What is the Value Added Producer Grant (VAPG) and How to Apply

NOTE: VAPG electronic applications are due May 11th, 2023 and paper applications are due May 16th, 2023.

Many farmers message our FarmRaise team asking about the Value Added Producer Grant Program (VAPG), a U.S. Department of Agriculture (USDA) grant that awards funding for projects that “add value” to a farm operation in three categories: (1) processing costs (2) marketing and advertising expenses and (3) some inventory and salary expenses. To answer your questions, we spoke with professionals from the USDA Rural Development Office and an expert grant writer to get some insight into what makes a successful application.

In this post, we’ll cover:

1. What the VAPG program is and how much funding you could receive
2. Eligible projects
3. The VAPG Matching Requirement
4. Detailed VAPG application instructions
5. Further resources

Before we dive in, if you're on the hunt for grants like the VAPG, know that our team at FarmRaise is eager to partner with you to find the best funding options for your farm.

Be more competitive for grants like the VAPG by tracking any expenses related to your farm today. Sign up for the FarmRaise Tracks app to get started!

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An Overview of the VAPG Program

The VAPG program has approximately $20 to $25 million total funding available to producers  each year, with between 30 and 50 percent of projects receiving awards. Individual projects can  fund planning activities or working capital grants, with a maximum grant amount of $75,000 for planning grants and $250,000 for working capital grants.

Writing this grant can be a heavy lift, depending on whether you choose to apply for more than $50,000 or less than $50,000. This threshold is important because if you exceed $50,000 in your funding request, you must have an independent third party conduct a feasibility study for your project and include a business plan. If your request is $50,000 or below, you can skip that step and utilize a simplified application.

VAPG is a program under the USDA’s Local Agriculture Market Program (LAMP) which was created under the 2018 Farm Bill.  Producers can find other LAMP grant funding opportunities as well as hundreds of other grants, loans and cost-shares in the FarmRaise Farm Funding Library. You can try the library for free and upgrade later if you want to take advantage of the library’s many features.

What Does “Value-Added” Mean?

What does “value-added” actually mean? For the purposes of this grant, the USDA defines “value-added” as projects or activities that fall in the five following categories:

1. Change in physical state (turning berries into jam or tomatoes into sauce)
2. Enhancing value by changing the way something is produced (think certifications that would help you capture a better price on the market, like organic certification)
3. Physical segregation
4. Local production (building a market for your existing farm goods or new products in your local area, increasing or scaling your local production)
5. Farm or ranch-based renewable energy (using your farm products to create renewable energy — does NOT include solar/wind)

If you're interested in boosting your solar or wind energy efforts, learn more about the Rural Energy for America Program. 

What Projects Does VAPG Fund?

The VAPG grant is oriented toward assisting with costs of most “post-harvest” activities like working capital expenses or marketing opportunities. For livestock producers, “post-harvest” is the point at which your animals have been slaughtered and have moved forward to the “cut and wrap” stage. Competitive and common uses for VAPG funds include:

• Designing a logo, website and/or labeling or paying a contractor to do so

• Paying the costs associated with changing the physical state of your agricultural good
• Developing signage for your farm stand
• Printing a custom farmers’ market tent
• Creating packaging for your product or your CSA box
• Coming up with a marketing plan

It does NOT cover:

• Production-related expenses that are pre-harvest (or pre-slaughter, for livestock)
• Equipment purchases
• Grant writing

While you can’t use the grant to purchase equipment yourself, you could use the grant to pay expenses associated with getting the job done another way. For example, do you need cold storage for your project to be feasible? Instead of purchasing a walk-in freezer for your property, you could use the grant funding to pay to rent cold storage elsewhere.

Think about how you might be able to pay contractors to get the work done, instead of buying your own equipment. This grant is all about giving you the means to start or expand a value-added activity for your farm, so non-equipment expenses are a great way to validate that your project has legs without the risk of purchasing an equipment asset up front.

What’s the Matching Requirement?

VAPG requires applicants to match the funds received 1:1. Matching funds means that you must be prepared to double — with your own resources — whatever the amount is you apply for.

This matching requirement can be daunting, but the good news is that you can use “in-kind” resources for up to half of your match. In-kind contributions are non-cash contributions you’ll bring to the table — like your own time, the raw materials/goods, or labor. So, if you’re applying for a $50,000 grant, you may want to illustrate that you’ll contribute the first $25,000 of your match as “in-kind” and the remaining $25,000 as cash.

