Rules for value-added ag

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One of the options for increasing farm revenue is to retain more of the value of the final product. If you decide to venture into producing a value-added product, or increasing your retained value, David Kohl, professor of agricultural and applied economics at Virginia Tech, offers these suggestions:

1. Form a co-op or build strategic alliances.
2. Make sure that at least half of your board of directors or advisers is from outside of agriculture. Include some consumers.
3. Overestimate the time you will spend and the cost incurred by 25 percent.
4. Today’s niche product is tomorrow’s commodity product. Always think three to four products ahead.
5. Have an exit plan.

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