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Junior and Senior Level Ag Bus. | |Colorado Agriscience Curriculum

|Section: |Agribusiness |

|Unit: |Marketing |

|Lesson Title: |Value Added |

|Colorado Ag Education Standards| |

|and Competencies |AGB11/12.04 - The student will understand the influences of agricultural economy and its influences on the overall economy. |

| | |

| |Understand market alternatives. |

| | |

|Colorado Model Content | |

|Standard(s): |English Standard 1: Students read and understand a variety of materials. |

| | |

| |English Standard 4: Students apply thinking skills to their reading, writing, speaking, listening, and viewing |

| | |

| |English Standard 5: Students read to locate, select, and make use of relevant information from a variety of media, reference, and |

| |technological sources. |

|Student Learning Objectives: |The student will: |

| |Define Value Added Agriculture |

| |Identify the key components to: value-added agriculture |

| |Learn HOW to add value to agricultural products |

| |Learn how to become an active participant in Value Added Agriculture |

|Time: |90 minutes (or 2 50 minute periods). |

| |The lesson is not broken into two portions; but has several places where it can easily be stopped and continued the next day. |

|Resource(s): |Value Added Agriculture Program, Iowa State University Extension: |

| |Agricultural Marketing Resource Center: |

| |Colorado Value Added Marketing Resources: |

| |Idea Assessment / Business Development Process, Don Hofstrand, Co-Director, Ag. Marketing, Iowa State University: |

| | |

| |“Getting from Idea to Implementation: A checklist for Producers Starting a New Value-Added Agricultural Business” Hackman, Deanne, |

| |Missouri Value-Added Center: |

| |Value Added Markets and Industries: |

| |What is Value-Added Agriculture? |

| |Value Added Agriculture Centers: |

| |Additionally, there is a student note slideshow handout. |

|Instructions, Tools, Equipment,|Prior to the beginning of class, set 5 chairs up at the front of the classroom. These chairs are the ‘contestant’ chairs for the |

|and Supplies: |Price is Right interest catcher game. Make sure there are 5 pieces of paper on each chair AS WELL AS a marker on top of the papers.|

| | |

| |5 Chairs – located at front of classroom |

| |5 pieces of paper stacked on EACH chair |

| |5 markers – one for each chair. |

| |Bring 6 items to the class for the contestants to ‘bid’ on. Make sure to differentiate the products – |

| |Make sure that you KNOW the current market value of these products. It’s important for you, as the instructor, to know the ‘actual |

| |retail price’ of your products. |

| |Make “Actual Retail Price” cards indicating the product (and its retail price), that you can give to the student playing Bob Barker.|

| |Blank copies of these cards are located at the end of the lesson. |

| |Make sure NOT to reveal these products to the students until the ‘model’ brings them out to be bid on (so keep them in a desk |

| |drawer, under a tarp, etc.) |

| |2 commodity items (whole corn, wheat, commodity beef etc. |

| |2 value-added items related to the commodity items (corn meal, 3-way (COB) livestock feed, bread, branded beef product (Certified |

| |Angus Beef, Rancher’s Renaissance) etc.) |

| |1 additional technology driven value-added item related to the commodity items (ethanol or biodiesel (if available), Roundup Ready |

| |products, Vitamin A enriched rice, ‘heat & eat pot roast / hamburger / beef strips’ etc. |

| |1 value-added service that also relates to the original commodity products (corn mazes, pheasant hunting opportunities in Eastern |

| |Colorado wheat fields, Big Game hunting operations located on working cattle ranches etc.) |

| |Determine ahead of time who the 5 game-show contestants will be. |

| |Bring a microphone (real, toy) or craft a microphone out of something in the classroom / shop area for Bob Barker to use. |

| |Make sure to have a small bag of candy / gum to give the game show contestants (as well as Bob Barker and the ‘actor’ helping |

| |operate the show. |

| |Copy of “Value Added Agriculture” Student Notes PowerPoint presentation – enough for each student in the class |

