1 Month Left to Apply for Value-added Grants

$37 million in grants available to value-added producers—including beginning and small-scale farmers.

by Dani Yokhna
Value-added farm product, pickles
Courtesy Stephanie Staton
Hobby farmers who assistance starting up their value-added-products business can apply for USDA Value Added Producer Grants.

The USDA is inviting hobby farmers to apply for Value-Added Producer Grants. The program combines two years’ worth of funding, making $37 million available for new value-added projects. Hobby farmers wishing to apply for grants must submit their project proposals by Aug. 29, 2011.

“Value-added, niche markets are one of the best strategies for creating and maintaining profitability for beginning and small and mid-sized family farmers and ranchers,” says Traci Bruckner, assistant director of policy at the Center for Rural Affairs. “Those applicants that meet the beginning, small or mid-sized family farm criteria will automatically get 10 points out of a total of 100.”

VAPG is a competitive grants program that awards grants to producers to help them develop farm-related businesses that add value to basic agricultural products through branding, processing, product differentiation, labeling and certification, and marketing. VAPG includes projects that market inherently value-added production, such as organic crops, grassfed livestock, and locally produced and marketed food products. VAPG also funds regional food-supply networks that benefit small- and mid-sized farms by incorporating the producer into larger farm-to-plate value chains.

Grants may be used to develop business plans and feasibility studies (including marketing plans) needed to establish viable marketing opportunities for value-added products or for working capital to operate a value-added business venture or alliance.

“One of the stumbling blocks of late to farmers and groups of farmers seeking VAPG funding is the one-for-one matching grant requirement,” Hoefner says. “In a major win for farmers that National Sustainable Agriculture Coalition fought for, farmers may now provide up to half the match requirement through sweat equity—the farmers’ time in developing or implementing the project. This is an important new development that should make it easier for farmers to apply for program funding.”

“Congress made a good choice in targeting VAPG funds to small- and medium-sized family farms as well as to beginning and socially disadvantaged farmers and ranchers,” notes Ferd Hoefner, NSAC policy director. “Ten percent of program funding is reserved for local and regional food-supply networks that link farmers with other processors and distributors that market value-added products in a manner that improves small- and medium-sized farm profitability. Ten percent is also reserved for projects primarily benefitting beginning and socially disadvantaged farmers and ranchers.”

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The VAPG program was initiated by Congress as part of the Agricultural Risk Protection Act of 2000 and extended and revised as part of the 2002 and 2008 Farm Bills. Funding in fiscal  year 2010 was more than $20 million, but funding was reduced to just less than $19 million as part of the Continuing Resolution for fiscal year 2011. The agricultural appropriations bill passed by the House of Representatives in mid-June would slash the program by more than a third to $12.5 million.

“We urge the Senate to reject the House-passed cut to VAPG and to maintain funding for this innovative, market-based, jobs-creating program,” Hoefner says.

The Center for Rural Affairs is operating a Farm Bill Helpline to assist hobby farmers and other producers as much as possible during the application process. It provides direct access to staff with knowledge about the program rules who can help farmers understand the application process.

The agency estimates it will make about 250 awards, which are expected to be announced by the end of November 2011.

Applicants may submit a planning grant (up to $100,000 each) or a working capital proposal (up to $300,000 each). The agency is estimating, based on previous experience, the average size grant award will be $116,000. In the last round of awards, 41 percent of total awards were under $50,000.

Applicants may propose any time frame for the project, provided it does not exceed three years. he complete application package will be available from the USDA Rural Development site.

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