Unpacking the Value-Added Producer Grant

Many farmers message our team asking about the USDA’s Value Added Producer Grant (VAPG), a grant that awards funding for projects that “add value” to a farm operation. To answer your questions, we spoke with USDA Rural Development professionals and an expert grant writer to get their perspective on this opportunity.

Photo by Edwin Remsberg and available from the USDA-SARE program.

The 30,000 foot view on VAPG

Approximately $25 million are made available to producers through the program each year, with between 30 and 50% of projects receiving awards. Individual projects can be for planning or working capital grants, with a maximum award request of $75,000 for planning grants and $250,000 for working capital grants. Applications usually open in January and close in March.

Writing this grant can be a heavy lift, depending on whether you choose to apply for over or under $50,000. This threshold is important, as if you exceed $50,000 in your funding request, you must have an independent third party conduct a feasibility study for your project and include a business plan. If your request is $50,000 or below, you can skip that step and utilize a simplified application.

What does “value-added” mean?

What does “value-added” actually mean? For the purposes of this grant, the USDA defines “value-added” as projects or activities that fall in the following five categories:

1. Change in physical state (turning berries into jam, or tomatoes into sauce)
2. Enhancing value by changing the way something is produced (think certifications that would help you capture a better price on the market, like organic)
3. Physical segregation
4. Local production (building a market for your farm goods in your local area, increasing or scaling your local production)
5. Farm or ranch-based renewable energy (using your farm products to create renewable energy — does NOT include solar/wind)

What does it fund?

This grant is oriented towards assisting with costs of most “post-harvest” activities. For livestock producers, “post-harvest” is the point at which your animals have been slaughtered and have moved forward to the “cut and wrap” stage. Competitive and common uses for VAPG funds include:

• Designing a logo
• Designing your website
• Paying contractors to do the above two things
• Paying the costs associated with changing the physical state of your agricultural good
• Developing signage for your farm stand
• Printing a custom farmer’s market tent
• Creating packaging for your product or your CSA box

It does NOT cover:

• Production-related expenses that are pre-harvest (or pre-slaughter, for livestock)
• Equipment purchases
• Grant writing

While you can’t use the grant to purchase equipment yourself, you could use the grant to pay expenses associated with getting the job done another way. For example, do you need cold storage for your project to be feasible? Instead of purchasing a walk-in freezer for your property, you could use the grant funding to pay to rent cold storage elsewhere.

Think about how can might pay contractors to get the work done for you, instead of buying your own equipment. This grant is all about giving you the means to start or expand a value-added activity for your farm, so non-equipment expenses are a great way to validate that your project has legs without the risk of purchasing an equipment asset up front.

What’s the deal with the matching requirement?

VAPG requires applicants to match the funds received 1:1. That means that you must be prepared to double — with your own resources — whatever the amount is you apply for.

This match requirement can be daunting, but the good news is that you can use “in-kind” resources for up to half of your match. In-kind contributions are non-cash contributions you’ll bring to the table — like your own time, the raw materials/goods, or labor. So, if you’re applying for a $50,000 grant, you may want to illustrate that you’ll contribute the first $25,000 of your match as “in-kind” and the remaining $25,000 as cash.

In terms of the cash portion, you need to be able to show that you have access to the amount of cash required for the match. What counts as proof? A bank statement from your savings account or a note from your bank illustrating your line of credit will do.

Is my project eligible?

You are eligible to apply for VAPG if:

• You own and produce at least 50% of the raw commodity used in the project
• You have at least one year’s history of sales from your operation
• You’re an independent farmer that has filed Schedule F taxes in the past, OR you apply as an agricultural producer group, cooperative or majority-controlled producer-based business

If you meet the above requirements, then VAPG is really all about the project that you’re proposing. The grant is competitive, so you want to illustrate that your project can do a few key things for your farm. The project must increase your revenue, expand your customer base, and increase your income to be competitive.

How do I apply?

If you’re considering VAPG, we recommend reaching out to our team to discuss your project idea before you start applying.

You might be ready to dive right in, and in that case, here are a few steps to get you started:

1. If you do not have these already, you will need to set up a DUNS and a SAM number for your organization. These processes do not require you to pay any fees, but they will require you to fill out some forms online, and they take several days to several weeks to go through. We recommend filing for your DUNS and SAM numbers immediately if you intend to apply.
2. Once registered, look up the VAPG application materials by keyword searching “Value-Added Producer Grant” in the “Search Grants” window on grants.gov.
3. Once on the VAPG page, you’ll want to go to “Related Documents” tab and download the “VAPG Application Toolkit_Working Capital” and “VAPG Application Toolkit_Planning” documents.
4. Hit “Apply” on the top right to get started. You may also submit a paper application by mail, postmarked no later than the deadline.

Should I write the grant myself?

Most farmers do write their own grant proposal for VAPG. However, given the competitiveness of the program and the requirements of the grant, some farmers opt to receive assistance from our team at FarmRaise or external grant writers in producing the grant proposal. I recommend reaching out to our team at info@farmraise.us if you have interest in this grant and are ready to get started. We offer both grant writing assistance and grant review/editing services with our Premium membership, and we’d be glad to discuss your project idea with you to start!

It’s also a good idea to start working on your proposal early if you’re sure you want to apply. We recommend giving yourself at least two months to get the grant written and submitted, and more time is required if you’re applying for a grant that’s over $50,000 in value.

Additional resources:

• Video overview by expert Ellen Rawley