Entrepreneurial talent seems to come naturally to many farmers. But that doesn’t mean you’ll always be a natural at value adding. There’s a world of difference between getting a good deal on a load of fertilizer versus launching a new value-added product.
In fact, value adding can feel like uncharted territory. But that can be an oversimplification too. The real truth is probably somewhere in the middle. As a farmer, you’ve got good instincts and you’ve learned a lot of critical business lessons. Now you need to figure out what skills you need and what tests you have to pass in order to drive your idea to success.
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One of those tests is whether you can think like the person that you’re depending on to buy your product.
But at the very start, most entrepreneurs hesitate over two other basic questions. Is there some sort of process or approach that will help me come up with a winning idea? And, how can I be sure that this is an idea worth pursuing?
Gary Morton, a Coldbrook, Nova Scotia consultant who has helped farmers launch value-added products for more than 20 years, recommends farmers take a step back and shift their perspective when trying to think of ways to add value to their operations. “Really open up your mind,” says Morton. “Look at what’s going on in other food sectors, even at what’s going on outside of agriculture.”
You may be looking at your dream in terms of adding price. But it isn’t going to work if you don’t first think of it in terms of adding value. What is it about your product or service that will make it more valuable to the target customer who buys it, so they’ll be willing to spend more in order to get it?
There are many ways to increase this perceived value including: offering a higher grade of quality, a special variety or unique breed; a new distribution channel; or through a promotional strategy, branding or further processing.
The better you understand your customer’s needs and desires, and the better you know what would make their lives easier and help them solve some of their problems, the more value they will see in your product, Morton says.
An obvious place to start is to look at transforming something you grow into something gourmet, like specialty livestock breeds. Other options could start with specially processed grains or oilseeds, or even selling cut flowers, garlic, herbs, bedding plants, sweet corn or handmade soap, to name just a few possibilities. You could even open your farm as a wedding venue, or develop an on-site retail or processing business.
The easiest place to begin your research is with an online search. You can look up demographic information and find out what other businesses are offering. You can also look at local-food websites in Canada and abroad, or you can search for specialty crop applications that other farmers are already developing.
Watch for the drivers of change. These include trends in population demographics. Aging baby boomers want to maintain their health into their retirement years by eating healthy foods. Millennials and Gen Xers have shown a strong interest in socially responsible eating. Increased immigration has meant increased demand for fruits and vegetables from Asia, Africa and the Caribbean. Time savers have proven popular with time-crunched parents who work outside the home in the majority of families.
Buzz words can give you ideas too, such as local, sustainable, healthy, responsible animal welfare, culinary tourism. These are just some of the latest trends, but even the experts admit it can be difficult to predict where they’ll go from here.
“I think of my customers as people who eat,” says Plattsville, Ont. organic vegetable grower Nathan Klassen. Many times, his customers simply want to feel they have a link to the farmer who is producing their food. That’s a value that Klassen says he can deliver on. “We don’t look to be ahead of trends too much with our products. Our main planning tool is past performance.”
Most of the people who stop at his farmers market stall are looking both for a quality healthy product plus that sense of connection to where their food comes from, says Klassen. Quality and consistency are what keep his customers coming back. “People know what they like, and they know what they get will be of similar size and quality each week,” he says.
Organizations that represent the farmers who are involved in direct marketing are another good source of information and support. Meghan Snyder, co-owner of Snyders Family Farm, an agri-tourism destination near Ayr, Ont., says she has learned a lot through her membership in the Ontario Farm Fresh Marketing Association (OFFMA). “We all learn from each other,” she says.
This group regularly takes tours to other areas including other countries. These tours are a source of new ideas for the members. Farmers often see something elsewhere that isn’t being done at home yet, says OFFMA executive director Cathy Batholic. The tours are also an opportunity for farmers to network with each other and to bounce ideas off one other, she adds.
Cindy Wilhelm, co-owner of Dragonfly Garden Farm near Chatsworth, Ont., advises farmers to join groups online through Social Media like Facebook and Twitter. “We have access to the knowledge of thousands of farmers who openly share their experience with just a few clicks of the mouse. Ask for help when you need it. The family farm community wants to see you succeed.”
Mark Gerber, co-owner of Oakridge Acres Country Meat Store, says they try to stay on top of healthy eating trends and maintain close ties with health care providers such as naturopaths and nutritionists. They sell drug-free meat from 40 different farms along with gluten-free products, which appeals to the health-conscious consumer, explains Gerber.
Often it is existing customers asking for things that sets a value-added business in a new direction. After repeated requests for cooking instructions from their customers, Gerber realized their customers had become reliant on the ready-made dinners available from grocery stores. In response, the Gerbers added a certified kitchen to their store where they make healthy meals using their meat. “It’s another way of marketing our animals,” says Gerber who adds that he wishes they had built the new kitchen twice as big to accommodate the demand.
Morton says one of the most common mistakes he sees farmers make when developing value-added products is not spending enough time validating their idea early in the process. Too often the process is product-driven.
Sometimes farmers get some seed funding and they take this as a sign that the product they have is something the market wants. Instead, Gerber recommends farmers make a prototype, and then test its selling power at a few events or special markets. “Listen to the people giving you the money,” Gerber says, who then adds, “See if you get repeat customers.”
The goal, says Gerber, is to be sure you have a good grasp on what the market actually wants, and not just what you think it wants or what you want to make.
It’s like the old saying: it is a lot easier to ride a horse in a direction it already wants to go. Likewise, it’s easier to sell customers something they already want.
This is the second in a series of four value-adding columns from New Dundee, Ont., writer Helen Lammers-Helps. She can be reached at [email protected].
