Agriculture is the economic backbone of many countries in the world. The last decade has seen an abrupt rise in population and weather changes globally leading to a sudden hike in the demand of food requirements…
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This has resulted in the increase of production costs and lowering of profits for the grower of commodities that run the cycle of human existence. Consequently, the producers are identifying opportunities for their own growth and investing in value addition of the products that they produce. This removes many of the intermediaries in the supply chain resulting in lowered prices for the consumer and increasing profits for the producer. For today’s growers, the reins of the future are in their hands. Producer investments in value added business with a workable strategy is not only lucrative but also increases the potential of the producer with minimum output, therefore a very attractive option for the producers around the world.
Economic Implications for Producer Investments in Value-Added Business
The global economic spectrum has changed drastically in the last decade. The rise in population, inflation and prices of raw materials has changed the economic equilibrium that existed in demand and supply change. With the rise in population, the demand for food items is also on the rise resulting in increasing demand of agriculture produce. This should mean higher income opportunities for the producers. The fact is the other way around due to the rise in the prices of raw materials required for agriculture and diminishing consumer capability to buy. As a result, the returns that the farmers and the ranchers earn on agriculture produce decreases thereby affecting the entire rural class that makes up a good number of populations in many agriculture-producing countries. To get higher returns, more farmers and growers are investing in their produce to make them more value added even to the level of retailer. With the final produce reaching the stores and retailers directly from the producers, the profit margins for the agriculture related people has increased significantly resulting in growth of agriculture and of economic prosperity of the growers. Another benefit that the farmers get through these investments is freedom from industrial exploitation making it very beneficial for them (pg11-18, Tadlock Cowan, 2003). The Need of Producer Investment in Value Added Businesses The growing competition in the global market is changing the attitudes of the farmers by motivating them to improve their quality of produce by employing latest technology in farming and growing. Today, the farmers know the market economies and the latest technology that they can use to convert their produced raw material to more finished goods. The modern growers keep in the view the requirements of the end-user of the produce and try to develop the products keeping that in mind. This bold change in the
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