| |Markers, colored pencils etc. for students to complete the Picasso Moment (Objective 3) |

|Interest Approach: |Cue up Slide #1 on the PowerPoint Presentation |

| |Good morning everyone! I’m so glad you could make it today because we’ll be playing a fantastic pricing game many of you are |

| |familiar with. |

| |Welcome to the “Price is Right!” Today’s contestants will have the opportunity to compete for fabulous prizes as they strive to |

| |determine the fair market price for several agricultural items! Before we start our show and determine who the contestants will be,|

| |I need one person to volunteer to be the host of our show, Mr. Bob Barker. Is anyone interested in playing this dynamic role? |

| |Elicit Responses; choose a student to be the game show host |

| |Fantastic! Thanks for agreeing to host our game show today! As the host, I’m going to present you with this microphone. Please |

| |feel free to use it as much as necessary! |

| |Quietly to the host: “I’m going to ask you to place the contestants in their chairs as their name is called – do you have any |

| |questions? Great – so, as I call out their names, I need you to escort them to their chairs and make sure they have the papers and a|

| |marker on their lap.” |

| |Directed to the class – Are we ready to find out who today’s contestants are? |

| |Elicit Responses |

| |Great! |

| |_______________, come on down! You’re the first contestant on The Price is Right! |

| |______________, come on down! You’re the second contestant on The Price is Right! |

| |_______________, come on down! You’re the third contestant on The Price is Right! |

| |______________, come on down! You’re the fourth contestant on The Price is Right! |

| |____________, come on down! You’re the fifth contestant on The Price is Right! |

| |Select 4-5 contestants just like it is done on the game show. |

| |As you are selecting the contestants, make sure to say “Student Name – come on down! You’re the next contestant on the Price is |

| |Right!” |

| |As the students make their way to the front of the classroom, have the student playing Bob Barker indicate which chair they should |

| |sit in. |

| |Make sure the student playing Bob Barker has completed “Actual Retail Price Cards (blank ones located at the end of the lesson) AND|

| |the following script (which is located at the bottom of the lesson) |

| | |

| |BOB BARKER: All right contestants – Thank you so much for participating today! As you know, the way we play the game is that one |

| |item will be brought up for you to bid on. The contestant that most closely matches the actual retail price WITHOUT going over wins|

| |the bid. Do you have any questions? Great! |

| |BOB BARKER: _____________, our model for today is bringing out the first item up for bid. |

| |At this point, elicit the help of an additional student (or student aide) to be your ‘model’ for the products. The student ‘model’ |

| |is charged with bringing out the first product, showing it to the contestants and describing it for them. |

| |BOB BARKER: We’ll start with _______________. Please write down how much you think this item costs; then share it with the class. |

| |After the first student has written their bid down for everyone to see, Bob Barker will call on the next contestant to write their |

| |bid down and share it with the class. Continue this until all 5 students have written down bids and shared them with their |

| |classmates. |

| |BOB BARKER: And the actual retail price is:_______________________ |

| |This is where Bob Barker reads the information for item #1 off the Actual Retail Price Card. |

| |BOB BARKER: __________________ you’ve won the bid! Congratulations! ____________(model) will give you your prize. |

| |In a deviation from the actual game (because there’s actually a lesson to teach and we don’t have time for individual games at this |

| |point), ask the model to give the student that won the bid a ‘prize’ – either a piece of candy / gum etc. |

| |BOB BARKER: The second item up for bid is ____________________. Again, please write down how much you think this item costs; then |

| |share it with the class. |

| |After the first student has written their bid down for everyone to see, Bob Barker will call on the next contestant to write their |

| |bid down and share it with the class. Continue this until all 5 students have written down bids and shared them with their |

| |classmates. |

| |BOB BARKER: And the actual retail price is:_______________________ |

| |This is where Bob Barker reads the information for item #2 off the Actual Retail Price Card. |

