Value-adding is simply the act of adding value to a product, whether you have grown the initial product or not. It involves taking any product from one level to the next. For farmers, value-added has a particular importance in that it offers a strategy for transforming an unprofitable enterprise into a profitable one.
For example, a coffee farmer who simply grows and harvests his or her coffee cherry, and then sells it “as is” to a local processor, usually sells at a price below the cost of production. This marketing plan may be viable in the short run, because it covers the cash costs involved in producing the crop. But what if the farmers dream of bigger and better things, like extending his farm, buying some new equipment or upgrading his donkey for the latest model? That’s where it’s kind of handy to have a few bucks left over after all the basic bills have been paid. In other words, selling coffee ‘as is’ at the current market prices will never be a profitable option when it comes to Farmer Joe.
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