usda Value-Added producer grant (VAPG)

While there are no grants to start a farm, the USDA Rural Development Value-Added Producer Grant (VAPG) can help a farm operation achieve and sustain profitability. If you are interested in processing the agricultural commodity produced on your farm into a product with a higher market value, or if you produce or market your farm commodity in a nonconventional way, then you may be eligible for a VAPG. Through this effective Federal program, producers can receive as much as $250,000 in working capital to spend in three years or less. 

Oliver Farm received a 2015 Value-Added Producer Grant to assist in processing and marketing costs for sunflower oil, pressed from seeds grown on the family farm in Pitts, Georgia.

Oliver Farm received a 2015 Value-Added Producer Grant to assist in processing and marketing costs for sunflower oil, pressed from seeds grown on the family farm in Pitts, Georgia.

There are some limitations. The grant only pays for processing and marketing costs on a reimbursement basis, so that for every qualified dollar you spend, the USDA deposits a dollar in your bank account. It will not pay for production or harvest of the commodity by an applicant; the purchase of buildings or land; or family members' time. However, most costs attached to the commodity from the time of harvest to the time it reaches the consumer are covered. This list includes — but is not limited to — processing and packing, supplies, office accounting systems, nearly all marketing outlays, and even some supply of raw commodity purchased from outside sources.

Grant applications are not easy; they generally take at least a month to compose, which means they are not cheap. Success is also not guaranteed. The program is competitive, and applications are scored both by each individual state office and by an objective reviewer at the national level. But a good grant proposal can profit an operation by paying for expansion costs or subsidizing current processing and marketing costs to free up capital for other areas of the business. 

The information in this summary is no way exhaustive. For example, harvesters of seafood and forestry products are also eligible. A further breakdown of the program, along with some helpful resources, are below. The request for applications usually comes out around April each year, with a 90-day turnaround. 

Cooper Agricultural Services, LLC specializes in the Value-Added Producer Grant program, providing application assistance and qualified third-party feasibility studies, market analysis, and operational plans. If you are interested in a VAPG application, you can email us through our contact page or use the form at the bottom of the page. 


overview

Established in FY02, the VAPG program is designed to help farmers increase their income by sharing the cost of processing and marketing their raw commodities. To qualify as a “value-added” product, the original product must be produced or marketed in a manner that enhances its value (i.e. organic, local, grass-fed) or undergo intensive processing, such as transforming milk to cheese or blueberries to blueberry juice. The applicant must be a producer, harvester, or a producer-owned and controlled business entity. Grant funds can be used for business planning activities and for working capital.

VAPG Project Evaluation

The USDA administrator can award an additional 10 points to particular projects, based on program funding priorities.

 Value-Added Methods & Examples:

  • Change in physical state
    • Strawberries into strawberry jam
  • Physical segregation
    • Non-GMO from GMO
  • Produced in a way that enhances value
    • USDA Certified Organic
  • Locally produced and marketed agricultural food product (USDA definition of "local": 400 mile radius from point of origin or within the same state)
  • Farm renewable energy
    • Biodiesel

Applicants Receiving Priority Points:

  • New & Beginning Farmers and Ranchers
  • Socially-Disadvantaged Producers
  • Military Veterans
  • Operators of Small- or Medium-Sized Family Farms (grossing less than $1,000,000 annually in three years prior to applicaton)
  • Farmer or Rancher Cooperatives
  • Mid-Tier Value Chains

Funding

$500,000 project for no more than 3 years. The USDA provides $250,000 in reimbursements for eligible expenditures. Applicant must show $250,000 in anticipated operational costs as part of the matching requirement — $125,000 of which can come from applicant's sweat equity. Project length is determined by applicant's capital needs and the ability to show eligible matching expenditures. For example, grant projects can be as short as one year if the applicant can provide sufficient data that demonstrates all USDA and matching funds will be spent within the designated timeframe.

  • Requires 1:1 cost match
  • No conflict of interest. Cannot pay family members.
  • Funds cannot be used to purchase land, facilities, or equipment.

Planning Grant: max award $75,000

  • Facilitates economic planning activities to determine viability of new value-added venture. Costs may include independent feasibility study and development of business/marketing plan.

Working Capital: max award $250,000

  • For operational costs directly related to processing and marketing. Requires a project-specific feasibility study by a qualified third party and a business plan unless —
    • Applicant requests less than $50,000 (simplified application).
    • Applicant requests funds to expand market for existing value-added product that has been produced and marketed for two years at the time of application.
  • Marketing plan required.


2014 Value-Added Producer Grant by Region. Source: National Sustainable Agriculture Coalition

2014 Value-Added Producer Grant by Region. Source: National Sustainable Agriculture Coalition


Resources


Interested in applying for a VAPG, please contact us.