| |BOB BARKER: __________________ you’ve won the bid! Congratulations! ____________(model) will give you your prize. |

| |Continue the game in this manner until all 6 items have been bid on, and prizes have been awarded. |

| |Thank you game show contestants, Bob Barker, and the lovely model ___________. Your participation in this event has been |

| |sensational! Thank you again! |

| |Have the students playing the game take their seats. |

| |What did we learn here today by playing The Price is Right? |

| |Elicit Responses |

| |That’s right! We learned how much different agricultural products cost consumers! Can anyone guess why this is an important |

| |concept for agricultural producers and members in the agricultural business community to understand and master? |

| |Elicit Responses – Try to direct classroom discussion towards ‘adding value to products’ |

| |Excellent responses. Did anyone notice that many of the products were related in some way? |

| |Lead the students through a discussion on how the products are related use a flow chart if necessary: For example – whole corn, |

| |corn meal, ethanol, corn mazes – all of these products feature corn, but they all have different values associated with them. |

| |When we start to look at the different values agricultural products bring we are looking at a very HOT topic in agriculture today. |

| |Does anyone know what that topic is? |

| |Elicit Responses |

| |Great work class! That topic is “Value-Added Agriculture.” Today we’re going to be exploring Value-Added agriculture in depth – so|

| |we’ll have to put our thinking caps on and look at agricultural products in a whole new way. |

| |Pass out the PowerPoint Slide “Value-Added Agriculture” Student Notes. |

| |While you’re still getting your thinking caps adjusted, I’d like you to make sure you have a writing utensil to capture some very |

| |important information about adding value to products. When I say VALUE I want you to focus your attention on the screen. Ready? |

| |Set? VALUE! |

| |Begin teaching the lesson – PowerPoint slides #2 - #8. |

|Objective 1: |What is Value-added Agriculture? |

| | |

| |The following information is chunked into user friendly format on the PowerPoint Slides. Encourage students to follow along on |

| |their Student Notes pages. Add class discussion, examples etc. as necessary. The information on the PowerPoint Slides is scripted|

| |below in case you’d like a more detailed description: |

| | |

| |Adding value: The process of changing or transforming a product from its original state to a more valuable state. |

| | |

| |Simply stated – to economically add value to an agricultural product (such as wheat) by processing it into a product (such as flour)|

| |desired by customers (such as bread bakers). |

| | |

| |Another way to look at adding value is to view it as the “process of capturing or creating value in a product in order to receive a |

| |greater portion of the value of that product at final sale.” |

| | |

| |Many raw commodities have intrinsic value in their original state – they are raised by an agricultural producer; then sold to a |

| |company or corporation for further processing. For example, field corn, wheat, weaned calves; market lambs etc. all have value. |

| |The producer raises the products; then sells them to someone else at a certain point in their growth cycle. |

| | |

| |BUT – could the producer get more money for their products if they: |

| |Grew the product differently |

| |Physically changed the product before selling it |

| |Coordinating with an agricultural business sector to change the way their product is marketed? |

| | |

| |For example: field corn grown, harvested and sold to a commodities broker has value. |

| | |

| |Value-added Example: Field corn grown, harvested, stored on a farm and then fed to livestock on that farm has added value because |

| |the corn has been transformed into animal protein or meat. |

| | |

| |In today’s rapidly changing agricultural world it is important to identify the value-added activities that support investment in |

| |research, processing and marketing. |

| | |

| |Applying biotechnology, engineering food from raw products to consumable forms, and restructuring food distribution systems all |

| |provide opportunities for adding value. |

| | |

| |In addition, producers involved in adding value should think of themselves as members of a food company that processes and markets |

| |products to consumers – which is a major deviation from the ‘I am a farmer, I am a rancher – I produce corn, wheat, calves, steers, |

| |lambs etc. mentality of former agricultural producers. Today’s value-added agricultural producers are growing bread, corn meal, |

