2012 Value Added Producer Grant Program Announced

The Notice of Funding Availability (“NOFA”) for the 2012 VAPG was released August 15, 2012. Applications are due by October 15, 2012; awards are expected to be announced January 18, 2013.
While the NOFA gives links to an application guide and an application template, these documents have not actually been posted as of this writing. This is unfortunate as significant direction is given in those documents that are not contained in the NOFA. Please note that the details below are subject to change depending on the content of the application guide and an application template. This happened with the 2011 program as well, with the template and guidelines coming 1 – 2 weeks after the NOFA.
Serious applicants should assess their proposed projects as soon as possible. This program is very competitive, with about a 20-25 percent success rate in most years. To our knowledge, Morrison has directly written more VAPG grant proposals than any firm in the country since the program’s inception. We have been awarded 36 of our 39 applications.
This memo covers the following topics:
- Regulations at a glance
- Purpose of the VAPG program
- What are value-added agricultural products?
- Eligible applicants
- Planning grants
- Working capital grants
- Eligible uses
- Ineligible uses
- Matching funds
- Due date
- I have more questions
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Regulations at a Glance
1. Grant and matching funds must be used to promote value-added agricultural products, primarily for the benefit of agricultural producers and organizations of agricultural producers.
2. “Value-added agricultural products” are described below.
3. Eligible applicants are described below.
4. Grant and matching funds may be used for domestic or international projects.
5. Grant and matching funds may be used for planning projects or working capital projects, but not both in the same year's program.
6. Working Capital projects must last no more than 36 months; planning projects should be completed in 12 months.
7. Federal funds must be matched at least 1:1 with cash or in-kind contributions.
8. There are two classes of reserved funds, for which 10 percent of total funding will be set aside (each): Beginning and socially disadvantaged farmers and ranchers, and proposed projects that develop mid-tier value marketing chains.
Purpose of the VAPG program
The purpose of the program is to “enable viable agricultural producers to develop businesses that produce and market value-added agricultural products” so as to allow those producers to participate in the economic returns from value-added activities such as making and/or marketing a processed product. There are two types of VAPG grants available: “Planning grants” and “working capital grants” (described below).
What are value-added agricultural products?
The agricultural commodity must meet one of the following five value-added criteria:
1. Has undergone a change in physical state (e.g., juice, salsa, bread, bio-diesel).
2. Was produced in a manner that enhances the value of the agricultural commodity (e.g., organics).
3. Is physically segregated in a manner that results in the enhancement of the value of the agricultural commodity (e.g., non-GMO).
4. Is a source of farm- or ranch-based renewable energy, including E–85 fuel.
5. Is aggregated and marketed as a locally-produced agricultural food product (sold within 400 miles of the farm or ranch or within the state in which it was produced).
Further:
1. The customer base for the agricultural commodity or product is expanded, and
2. A greater portion of the revenue derived from the marketing, processing, or physical segregation of the agricultural commodity or product is available to the producer of the commodity or product.
Mid-tier value chain projects must involve "Local and Regional Supply Networks" that contain at least two alliances, linkages, or partnerships within the value chain. They must also directly impact the profitability and competitiveness of Small and Medium- Sized Farms and Ranches that are structured as Family Farms. Finally, the project must include an agreement from an Agricultural Producer Group, Farmer or Rancher Cooperative, or Majority- Controlled Producer-Based Business Venture that is engaged in the value chain on a marketing strategy.
Eligible applicants
Grants will be awarded to:
1. Independent producers (includes agricultural producers, steering committees of producers who have not yet formed a formal business entity, and producer owned corporations and associations).
2. Eligible agricultural producer groups (e.g., trade associations).
3. Farmer or rancher cooperatives.
4. Majority-controlled producer-based business ventures.
Planning grants
A grant to facilitate the development of a defined program of economic planning activities to determine the viability of a potential value-added venture, and specifically for the purpose of paying for a qualified consultant to conduct and develop a feasibility study, business plan, and/or marketing plan associated with the processing and/or marketing of a value-added agricultural product. These uses include, but are not limited to:
- Obtain legal advice and assistance related to the proposed venture.
- Conduct a feasibility analysis of a proposed value-added venture to help determine the potential for marketing success.
