2. Reasons for value adding
Use crops not prime for sale
still high quality – visual blemishes, too ripe to get to
market, etc.
20 -45% of crop lost from fresh sales in research plots
Love to cook and create
Personal dream
Create cash flow for a longer period of time
Potential to make more money on crops when
processed
Local business development
3. Challenges of value adding
Can you make it worthwhile – financially and lifestyle
Finding successful products
Selling those products
Find the financing to get started
Must figure out and then abide by regulations
4. Areas to gain knowledge
Product selection and testing
Who is your market and what do they want?
Where will you make the product?
Food safety
Rules and regulations
Business planning
Pricing, competitive analysis
Marketing
Ingredients
Customer service
Insurance
5. What is your product?
Unique products
aim for a product consumers cannot get
– something unavailable or superior
Salsas are being done by many –must be exceptional and
pay for extra marketing or make something else
Something you love- a long venture
Determine what products you can produce
Different products require differing levels of food
safety and regulation which can mean differing
equipment and registration costs.
6. Recipe development
Develop recipes Once you have a product
Ensure the recipe follows that the consumers love
food safety requirements and want to buy, then
run small scale trials at
adapt the recipe to full
home to create the scale production
desired product Test the scale up
Produce the recipe in a
products on the
commercial kitchen and consumers again
test on consumers Calculate the needs for
the larger scale and out
into a business plan
7. Product testing
Test products on friends & then on the target market
Survey consumers views on Blind test your product
product against similar products on
Taste the market and/or against
Sweetness other versions of your
Sourness product
Salty, etc. Conduct tests directly with
Texture target consumers- ie. farmers
Appearance market, events
note local health regulations -at
Overall appeal a minimum the product would
Likeliness to purchase have to be made in commercial
kitchen
Frequency of purchase
Or conduct tests in
Price range they are
willing to pay
professional testing panels
Enter contests
8. Ensure consistency and high quality
Today’s consumers expect Use high quality
the exact same product ingredients to get a high
every time quality product
The quality of the product Have a consistent supply of
must be exceptional to the main ingredients –if
justify premium price - using local crops, pick ones that
Small scale production is more can be produced consistently
expensive than large commercial and in high quality
production Find processes to achieve
and keep excellent quality
Develop and always follow
a protocol for production
9. Who is your market?
Who are the consumers that will buy your products?
Income or passion to pay the premium price
Ethnicity if product targets
Local demand
How do you get your product available for purchase?
Farmers markets, online, gift basket companies, etc.
Adapt product taste, volume, size and type of
packaging to fit the identified market
10. Where will you make your product?
At this time, there is not a cottage food law in Nevada
allowing commercial processing in private kitchens
In Nevada, commercial products must be processed in
an inspected kitchen certified by the local health
inspector.
Kitchen rentals – incubators, community kitchens
providing fee for service
Any currently inspected kitchen can be used – some
Senior centers, school facilities and restaurants are
willing to rent out space or take your
protocol and manufacture it for you.
11. Renting a commercial kitchen
Before building your own kitchen it is recommended
to rent a facility to gain experience
Create a clear business arrangement on paper
Research and obtain any insurance and licensing
required
At least one person in the
kitchen must have
servsafe certification
12. Rules and Regulations
Business licenses
County/city
State - http://nvsos.gov/index.aspx?page=267
Approval by your health inspector
Start a positive relationship with your local health inspector
early
Due to the uncertain rules for small scale processing federally
and in Nevada the expectations and requirements vary
between health inspectors
Their goal is to help insure that you produce a safe product
Follow the required federal rules
Difficult to determine for small scale processing
Key - food safety
13. Ensuring your product is safe
To create a good, safe product follow the federal guidelines,
the best food practices, and what the state health inspector
tells you.
There needs to be a paper trail for each finished product
back through the processor and all sources of ingredients.
At least one person in the processing kitchen needs to take
the food safe course.
Establish a Good Manufacturing Processes (GMP) for each
product and the kitchen
These processes how, where and when of the safety practices
required for each product.
Research the requirements for each product
14. Good Manufacturing Practices
Establish a detailed paper trail for all ingredients in the
processing item. If an ingredient is tainted, the origin
needs to be found.
Outline an in-house description of how an item is
handled from its entry into the kitchen (date), its care
(refrigerate), the way in which it was processed
(temperature), the way in which it is packaged, how to
care for it post processing, and proper labeling. Also,
the distribution of the product to purchaser needs to
be paper trailed.
15. Different rules for different products
Vegetable and fruit products: For safe, simple products
fresh or fresh cut vegetables, fruits or herbs, dried
products or fermented products that are fermented to pH
less than pH 4.6
best practices need to be outlined
the paper trail of ingredients
Labeling-5 points
approval by the inspector.
