What grants are available?

An announcement will be published annually inviting applications for grants or up to $500,000. Requests for smaller amounts will have somewhat higher priority.

There are four categories of eligible applicants. All must be producers of agricultural commodities or products, including aquaculture, fish harvesting, and wood lot enterprises. They are:

• Independent producers of agricultural commodities – This includes individual farmers, producer owned corporations or partnerships, and steering committees composed of independent agricultural producers in the process of organizing an association to operate a value-added venture.

• Agricultural producer groups – Any organization that represents independent producers such as a producer trade association or a state of national commodity group.

• Farmer and rancher cooperatives – Any duly recognized farmer or rancher cooperative in good standing under state law.

• Majority owned producer-based business ventures – Any corporation, LLC, LLP or other type of business structure where producers have more than 50% of the ownership and control of the entity.

Only independent producers can receive a grant to expand an existing value-added market. Other types of applicants must limit their proposals to emerging markets (markets that the applicant has not traditionally supplied).

Grants must be used to promote activities that will improve the customer base for the commodity or product and allow the producer of the commodity or product to keep a greater portion of the revenue derived from value-added activities. These activities include:

• Changing the physical state of the product – such as processing milk into cheese

• Producing and marketing a product in a manner that enhances its value – such as organically produced.

• Physical segregation of an agricultural commodity or product in a manner that results in the enhancement of value – such as an identity preserved marketing system.

• Using any agricultural product or commodity to produce renewable energy on a farm or ranch.

There are two kinds of grants. Applicants must apply for either a planning grant or a working capital grant.

Planning Grants:

Applicants who have not completed the required planning activities can use the funds to conduct a feasibility analysis of the proposed venture, develop business operating plans, develop business marketing plans and obtain legal advice and assistance related to the proposed venture. Grant funds may be used to pay up to 50% of the cost of hiring lawyers, accountants, other qualified consultants to complete the planning activities and paying related expenses. The applicant must provide a matching contribution in cash or in-kind contribution.

Working Capital Grants:

Applicants who have completed the planning activities and are able to provide copies of feasibility studies, business plans & financial projections can apply for a working capital grant. The funds can be used to pay for legal expenses of organizing the venture, having an accountant design an accounting system, or paying operating costs of the business. The applicant must provide matching funds at least equal to the grant amount. Matching funds can either be cash or confirmed funding commitments. This can include in-kind contributions. Matching funds cannot come from other federal grants.

Grants and matching funds cannot be used to:

• Build, buy, lease, repair or rehabilitate a building or real estate.
• Purchase, rent or install equipment.
• Prepare the grant application.
• Pay expenses not directly related to the value-added venture.
• Fund political or lobbying activities.
• Pay costs incurred prior to receiving the grant.
• Pay the cost of production of any commodity or product to which value will be added.