Minnesota Producer, Eric Kleins, Secures $250,000 Value-Added Grant

Originally published on October 3, 2020. Thank you to Eric Klein for sharing his story with our team.

It’s a busy time on Hidden Stream Farm in Southeast Minnesota. “The processing plant is booked out for all of next year basically,” Eric Klein, who owns and operates the farm with his family, commented. It’s busy because there has been a huge demand for meat this year caused by shortages in stores and an amplified demand for local food. 

Hidden Stream Farm is a unique, diversified farming operation east of Rochester, MN. The farm produces chicken, beef, and pork using sustainable methods, like raising the animal on grass-based and deep bedded systems. The Klein family invested in a processing plant in nearby Dover in 2016, a long-time dream of Eric’s that has allowed them to keep up with customer demand, while also providing a much-needed processing site for other producers throughout the area. [Read more about the Klein family here.]

Now, a new journey awaits the Klein family farm. Eric was fortunate to receive news this year that Hidden Stream Farm was awarded a USDA Value-Added Producer Grant (VAPG) worth $250,000 to professionalize, improve and expand their marketing efforts. Eric, who has a FarmRaise account, took some time to share his experience with our team this week. Read on below to glean Eric’s insights on the grant writing process. 

The VAPG Opportunity

“It’s a working capital grant,” Eric said. With the Value-Added Producer Grant, you can develop projects that meet your operating, planning and consulting needs with regards to developing new products, adding value to your agricultural goods or reaching new markets. For Hidden Stream Farm, their VAPG award will help them expand their marketing efforts. 

“We wrote the grant before covid-19 hit. We were going to host events on the farm, expand our social media presence, etc. What we’re trying to do is enhance our retail presence and implement a better online presence through social media… I have been running our website for many years but it’s never really gotten traction.” This grant will change that. 

“We want to produce some snack stick products. With VAPG, we can now design the packaging and create a box for a shelf display.”

For the Klein family, the VAPG opportunity allows them to invest in scaling up marketing efforts without “robbing Peter to pay Paul.” This is crucial given that the family’s recent investment in their processing plant left them with the processing capacity to scale things up, but without extra cash to invest in marketing.

Writing the Grant

“We had to hire a grant writer,” Eric said when we asked about the writing process. Eric’s family is familiar with a grant writer in the area who works with farmers all over the USA, only taking on a dozen projects or so each time.

“He put it all together for us. He came out to see our place, interviewed us, asked about our hopes and dreams, and took really good notes. Then he tied it all together for us.” The Kleins paid their grant writer an upfront fee for the writing, plus a percentage of the total award (upon success).

The Grant Process

After hearing of their acceptance earlier this year, Eric and his family were asked to revise their workplan for the grant to accommodate the changing scope because of covid-19. Field days and gatherings are no longer possible, so the Kleins are reworking the plan to achieve their original goals in light of this new situation.

“They have to re-read it and make sure they know you’re within scope of the project,” Eric said. He hopes to have the revisions approved as soon as possible so that they can get started this month.  

We asked Eric about managing the grant, now that it’s been awarded. “We’ll have to do some reporting, though I’m not sure what all it’ll entail. We’ll manage that ourselves.” The grant writing team the Kleins worked with will help support their grant management efforts (drafting invoices, for example) at the very beginning of the project, but then the Kleins are on their own.

VAPG is paid out as a reimbursement, Eric shared. “We submit invoices every month that say, ‘we spent this much on marketing, this much on transportation, etc.’ So you do have to have enough cash on hand at the outset.”

VAPG also requires a 1:1 match for the award. Eric said that there’s a good amount of in-kind contributions producers can make toward the match. So, instead of having to match all VAPG awarded funds with your own cash, you can match it with labor hours and marketing efforts, among other things. For Eric, having a grant-writing partner was crucial to understanding the ins and outs of the matching requirements. 

Experience Beyond VAPG

Eric and his family have had their fair share of experiences with grant and cost-share programs before VAPG. 

“We’ve done smaller grants through Minnesota Department of Agriculture [through the AGRI program], and those are very simple, a couple of pages and you write a halfway decent workplan.” Contrast that to the length of their VAPG grant application – more than 40 pages – and you can start to see the variation in workload of these programs. 

The Kleins have also participated in the Emerging Markets program through their local lender, Compeer, which allowed them to access $12,000 for their son, who operates his own livestock operation to complement Hidden Stream Farm.

“We’re also big fans of the Farm Beginnings Program offered by the Land Stewardship Project,” Eric said. “They do in-class teaching, give you sessions on cash flows, bring in experienced people from bankers to farm business planners.”

“We’ve done EQIP (NRCS’s Environmental Quality Incentives Program) in the past. It was a good experience. They over-engineer the process, but it’s okay,” Eric shared. They used their EQIP dollars to build exterior fencing for their rotational grazing system. Eric wants to reconnect with NRCS for cover crop funding support in the future. 

The Kleins were one of the earliest participants in the Minnesota Agricultural Water Quality Certificate program, too, which grants regulatory certainty to producers that adopt certain water quality friendly practices. 

Private Funding

As far as private funding – like loans – goes, Eric is primarily interested in “alternative” funders. “I’m tired of the conventional bank mindset. We want to find guys that really understand the value of organic and soil health.”

But Eric’s not about partnering with just anyone. “I want to do my due diligence instead of just laying down for whoever offers me money. There has to be something in it for me, too.”

Advice to Other Farmers

We asked Eric to share some parting advice for other farmers who are interested in grant and cost-share programs. He said, “The grants do add more work to you. You have to really know what you’re going to do with the award.” Eric highlighted the need for a long-term farm vision, saying, “Think about: ‘how is this really going to help us?’ You’re taking a leap of faith, you’re planning out three years in the life of your business.”

What about when the grants get gnarly? “There are a lot of times we thought… is this worth it? But it’s hard to walk away from $250,000!”

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