NSAC's Blog
USDA Awards $46 Million for Farm Value-Added Business Development
October 27, 2016
Pickled carrots. Photo credit: Flickr user, lipstickproject.
Editor’s Note: This is the first in a series of three posts on the Fiscal Year 2016 awards for the Value Added Producer Grants program. This post provides an overview of the awards. A second and third post will dig deeper into specific awards.
When farmers and entrepreneurs take raw agricultural products, like vegetables or grains, and turn them into something “value-added”, like salsa or bread, they have an opportunity to improve their own incomes while also creating jobs, contributing to rural economic development, and enhancing food choices for consumers. Value-added products are an important tool for meeting the ever-growing demand for local and regional food products; unfortunately, many farmers still struggle to take the next step into value-added production.
In order to help farmers, growers, and budding entrepreneurs bring their growing businesses to the next level, the U.S. Department of Agriculture (USDA) administers a program called the Value-Added Producer Grants (VAPG) program. VAPG provides competitive grants to individual independent agricultural producers, groups of independent producers, producer-controlled entities, producer associations, and farmer or rancher cooperatives to create or develop value-added producer-owned businesses. These grants may be used to fund business and marketing plans, feasibility studies, or to acquire working capital to operate a value-added business venture or alliance. Working capital applications must be supported by an independent feasibility study as well as a business plan.
On Thursday, October 27, USDA announced that 326 farm businesses from 47 states, Puerto Rico, and the Virgin Islands will receive $45.6 million in grants from the fiscal year (FY) 2016 round of VAPG.
The funding for FY 2016 is a combination of discretionary funding from FY 2016 appropriations legislation and mandatory funding from the 2014 Farm Bill. For FY 2016, Congress appropriated $10.75 million to supplement direct spending from the 2014 Farm Bill, which provided $63 million over five years. Of the $45.6 million in new awards, approximately $35 million is from the farm bill direct spending account.
Demand for the VAPG program remains very high, and is likely to continue to increase if commodity prices remain low. In fact, VAPG was born out of the desire by farmers, in a time of depressed prices, to find a way to add value to their operations while also lifting up their communities. That original impetus for the creation of VAPG is very similar to circumstances today; farmers are struggling to cope with stagnant global commodity prices and looking to innovative value-added practices to keep their businesses and communities thriving. As the next farm bill debate ramps up, NSAC will seek to expand VAPG so that it can continue to serve and support farmers and rural communities around the country.
VAPG by the Numbers
(Editor’s note: USDA provides relatively little information about the awards, so in each category cited above and below, there may be more in a category than what we can ascertain based on the brief summaries provided.)
The FY 2016 awards include at least:
- 5 mid-tier value chain, supply network, and food hub projects
- 34 organic food projects
- 51 projects marketing their value-added products locally or serving a local market
By type of product, meat and dairy projects led the way with 104 projects (48 dairy and 56 meat); within that category, at least 15 projects specifically mention a focus on production and marketing of grassfed meat or pastured poultry products, though the actual count is likely much higher.
84 of the FY 2016 projects will create or market products using specialty crops (fruit, vegetables, nuts, etc.). Wine, cider, juices, and other beverages came in close behind with 75 awards. The remainder of FY 2016 award projects focused on grain and oilseeds, maple syrup and honey, eggs, fish, and fuel and other non-food products.
When and if more complete information becomes available, many of these numbers may change somewhat. The preliminary information released by the Department includes only very brief descriptors.
Approximately 12 percent of all FY 2016 awards were for planning grants and feasibility studies.
State and Regional Breakdown
At the regional level, the Midwest led the way with 28 percent of all projects. The South followed closely behind with 25 percent. The West and Northeast accounted for 24 percent and 20 percent of projects, respectively.
In the chart below, we list the top 10 states by number of awards:
| State | Number of Awards | Total Amount Awarded |
| Wisconsin | 23 | $3,702,436 |
| Virginia | 20 | $3,914,202 |
| Washington | 18 | $2,327,704 |
| Nebraska | 16 | $1,385,401 |
| Pennsylvania | 16 | $1,982,920 |
| California | 15 | $1,913,359 |
| Missouri | 15 | $2,136,150 |
| New York | 14 | $2,279,655 |
| Oregon | 13 | 1,928,410 |
| Kentucky | 12 | $1,708,611 |
| North Carolina | 12 | $1,375,245 |
And the top 10 states by total grant amount:
| State | Number of Awards | Total Amount Awarded |
| Virginia | 20 | $3,914,202 |
| Wisconsin | 23 | $3,702,436 |
| Washington | 18 | $2,327,704 |
| New York | 14 | $2,279,655 |
| Missouri | 15 | $2,136,150 |
| Pennsylvania | 16 | $1,982,920 |
| Oregon | 13 | $1,928,410 |
| California | 15 | $1,913,359 |
| Kentucky | 12 | $1,708,611 |
| Maine | 10 | $1,613,118 |
Click here for the complete list of the new Value-Added Producer Grant award recipients.
Previous VAPG awards supporting local and regional projects are mapped on the Know Your Farmer, Know Your Food compass.
For more information on VAPG, visit NSAC’s Grassroots Guide to Federal Farm and Food Programs and Farmers’ Guide to Applying for the Value-Added Producer Grant Program.
Categories: Grants and Programs, Local & Regional Food Systems
Would a small business grant for Value Added Business Development be possible for a company that has a great fertilizer and chemical business and want to keep all Ag employees full time in the off season. We already do some things but are looking to grow these so we can continue to keep valuable employees full time and offer full time benefits.
It would probably be worth speaking with your state/local USDA reps. Check out our grassroots guide for more details: https://sustainableagriculture.net/wp-content/uploads/2016/04/2016_4-NSAC-VAPG-Farmers-Guide-FINAL-1.pdf