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

September 14, 2022

Many farmers message our 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 their perspective on this opportunity.

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.

An Overview of the VAPG Program

The VAPG program has approximately $20 to $25 million total funding available to producers through the program each year, with between 30 and 50 percent of projects receiving awards. Individual projects can be to fund planning activities or for working capital grants. The maximum grant amount is $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 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. You can find other grant funding opportunities at the LAMP web page.

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 under the following five 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)
  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 — the amount you apply for.

This match 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

If you meet the above requirements, then VAPG your 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:

How Do I Apply?

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

If you’re ready to dive into the narrative-based application process, here are a few steps to get you started:

  1. If you do not have these already, you will need to set up a System for Award Management (SAM) number for your organization. These processes do not require you to pay any fees, but they will require you to fill out some forms online, and they take several days to several weeks to go through. We recommend filing for your DUNS and SAM numbers immediately if you intend to apply.
  2. Once registered, look up the VAPG application materials by keyword searching “Value-Added Producer Grant” in the “Search Grants” window on grants.gov.
  3. Once on the VAPG page, you’ll want to go to “Related Documents” tab and download the “VAPG Application Toolkit_Working Capital” and “VAPG Application Toolkit_Planning” documents.
  4. Hit “Apply” on the top right to get started. You may also submit a paper application by mail, postmarked no later than the deadline.

VAPG Deadlines

The VAPG deadline is generally in the spring of each fiscal year. Paper applications are due later than electronic applications by about a week or so. Keep that in mind as you plan your grant application process. You can check deadlines each year at the USDA’s Rural Development website.

Should I Write the Grant Myself?

Most farmers write their own grant narrative 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 from our team at FarmRaise. We can help you strategize and plan for how you’ll complete your VAPG grant submission and whether (and how) to write the proposal on your own. We’ve also connected farmers to VAPG grant writers who can bolster your grant proposal. 

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 🌱

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