that gives it a greater perception of value. Adding a brand name to a generic product can be just as valuable as producing something new or in a way that no one has thought of before.
Can we say value addition to product is profitable? Well, in many controlled instances, YES! Addition of value to a particular farm produces does not make it only attractive, it communicate easy lifestyle to it users. If I can get grounded pepper from MOU Agro why should I get ungrounded pepper to grind at home again? The world has moved from producing women that spent hours cooking for their husbands to women that cook but time conscious. No one want to spend three hours cooking a meal that can be done in 30 minute or even faster. If I can get my cassava flakes (garri) in the market why should I get cassava and try extracting cassava flakes from it again? Value addition is highly profitable provided that the firm knows their target market and audience, provided they know the right person to sell to.
How then do we add value and make profit?
- Understand your value chain: Farmers are to understand the value chain of the crop you are producing, understand the end product that it can be converted to, understand the mathematics of the plant and how extraction or drying or other method of processing can be carried out. A cassava farmers can’t compare himself/herself with a cashew farmer because their value chain is quite different and they can’t use the same machine to arrive at same result. A poultry farmer should not compare his/her value chain with a vegetable farmer, it won’t work, it is important all farmers understand their farm produce value chain, it makes profitability sweeter.
- Start small: Recently I was on a programme with a popular cassava farmer in Nigeria and she made a statement and directed it towards the youth, she said it is impossible to want to start cassava farming and the first thing you want to buy is a processing plant when you don’t even have a customer, we as farmers, let us learn to start small. When starting up, instead of purchasing all fixed asset with a loan why not partner with a processing plant close to you, produce on your farm, process with them, sell to your target market and gather a strong customer base that keeps returning to buy from you before you loan up for fixed asset.
- Incorporate the standards: After you have gathered the right knowledge and started small, perspire to incorporate the standard, you can’t keep producing the food people will eat without walking up to some official federal organisation for a seal, stop spreading unhealthiness. Work towards incorporating the standards.
- Improve your packaging skill: I presently follow a page on Instagram called splashofgreen not a Nigeria company, I fell in love with their food packaging, I keep saying this, farmers should not just stop educating themselves, it is not bad to take up packaging classes, it is not bad to look into developed countries and see the way they package their food, stroll to malls and see the way imported food are well packed. It add value to farm produce and make people pay more.
The profitability of processing and value addition lies in our ability to tap into the loopholes of our farm produce and let us all make consumers eat right and at the same time make our pocket heavy with cool cash.