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Author Topic: How to Increase Profitability By Adding Value To Farm Products in Nigeria  (Read 2883 times)
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« on: August 10, 2014, 10:13:38 PM »

The term “value-added agriculture” gets tossed around a lot, but what does it really mean? Many farmers want to increase profitability and adding value to raw agricultural products in one way to accomplish that goal. To achieve this however, farmers need to think in new and different ways and break away from focusing all of their efforts on production. There are two ways to add value: by capturing value or creating value.

Capturing value relates to capturing some of the value that is added to a product by processing or marketing. The farmer’s share of every Naira that consumers pay for food has been shrinking over the years.

The farmer continues to get less and the rest goes to processing, distribution and marketing. These figures sound discouraging but clearly illustrate the potential opportunity to attain more value.  

Farmers can capture value by entering the processing arena—turning farm products into food products adds significant value. This involves risk and requires a new skill set. Often farmers can create alliances in cooperatives or limited-liability companies that can combine resources to achieve common goals..

Direct marketing is also a way to capture value and can be done in a variety of ways on both a small or large scale. On-farm stores, farmers’ markets, mail order and Internet sales have proven to be beneficial in capturing value. Many farmers are also now achieving a bigger profit margin by direct sales to the food service industry serving restaurants, schools and hospitals.

Creating value is another strategy that involves developing products that are differentiated in some way. The product difference may be real or perceived.
The key to success is that the consumer feels there is added value to the product and is will pay for it. Creating value can be accomplished with branded products or those with special certification.

e.g Maize farmers: sell cooked or roasted corn

Now let me tell you how much that amount of corn would be bought be consumers if its boiled or roasted and sold on the streets.

1 roasted or boiled cub of corn sells for 50 Naira each on average.
Lets assume that from the 200,000 cubs per hectare, we lose 25% and are left with 150,000 per hectare
If that amount of corn were sold retail we would get 150,000 cubs x 50 Naira = 7.5 million per hectare.
Your total farm would sell for 7.5 million

Yes. 52.5 million Naira is the amount your corn would sell for on the streets by the time a simple value of Roasting or Boiling has been added to it. That is a very long way from what you will get if you choose to sell your corn at the

Your Catfish and Tilapia: Into pepper soup product (brand)eg “kola soup”
Your cassava: Into Garri product (brand) eg “Ay garri”
Your plantain: Into plantain chips product (brand) eg marvelous Chips
« Last Edit: August 13, 2014, 02:41:13 AM by moderator1 » Logged

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