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Programs in Action: Growing Business with the Value-Added Producer Grant Program

May 12, 2015

Last week, USDA announced the request for applications for this year’s Value Added Producer Grant (VAPG) program cycle.

Today we check in with a past VAPG grantee to see how their farm business has grown thanks to the grant funding made possible through this important federal program!

In 2012, Steve McKaskle and his family had a successful and growing business, McKaskle Family Farm, growing organic grains like rice in Braggadocio, Missouri. The only catch was that they lacked the processing equipment to transform their raw products into shelf-ready items through cleaning, milling, and packaging.

They were considering purchasing their own processing equipment instead of going through a third-party processor, but didn’t want to make a risky business bet without doing thorough planning first. Their first USDA Value-Added Producer Grant (VAPG) helped them do just that – they conducted a financial feasibility study for purchasing milling, cleaning and packaging equipment for the farm’s organic grains. The feasibility study also allowed McKaskle to evaluate scaling up his operations, laying the foundation for increased sales to regional retailers, and increased recognition as a regional processor for local farmers’ grains.

“I originally thought building my own rice mill would be very expensive, but the VAPG planning grant allowed us to find a contractor who introduced me to milling equipment that was affordable. Without the grant we would not have had these resources and we would not have had access to the working capital grant—it’s been critically important.” — Steve McKaskle

Plan in hand – and with interested buyers lined up – McKaskle applied for and received a working capital VAPG grant to help his business take this next expansion step.  For McKaskle, “the VAPG working capital grant is helping us immensely because we are still growing, making investments, running out of room—the grant is helping to buffer our expansion.”

McKaskle is particularly proud of the local partnerships and community development his VAPG grants kick-started. With his milling equipment secured, McKaskle has made a name for himself as a regional processor of organic grains and his business is expanding by the day. One regional farmer hauls his product from 3 hours away just to use McKaskle’s equipment. McKaskle encourages farmers to consider switching to organic production; his model appeals to conventional farmers who are considering the transition to organic, as “the price farmers earn for transitional grains splits the difference between the organic and the conventional price.”

McKaskle’s participation with VAPG facilitated relationships with corporate, academic, and local partners. McKaskle’s organic products have long history with many well-known companies, including Patagonia and Nike. Currently, his basmati and medium grain rice is served in Chipotle restaurants, and he formed a new company to market his organic popcorn under the Braggadocio name. He is participating in the University of Missouri’s organic weed control research, which is considering a variety of innovative alternatives to chemical weed control.

Across the country, many diversified producers are looking to emerging markets for value-added farm products as an opportunity to expand their business. As demand for high quality farm-based products increases, farmers producing value-added products are paving the way for local and regional systems for processing, packaging, and distribution. The Value-Added Producer Grant program supports producers adopting innovative systems of production and marketing, increasing farm income, creating new jobs, and expanding local food options for consumers.

VAPG grants are particularly critical during the initial transition into these markets and early stages of a business venture. The program administers two types of funding—planning and working capital grants. Planning grants fund economic planning activities such as feasibility studies and the development of business and marketing plans. Working capital grants can be used to pay for eligible expenses related to the processing and marketing of value-added products, such as inventory, labor, supplies, and fuel. To apply for the working capital grant, a farmer must have a completed feasibility study and business plan. In this way, the VAPG program builds on farmers’ successes.

To learn more about the application process, refer to our blog post on the 2015 application period and our Farmers’ Guide to the Value-Added Producer Grant program.

If you are considering applying, time is of the essence, as applications are due by July 7 and they are not easy proposals to pull together, so read our Farmers’ Guide without delay!

Categories: Grants and Programs, Local & Regional Food Systems, Rural Development

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