The Democratic Plan to Support Value-Added Agriculture
Value-added agriculture means turning a raw crop into a product that sells for more. Democratic supporters want help for farmers who try it, and critics ask who bears the risk.
What is value-added agriculture?
It means taking what you grow and doing something to it before it sells: milling grain, bottling milk, making cheese, smoking meat, roasting chile, canning produce or selling a packaged product with your own label. The farmer earns more of the final price.
Supporters of the Democratic plan say value-added work can keep more money in rural communities and give small farms a path to survive. Pueblo is known for its chile, and southern Colorado has plenty of growers who could process and sell their own products.
Some farmers use a middle path: custom processing, where a licensed plant handles the work and the farmer keeps the brand. That cuts the equipment cost, although it ties you to the plant's schedule and capacity.
What do supporters propose?
Proposals include grants and loans for processing equipment and facilities, help with food safety and marketing, shared kitchens and processing plants, and technical assistance for business planning. They also want more small meat and produce processors, since lack of capacity holds many farms back.
Federal help is available through USDA Rural Development and other programs, and general information is at Farmers.gov. Funding rounds and rules change, so check current offerings.
Loans are covered by FSA, and the SBA has small business help. Supporters also want help with branding, packaging and finding buyers, since many farmers are great producers but have never run a marketing campaign. Cooperatives and shared brands can spread that cost.
- Grants and loans for equipment
- Shared kitchens and small processors
- Food safety and marketing help
- Business planning support
What do critics say?
Critics, including many Republican lawmakers, respond that grants pick winners, that many value-added businesses fail, and that taxpayers should not underwrite risky startups. They prefer lower taxes and fewer regulations to subsidies.
Others point out that a farmer who turns processor takes on new risks: a new labor load, new regulations, a new market, new debt. Supporters agree and say that is why technical help matters.
The disputed facts include how many such businesses succeed and what the public return is. Look at independent reviews from GAO and data from USDA ERS. A simple illustration, offered only as an example: a grower who sells chile at a wholesale price may earn far less than one who roasts, bags and sells it directly, but the second grower also spends hours on packaging and sales. Whether that trade pays depends on the numbers.
Planning your own value-added project
Start with the customer. Who will buy it, at what price, and how will they find you? Test a small batch. Work out your costs including labor, packaging, licensing, insurance and marketing. Then decide whether the extra price covers them.
Check food safety and licensing rules with the FDA, FSIS for meat and poultry, and state and county agencies. The farm money guide and small farm guide walk through the finances and the basics.
Talk to a licensed accountant or attorney, since this site offers commentary, not advice. Another thing to think about is seasonal timing. A product that sells only in the fall leaves the equipment idle the rest of the year, so plan for how the investment earns its keep over twelve months.
Colorado resources
The Colorado Department of Agriculture has programs and information for local food businesses, and CSU Extension runs training in food safety and business planning. Local farmers markets and grocers are often the first customers.
If you plan to apply for a loan, compare lenders and get terms in writing.
Insurance matters too. Product liability coverage is a real expense for food businesses, and a licensed insurance agent can quote what you will need.
Keep reading
Food and farm stories are at farm.FM food and farm.FM agribusiness. A related story is a farm.FM piece on selling farm products.
Programs change, so confirm current details with the agency.
Learn from others in the same business. Visit a farmer who already sells a processed product, and ask what they would do differently. Finally, give yourself time. Most value-added products take a season or two to find their footing, and a small, steady start usually beats a large launch financed on hope.
Sources and further reading
- USDA Rural Development: rural business and community programs
- Farmers.gov: USDA one-stop site for producers
- FSA Farm Loans: FSA direct, guaranteed, microloan and emergency loan information
- SBA: small business loans and counseling
- GAO: government watchdog reports
- USDA Economic Research Service: farm economy data and analysis
Ask locally: A CSU Extension agent or the Colorado Department of Agriculture can explain licensing and food safety rules for processed products.