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For more information about the Department of Agricultural and Resource Economics, and about training and career opportunities, please contact:

Undergraduate:
ugarec@ag.arizona.edu
Phone: (520) 621-6244

Graduate:
garec@ag.arizona.edu
Phone: (520) 621-2421

Related Links:

FAO - Agro-Industries and Post-Harvest Management Service

Value Added
Moving From the Farm to Retail

Apple Annie's Orchard is a flourishing family business in Willcox, Arizona. In 1986, they began making apple bread using a special family recipe. They started out small--using apples from their orchard and baking four loaves of bread at a time. Since then they have developed several other apple products and have had to purchase apples from other sources in order to meet consumer demand.

The apple bread and other items made by Apple Annie are examples of value-added products. In value-added agriculture, raw commodities, such as apples, are transformed into consumer-ready goods. Over the past 50 years, nearly all growth in food expenditures has been for value-added products. Much of this growth can be attributed to increased demand for convenience-oriented and away-from-home food products.

Economic considerations for developing value-added products include consumer demand and demographics, product quality, uniqueness and consistency, storage, pricing, and technological production issues. Transforming raw agricultural products into consumer-ready goods requires managerial expertise, as well as skilled labor, packaging, transportation, rent, and other costs. Labor is by far the largest resource component in taking products from the farm gate to the consumer.

Faculty Involvement
Gary Thompson has conducted extensive research in identifying retail price premiums, as well as consumer economic and demographic traits for consumers of fresh organic produce.

Student Involvement
Andrea Marks (class of 1996) is a merchandising assistant at a national food distributor in Phoenix. She troubleshoots customer problems, develops new promotions, and identifies new products.

Brenda Sleeuwenhoek (class of 1997) works for a Dutch flower company conducting market research in new sales channels, such as the Internet. Her responsibilities also include customer satisfaction, product strategy, and brand names.

Additional Readings
Thompson, G.D., and J. Kidwell. "Explaining the Choice of Organic Produce: Cosmetic Defects, Prices, and Consumer Preferences." American Journal of Agricultural Economics 80(1998): 277-287.

Photo: Courtesy of Apple Annie's Orchard

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