- Develop a business plan that provides comprehensive details on the management, planning, and other operational aspects of a proposed venture.
- Develop a marketing plan for the proposed value-added product, including the identification of a market window, the identification of potential buyers, a description of the distribution system, and possible promotional campaigns.
- Planning funds may not be used to evaluate the agricultural production of the commodity itself, other than to determine the project’s input costs related to the feasibility of processing and marketing the value-added product.
Working capital grants
A grant to provide funds to operate a value-added project, specifically to pay eligible project expenses related to the processing and/or marketing of the value-added product that are eligible uses of grant funds.
These uses include, but are not limited to:
- Design or purchase an accounting system for the proposed venture.
- Pay for processing costs (e.g., packaging, processing labor) excluding the cost of the commodity to which value is being added.
- Pay for salaries, utilities, and rental of office space.
- Purchase inventory, office equipment (e.g. computers, printers, copiers, scanners), and office supplies (e.g. paper, pens, file folders).
- Conduct a marketing campaign for the proposed value-added product.
Applicants for working capital grants must have a feasibility study prepared by an independent consultant and a business plan prior to submitting the application (with some exceptions to the feasibility study requirement for requests under $50,000, and requests over $50,000 by Independent Producers for a product they have marketed for at least two years). If you need an independently prepared feasibility study or a business plan, contact Morrison. With CPAs on staff, we can do this as part of our integrated services in a timely, cost effective manner.
Eligible uses
In general, grant and cost-share matching funds have the same use restrictions and must be used to fund only the costs for defined eligible purposes:
1. An application may be for either a Planning Grant or a Working Capital Grant (see below), but not both.
2. Grant funds may be used to pay up to 50 percent of the costs for carrying out relevant projects. Matching funds must provide for the balance of costs.
3. Matching funds may generally only be used for the same purposes allowed for grant funds.
Ineligible uses
Grant and matching funds may not be used to:
- Support costs for services or goods going to or coming from a person or entity with a real or apparent conflict of interest, except as specifically noted for limited in-kind matching funds.
- Pay costs for scenarios with noncompetitive trade practices.
- Plan, repair, rehabilitate, acquire, or construct a building or facility.
- Purchase, lease purchase, or install fixed equipment, including processing equipment.
- Purchase or repair vehicles.
- Pay for the preparation of the grant application.
- Pay expenses not directly related to the funded project for the processing and marketing of the value-added product.
- Fund research and development.
- Fund political or lobbying activities.
- Fund any activities prohibited by 7 CFR parts 3015 and 3019, 2 CFR part 230, and 48 CFR subpart 31.2.
- Fund architectural or engineering design work.
- Fund expenses related to the production of any agricultural commodity or product, including seed, rootstock, labor for harvesting the crop, and delivery of the commodity to a processing facility.
- Conduct activities on behalf of anyone other than a specifically identified independent producer or group of independent producers, as identified by name or class.
- Pay owner or immediate family member salaries or wages.
- Pay for goods or services from a person or entity that employs the owner or an immediate family member.
- Duplicate current services or replace or substitute support previously provided.
- Pay any costs of the project incurred prior to the date of grant approval, including legal or other expenses needed to incorporate or organize a business.
- Pay any judgment or debt owed to the United States.
- Purchase land.
- Pay for costs associated with illegal activities.
Matching funds
Grant recipients must provide matching non-Federal funds at least equal to the amount of the grant received. These matching funds must be spent in the same ratio that they are provided (e.g., 1 to 1). Matching funds can be cash, "in-kind" non-cash contributions, or a combination of both. Matching funds may also be provided by third parties. If you think meeting the matching fund requirement would be difficult for you, contact Morrison for possible strategies.
Due date
The due date is October 15, 1012. Awards are expected to be announced January 18, 2013; projects must begin within 90 days of the award date.
I have more questions
For a no-cost preliminary assessment, to learn more about our services, or to request information on grant programs, call Brent Morrison at 530 893-4764, ext. 202 or email bmorrison@morrisonco.net.
The grant process and the related governmental regulations can be complex. The VAPG program offers great rewards but the process is highly competitive. All proposed projects have their strengths and weaknesses, as do the applying entities. Our expertise is in helping our clients achieve every scoring point possible, highlighting strengths, and overcoming negatives as best possible.

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