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Robert M. Kerr Food & Agricultural Products Center

What is Value-Added?

Value-Added is the process of taking a raw commodity and changing its form to produce a high quaility end product.

Value-Added is the process of taking a raw commodity and changing its form to produce a high quaility end product. Value-Added is defined as the addition of time, place, and/or form utility to a commodity in order to meet the tastes/preferences of consumers. In other words, value-added is figuring out what consumers want, when they want it, and where they want it – then make it and provide it to them.

Value-Added provides substantial benefits

  • Increased ability to capture a percentage of the farm-to-retail price spread

A typical loaf of bread for example:

  • Wheat represents less than 9% of the retail value
  • Milling, baking, and related activities represent almost 65% of the final value
  • The rest is transportation and retail mark-up