| |ethanol, steaks, hamburgers, and lamb chops. |

| | |

| |Enhance this learning through a Newton Moment: |

| | |

| |Now that we’ve worked our way through an introduction to “Value-Added Agriculture” let’s take a few minutes and make sure we have |

| |really grasped this concept. |

| | |

| |When I say NEWTON, I want everyone in the class to take out a blank piece of paper and write at least ONE ‘why’ question. This |

| |‘why’ question must relate to the information we just learned and that you captured in your notes. |

| | |

| |This moment will help us deepen our understanding of Value-Added Agriculture and prepare us for the next Learning Objective. Any |

| |questions? Great! NEWTON! |

| | |

| |As the students are writing their ‘why’ questions, monitor the student’s progress – answering questions if necessary and bringing |

| |others ‘back on task.’ |

| | |

| |Fantastic question writing everyone! One at a time, I’d like each of your to share your questions and see if others can answer |

| |them. You will only be able to answer each question for 10 seconds – after the 10 seconds is up, we will move to the next question.|

| |I will write any questions we, as a class, can’t answer on the board / flip chart / transparency. At this point EVERYONE will be |

| |allowed to ask their question. |

| | |

| |Excellent work! Let’s return to the questions I wrote on the board / flip chart / transparency and see if we can work through a few|

| |answers. Provide clues to the students if necessary; see what questions learners can answer with less time pressure and a few |

| |clues. There may be unanswerable questions – consider these a teachable moment about the wondrous mysteries and paradoxes of life. |

| | |

| |Now that we’ve examined the basic principles behind value-added agriculture, let’s examine HOW value is actually added to products. |

| |We’ll need to get out our “Student Notes” packet again and be prepared to be ‘dazzled’ by the many ways producers might add value to|

| |their products and make more money. |

|Objective 2: |The following information is chunked into user friendly format on the PowerPoint Slides #9 -#20. Encourage students to follow along|

| |on their Student Notes pages. The student note pages also include a Hieroglyphics Moment where students are asked to ‘draw’ what |

| |the information means to them. |

| | |

| |Add class discussion, examples etc. as necessary. The information on the PowerPoint Slides is scripted below in case you’d like a |

| |more detailed description: |

| |Objective: Adding Value to Agricultural Products – Capturing vs. Creating Value |

| |Adding value to products can be accomplished in a number of different ways, but generally falls into one of two main types: |

| | |

| |Creating Value (through innovation or industrial innovation) |

| |Capturing Value (through coordination) |

| | |

| |CREATING VALUE: Creating value occurs with actual or perceived value to a customer for a superior product or service.  |

| |The objective is to create something that has value |

| |Create innovative new products, enhanced product characteristics, services, brand names or unique customer experiences may create |

| |additional value for farm products. |

| |Innovation: Improving existing processes, procedures, products and services or creating new ones. |

| | |

| |Focus on very narrow, highly technical, geographically large markets where competition is sparse. |

| |Marketing unique or branded products. |

| | |

| |Innovative value-added activities are sources of growth through changes in the kind of product, or in the technology of production. |

| |Producing identity-preserved or specialty crops for value chain participation |

| |Combining family activities (animal petting, hay rides, etc.) or recreation associated with direct on-farm product marketing to |

| |consumers. |

| | |

| |Industrial Innovation: Processing traditional crops into nonfood end uses. |

| | |

| |Use research and emphasis that has been placed on finding industrial, nonfood uses for common agricultural products. |

| | |

| |Ethanol from corn |

| |Biodiesel from soybeans |

| |Particleboard from straw. |

| | |

| |CAPTURING VALUE: Capturing value occurs through changes in distribution of value in the food/fiber production chain.  These changes|

| |are generally efforts to "capture" more of the consumer dollar. The following examples are directed toward capturing more of the |

| |end-use value of farm production. |

| | |

| |Direct marketing |

| |Vertical integration |

| |Producer alliances |

| |Cooperative efforts |

| | |

| |Direct Marketing: Selling products directly to the consumer. Beef producers might sell their finished animals directly to the |

