Compelling reasons to add value to your produce
Posted Wednesday, June 11 2014 at 01:00
While farmers put a lot of effort in their crops or livestock, they tend to get the least out of it when it comes to the market. Why is it? How can this change? It is by adding value.
For so long, we have been very comfortable with the way we have traditionally handled agricultural produce. In Uganda, most fruits, vegetables and other foods are eaten fresh and any leftovers immediately thrown away.
Since we have been endowed with good weather that hardly reaches either extremes, we never have felt the urgency before to consume food in an efficient manner, let alone preserve it.
Let us take a look at these scenarios:
• The cost of a basin of tomatoes during harvest season at the farm gate is equivalent to two bottles of tomato sauce, which are less than 300mls in size each.
• The cost of a kilo of poorly handled mukene (silver fish) at the shores of Lake Victoria is equivalent to the cost of less than 200 grams of supermarket-grade packed mukene.
• Gorillos, a favourite snack for school children, is a by product of maize. A packet of 60 grams is equivalent to the cost of one kilo of maize at the farm gate.
• A measure (mulengo) of four large mangoes sold at those roadside markets, which are along the highways, costs Shs2,000. The same mangoes can make three glasses of thick concentrated juice that will sell for no less than Shs7,500.
The reason behind this anomaly is very simple; It is called value addition.
Broadly, value addition refers to economically adding value to a product following a particular process in order to form characteristics that are more preferred in the market place.
From the examples given above, it is very evident that with the continued “business as usual” approach by many of the Ugandan agricultural producers and traders, little will be reaped from the months of effort put in growing the crops or rearing the animals.
Previous government efforts have concentrated on helping farmers to embrace new methods of production or adopting new products while leaving issues of value addition and marketing to players in the private sector.
With the simplification of technology lately, not much is required to carry out basic value addition at the farm gate. Take the example of mukene (silver fish), which has traditionally been considered a dirty product, which is full of stones as a result of the poor handling.
Today, with simple approaches like rack mount drying, sorting and packing in clean bags, the improved product commands a premium. The same can apply to the milk that goes to waste during the rainy season when the production peaks. Dairy farmers could come up with other by-products like cheese and yoghurt that ensure there is no wastage but also fetch premium prices too.
With Naads now nearly buried, it is important that the next entity, which will take over the function of facilitating local agricultural producers, considers addressing value addition as an integral component towards improving rural incomes.
THE BENEFITS OF VALUE ADDITION
Value addition has some of the following benefits:
• Increased revenue. Every extra layer adds a percentage of increased financial value. This has the effect of improving the incomes of the producers. The farm gate price of a kilo of maize is a half that of a kilo of posho (milled maize). In the examples given, one can notice a more than 300 per cent increase in commercial value after the value addition process.
• It allows the producer to focus on the consumer while producing. Through meeting expectations, one creates a loyal market around the product.
Imagine if you process fruit juice from your mangoes, you would plant the right mango varieties for making juice.
• The marketing bill, which is the difference between farm gate value and retail value is growing bigger by the day. The marketing bill consists of costs of processing, marketing, transportation, among others. It is a good idea if the producer could get a share of this, especially on the processing side.
• Increased shelf life is a benefit any producer would want. The longer the product can stay without getting spoilt, the more the guarantee one has of a product selling at their preferred price.
Milk hardly lasts over 24 hours but with boiling, it can last more days while with further processing into ghee, the same milk can last months.
• With value addition comes increased bargaining power. Using the example of mukene, lakeside processors who use racks ensure that the fish is free of contaminants.
Thus, they always set their own price while their counterparts using the rudimentary “ground drying” tend to attract relatively low offers. The effect of increased shelf life also means that one does not have to rush to sell. It is a boost to the bargaining power.
• Brand Creation is one of the de facto results of value addition. The fact that your product can be directly identified with you or your farm is important in an industry where customers exercise a lot of brand loyalty. This allows them to always readily identify with you as well as win you more referral customers.
HOW TO ACHIEVE VALUE ADDITION
How can this be achieved?
• Training producers on better post-harvest handling of produce since that is the start of the journey towards a good product on the market. Bananas with brown spots certainly may not sell that much in a supermarket compared to those without.
• Training on multiple processing alternatives of produce. Bananas that are on the verge of rotting do not have to be thrown away for they are a good raw material for making our much loved pancakes (kabalagala). Surplus tomatoes, jackfruit, pineapples, for instance, can be sun-dried and stored for consumption later.
• Creating village teams of farmers that can combine their expertise and resources to collectively engage in a value addition exercise. In a scenario, where there is a community of bee keepers, instead of selling the raw product, they can invest in basic processing machinery to bottle this honey and even brand it ready for use by the end consumer. Sugarcane farmers can invest in juice extractors and, instead of selling raw sugarcanes at measly prices, earn a lot more from the extracted juice.
• Harnessing indigenous technologies for food processing that are already embedded in the local skillsets. They would merely improved on them to achieve what is otherwise being done primarily using “modern” technologies. A case in point is how ghee is processed in western Uganda.
• Educating the producers on the potential uses of the ‘waste’ material from processed raw material. Bagasse, which is the sugarcane fibre waste left after juice extraction, can be used to make paper, containers for the food industry and even as a component in hydraulic cement.
Paper making technologies have been “demystified” in India. There is low-cost machinery available for use in rural areas. This can act as a spinoff business for sugarcane farmers allowing them to sell extracted juice and at the same time making paper products like greeting cards and business cards, among others.
The author is an ICT and agro entrepreneur