USDA Publishes Interim Rule for Value-Added Producer Grants
February 23rd, 2011
In June 2010, the USDA solicited public comments on the proposed rule for implementation of the Value-Added Producer Grant (VAPG) program. This morning, after months of anticipation, the agency released the interim final rule. Later this morning USDA Deputy Secretary Kathleen Merrigan will hold a press call regarding the interim rule for VAPG.
With the interim final rule now published, it is expected that the Notice of Solicitation for Applications for fiscal year 2010 funding for the program will be issued soon. Approximately $20 million will be available.
Several improvements are made in the interim final rule.
First, in order to keep business and enterprise planning of VAPG projects farmer-centered, NSAC recommended that farmers and ranchers directly participate in the development of VAPG projects and be allowed to count their time as an in-kind contribution toward the program’s matching requirements. The interim rule responds to this suggestion, stating that applicants “may contribute time as in-kind match amounting up to 25 percent of the total project cost, provided that a realistic and relevant valuation of their time can be documented.”
Second, recognizing that producer groups and farm coops are rarely comprised entirely of beginning farmers and ranchers, NSAC recommended that entities with at least 25 percent beginning farmers and ranchers be permitted to apply for the funds reserved for this VAPG priority group. The agency was unwilling to adopt this standard, but did move significantly in the NSAC-proposed direction by reducing the requirement from 100 percent to 51 percent beginning farmer-based membership. This should help make the reserve fund more useful, but will require careful monitoring to determine whether or not the standard is still too high to be practical.
Third, NSAC recommended that when proposals are equally ranked, those targeting the VAPG priority groups – small and medium-sized family farms, beginning farmers and ranchers, and socially disadvantaged farmers and ranchers – receive priority and the agency agreed and added that specification to the rule.
Fourth, NSAC proposed the agency’s annual gross sales-based definition of medium-sized farm or ranch be increased from $700,000 to $1 million and the agency agreed. This change will more adequately reflect enterprise and regional differences, while ensuring targeting of program funds to the “disappearing middle” of agriculture.
Fifth, while not in the interim rule itself, in the discussion of comments submitted on the proposed rule including NSAC’s, the agency commits itself to developing a simplified application form for proposals requesting less than $50,000, as required by statute.
The interim rule also takes two turns for the worse.
First, rather than increasing the percentage of total proposal evaluation ranking points for projects that foster the program’s statutory priority for small and medium-sized family farms and beginning and socially disadvantaged farmers, the interim rule actually decreases those ranking points from 15 to 10 out of a total of 100. NSAC has proposed 25 points.
Explaining this decision, the Agency states: “reducing priority points from 15 to 10 will result in a better balance among applicants in priority categories and other applicants who do not qualify for priority points who also submit worthy applications.” The additional 5 points were transferred to the point section for “nature of the proposed project.”
Translation? The agency indicates it will thumb its nose at the congressional directive from the farm bill and instead seeks to give non-priority applicants a stronger leg up. Better balance here means that projects serving large farms might have been unfairly treated if even the proposed rule’s 15 points had been left in place. Or, in other words, the agency prefers to insert its own view of program priorities for the one Congress placed in the 2008 Farm Bill.
Second, in a breathtaking about face from not only the proposed rule but from the way the program has operated since its inception in 2000, the interim final rule expands eligibility for the program to landlords and owners who are not actively engaged in farming.
Among the other significant changes in the interim final rule are the addition of definitions for different types of value-adding enterprises, removal of several proposed restrictions on projects focused on “branding” of products, and elimination of any ranking points for projects being located in a rural area.
We are still in the process of evaluating the new rule and may post additional information at a later date. We will also keep readers posted on the timing for the next request for applications.
The interim final rule is effective March 25, 2011 and the deadline for public comments on the interim final rule is April 25, 2011. In the interim rule, the agency notes that it is “[s]pecifically…seeking comment on ways to improve the ability of tribal entities participation in the VAPG Program.”
Written comments may be submitted online at http://www.regulations.gov; by mail to Branch Chief, Regulations and Paperwork Management Branch, U.S. Department of Agriculture, STOP 0742, 1400 Independence Avenue, SW., Washington, DC 20250–0742; or by courier to Branch Chief, Regulations and Paperwork Management Branch, U.S. Department of Agriculture, 300 7th Street, SW., 7th Floor, Washington, DC 20024.