In terms of the cash portion, you need to be able to show that you have access to the amount of cash required for the match. What counts as proof? A bank statement from your savings account or a note from your bank illustrating your line of credit will do.

Am I Eligible for VAPG Program Funding?

Your eligibility for VAPG is dependent upon whether:

• You own and produce at least 50% of the raw commodity used in the project
• You have at least one year’s history of sales from your operation
• You’re an independent farmer that has filed Schedule F taxes in the past, OR you apply as an agricultural producer group, cooperative or majority-controlled producer-based business venture

If you meet the above requirements, then your VAPG application success is really all about the project that you’re proposing. The grant is competitive, so you want to illustrate that your project can do a few key things for your farm. The project must increase your revenue, expand your customer base, and increase your income to be competitive.

Are Beginning Farmers Eligible for VAPG?

It can be hard to find the capital to get your farm off the ground. Thankfully the USDA might offer you priority if you’re:

• a beginning farmer or rancher
• a socially-disadvantaged farmer or rancher
• a small or medium-sized farm
• a ranch structured as a family farm
• a farmer or rancher cooperative
• proposing a mid-tier value chain

How Do I Apply for VAPG?

If you’re considering VAPG, eligible applicants should have a strong understanding of the project they have in mind.

Start by completing our VAPG Readiness Survey.

‍Taking the survey will ensure that your intended project is eligible for this program. When you finish the survey, you’ll see our recommendation for appropriate next steps for your operation, including how to get connected with a grant writer or find your own grant writer.

VAPG Application Process

The VAPG deadline is generally in the spring of each fiscal year. In 2023, electronic applications are due May 11th, 2023 and paper applications are due May 16th, 2023. We recommend getting started right away, as writing a VAPG application can take 60 to 100 hours to complete. Keep that in mind as you plan your grant application process.

The application is a multi-step process. You can complete it yourself or receive support from a mentor or grant writer. Here’s a quick review of the application’s major components:

Registration & Orientation

Step 1: Review the Application Toolkit

• If you’re planning to apply for the Working Capital Grant, download the Working Capital Grant toolkit document. If you’re applying for the Planning grant, download the Planning Grant application toolkit. Both toolkits should work whether you’re using a Microsoft Windows on your PC or Page on your Mac. These toolkits are from 2022 and are expected to be very similar to 2023’s. This year’s toolkits will be available here once released by the USDA, so check back for updates. You’ll need to download the toolkit

Step 2: Register with SAM.gov and UEI

• Since 2022, any entity applying for federal funds must have a Unique Entity Identifier (UEI) and valid registration on the System for Award Management (SAM). As an individual agricultural producer however, are not required to have a UEI or be registered in SAM. To register, visit SAM.gov. It can take 10-12 business days to receive a UEI, and can take longer the closer you are to the deadline - so we recommend prioritizing this step!

Step 3: Compile your farm business paperwork

• For entities, you’ll need:
• Completed Schedule F from the previous year
• Articles of Incorporation (C Corp) or Operating Agreement (LLC)
• Bylaws
• Certificate of Good Standing
• Individual CV/Resume for all involved parties
• For individuals, you’ll need:
• IRS tax form from the previous year, showing farm income
• Individual CV/Resume
• If you are a Tribe entity, visit Appendix A of the Application Toolkit for the required documents.
• Complete any relevant documents for special categories as needed, found in Appendix E of the Application Toolkit.

Step 4: Connect with your local Rural Development Office

• After finding your local RD’s contact information, give them a call to let them know about your intended application. Ask if they have any recommendations or resources to support you. Many offices will review your draft materials prior to submission.

Project Planning, Market Analysis & Community Support

We recommend completing the following sections in a separate document, instead of drafting directly into your application.

Step 5: Market Research

• At this point, you should have a tangible and concise way to describe the project you want to undertake, now you should build the market research and sales projections to support the outcomes the project will drive. Third party research, customer data, and local market research are great data to support any assumptions or claims in your project.
• Begin compiling your resources in one place, and consider how they will fit into the narrative portion of your application. It is helpful to read the questions in your application toolkit ahead of your research.