| |consumer ‘on the hoof.’ The consumer would then be responsible for having the animal slaughtered and processed. |

| | |

| |Vertical Integration: One producer or business owns the product from beginning (birth / planting) through all growth stages, during|

| |processing and distribution. This producer or business doesn’t sell the product until the consumer purchases it. |

| | |

| |The poultry industry has become very adapt at vertical integration. Tyson Farms owns the genetics, the chickens, the feed, the |

| |assets, the processing facilities, the distribution facilities, transportation equipment etc. The company receives payment for |

| |their products only when retail grocers purchase the finished product (fryers, chicken strips, chicken nuggets, grilled chicken |

| |strips etc.) |

| | |

| |Producer Alliances: Consolidating among individuals or companies from the same level of the food chain in order to produce and |

| |market a superior product |

| |Beef producers band together to produce beef that has similar genetics, size, eating qualities. They then contract with a processor|

| |who will process and label their products differently than commodity beef. |

| | |

| |Cooperative Efforts: Pooling among individuals or companies from the same level of the food chain in order to increase bargaining |

| |power |

| |Several hog producers combine their market hogs to make a truckload. |

| |A group of 100 producers jointly market low-phytate corn so that they have bargaining power. |

| |Local CO-OPs allow producers to market their products under one umbrella. The 4th largest beef packer in the United States is |

| |Farmland; a producer owed cooperative. |

| | |

| |Minimizing Costs: |

| | |

| |Before producers can explore value-added processing and marketing, they MUST minimize production costs. |

| | |

| |Only low cost and efficient producers will be able to survive and compete in production agriculture. |

| | |

| |Adding value cannot take the place of reaching the efficiencies of production attainable through technology and economies of scale. |

| | |

| |Excellent work taking notes everyone! Let’s take a few minutes and celebrate our hard work with our neighbors. When I say GET THE |

| |NEWS, we’ll be participating in an Eye-Witness News Moment. |

| | |

| |Quickly pair up into teams of two. Now, I’d like one of you to be the reporter and the other to be the eyewitness! |

| | |

| |The eyewitness needs to stand tall and take on the air of someone who saw “Capturing vs. Creating Value” under discussion with their|

| |very own eyes – you must be a know-it-all with a pleasant personality. |

| | |

| |The reporter must address an imaginary camera, with microphone – use your pen – in hand, and welcome the viewing audience to ‘this |

| |breaking news report.’ As the reporter you must question the eyewitness about the content we just learned in “Capturing vs. |

| |Creating Value.” |

| | |

| |Do you have your roles ironed out? Great! |

| | |

| |This is a timed event; after 30 seconds I will give the class a signal – at this signal you will switch roles – and play again for |

| |another 30 seconds. |

| |Does anyone have any questions? If not, then GET THE NEWS! |

| | |

| |Monitor the students’ news reports – by moving around the room and observing each team. Make sure to give the students a signal at |

| |30 seconds – indicating that they must change roles. |

| | |

| |Fantastic effort! It sounds like everyone really has a handle on “Capturing vs. Creating Value” Let’s check for understanding. |

| | |

| |At this point you may want to increase individual accountability by randomly selecting individuals to tell what their eyewitness |

| |said. |

|Objective 3: |If teaching in two 50 minute blocks, this is an ideal place to stop the lesson and pick it up again the next day. |

| | |

| |The following information is chunked into user friendly format on the PowerPoint Slides #21 -#33. Encourage students to follow |

| |along and fill in information on their Student Notes pages. |

| | |

| |Add class discussion, ask students to provide real-life examples for each of the 6 categories before they are revealed on the |

| |PowerPoint Slides etc. as necessary. The information on the PowerPoint Slides is scripted below in case you’d like a more detailed|

| |description: |

| | |

| |Objective: The Key Components of Value-Added Agriculture |

| | |

| |Many times adding value to an agricultural business requires a combination of techniques to provide producers with a competitive |

