The Truth About Making Money Value-Adding

Lots of farms featured on the Edible-Alpha® podcast operate viable value-added businesses. Rustic Road Farm has a popular soup brand, for example, while B&E’s Trees makes maple syrup and energy pouches under the Embark Maple label. Doudlah Farms Organics, spotlighted in our most recent podcast, has a successful line of organic dry beans, seeds, and flours that’s rapidly expanding into new markets.

Many other farm entrepreneurs in FFI’s network are interested in launching a value-added business but haven’t yet taken the plunge. They like the idea of diversifying their business model, and they see real revenue potential in producing a finished good or service. They’re just not sure quite how to tackle such an endeavor or, more importantly, how to make money at it.

Well, that’s precisely why FFI created the Edible-Alpha® Learning Center: to help food and farm entrepreneurs figure this stuff out. Our training courses offer valuable guidance, of course, but so do the business-building stories shared on our podcast. Our featured entrepreneurs—many of them farmers who’ve branched into value-added—dish on what they know now, what they wish they’d known earlier, which strategies have worked, which strategies have tanked, and what has surprised them to discover along the way.

Doudlah Farms Organics has encountered plenty of surprises while launching and growing its CPG brand. Owner Mark Doudlah says there are several aspects of value-added agriculture that, had he known from the start, would’ve helped him set more reasonable expectations for the business. Many other ag entrepreneurs have shared similar things that surprised them about value-adding.

For many, the first discovery is simply that launching a value-added business is hard, or at least more challenging than they expected it to be. A big reason why it’s harder is they didn’t realize how many steps are involved in turning a crop into a finished product sold to consumers—or how much cost is attached to each one. Until they foray into CPG, many farmers have never needed to think about this before. But as they quickly find out, each step—cleaning, warehousing, co-packing, risk management, food safety assurance, branding, marketing, and more—carries a price tag that cuts into earnings.

Additionally, many farmers are surprised by how nuanced each sales channel is, and that each may require different resources and skillsets to manage. They may also find out that they’re not as capable at a CPG-related task as they thought they’d be and should therefore hire that task out. Or, conversely, they learn that they are more skilled at something than they ever knew.

Another major revelation? Building a profitable value-added business takes time. The CPG space is crazy-competitive, filled with legacy food companies and slick startups that excel at consumer targeting, marketing, and branding. A farmer-producer can absolutely breakthrough, but it rarely happens overnight—or even in the first year. It can take a few years to build brand awareness, generate customer loyalty, and do enough volume to turn a profit.

As Mark says in the podcast, starting a value-added business is not easy, but it can be incredibly rewarding. And with the right guidance—and a solid business plan—it can ultimately be profitable too.

Mark Doudlah was a fifth-generation conventional farmer until a family health crisis inspired his transition to organic and regenerative practices. Several years later, Doudlah Farms Organics is a thriving diversified agricultural business committed to regenerating the soil and water and producing safe, healthy, organic food. Mark shares the evolution of his business, including growing a value-added consumer brand.

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