This paper is part one of a two-part companion series on Value-Added Ag-Based Economic Development. In this paper, we explore the confusion caused by the application of the term “value added” to a wide range of activities that may have very different characteristics. We also describe the difficulty of deciphering household income attributed to value-added activities and construct a framework for understanding the range and characteristics of economic activities of the farm household outside traditional commodity production. In the second paper, we outline what policymakers and others hope to achieve through value-added agricultural development and examine whether there is any theoretical or empirical basis for such expectations.