| |advantage in the marketplace. There are essentially six categories of added value. Producers can use one or more of these |

| |strategies for adding value to their products; mixing and matching strategies to best fit their operation: |

| |Changing the physical state or form of products |

| |Milling wheat into flour |

| |Making strawberries into jam |

| |Growing alfalfa for use in a biomass generator (changing alfalfa into energy) |

| |Producing products in ways that enhance value (either real or perceived) |

| |Growing organic crops |

| |Producing antibiotic and hormone-free beef |

| |Producing free-range chickens |

| |Producing vitamin A enhanced rice |

| |Producing pork from sows not kept in farrowing crates |

| |Differentiating agricultural products in order to enhance the value of those products |

| |Selling beef under a branded beef label: such as Certified Angus Beef, Certified Hereford Beef, Coleman’s Natural Beef, Laura’s |

| |Lean Beef, Sterling Silver for more dollars per pound than ‘commodity’ beef. |

| |Marketing ‘microwavable’ pot roasts to consumers that they can heat and eat in as little as 10 minutes |

| |Marketing pre-seasoned corn-on-the-cob for grilling enthusiasts who don’t want to pre-butter and season their corn prior to grilling|

| |it. |

| |Bundling products. |

| |Beef and wood producers jointly market beef and flavored wood chips for the ultimate grilling experience. |

| |Greenhouse growers sell pre-planted hanging baskets to customers for $35.00 per basket as opposed to selling the individual plants |

| |($6.00 for 12 different plants) |

| |A group of diversified vegetable producers and a group of beef producers market a branded beef and vegetable soup. This adds value |

| |by marketing a bundle of products. |

| |Producing and marketing commodities that improve operating efficiency somewhere up the supply chain. |

| |Produce a new wheat variety that improves milling and baking efficiency; therefore processors up the marketing chain are willing to |

| |pay a higher farm price |

| |Produce cattle with less back fat and more internal fat (marbling) so packing plants will pay a higher farm price. |

| |Owning assets somewhere up the supply chain for further processing. |

| | |

| |Corn producers become involved in producing ethanol |

| |Cattle producers begin processing their own meat. |

| |Organic soybeans are toll processed for producer-owned, branded soymilk |

| |A dairy markets its own organic ice cream under the name "Ozark Organic Ice Cream." |

| | |

| |By using one (or more) of these six methods for adding value to agricultural products, several things happen: |

| |The customer base for the product is expanded |

| |There are more customers for your product |

| | |

| |Producers receive a greater portion of revenue |

| |This increased revenue comes from the marketing, processing or physical product differentiation conducted by the producer. |

| |Each of these methods provides producers or agribusinesses with strategic advantages in the marketplace – they make more money! |

| |Now that we understand the 6 key categories producers can add value to their products it’s time to take a step back and look at the |

| |difference between commodities and products. |

| | |

| |Commodities vs. Products |

| | |

| |For many years agricultural producers had a ‘produce-and-then-sell mentality,’ where they simply grew their crops or livestock; |

| |hoped to find a buyer, and then ‘took’ whatever price was offered on the day they sold their products. |

| | |

| |Today’s agriculture includes FIRST determining what consumers want in their food products and then creating or manufacturing |

| |products with those attributes. |

| | |

| |With the continuous shifting to a global economy, the international market for value-added products is growing. Market forces have |

| |led to greater product differentiation and added value to raw agricultural products because of: |

| |Increased consumer demands regarding health, nutrition, and convenience  |

| |Efforts by food processors to improve their productivity |

| |Technological advances that enable producers to produce what consumer’s desire. |

| |Demographic trends show growth in the convenience-oriented, health-conscious and environmentally concerned sectors where price is |

| |not as important as quality. |

| |Producers involved with adding value will become more than commodity producers. In today’s global economy they will think of |

| |themselves as producing products for end users, instead of producing only raw commodities. |

| |For example, beef producers produce table-ready meat instead of finished (slaughter-ready) animals. |

