Center For Profitable Agriculture

PROJECT HIGHLIGHTS | PRODUCTS ON THE MARKET

Value-Added Projects — Project Highlights — 1

	Adding Value to Sweet Potatoes
	Agri-Tourism
	Analyzing and Developing Markets for Lump Charcoal and By-products
	Apple Butter
	Assessing Market Potential for Unique Farm-Made Specialty Jellies

Adding Value to Sweet Potatoes

The sweet potato is a good candidate for adding value because such products make excellent use of cull potatoes. However, the sweet potato’s image as a “poor man’s food” must be overcome. Repositioning the product and substantial promotion must make consumers aware of the many uses of sweet potatoes. Educating consumers on the benefits of eating sweet potatoes, and providing them with tasty recipes and samples of tasty products will also be necessary to increase consumption. While an accurate estimate of the market demand for sweet potato products is virtually impossible to predict, significant efforts to advertise and promote the products will be necessary. Marketing resources should be focused on developing promotional material, generating publicity and participating in local events. Low profit margins on each value-added product, coupled with relatively low sales prices per unit, will be needed to cover costs. Prior studies indicate an average sales per customer at direct-to-consumer outlets at around $10. Assuming average start-up and operating costs, a marketing plan designed to target more than 25,000 consumers would be needed.

Agri-Tourism

Promoting agri-entertainment enterprises in Tennessee often requires substantial promotion, publicity and advertisement. Listing in the Tennessee Vacation Guide, brochures at Tennessee Welcome Centers and Rest Areas, direct promotions to school groups and targeted advertisements to other groups create opportunities for exposure to a large audience of potential customers. Because the number of visitors will certainly be less than the total area population, agri-tourism enterprises need to aggressively promote the business to a much larger audience to ensure sufficient customer traffic. In addition to a well-planned marketing campaign, agri-entertainment operations should plan to carefully identify all regulatory concerns applicable to the operation (local, state and federal food regulations, zoning restrictions, confined animal regulations, health department codes and insurance limitations).

Analyzing and Developing Markets for Lump Charcoal and By-products

Developing markets for products is challenging, especially in a market with significant competition. Products must be positioned to fill a niche in the market. Market analysis, planning and implementation will be vital to potential product success.

By-products of production processes often create obstacles for producers. Ideally, a market will exist for the by-products that will bring additional revenue. In some cases, clear markets may not exist, and producers may need to work to develop markets or find a way to dispose of the by-products cost efficiently.

Apple Butter

Analyzing the feasibility of automating a food preparation process is like taking a spin on a merry-go-round—it doesn’t matter where you jump on, things get dizzy in a hurry. First of all, the costs associated with an automated production system need to be carefully studied. New facilities, machinery and equipment alone could range from $30,000 to $100,000, while annual operating costs could range from $10,000 to $90,000. However, by automating the system, variable costs per jar should actually be lowered assuming that total production (units of output) is increased. It is often this greater production that contributes to problems. A marketing system must be designed to move a larger number of finished products, and retail supermarkets are often considered the best channel for a large volume of product. Sales data for similar products should be carefully studied and distribution to supermarkets should be cautiously planned. If the use of brokers and distributors is being considered, the effect of their product mark-up before it reaches the consumer should be considered. If direct distribution to supermarkets is planned, transportation costs and costs of securing enough individual stores to move a sufficient volume of product should not be overlooked.

Assessing Market Potential for Unique Farm-Made Specialty Jellies

Formal and informal consumer surveying and product sampling can provide useful information to assist in possible new product launches. A recent informal survey activity first asked participants to rate their likelihood to purchase various unique flavors of farm-made jellies. Then, participants were asked to rate the taste of each jelly flavor. Participants were also asked to rate various possible brand names for the specialty jellies and to rate their likelihood to purchase the products for regular use and as gifts. A careful review of the results of this informal marketing activity can assist with various product and market development planning.