MSU Extension

The United State Department of Agriculture’s (USDA) Value-Added Producer Grant program provides matching funds to assist agricultural producers with acquiring feasibility studies, developing business plans or providing working capital to conduct value-added activities. Value-added activities are those that relate to the processing and/or marketing of bio-based products. Developing new products, creating and expanding marketing opportunities, and job creation are the end goals of this program. USDA Rural Development State Director, James Turner, is a strong supporter of the program.

This is one of the few grant programs designed to provide funding for private, for-profit agricultural producers seeking to expand. Applicants for these matching grants can be: independent producers, farmer and rancher cooperatives, agricultural producer groups and majority-controlled producer-based business ventures. Applicants can be located in urban, suburban or rural areas – there is no location requirement. However, applicants must meet specific selection criteria. First and foremost, you must currently be producing an agricultural product to which you will add value.

You may receive priority if you are a beginning farmer or rancher, a socially-disadvantaged farmer or rancher, a small or medium-sized farm or ranch structured as a family farm, a farmer or rancher cooperative or are proposing a mid-tier value chain, as defined in the Program Regulation.

There are two types of grants: planning grants and working capital grants. Both types of USDA Value-Added Producer grant requests must be matched dollar for dollar with private or in-kind funds. Planning grants are commonly used to pay third-party consultants to develop feasibility studies or business plans for value-added activities. Working capital grants are used to expand the operations or market of existing value-added products. Working capital grants cannot be used to build facilities, cultivate raw products, or to purchase manufacturing equipment.

Grants are awarded on a competitive basis at a national level. For the 2012 application year, $14 million was available through the grant program nation-wide. The maximum request for planning grants is $100,000 and the maximum request for working capital grants is $300,000. Multi-year requests are considered.

The 2013 grant cycle may be announced as early as January, but due to budget and Farm Bill uncertainty, it could be delayed. Interested producers should review program requirements, scoring system and the application template now. Once the notification is released, applicants will have approximately 60 days to submit their application.

To receive a grant program notice, producers can call the USDA Rural Development State office Business Programs Division in East Lansing at 517-324-5157 and asked to be placed on the mailing list or you can register to receive notices on the Grants.gov website.

“The application process for Value-Added Producer Grants is complex,” says Bobbie Morrison, Business Programs Specialist with the USDA Rural Development Office. “We recommend contacting the USDA Rural Development State Office in East Lansing before starting the application, so guidance and helpful suggestions can be provided.”

Morrison said that many applicants who do not consult with the USDA Rural Development State Office Staff in advance have applications that are found incomplete and cannot be considered eligible for funding. There is no cost to producers who contact the USDA Rural Development office and work with staff to make sure their applications are complete. For the 2011-12 funding cycle, Rural Development received 16 applications, but only nine were considered complete and competed for funding, so there is a big advantage to those that work with USDA Rural Development early in the process and submit their applications before the deadline.

Many successful agricultural businesses have secured these grant funds to expand their operations. Michigan has received more than 50 grants since the inception of the program in 2001.

Producers interested in this grant program should contact the USDA Rural Development State office in East Lansing at 517-324-5157 and ask to speak with a staff member of the Business Programs.