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Value-Added Producer Grant
Application Requirements
Eligibility Discussion

Applicants for the VAPG program must submit an Eligibility Discussion with their applications. The Eligibility Discussion is limited to six pages and provides a detailed discussion describing how the eligibility requirements are met. There are three areas of eligibility that an applicant must address in this section: Applicant Eligibility, Product Eligibility, and Purpose Eligibility. Additionally, if reserve funds are requested, applicants must provide documentation demonstrating that the applicant organization 1) meets the definition of a Beginning Farmer or Rancher; or 2) meets the definition of a Socially Disadvantaged Farmer or Rancher; or 3) meets the requirements for Mid-Tier Value Chain.

Please note that the Eligibility information we are requesting this year is different from the format used in previous years. We strongly recommend applicants follow the prompts in the Eligibility Discussion Requirements tab below when documenting their eligibility; as well as make use of the Eligibility Checklists provided on this website to ensure they have included all of the required information addressed in the NOFA. If you need assistance completing your application, please contact your local Rural Development office. Contact information can be found by clicking the link on the right side of this page.

Applicant Eligibility

Applicants must be an Independent Producer, Agriculture Producer Group, Farmer or Rancher Cooperative, or Majority-Controlled Producer-Based Business Venture as defined in 7 CFR part 4284, subpart A.

• An applicant applying as an Independent Producer must be 100 percent owned by Independent Producers. The owner(s) must currently own and produce more than 50 percent of the Agricultural Commodity that will be used for the Value-Added Agricultural Product, and that product must be owned by the Independent Producer owners from its raw commodity state through the marketing of the final product. Examples of Independent Producers are steering committees, sole proprietorships, LLCs, LLPs, other for-profit corporations, and non-profit corporations.
• An applicant applying as an Agriculture Producer Group must have a mission that includes working on behalf of Independent Producers. The majority of its membership and board of directors must meet the definition of an Independent Producer. The applicant must identify the Independent Producers on whose behalf the proposed Project will be completed. Note that this type of applicant may not apply on behalf of its entire membership. The Independent Producers on whose behalf the proposed Project will be completed must currently own and produce more than 50 percent of the Agricultural Commodity that will be used for the Value-Added Agricultural Product, and that product must be owned by the Independent Producer owners from its raw commodity state through the marketing of the final product. Examples of Agricultural Producer Groups are trade or commodity associations.
• An applicant applying as a Farmer or Rancher Cooperative must demonstrate that it is a farmer or rancher-owned and controlled business from which benefits are derived and distributed equitably on the basis of use by each of the farmer or rancher owners. The cooperative must be in good standing and incorporated as a cooperative in its state of incorporation.. The owners must currently own and produce more than 50 percent of the Agricultural Commodity that will be used for the Value-Added Agricultural Product, and that product must be owned by the Independent Producer owners from its raw state through the marketing of the final product.
  
  Farmer or Rancher Cooperatives that are 100 percent owned by farmers and ranchers must apply as Farmer or Rancher Cooperatives. It is the Agency’s position that if a cooperative is 100 percent owned and controlled by agricultural harvesters (e.g. fishermen, loggers), it is eligible only as an Independent Producer and not as a Farmer or Rancher Cooperative. If a cooperative is not 100 percent owned and controlled by farmers and ranchers or 100 percent owned and controlled by agricultural harvesters, it may still be eligible to apply as a Majority-Controlled Producer-Based Business Venture, provided it meets the definition in 7 CFR part 4284, subpart A
• An applicant applying as a Majority-Controlled Producer-Based Business Venture must have more than 50 percent of its ownership and control held by Independent Producers; or partnerships, LLCs, LLPs, corporations, or cooperatives that are themselves 100 percent owned and controlled by Independent Producers. The Independent Producer owners must currently own and produce more than 50 percent of the Agricultural Commodity that will be used for the Value-Added Agricultural Product, and that product must be owned by the Independent Producer owners from its raw commodity state through the marketing of the final product. Examples of Majority-Controlled Producer-Based Business Ventures are LLCs, LLPs, and other for-profit corporations. No more than 10 percent of program funds can go to applicants that are Majority-Controlled Producer-Based Business Ventures.

Applicants other than Independent Producers must limit their Projects to Emerging Markets. All applicants must demonstrate an increase in customer base and an increase in revenue returns to the producers.

If the applicant is an unincorporated group (steering committee), it must form a legal entity before the Grant Agreement can be approved by the Agency. A steering committee may only apply as an Independent Producer. Therefore, the steering committee must be 100 percent composed of Independent Producers and the business to be formed must meet the definition of Independent Producer, as defined in 7 CFR 4284, subpart A.

