USDA offering up to $44m in value-added producer grants

Program helps farmers generate more income and create jobs for rural communities.

For farmers, adding value to their products means adding revenue to their businesses, which also means more jobs and opportunities for their communities. The Value-Added Producer Grant (VAPG) program is intended to help farmers do just that, and on April 8, the U.S. Department of Agriculture announced the availability of up to $44 million in funding for farm and farm-related businesses through the program.

Launched in 2001 and administered by USDA’s Rural Business & Cooperative Service, the VAPG program provides competitive grants to producers for working capital, feasibility studies, business plans and marketing efforts to establish viable value-added food and fiber businesses.

"America's farmers, ranchers and rural business owners are innovative entrepreneurs, and this program helps them grow economic opportunities for their families and communities by increasing the value of the items they produce," Agriculture Secretary Tom Vilsack said. "The Value-Added Producer Grant program has a great track record of helping producers increase the value of products and expand their markets and customer base, strengthening rural America in the process."

Program grants may be used to develop new products and create additional uses for existing ones. Priority for these grants is given to veterans, members of socially disadvantaged groups, beginning farmers and ranchers and operators of small- and medium-sized family farms and ranches. Additional priority is given to applicants who seek funding for projects that will create or increase marketing opportunities for these types of operators.

“VAPG helps farmers increase their incomes and create new marketing opportunities for their products, which in turn supports the local economy by creating more jobs in the community,” said Wes King, policy specialist at the National Sustainable Agriculture Coalition. “The program has helped thousands of producers grow their businesses and their customer bases through processing and market differentiation, like developing supply networks to turn wheat into flour for local millers and bakers, and through farm-identified marketing like “Homegrown by Heroes,” which help veteran farmers tell the story behind their farms and products.”

More information on how to apply is on page 20607 of the April 8 Federal Register. The deadline to submit paper applications is July 1, 2016. Electronic applications submitted through grants.gov are due by June 24, 2016. Additional information and assistance is available through county USDA Rural Development offices.

Up to $75,000 is available for planning grants and up to $250,000 is available for implementation grants, with project periods lasting from one to three years, depending on the complexity of the project. The congressionally established priorities for the program are projects that expand opportunities for small and mid-sized family farms as well as for beginning, socially disadvantaged and military veteran farmers and ranchers. Local food marketing is also eligible, including value chains that link farmers to the rest of the food distribution system in a manner that increases the return to the farmer.

"At a time when commodity prices are slumping, exploring value-added opportunities can be a path to a more rewarding and sustainable future," King said. “Farmers can increase their share of the consumer food dollar by moving into marketing channels that reward innovation and quality rather than undifferentiated raw commodities.”

Since 2009, USDA has awarded 1,126 Value-Added Producer Grants totaling $144.7 million. USDA awarded 205 grants to beginning farmers and ranchers.

The $44 million funding opportunity, the largest single-year award allocation in the program’s history, represents a boon for producers who are able to put forward proposals this year, but could leave future potential applicants out in the cold. This year’s allocation combines $10.75 million in discretionary funds from the FY 2016 Consolidated Appropriations Act with half of the program’s 2014 Farm Bill mandatory funding – funding that was intended to last through the entire five-year farm bill cycle.

“Releasing half of the total 2014 Farm Bill money in just one funding cycle curtails the program’s ability to support farmers in developing value-added enterprises in future years,” said NSAC Policy Director Ferd Hoefner. “We wholeheartedly support VAPG, a program which we have championed since its inception, but are disappointed in the decision to spend the majority of funds in a single grant round, leaving 2017 and 2018 shortchanged. We will continue to urge USDA to adopt strategies that ensure sound fiscal management and program effectiveness.”

Timing has also been an issue for the program in recent years. Farmers and farm organizations have requested that USDA run the application process during the winter, when farmers are less busy and have more time to put together applications. Though USDA officials have repeatedly stated that this is their intent, the application cycle timing has been unpredictable and often delayed, with only one year in the last seven being issued in the winter months of the assigned fiscal year.

The NSAC will soon release its annual Farmers Guide to the VAPG Program, a unique resource that walks farmers through the program’s application requirements, including a step-by-step description of the application and ranking processes.  The Guide will be available for free on the NSAC website: http://sustainableagriculture.net/publications/.

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