Value added products are an important and creative way to diversify your revenue streams and up-cycle your lower grade or one off harvests. There are several things to consider before going into full blown value added production to ensure you will be profitable, create food safe products and can handle the additional workload.
In this section we will look into how a value-added product fits into your business model and some of the requirements and considerations you will face when developing a value-added product.
Where to start?
When considering the development of a value-added product the first step is figuring out what product can be created to use up your off-grade produce or help you gain an additional share of the market. The next step is to do some production research. Is this a skill you bring to the table or will you have to collaborate with a chef, cook, etc.? Keep in mind that if this is a product you plan to market on a larger basis, scaling up the original recipe is more than just increasing the amount of ingredients. In addition, when distributing to a larger market you need to consider your packaging, shelf life, visual appeal, etc. when developing the final product. You will most likely have to collaborate with someone who has gone through this process before or seek the advice of a trained food scientist to address some of these questions (see the “Resources” at the end of this section).
Consider the following questions about the value added product you plan to create.
- What is your product?
- List of ingredients?
- What is your time and $ budget for production?
- In what quantity & what sizes?
- Sold in what? Labeled how & with what?
- Where/who are you selling to?
- For how much will you need to charge to make a profit?
- Direct sales or Indirect? Or Both?
Department of Health:
It is extremely important that the products that you make are safe to consume and that proper protocols during production were used. Many value added products must be made in a certified kitchen to be sold to the general public.
Certified Kitchens: You will notice on your search for certified kitchens that they are hard to find. This is a challenge in Hawaiʻi and the need for more certified kitchens Statewide is real. If you are not able to find a certified kitchen in your area or on your island consider asking a small restaurant, school or church if there is an opportunity to use their kitchen during hours they are not in operation to make your product.
Home Kitchens: A home kitchen cannot be certified. The “Kitchen” must be in a separate dwelling. i.e enclosed garage.
The following items may be produced in a home kitchen and sold at for-profit and non-profit events such as farmers markets, craft fairs, fundraisers, bake sales and by any other means where you sell directly to the consumer (This list does not include all, but it covers most types of approved homemade food products):
- Breads, rolls, mochi
- Cakes, cookies, and pastries
- Candies and confections
- Jams, jellies, and preserves
- Cereals, trail mixes, and granola
- Popcorn
The State of Hawaiʻi Dept. of Health has a handout with additional information at: https://health.hawaii.gov/san/files/2019/09/HMF-HANDOUT.pdf.
Permits: Depending on where you are planning to sell your value added products, different permits will be required to sell legally and regularly. Here are the general permits and requirements most agribusiness will come across when they want to sell food or value added products.
Take the initiative to contact the Department of Health on your Island to find out the process for obtaining permits & certification in the most timely manner in your County. Every island office follows the same rule book but any considerations made are made on a case by case basis and knowing who can help you gather & expedite information in your local office will be helpful.
Potentially Hazardous Foods: Knowing what PHFs are will help you understand which value added products will need to made in a certified kitchen. For a full list of these food visit the Department of Health website.
Here is a quick overview
- Food from an animal origin that is raw or heat-treated. Some examples are eggs, milk, meat, and poultry.
- Food from a plant origin that is heat-treated.
- Raw seed sprouts.
- Cut melons, including watermelon, cantaloupe, and honeydew. (The DOH treats sliced or altered fruits, whether sold or distributed as samples, as “processed foods” which must be prepared under special guidelines for sanitation and safety and may be required to be prepared in an approved facility)
Food Safety
Here are important standards to know about producing food/products that is safe for the market place. For a complete food safety assessment of your farm property or your agribusiness contact the Department of Agriculture Food Safety Specialist in your County.
Raw Fruits & Vegetables:
- No license is required to sell fresh, whole, raw fruits and vegetables. Increasingly farmers may be required by institutional, retail, and wholesale buyers to be GAP (Good Agricultural Practices) certified.
- Salad greens may present confusion. No license/inspection is required if the product is labeled “wash before eating” and is a whole leaf or plant.