Entities that contract out the production of an Agricultural Commodity are not considered Independent Producers.

Any businesses that are selected for awards must provide documentation that they are in good standing with the state of incorporation.

Eligibility Discussion Template



Product Eligibility

The project proposed must involve a Value-Added product as defined in Section I of the notice. There are five methods through which value-added can be demonstrated. Regardless of which method is used, an expansion of customer base AND an increase in revenue to the agricultural producers must also be demonstrated.

1. A change in physical state occurs when an Agricultural Commodity cannot be returned to its original state. Examples of value-added products in this category are fish fillets, diced tomatoes, ethanol, bio-diesel, and wool rugs. Common production or harvesting methods are not considered a change in physical state. For example, dehydrated corn, bottled milk, raw fiber, Christmas trees, and cut flowers are not eligible in this category.

2. Production in a manner that enhances the value of the Agricultural Commodity occurs when a nonstandard production method adds value per unit of production over a standard production method. It is the Agency’s position that only Working Capital applications are eligible for this category because the enhanced value must be demonstrated using information from a Feasibility Study and Business Plan developed for the Venture. Examples are organic carrots, eggs produced from free-range chickens, and beef produced from cattle fed a “natural” diet.

3. Physical segregation that enhances the value of the Agricultural Commodity occurs when a physical barrier (i.e. distance or a structure) separates a commodity from other varieties of the same commodity on the same farm during production and that the separation continues through the harvesting, processing, and marketing of the product or commodity. An example is genetically-modified corn and non-genetically modified corn produced on the same farm, but physically separated so that no cross-pollination occurs.

4. A source of farm- or ranch-based renewable energy is an Agricultural Commodity or Product used to generate energy on a farm or ranch. Technologies that convert agricultural commodities and products into energy (e.g. biomass, such as anaerobic digesters, algae, etc.) are eligible in this category. On-farm generation of energy through wind, solar, geothermal and hydroelectric are eligible only when they are used in the production of a value-added product. Wind, solar, geothermal and hydroelectric are not eligible if they are simply converted to energy/electricity and sold off the farm. Fuels that are not generated on a farm or ranch owned or leased by the owners of the Venture are not eligible under this category, but may be considered under the first category.

5. Aggregation and marketing of locally-produced agricultural food products occurs when any food product made from an Agricultural Commodity is raised, produced, and marketed within 400 miles of the farm that produced the commodity or within the same State as that farm. Applications should illustrate the rationale for why local sales and marketing of an agricultural commodity or product will result in added value to the product. Examples include local grapes that will be aggregated and sold to a processor that will produce a select/vintage local wine, or sales of local corn at the Farmer’s Market that results in fresher product to the consumer who will pay a premium for the farm fresh product. Please note that organic produce or other types of products that are produced in a manner that enhances their value can apply for grants under this category as long as 100 percent of the marketing of the product will occur within 400 miles of the farm that produced the Agricultural Commodity.

Note: Applications that propose ONLY branding, packaging, or other means of product differentiation are not eligible in any category. However, applications may propose branding, packaging, or other product differentiation activities as a component of a value-added strategy for products otherwise eligible in one of the above categories. Eligible activities must be directly related to the processing and marketing of the value-added agricultural commodity or product, and cannot include evaluation or analysis of related agricultural production activities for the agricultural commodity.

Product Eligibility Discussion Requirements Template



Purpose Eligibility

The application must specify whether grant funds are requested for planning or for working capital activities. Applicants may not request funds for both types of activities in one application. Working capital expenses are not considered eligible for Planning Grants and planning expenses are not considered eligible for Working Capital Grants. Applications requesting more than the maximum grant amount will be considered ineligible.

It is the Agency’s position that applicants other than Independent Producers applying for a Working Capital Grant must demonstrate that the Venture has not been in operation more than two years at the time of application in order to show that the applicant is entering an Emerging Market. All applicants must demonstrate an increase in customer base and an increase in revenue returns to producers from their project.

Purpose Eligibility Discussion Requirements Template



Reserved Funds Eligibility (if applicable)

The Notice of Funds Available (NOFA) section IV(B)(7)(iv) describes the additional eligibility criteria for Reserved Funds applicants. Applicants intending to compete in one of the Value-Added Producer Grant (VAPG) Reserved Funding competitions are advised to visit this VAPG Reserved Funding Options Web Link for more information, and to learn how to document their eligibility for reserved funds in one of the following three categories: Beginning Farmer or Rancher, Socially Disadvantaged Farmer or Rancher, or Mid-Tier Value Chain.

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