The AERU Value Chain Compass

Scale

Processing

Processing often has to take place within a short time of the decision to harvest, if product quality is to be be maintained. This means processing capacity can be a major consideration in developing a value chain. The value chain may invest in its own processing capacity. Alternatively, it may purchase access to an existing processor. In both cases, the value chain must decide the scale of its required processing capacity. A small volume may involve a high cost by the industry standard. It is also possible that interrupting a processing plant’s operations to accommodate a special product may reduce the economies of scale previously achieved by the plant.

Questions for developing a value chain

• What is the scale of processing capacity required for the value chain to be commerically viable?

• Is it possible to enter into a contract with an existing processor to provide this capacity to the value chain at an affordable unit price?

• Does the value chain need to invest in its own processing capacity?