- A license/inspection is required if leaves are mixed after harvest, the product is cut up or chopped, and the product is labeled “ready to eat.” (As with cut fruits in the above section, the DOH treats sliced or altered vegetables (shelled peas, prepared salads, etc.) whether sold or distributed as samples, as “processed foods” which must be prepared under special guidelines for sanitation and safety and may be required to be prepared in an approved facility)
Processed Fruits & Vegetables:
- FDA and USDA food safety regulations apply to processed foods. Processed foods include minimally processed fruits and vegetables (e.g., cut melon, peeled squash, husked corn) jams, salsa, sauces, dried fruits, dried herbs, teas, cider, blended salad greens, condiments and spreads, canned or frozen food, etc. In Hawaiʻi, the DOH licenses processors of fruits and vegetables.
- In Hawaiʻi, home kitchens may produce certain foods (see the list in the “home Kitchen” section above) for sale only directly to the consumer. Home kitchens are not allowed to produce and sell acidified or “pickled” foods. Home kitchens are not licensed or inspected.
Additional Considerations:
- Certain Foods will require: water activity & pH testing. Done at a food lab or food tech facility.
- DOH determines (potentially hazardous foods) and will assess whether or not a permit is needed
- Some outlets will require proof of “non-permit”
- Different Venues/Markets will require different things. Do Your Research. Contacting the State of Hawaiʻi Dept. of Health Sanitation Dept. (http://health.hawaii.gov/san/) can help you identify the requirements for developing and selling your value-added product.
Labeling:
Labeling is very important to selling your products. Refer back to the marketing and branding section for ideas and strategies for packaging and labeling.
- Basics Guidelines: Certain labeling guidelines will be required at certain revenue margins and units produced. http://health.hawaii.gov/food-drug/files/2013/05/BASIC-GUIDELINES-FOR-FOOD-LABELING.pdf
- Branding & Design: Consumers buy with their eyes first so be sure that your product (amongst the many on the shelf) has enough design interest to catch their attention.
- Certifications & Seals: Consumers like certifications and seals. It often makes them feel safer & more confident in the brand. You can create your own seal with a self-proclaimed statement or you can apply to other seals that are already reputable to the consumer. i.e. Made in Hawaiʻi, Seal of Quality, Certified Organic etc.
Ingredients:
Knowing what is in the products is sometimes vital to actually making the purchase. Here are the general ingredient and label questions you will get and should be prepared for:
- Nutritional Facts: Even if you do not need a detailed nutritional label, having information on the nutritional value of the product is recommended.
- Calorie Counts: If you are not able to give hard numbers for this, be prepared for a consumer that may ask this question. Having a baseline ballpark figure might be a strategic tactic.
- Serving Sizes: Consumers are familiar with this buying metric and it is helpful in guiding their decision to buy.
- Shelf Life: This should always be on your product. This tells the consumer how long it is safe to eat and what storage method is necessary to keep it fresh.
Other Tips:
- Partnerships (you have the crop, they have the kitchen): you don’t always have to everything yourself. Partnering on a product is something you should explore if time and resource is not on your side but you have a winning idea.
- Private Labeling (Branding): If you plan to have a manufacturing company create your value added product be sure to add your own branding on it before you sell it.
- Market Trends in food manufacturing
- Clean Labels: Labels that suggest the food is “cleaner” & safer i.e. gluten free, cage-free, free range, organic
- Minimal Ingredients: less than 5 ingredient products
- Snacks and Beverages: Serving sizes that can be “carried on” during travel and do not need to be in your checked luggage
- Food Experiences: Farm to table events, or food tours to experience eating and adventuring in a new place or new venue.
Resources:
Kapiʻolani Community College Culinary Innovation Center provides technical expertise and resources in food product development, nutritional labeling, analytical testing and general consulting (for a fee). Visit their website for more information: http://culinary.kapiolani.hawaii.edu/culinary-innovation-center/
The Maui Food Innovation Center provides technological expertise, innovative training, consultation, a manufacturing facility, and a Resource Hub for new and established food entrepreneurs endeavoring to bring their products to market locally, regionally and nationally. Visit their website for more information: http://maui.hawaii.edu/foodinnovation/
State of Hawaiʻi Department of Health (SOH DOH)- The Food and Drug Branch has been consolidated with the Sanitation Branch and is no longer a separate program within the Department of Health. The Sanitation Branch web-page on food information is located at: http://health.hawaii.gov/san/food-information/