16. Different rules for different products
Vegetable and fruit products - Shelf stable high acid or
acidified foods for pH below 4.6
i.e. jams, pickles, sauces
require approval from the FDA on forms 2541 and 2541a.
Need details on ratios of ingredients, processing times
(adjusted to altitude), and various pH measurements.
Follow the recipes approved by the USDA -most recent
Ball canning books , National Center for Home
Preserving at the University of Georgia.
Need recorded data for each batch.
17. Different rules for different products
Other products considered safe processing
Most baked goods 9except some custards
Some refrigerated products may have potential
Low acid foods – too difficult for most small kitchens
Meat products require one or more USDA inspections
18. Product labeling
Keep the label as simple as possible
Avoid any health claims on the label or anywhere
because it requires extensive paperwork with an
additional agency
Small scale production allows an exemption from full
labeling – need to file for exemption
Labels can be made in house on specialty printers or
ordered from printer companies – the choice will
depend on volume, cost and convenience
19. Simplest label requires
1. Name of product
2. Weight/volume
3. List of ingredients
4. Care of product (e.g. refrigerate after opening)
5. Contact information leading back to processor
(e.g. web site, physical address)
Mimic labels on approved products as there are specifics
in format and design
20. Business Planning
Processing is a business and one that can quickly lose
money without proper management and planning
Create a realistic business plan – initial time
investment very fruitful later – help is available from
Nevada Small Business Development Center, SBA,
RNDC, College of Southern Nevada - Business and
classes such as Next Level are available
Consider:
Mission, vision, goals
Expenses, supply sources, labor needs, financing,
insurance, projecting sales. marketing, time frames, etc
21. Competitive analysis
Competitive analysis is when you study the market for
products similar to what you want to produce
The analysis should determine:
Whether there are similar products in the market - how
many and what is their quality?
If there is room in the market for your product (demand
not being filled)
If your product is better or worse then the competition
Pricing of the competition
22. Pricing
Pricing can be determined by combination of:
Exceeding the production cost
Finding what the market will bear
Researching the competitors pricing and deciding on
pricing above or below
23. Is the Product Profitable?
Estimate the size of market you can acquire
Is it large, stable and long-lived enough to
warrant starting the venture?
Estimate price of the product
Identify the cost of production
Consider all costs: Product development
costs, registration fees, costs of production,
cost of materials, cost of labeling, shipping,
cost of marketing, staff, equipment, land,
building, your labor, etc.
Determine the break even point – add risk
and profit
25. Marketing
Identify how to reach your target market
what are their habits & hobbies
Use the profile features to reach them economically
Social media is a small business marketing dream free
and can be viral. Learn how or hire someone
knowledgeable. A website is essential. Keep it up to
date
Match your marketing drive to the volume of sales you
need -maybe the farm stand is all you need
Ensure that your product promotion, packaging and
label match the image that you want your product to
reflect
26. Consider creativity to succeed
Think out of the box – only unique products and
approaches stand out from the others
Kitchens alone often lose money. It may pay to outsource or
find other uses for the facility to split costs
Materials – most supplies are available or only at
reasonable prices in huge volumes - ie. jars need to buy by
the pallet- budget for these larger volumes up front and
have storage area
Evaluate how many raw materials go into the product –
using bulky whole cucumbers uses less cucumbers than a
thinly sliced pickle but looks the same -cooked down
sauces/ dehydrated products can be amazing but takes
much more raw produce to make
27. Common beliefs to avoid
“If you build it, then they will come”
If you build it, the way the specific consumer group
wants it, make them aware of it and deliver it to them,
then they will come.
28. Managers of thriving businesses:
Know their break even point for every product
Can estimate quickly the cost/return impact of a change in
market availability, labor, etc.
Sell to several strong markets
Have markets/sales planned for products months in
advance
Have someone skilled in marketing
Have a consistent labor source
Ensure that the market knows about their product and
where to buy it
Have a product that the consumers want and are willing to
pay for
29. Common beliefs to avoid
My product is amazing. My friends
and family love it so it will sell.
The opinion of the majority of your specific market
segment is what counts
Urban tastes and values are often very different than
rural
30. Common beliefs to avoid
If I make and sell my product the
way that I would want it then that
will work for the consumers
Your logic, desires and needs DO NOT necessarily
equal that of the specific consumer group
Only the opinion, desires and needs of the specific
consumer group counts
31. Common beliefs to avoid
Everyone will trust our farm’s
products because we are honest
In the market trust has to be gained with proof
Every step must be taken for quality control and
certification when required.
Personal relationship building is essential
