2009 Value-Added Producer Grants

For Immediate Release:
September 1, 2009

Kate Fitzgerald, 202-547-5754

USDA Announces $18 Million Available for Value-Added Producer Grants Important to Family Farm Viability

Washington, D.C. September 1, 2009 – The U.S. Department of Agriculture today announced the availability of $18 million for the Value-Added Producer Grant (VAPG) program. Publication of a revised VAPG Notice of Funds Available (NOFA) appears in today’s Federal Register.

VAPG competitive grants allow farmers to plan for new agricultural businesses or develop or expand existing businesses that add value to their farm product through specialized production, processing, or marketing. In addition to food and fiber processing, market differentiated products, commodity segregation, local food products, mid-tier value chains, and some on-farm energy production projects are eligible. Applications for this round of VAPG grants are due November 30, 2009.

“The long-awaited announcement of Value-Added Producer grant funds is good news for rural America,” said Ferd Hoefner, Policy Director for the National Sustainable Agriculture Coalition. “Value-added businesses have proven to be an effective way to increase producers’ income and boost economic activity in their communities—especially important during these tough economic times. We are pleased USDA has revised the request for proposals to give greater weight to projects serving small and medium-sized family farms.”

The Value-Added Producer Grant (VAPG) program is a federal farm bill program administered by USDA’s Rural Business-Cooperative Service. The program makes grants to individual farmers or to producer-controlled coops, groups, businesses, and associations for conducting feasibility studies and developing business plans (for which applicants may apply for up to $100,000) or for working capital (for which applicants may apply for up to $300,000). There is a simplified application for grants of less than $50,000. Matching funds are required and must be at least equal to the amount of grant funds requested. The maximum timeframe for a VAPG grant project is 36 months—for this round of grants, projects cannot begin earlier than March 1, 2010 and cannot end later than February 28, 2013.

Important changes were made to the VAPG program during 2008 Farm Bill reauthorization that are now fully reflected in the revised funding announcement. These include priorities for beginning and socially disadvantaged farmers and ranchers, small and mid-sized family farms, local food, and the development of ‘mid-tier value chains’ — business relationships that are aimed at assisting mid-sized farms that want to capitalize on the demand for high quality products from farms that adhere to strong environmental and social values.

Ten percent of the available VAPG funds are set aside for projects serving beginning farmers, projects serving socially disadvantaged farmers, and projects developing mid-tier value chains. Priority will be given to small and medium-sized family farms (mid-sized farms are defined as farms with annual gross farm sales between $250,001 and $700,000, with small defined as anything less than that). In addition, the definition of value-added agricultural product now includes a product that is aggregated and marketed as a locally-produced agricultural food product (defined as within 400 miles of the end consumer or within the same state).

“The growing interest in local and regional food systems has increased the demand for exactly the kinds of business activities that VAPG can fund, such as processing and aggregating facilities” said Kate Fitzgerald, Senior Policy Analyst with the National Sustainable Agriculture Coalition. “A VAPG grant can help businesses link sustainable and organic producers with nearby markets and meet a triple bottom line of increased farm and rural income, improved health and reduced carbon consumption.”

Past examples of VAPG recipients demonstrate that the program can support a diversity of projects and agricultural producers.

Kenny’s Farmhouse Cheese in Austin, Kentucky received $24,500 in 2007 to conduct a feasibility study on business expansion, improved technology, and transition to organic dairy production. Dairy farm owner Kenny Mattingly was concerned about the future of milk as a commercial commodity and whether he and his family could continue to live on the small dairy farm he took over from his father in the 1990s. After a trip to Europe where he learned about the art of cheese making, Kenny decided to get involved in value-added product marketing.

Since 1998 when he began to produce Gouda cheese on his small farm, news of Kenny’s cheese making enterprise has spread like wild fire. In less than ten years, his cheese production has increased from 3,000 to 34,000 pounds. Kenny will used his VAPG grant to conduct feasibility studies of business expansion scenarios, developing a successful business plan, improving technology and equipment on the farm, and transitioning to organic products by raising cows that feed on native grasses.

Grassland Beef, a company made up of four independently owned family farms in Monticello, Missouri used their $215,000 VAPG grant to develop a fresh market for their grassfed meat. Fresh meat is a growing market among consumers seeking healthy, environmentally responsible meat options. At the same time, selling fresh meat is more complicated than frozen meat and requires sophisticated packaging and handling strategies. Grassland Beef used their VAPG grant to develop the market for this fresh meat and to work on the technology and infrastructure for sales.

Amazing Grains! A Montana grain growers’ cooperative markets processed, millable Indian rice grass seed. They used their working capital VAPG grant in 2003 to expand their processing capacity, including hiring key staff, providing cash for inventory and other start-up costs, and providing financial resources for market identification, development, and expansion.

“It’s very encouraging to see public funding made available through Value-Added Producer Grants for projects that support farmer innovation and that help producers meet consumer demand for fresh, healthy food, produced in a sustainable manner,” says Fitzgerald.

For further information and to see an Application Guide and an application template, applicants should visit the program web site at: http://www.rurdev.usda.gov/rbs/coops/vadg.htm. In addition, applicants should contact their USDA Rural Development State Office by calling 1-800-670-6553. Please note that applicants may submit a draft of their application to their State Office for a preliminary review anytime prior to September 30, 2009 to assess whether the proposed project meets eligibility criteria.