What is value-added production?
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: canned vegetables, jams, sausages and jerky, bread, wine, and prepared foods such as tamales or cookies. There are also non-food value-added products, such as soaps made with goat milk or crafts made of dried herbs.
Why should I consider value added production?
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.
Is there a market for my product?
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.
By Tim Nisly,
South Valley Economic Development Center
Do you have a great recipe, and you want to take it to the next level? Do you want to sell your product to grocery stores or restaurants, or cater weddings on the weekends? Starting your own food-based business is a complicated but rewarding process, and knowing the steps to take to get your product to the public can make the process much easier.
Before you start, there is a set of "best practices" that you should go through when creating any business, such as looking at the competition, picking a legal structure, putting together costs and sales projections, and choosing your niche.' It sounds complicated but there are free resources to help you with your business plan, such as Albuquerque SCORE, an association of experienced business people who volunteer their time to help others succeed.
Once you have a business plan together, food-based businesses are required to have public health permits to ensure public safety, as you will be responsible for controlling contamination hazards and pathogens, and identifying allergens.
There are a few steps to get a processor's permit application approved. First, you need to create an operational plan, with a flow chart to show when ingredients are added, times and temperatures for cooking, as well as packaging, distribution, record keeping, and equipment and management details. Then you need to create a label with your contents, ingredients, name & address of the manufacturer, packer, or distributor, as well as a bar code. After your label is accepted, you'll have an initial inspection and then you'll be ready to cook! If this sounds like a lot of work, well, it is, but there are a variety of resources to help you along the way.
The South Valley Economic Development Center and Bernalillo County host a monthly orientation to help you succeed, where we cover many of the above topics and more. For more information, call (505) 877-0373 or visit us online.
And one final piece of advice: If you're truly interested in starting a food-based business, find someone who has done something similar (who isn't a direct competitor) and ask them how they did it. You'll find that people are more than willing to talk about their successes, and you'll get some great information that will save you a lot of time and money.
Does my product need to be produced in a commercial kitchen?
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:
Where can I find a commercial kitchen?
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.
Should I use locally grown ingredients?
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.
How do I sell at a farmers market?
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.
Where else can I sell my product?
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.
Should I market my products online?
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. It's easier and cheaper than you may think - learn more about web marketing here.
How can I increase my profits?
Find out how to increase your profits here. Also, if you are selling at a farmers market, the New Mexico Farmers Marketing Association has some great tips for increasing your sales.
What resources are available to me?
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.