The importance of value addition to your farm produce can’t be underestimated however; the concept of value addition can be misunderstood...
The importance of value addition to your farm produce can’t be underestimated however; the concept of value addition can be misunderstood by farmers and value chain actors. The common interpretation of value addition is the process of turning a raw produce into another un-identical form which would increase its monetary value. Yes this is true but there is another meaning to value addition which does not necessarily transform the produce to another form nor does it cost a dime but would eventually increase the market value of the produce.
3 ingredient of veggies production
Value addition can’t stand in isolation. The perfection of the concept of value addition starts from the very first day the seeds are planted. In order word; the beauty of value addition can only be seen when the farmers and the value chain actors in questions understand:
- The right production techniques
- The logistic of production and coordination of the whole process vis-à-vis right decision making
- The marketing process and the right market
The perfect understanding of the right market would inform the farmers or value chain actors in question on how the value should be added.
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Understanding the market sentiments
Market sentiment or the attitudes of customers toward display produce at the market which determines the pricing is often control by the quality of the produce, packaging, attractiveness etc. all these can be said to be factors of a face value. How do you present your produce, what manner of packaging material is used among other additions define the face value created!
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| Retailer displaying attractive produce at the top |
- First impression: First impression as it is commonly says last long. Buyers and consumers are always attracted to very good produce at the farm or market and market prices in relative to grades of produce are set accordingly. It is therefore very essential to create the first impression to the buyers and or consumer in order to take advantage of that aspect of human psychology: First impression count!
- Analogue of sachet water and bottle water: every other things being equal, there is no much difference between the content of sachet water and bottled water except in the packaging materials. The difference in packaging materials is responsible for the price of one being 500% more than the other. This scenario also plays out in the fresh vegetable markets. The quality of what is mostly found in supermarkets is always available in the general market but the value addition is often very poor therefore necessitating for wide price difference. Even at local markets, the price of one basket of tomato could be up to 30% more than the other due to their face value. Take a look at the 2 tomato baskets in the picture.
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| Homogeneous content but different presentations |
The appearance, attractiveness, quality vis-à-vis face value are ocean apart right? I can bet it with you that the content is out rightly homogeneous but the value addition makes all the difference.
You may also read on How to increase your farm efficiency
Understanding market packaging structure
Every market as it is for every produce has its packaging structure. For example; in general markets at wholesale level, tomatoes are package in raffia baskets, cucumber, cabbage, carrot etc. in sacks, bell pepper in sacks or cartoon, hot pepper in raffia basket or sacks, onions in woolen sack etc.
For your produce to be well accepted in the market by the buyers; it is essential you stay within the confine of this packaging structure and if at all you wishes to deviate, it must be in the essence of value addition.
- The following are the likely principles that must be followed as farmers
- You must obey the market packaging structures and or deviate a bit true value addition
- You must obey visual produce quantity per unit i.e. the package material must be full to the bream otherwise price reduction is likely
- You must understand and obey the 3 ingredients of market appeal
- You must understand market supply dip and surplus period/season
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Market appeal
Market appeal can play out at every level of the value chain; farm gate, wholesales market and retail level. Local market retailers are aware of this principle therefore often make use of it a lot in the battle of price psychology. While displaying their fresh produce, they put the very best among grade A on the very top to appeal to and attract passer-by customers. Once the customers fall for this bait, it is often very difficult to leave the spot except for the very determined. Even if the customers do not really want to buy that product at that time, the person often found themselves buying.
The 3 ingredients of Market appeal (The value addition principles)
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| Sorting, grading and packaging at farm level |
Sorting and Cleaning: This is the process of separating bad produce from the very good ones in order to reduce contamination and cleaning the good ones of debris and any defacing particles.
Grading: This is the process of separating produce into categories according to the degree of their quality and selling the grades separately at different prices. It may not necessarily means selling separately but could be sold together but the Grade A would be put at the very top to attract buyers.
Packaging: This is act of making produce to look more attractive to prospective buyers than what it actual value commands by using various devices – using attractive packaging materials, putting the very best, great matured colour, big sizes etc. at the top.
These are what were referred to as value additions at the beginning of this article. As simple as it looks, it determines how fast produce would be sold and at what price. Always remember that irrespective of the place you fall along the value chain, market appeal principles must be followed in order to win the price psychology battle during sales. I trust this article would help you along the way in your farming business. Do come back to me at the instance of any question, submission and critic. Cheers!
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