A large number of people are producing agricultural products, especially food products. Farmers may be growing fruits, vegetables in their farm. The farm produce is a commodity and the prices will large depend on market conditions, the demand and supply for the product. These prices are usually low so many large producers and companies are preferring to sell value added food supplier products. Those who are not familiar with the process of value addition will ask the question what is value added food, so that they can decide whether they wish to add value.
Value addition for food is the improvement in the value of the food by processing it further so that it is easier to consume or can be used for a longer time or consumers will pay more for it. For example for many agrocommodities like beans, the user will have to spend time shelling the peas and they can be used only for a shorter period of time. If the peas are shelled and frozen, the consumers are saving some time, so they will pay more. Similarly, many food products like spring rolls or beer battered prawns are prepared, combining different ingredients so that the user only has to heat the food before eating, he does not have to waste time in preparing, collecting the different ingredients.
It is usually very difficult to gauge the consumer demand for the various value-added products. A large number of companies are launching various food products after adding value to them, yet only a few of the products are successful. Typically only one third of the food items which are introduced every year become popular with the customers. The value-added food item is considered successful only if the manufacturer is able to make a profit after considering the money invested in developing, manufacturing and marketing the food item. Usually at least one year is required to develop a food product.
There are multiple stages in developing a food product, so a large investment is required. The first stage is screening the different options for making food products available to the manufacturer based on customer preferences, cost and other factors. The feasibility of making and marketing the product at an affordable cost is then checked. The cost of the making the food item, considering all the ingredients and manufacturing expenses is calculated. Prototypes of the food item are prepared in small quantities for test marketing. The food item samples are distributed among potential customers to get their feedback on these food items.
If the response to the market research is favorable and customers like the food item, the seller or manufacturer will make arrangements for large scale production. Suitable machinery will be procured for manufacturing, packing the processed product. Companies which supply the ingredients used for making the food item, will also be identified and orders will be placed. Existing retailers, dealers and distributors will be informed about the product, provided samples, so they can place orders. The food item is then manufactured on a large scale commercially for selling to customers.