Step 6: Sales Analysis & Predictions

• Estimate profit and revenue: A core tenant of a successful application is its ability to appropriately predict the increase in profit or revenue that the project will provide to your farm business.
• Perform sales analysis: Providing recent sales data from the last 1 to 5 years, analyze your volume of sales, cost and revenue for farm products, customer base and local markets.
• Build sales projections: Looking forward, how will the project affect future business. Estimate your increases in revenue, profit and other relevant metrics for growth. It is important to have appropriate predictions, based on market research and previous sales.

Step 7: Letters of Support

• To reinforce your market research and sales data, letters of support from your community are vital. VAPG outlines three types of sources you can use for Letters of Support:
• Independent producers
• Customers
• Third parties (i.e. Farmers’ Market coordinator, local food council, etc.)
• Give your supporters a template to work from to reduce the barrier of them having to draft something from scratch. To make your job easier, we’ve put together a VAPG Letter of Support template for you. We recommend being very clear about when you need the signed letter, offering a deadline weeks prior to your estimated submission date.

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Timeline & Budgeting

The budgeting component of this grant is very important. It outlines how your grant funding will be used in a detailed and organized manner, driving the outcomes of your project.

Step 8: Budget

• Before building the budget in your Application Toolkit, we recommend starting with Excel or Google Sheets to assist in the organization, formatting and calculations.
• Begin by listing out all the costs by name associated with the project, not your entire farm. Obtain quotes for costs you plan to make by calling vendors and collecting digital or physical records.

Step 9: Project Timeline

• Once you’ve completed your budget, you’ll move on to the project timeline. The timeline is separated by bucket tasks (such as “purchase new packaging” or “build digital presence and website”) composed of individual activities. Each activity will include a projected start and end date as well as the costs, broken down by where the funding for each cost is coming from (VAPG funds, in-kind matching funds and cash matching funds).
• When you have finalized your budget and project timeline, move them into your Application Toolkit. We recommend contact your local Rural Development Office to review your budget and project timeline once complete.

Composing Your Narrative & Submission

The bulk of the narrative portion is found in Sections 5 and 6 of your application toolkit, however you must complete Sections 1-4, 7 and the Appendices to the full extent. Ensure that each appropriate checkbox is filled, and that every single prompt is addressed.

Sections 1-4 & 7:

• Section 1-4 detail your eligibility, qualifications and brief summaries of your project.
• Section 7 requires verification of your matching funds, including proof (usually through bank statements) attached in Appendix D.

Sections 5 & 6:

• Section 5 includes your main grant narrative, pulling from the market analysis and third-party research you completed earlier. Aim for concise responses, citing your sources, and add any copies of your research in Appendix C.
• Section 6 includes evaluation criteria of your project: addressing the technological feasibility, operational efficiency, and expected profitability.

Forms & Appendices:

• SF424 and SF424 are required and must be consistent with the the rest of your application. We highly recommend contacting your local Rural Development Office to assist you in this paperwork.
• As previously mentioned, the appendices refer to different sections of your application, and allow you to include some necessary and additional information. Not all appendices are required, but review each one to see if it applies to you.

Final Review:

• Ensure that all research and third-party information is cited, all budget items are included and accurate, all project supporters/participants are included and appropriate Appendices are completed. Again, most local Rural Development Offices will offer to review your application prior to submission, if given enough time before the deadline (generally one month to two weeks ahead).

Submission

• Print and sign your toolkit in two places at the end of the narrative portion. Ensure all appendices are organized, including additional documents that prove your matching contributions, market research, etc. Print and sign SF424 & SF424A. You can mail your complete package to your local Rural Development Office, or check to see if your office will accept a scanned and emailed copy.
• Now, take a breath and congratulate yourself for completing your VAPG application!

Should I Write the Grant Myself?

Most farmers write their own grant proposal for VAPG. It’s also a good idea to start working on your proposal early if you’re sure you want to apply. Give yourself at least two months to get the grant written and submitted, and more time is required if you’re applying for a grant that’s over $50,000 in value.

However, given the competitiveness of the program and the requirements of the grant, some farmers opt to receive assistance. FarmRaise can also help you find grant writing support.

For any specific questions you have along the way, reach out to support@farmraise.com or your local Rural Development Office.

VAPG could be a good opportunity for independent producers to boost their farm or ranch profitability and expand their customer base. If you want to level up your agricultural products to “value-added products” check out Ellen’s VAPG grant writing tips and our VAPG Q&A with her in the video below. Ellen is the founder of Ellen Rawley Creative & Strategy which focuses on profitability of farms and food businesses. Happy farming and Keep Rising 🌱