Let us try to explain with a example .. Farmer A, B, and C grow groundnuts in their farm. each farmer gets same output of say eg 100 Kgs.
Farmer A takes his produce to local market and sells the groundnuts at 50 Rs. per KG and makes 5000 Rs.
Farmer B decides to peel the peanut shells and grade the groundnuts and takes his 80 KG ( after deducting peanut shell waste) it to the market sells at 90 Rs. per KG takes home Rs, 7200/-
Farmer C decides to take his groundnuts after drying them to the oil mill crush the peanuts and make groundnut oil. at a yield of around 55 % on his appox 75 KG after drying, He makes around 40 LIters of Groundnut oil. Which he sells for Rs. 220 per liter making him Rs. 8400/-
The above is just a illustration of how value addition works. You can keep scaling up value addition interms of product, Branding etc increasing the value at every stage.