| | |

| |Producers have a challenge to be responsive to consumer demands AND producing what is desired. |

| |Attentiveness to consumer demands in quality, variety and packaging are important |

| |To end this section, follow-up with a Picasso Moment |

| |If you were an artist painting a picture, how would you represent the information in this objective? |

| |What would be included in the picture? |

| |How would you portray the relationships that exist in this information? |

| |On the piece of paper in your “Student Notes” labeled, Picasso Moment, let’s take a few minutes to illustrate our understanding of |

| |the “Key Components of Value-Added Agriculture” using colored markers and pencils. I challenge you to avoid quick, literal, obvious|

| |representations – make this picture all your own. |

| |After the students have created their masterpieces, ask the students to get up from their seats, walk about, and observe their |

| |classmates’ creations. |

| |Excellent work everyone! Take a few minutes to stretch your legs and see what masterpieces your classmates have created! |

| |Fantastic! Now let’s pair up into teams of two – where you can explain to one another how your artistic creation represents the |

| |content taught in this objective. |

|Objective 4: |The following information is chunked into user friendly format on the PowerPoint Slides #34 - #37. Encourage students to follow |

| |along and fill in information on their Student Notes pages. |

| | |

| |Objective: Becoming involved in adding value |

| |A. How Much Value Can be Added? |

| |Understanding how value is added is important to evaluating production and marketing risk along with determining capital needs. |

| | |

| |Capturing value often emphasizes paying attention to market competition and controlling production costs. |

| | |

| |Creating value may require new production techniques, product development, service, market analysis and selling skills. |

| | |

| |Although capital requirements vary for both captured and created value-added production, returns relative to risk along with |

| |adequate capital and resources are often keys to success. |

| | |

| |B. Adding Value to Products – The Basic “How –to List” |

| |1. Start with intelligent market information on customers and competitors to make sure an opportunity exists. |

| | |

| |2. Start with a basic commodity and add a healthy dose of ingenuity to create a product desired by consumers that also has a |

| |valuable edge on the competition. |

| |3. Opportunities come in many shapes and forms, and the window of opportunity can change quickly. |

| | |

| |4. Value-added agriculture takes research, innovation, and drive. |

| |5. When value-added ventures become operational, members are transformed from commodity producers into processors and marketers of |

| |finished, value-added, food products. |

| | |

| |6. Forming value-added businesses generally involves specific developmental steps from starting with an idea to becoming a |

| |successful business venture. |

| |Develop an innovative idea. |

| |Study the market potential. |

| |Conduct a feasibility study. |

| |Decide if business idea is viable. |

| |Develop a business plan. |

| |Create business structure and organization |

| |Raise debt and equity financing |

| |Hire a management team. |

| |Implement a business plan and begin operations. |

| | |

|Conclusion |What a lot of information! Who knew adding value to agricultural products was such an involved, detailed, process? In order to |

| |stay involved in production agriculture, producers MUST find ways to add value to their products through maximizing their assets, |

| |tapping ‘hidden’ talents, utilizing community resources and local market opportunities, becoming more end-product focused, and in |

| |the end increasing profits. |

| |Whether it’s Capturing or Creating Value, or following one (or more) of the 6 strategies for adding value to agricultural products, |

| |producers must begin to realize how they can best maximize their profits through value-added agriculture. |

|Application--Extended Classroom|Work with your students to brainstorm a list of local producers / agribusinesses that are currently adding value to their products. |

|Activity: |Have the students interview these individuals / groups / businesses; asking the following questions: |

| |What products do you ‘add value to’ at the farm / business gate? |

| |What motivated you to look into this particular value added strategy? |

| |How did you get started adding value to your products in this manner? |

| |What pitfalls did you encounter? |

| |What successes have you had? |

| |Is it worth it to you to keep adding value to your products? |

| |Are your customers happy with the efforts you are putting forth? |

| |What changes do you foresee occurring in the agricultural industry in the next 5 years? The next 10 years? Do you feel that by |

