National Campaign for Sustainable Agriculture

Value Added Producer Grants Program

Program Description

The Value-Added Agricultural Producer Grants Program (formerly known as the Value-Added Development Grants - VADG) is a competitive grants program administered by USDA's Rural Business Cooperative Service that makes funds available each year to help producers enter into value-added activities. The program is administered through State USDA Rural Development offices. Individual producers, cooperatives, farm alliances and majority-controlled producer-based business ventures are encouraged to apply. Grants are awarded for both the marketing and processing of an agricultural product. Hard-won language was adopted in the 2002 Farm Bill to qualify how an item is grown or raised (e.g. grass-fed, free range, organic, etc.) as value-added.

Grants may be used to fund one of the following two activities; (1) Developing business plans and feasibility studies (including marketing plans or other planning activities) needed to establish viable marketing opportunities for value added products; or (2) for acquiring working capital to operate a value-added business venture or an alliance. Applicants are eligible to apply for only one of these two types of grants each cycle.

Program Administration

The program is administered by USDA's Rural Business Cooperative Development Service through USDA Rural Development State Offices. To find your RD state office go to: http://www.rurdev.usda.gov/rbs/coops/vadgstateoffice.html or http://www.rurdev.usda.gov/recd_map.html

Program Status

The VAPG producer grant program this year is different from the program offered in previous years. The 2002 Farm Bill expanded applicant as well as activity eligibility. Independent producers, including cooperatives, are eligible, and now agricultural producer groups, such as commodity groups and majority-controlled producer-based groups, have been added to the list of eligible applicants.

Using the Program

The VAPG producer grant program offers competitive grants to help independent agricultural producers enter into value-added activities. Grants may be used to fund one of the following two activities: (1) Developing feasibility studies or business plans (including marketing plans or other planning activities) needed to establish a viable value-added marketing opportunity for an agricultural product; or (2) acquiring working capital to operate a value-added business venture or an alliance that will allow the producers to better compete in domestic and international markets. In order to provide program benefits to as many eligible applicants as possible, applications can be for one or the other of these two activities, but not both.

Value-added products are defined as follows: (1) A change in the physical state or form of the product (such as milling wheat into flour or making strawberries into jam); (2) the production of a product in a manner that enhances its value, as demonstrated through a business plan (such as organically produced products); (3) the physical segregation of an agricultural commodity or product in a manner that results in the enhancement of the value of that commodity or product (such as an identity preserved marketing system). As a result of the change in physical state or the manner in which the agricultural commodity or product is produced or segregated, the customer base for the commodity or product is expanded and a greater portion of revenue derived from the marketing, processing, or physical segregation is made available to the producer of the commodity or product. Value-added also includes using any agricultural product or commodity to produce renewable energy on a farm or ranch. This grant program has a matching funds requirement. Applicants must provide matching funds at least equal to the grant. Other Federal grants cannot be used as matching funds. Grant funds and matching funds must be spent proportionately during the timeframe stated in the grant application. Matching funds must be used to support the overall purpose of the VAPG program.

Contact the U. S. Department of Agriculture Rural Development State Offices for applications and information about the program. Applications and information can also be found on the USDA website at www.rurdev.usda.gov/rbs/coops/vadg.htm.

The program is administered through State USDA Rural Development offices. You can find your RD state office at: http://www.rurdev.usda.gov/rbs/coops/vadgstateoffice.html State office personnel review applications for eligibility and completeness. They also do the first of three rounds of reviews in which points are assigned to each application based on the selection criteria outlined in the Notice of Funds Availability (NOFA). The USDA national office then obtains two additional independent reviews in which points are be assigned based on the evaluation criteria. All scored applications will then be forwarded to the National Office, where scoring is reviewed and applications ranked.

Criteria for Eligibility

Independent producers (including individual producers), agricultural producer groups, farmer or rancher cooperatives, and majority-controlled producer-based business ventures are eligible to receive grants under this program. If the applicant is an agricultural producer group, it must be providing assistance directly to a specifically identified group of independent producers. Grant funds cannot be used to support the organization's general operations. If the applicant is an unincorporated group (steering committee), they must form a legal entity before grant funds can be disbursed. The project proposed must involve a value-added product.

Resources

VAPG Program Fact Sheet developed by Sustainable Agriculture Coalition
VAPG Fact Sheet on Matching Requirements developed by Sustainable Agriculture Coalition

Who to Contact

State USDA Rural Development office http://www.rurdev.usda.gov/rbs/coops/vadgstateoffice.html

National Campaign for Sustainable Agriculture: 845 361-5201, Email:

Kim Leval, Center for Rural Affairs, (541) 687-1490, Email: