Click here for Print Version             

The Rural Business-Cooperative Service (RBS), USDA, published the solicitation for the Value-Added Producer Grant Program (section 6041) in the Federal Register on June 15, 2004.  Authorized in the 2002 Farm Bill (P.L. 107-171), the NOSA makes available $13.2 million (down from $27.7 million in 2003) in competitive grant funds for fiscal year 2004 to support independent agricultural producers develop value-added agricultural business ventures.  The purpose of the grants is to facilitate greater participation in emerging and new markets for value-added products.  The awarded grant can fund one of two activities: planning activities to design an effective value-added marketing opportunity or acquiring capital to run an established value-added business.  The grantee will be expected to provide proof of the availability of matching funds that must be equal to or greater than the awarded grant.  The maximum award per grant is $500,000 with no minimum grant requirement.  The RBS predicts it will award approximately 78 grants with an average award of $170,000.  Only projects that have a budget period length of 12 months will be considered.

Definitions of a Value-Added Product:

·         A change in the physical state or form of the product

·         The production of a product in a manner that enhances its value

·         The physical segregation of an agricultural commodity or product to enhance its value.

·         The production of renewable energy on a farm or ranch from any agricultural product.

Application dates

Applications must be completed and submitted by mail or electronically no later than July 30, 2004 by 4 pm (ET). Awards are expected to be announced October 1, 2004. See NOSA for a list of State and National offices.

Eligibility

·         Applicants must be an independent producer, agricultural producer group, farmer or rancher cooperative, or majority-controlled producer-based business venture.

·         An applicant applying to acquire capital must have a business plan in place at the time the application is submitted.

·         To be eligible under the farm or ranch-based renewable energy category, the energy must be produced from agricultural commodities, wind power, or solar power.

·         Applicants may submit more than one application, but only the highest scored project will be funded.

Leveraged Funds

·        The Value-Added Grant award can be used for up to 50 percent of the project cost of implementation.  The matching funds may be provided by either the applicant or by a third party in the form of cash or in-kind contributions.

Evaluation Criteria

·        Each application will be awarded a score depending on a specific set of criteria designed separately for Planning Grants and Working Capital Grants.  For Planning Grants a project will be evaluated for technological feasibility, operational efficiency, profitability, sustainability, the type of market where the value-added market will be made available, the potential number of costumers, etc.  Also the application will be rated according to the qualification of the individuals involved, the leadership abilities of the individuals proposing the venture, the number of independent producers currently committed, the specificity of the work plan, the amount requested (preference given to smaller grant requests), the ratio of project cost to number of owner-producers, the size of the farm receiving the award (smaller farms favored), whether the project adopts measures to implement the presidential initiative of bioenergy, and additional points may be awarded by the Administrator for particularly innovative and creative proposals.

·        The criteria for Working Capital Grants are very similar to those previously mentioned except that an established business plan must already be in place.  Also, there must be a significant increase in revenues for the business after implementation of the project’s work plan.

To be Eligible for the Presidential Initiative of Bioenergy

·        Five points will be awarded if an application demonstrates that at least 51 percent of the project cost will be dedicated to planning activities or working capital for bioenergy projects.  This energy should be produced primarily for on-farm use, unless the value-added product is ethanol, biodiesel, or energy produced from a manure digestor.  On-farm wind energy, solar, and hydro do not qualify for points in this rating process, although they are eligible projects for the Value-Add Program.