| |adding value to your products you will be ready to meet these changes ‘head’ on? |

| |Have the students bring their interview ‘scripts’ back to class. Work in small groups, and then in one large class group to create |

| |a classroom poster identifying: WHO IN OUR COMMUNITY ADDS VALUE TO THEIR PRODUCTS. Include the information gleaned from all of the |

| |student interviews in a creative, eye-pleasing format. |

| | |

| |**Additional Activity – Have the students visit the following website: Value Added Agriculture Centers: |

| | Assign each student or group of students a particular |

| |value-added center. Ask them to research their ‘center’s’ website and prepare a short PowerPoint presentation for the class |

| |documenting what they learned about value added agriculture from that particular site. |

|Application--FFA Activity: |Challenge students to think up ways to add value to the FFA Chapter. How can we add value to the products we sell (as a chapter) |

| |[fruit and / or meat sales come to mind] and better meet our customer’s needs? For example: |

| |Place FFA stickers on all meat products |

| |Sell organically or locally produced products |

| |Create custom packages for loyal customers |

| |Place individualized “Thank-You notes” on each product sold – thanking the buyer for supporting the local FFA chapter. |

|Application--SAE Activity: |Ask students to come up with ways they might be able to add value to their SAE products. |

| |How might they be able to market their products (entrepreneurship) and skills (placement) in an innovative format that addresses at |

| |least one of the 6 strategies for adding value? |

| |Challenge them to add these ways into the Skills / Competencies / Knowledge page, or Goals Page of their SAE Record Books. Also |

| |challenge them to think about incorporating including several of these strategies into their SAE program so that they can discuss |

| |them in Proficiency Award applications |

|Evaluation: |1. Collect the “Student Notes” packet. Check for thoroughness and completeness. |

| |2. Place the students into groups. Challenge the group to: |

| | |

| |a. Choose a basic locally produced commodity product to ‘add value to’ |

| | |

| |b. Determine market opportunity by obtaining intelligent market information on the commodity’s customers and competitors. Look at |

| |online market reports, search for local competitors etc. |

| | |

| |c. Determine if adding value to this product is feasible – will people buy it, can I sell it etc. Have the students poll peers, |

| |parents, teachers, local producers about their idea and write down the answers they receive. |

| | |

| |d. Using information learned in previous lessons, develop a business plan |

| | |

| |e. Create a business structure and organization. Who is the owner, who is the operator, is there any employee? How many? Etc. |

| | |

| |f. Have the students present their information to the class as a whole for a grade. |

| | |

|Evaluation Answer Key: |Projects will vary. Ensure students have mastered the material by checking to make sure they have identified at least one of the 6 |

| |strategies for adding value, or have established how they are either going to create or capture value. |

The Price is Right Script

BOB BARKER: All right contestants – Thank you so much for participating today! As you know, the way we play the game is that one item will be brought up for you to bid on. The contestant that most closely matches the actual retail price WITHOUT going over wins the bid. Do you have any questions? Great!

BOB BARKER: _____________, our model for today is bringing out the first item up for bid.

BOB BARKER: We’ll start with _______________. Please write down how much you think this item costs; then share it with the class.

BOB BARKER: And the actual retail price is: _______________________

BOB BARKER: __________________ you’ve won the bid! Congratulations! ____________ (model) will give you your prize.

BOB BARKER: The second item up for bid is ____________________. Again, please write down how much you think this item costs; then share it with the class.

BOB BARKER: And the actual retail price is: _______________________

BOB BARKER: __________________ you’ve won the bid! Congratulations! ____________ (model) will give you your prize.

Actual Retail Price Cards

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Item up for bid:______________

Actual retail price:____________

Item up for bid:______________

Actual retail price:____________

Item up for bid: ______________

Actual retail price:____________

Item up for bid: ______________

Actual retail price: ____________

Item up for bid:______________

Actual retail price:____________

Item up for bid:______________

Actual retail price:____________

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