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Value-Added Producer Grants

Encouraging producer groups and cooperatives to create and develop value-added producer owned businesses

Program Basics
The Value-Added Producer Grants (VAPG) program provides competitive grants to individual independent agricultural producers, groups of independent producers, producer-controlled entities, organizations representing agricultural producers, and farmer or rancher cooperatives to create or develop value-added producer-owned businesses. Agricultural producers include farmers, ranchers, loggers, agricultural harvesters and fishermen that engage in the production or harvesting of an agricultural commodity. These enterprises help increase farm income, create new jobs, contribute to community and rural economic development, and enhance food choices for consumers.

The term "value-added" includes an agricultural commodity or product that has undergone a change in physical state or was produced, marketed, or segregated (e.g. identity-preserved, eco-labeling, etc.) in a manner that enhances its value or expands the customer base of the product.

The program was first authorized in 2000 and was expanded as part of the 2002 Farm Bill to include inherently value-added production, such as organic crops or grass-fed livestock, and expanded again in the 2008 Farm Bill to include locally produced and marketed food products and mid-tier value chains (see below).

Grants may be used to fund one of the following two activities:

Grant funds may not be used for repair, acquisition, or construction of a building or facility or to purchase, rent or install fixed equipment. Cash and/or in-kind matching funds are required, must be at least equal to the amount of Federal funds awarded, and must be expended in advance, such that for each grant dollar advanced, an equal amount of match shall have been expended first.

The program is administered by the Cooperative Division of USDA's Rural Business Cooperative Service and grant applications are first screened through each state's USDA Rural Development Office.

Examples of Past Grant Recipients

Nebraska Small Farms Cooperative, Oneill, Nebraska
The Nebraska Small Farms Cooperative received a $250,000 grant in 2004 to expand its product line and market overseas. The coop has grown from 29 farmers/members in 2004 to over 90 today. It markets pre-cooked, USDA verified, non-hormone treated meat to businesses in the U.S. and Europe. Not only has the coop passed value-added profits back to farmers, but its success has also spilled over to a local meat processing plant as annual processing contracts were signed to benefit both parties.

Pinn-Oak Ridge Farm, Delavan, Wisconsin
In 2005, Steve and Darlene Pinnow received a $150,000 grant to brand and direct market their pasture-raised lamb. It has allowed them to expand their market from 40 restaurants and grocery stores to 60 retailers in Wisconsin and Illinois. The Pinnows are now working with a distributor in Chicago who learned about their pastured lamb from the USDA announcement of their VAPG grant.

Ives Cream, Norwich, New York
The Ives family operates a sustainable dairy farm that has been handed down through six generations. With the help of a $47,550 VAPG grant in 2004, they planned and executed a successful marketing campaign for their premium ice cream. Today, they operate a seasonal retail ice cream parlor in downtown Norwich, NY where great locally-produced ice cream, customer service, and a community focus have proven to be a winning business combination.

Prairie Pride, Inc., Deerfield, Missouri
This new-generation, producer cooperative will be converting soybean oil into bio-diesel fuel with the help of a $300,000 working capital grant in 2006. The new facility will ultimately crush 21,000,000 bushels of soy beans per year to obtain soy oil. The refinery will then convert that soy oil into 30,000,000 gallons of bio-diesel.

Application and Eligibility Information
eligibility of applicants, products, and project purposes. Be sure to consult the following section of the RBS website for more information, or contact your state Rural Development office (see Website section below for state office locator).

An online assessment tool is available to assist you in determining whether or not you are eligible to apply for a VAPG grant and it is located online at:

For information on when applications are open:

To locate your state USDA Rural Development office:

Contact Information
Gail Thuner
USDA VAPG Program Manager

Last Updated November 4, 2009

Please note: Building Sustainable Farms, Ranches and Communities is also available for download in PDF format.

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