Value Added Industry -The Industrial-Agricultural Response
The Basic Issue
One response to the rapidly changing situation in the rural area of Canada is a movement into "value added" industry. That means that the raw agricultural product is not shipped directly to other countries for their use but rather, value is added to those raw materials by either semi-processing them or turning them into fully processed items. This processing can be done directly to the raw material, like when wheat is turned into flour and then into pasta, or indirectly when grain is used as feed for animals or poultry and then the animals are either sold directly or processed further before sale.Every time the food is handled, more value is added to the product. The GST is actually geared towards following products through their production chain and tax is added for each increment of new value that is added, making it a "value added tax". The final customer pays the sum of the tax on all the values added to the raw material.
The rapid development of the hog industry in Manitoba in the last few years is because the freight subsidy known as The Crow Rate was removed making it more expensive to ship raw grain to the coast than before. It now pays to feed the hogs here, (adding value) and semi-process the meat before shipping the product to the coast. The ratio of freight costs to value of product is much lower when value is added prior to shipping.
Many people feel that Manitoba is far behind where it should be in developing value added processing to its section of the marketing chain, making it more difficult now to become established. For example while southern area of Westman debated about establishing a Pasta plant, two were established in North Dakota and they have captured much of the pasta market.
A second response to the rural dynamics today is the Human Resource response, putting efforst into human resource development.
Aspects of Value Added Industry
Rural Development Institute Research Studies
Other Resources