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SDA Announces Funding Opportunity for Value-Added Producer Grants

August 20, 2012

On August 15, USDA’s Rural Business-Cooperative Service announced the availability of $14 million in funding  for its Value-Added Producer Grant (VAPG) competitive grants program.  The Notice of Funds Available (NOFA) can be found in the August 15, 2012 Federal Register.  Applications are due October 15, 2012.

Program Basics:

VAPG is a competitive grants program that awards grants to producers to help them develop farm-related businesses that add value to basic agricultural products through branding, processing, product differentiation, labeling and certification, and marketing.

VAPG includes projects that market inherently value-added production, such as organic crops, grass-fed livestock, and locally produced and marketed food products.  VAPG also funds regional food supply networks that benefit small and mid-sized farms by incorporating producers into larger farm-to-fork, or “mid-tier,” value chains.

Grants may be used to develop business plans and feasibility studies (including marketing plans) needed to establish viable marketing opportunities for value-added products or to acquire working capital to operate a value-added business venture or alliance.  Working capital applications generally must be supported by an independent feasibility study as well as a business plan.

The maximum grant amount for a planning grant is $100,000 and the maximum for a working capital grant is $300,000.

Program Funding:

Approximately $14 million is available for VAPG for Fiscal Year 2012, however, the Secretary of Agriculture may use carry over funds from previous years of the program to fund additional applications after the $14 million is expended.

Applicants will have to provide at least a one-to-one match for every dollar awarded through the grant program.  The matching funds may include cash or eligible in-kind contributions, and half of the match may come from the farmer’s own time and effort put into the project (“sweat equity”).

Priority on beginning, socially disadvantaged and small farmers:

USDA provides a priority of grant funding to small and medium-sized family farms, beginning farmers and ranchers, and to socially disadvantaged farmers and ranchers.  Ten percent of VAPG funds are specifically reserved for beginning or socially disadvantaged farmers or ranchers, and an additional ten percent of funds are reserved for applicants that propose development of Mid-Tier Value Chain projects.

This priority and set-aside were included for the first time in the 2008 Farm Bill, and have faced various hurdles in implementation.  NSAC has been working with key champions in Congress to clarify this priority in the 2012 Farm Bill to ensure that cooperatives that include beginning farmer members are able to benefit from this priority as well as individual beginning farmer applicants.

Application Process:

Producers and cooperatives that are interested in applying for funding through VAPG should contact their USDA Rural Development State Office for questions about eligibility, submission requirements, or the application process.  Applicants may request technical assistance from their State Offices up to 14 days prior to the application deadline.  Applications may be submitted through the mail or electronically.  The deadline is October 15, 2012.

Application materials are available from USDA here.

VAPG and the 2012 Farm Bill:

Value-added products and marketing help improve farm income and farm and rural employment opportunities while creating more choices for consumers.  Programs such as VAPG demonstrate how important and effective grants can be in spurring economic development and creating jobs.

VAPG is authorized through the farm bill process and was first established in 2000, and expanded in the 2002 Farm Bill with $40 million in mandatory spending per year.  However, the 2008 Farm Bill cut this funding dramatically by only providing $15 million in mandatory funding over the life of the farm bill, which was quickly exhausted within the first few years of implementation.  VAPG has since been funded through the annual appropriations process.

With the fate of the 2012 Farm Bill still unknown, the future for this important program remains uncertain.  The Senate passed farm bill includes $12.5 million in mandatory spending per year and authorizes an additional $40 million in appropriations for FY14 – FY17.  The House Agriculture Committee’s bill would provide $50 million in mandatory funding over the life of the farm bill and $40 million in discretionary spending per year, however, that bill has still not been considered by the full House.  NSAC supports the substantial increase in funding over 2008 levels included in both bills, but would like to see program funding restored to initial levels established in 2002.

As the September 30th deadline for the expiration of the current farm bill looms closer, it is becoming more likely that we will be faced with some sort of extension of current law.  If Congress is able to pass an extension of the 2008 Farm Bill, the question will be whether or not funding will be included for important mandatory programs, like VAPG, whose funding expires on September 30th.  NSAC will continue to advocate for passing a farm bill this year and including mandatory funding for programs that are critical to small, beginning, and local food producers, such as VAPG, in any extension package that might be considered in the meantime.

For more information and resources on the Value-Added Producer Grant Program, see a previous blog post about VAPG funds.

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