U.S. Department of Agriculture Rural Development

1
U.S. Department of Agriculture Rural Development

• Value-Added Producer Grants

2
Value Added Producer Grant Overview

• Eligibility
• Application Requirements
• Proposal Evaluation Criteria
• Discussions and Questions

3
Program Regulations

• Notice of Solicitation of Applications (NOSA)
• Published Tuesday, January 28, 2008 Federal
  Register Vol. 73 No. 19

4
Program Regulations

• Paper application materials available at
  http//www.rurdev.usda.gov/rbs/coops/vadg.htm
• Electronic applications at http//www.grants.gov
• Templates to follow at http//www.rurdev.usda.gov/
  rbs/coops/vadg.htm

5
Program Regulations

• Paper applications Postmarked by March 31, 2008
• Electronic applications Received at
  httpwww.grants.gov by March 31, 2008

6
Program Regulations

• Fiscal Year 2008
• Application Limits
• Planning Grants 100,000
• Working Capital Grants 300,000

7
Program Regulations

• Primary Objective
• To enable eligible agricultural producers to
  develop businesses that produce and market
  value-added agricultural products
• Grants are made directly to the producers

8
Eligibility

• Three Levels of Eligibility
• Applicant
• Product
• Activity/Purpose

9
Applicant Eligibility

• ALL applicants must be agricultural producers
• Agricultural Producers
• Farmers, ranchers, loggers, agricultural
  harvesters, and fishermen that engage in the
  production or harvesting of an agricultural
  product

10
Applicant Eligibility

• Agricultural Producer (cont)
• Must own and produce more than 50 of the raw
  agricultural commodity that will be used for the
  value-added product
• Cannot be a custom producer
• May purchase 49 or less of agricultural product
  involved in this project

11
Applicant Eligibility

• Emerging Market (does not apply to independent
  producers)
• A new or developing market for the applicant
• A new product (for the applicant) going into a
  new or existing market
• or
• An existing product going into a new market (for
  the applicant)
• Venture must be focused on this new or developing
  market (except independent producers)
• Working capital grants (except independent
  producers) must show the venture has been in
  operation 2 years as of 3/31/2008

12
Applicant Eligibility

• Agricultural Producer Entities
• Independent producer
• Farmer or rancher cooperative
• Agricultural producer group
• Majority-controlled producer-based business
  venture

13
Applicant Eligibility

• Independent Producer
• Entities solely owned or controlled by
  agricultural producers who own a majority
  ownership interest in the ag product that is
  produced
• Must produce, supply own the ag. product to
  which value is being added
• Does not have to be entering an emerging market

14
Applicant Eligibility

• Agricultural Producer Group
• Any organization that represents independent
  producers, whose mission includes working on
  behalf of independent producers
• Majority of membership and board of directors
  must be independent producers
• Must propose ventures that are entering emerging
  markets and in operation 2 years or less

15
Applicant Eligibility

• Farmer or Rancher Cooperative
• 100 Farmer or rancher-owned and controlled
• and
• Benefits are derived and distributed equitably on
  the basis of use by each of the farmer or rancher
  owners
• Must propose ventures that are entering into
  emerging markets

16
Applicant Eligibility

• Majority-Controlled Producer-Based Business
  Venture
• More than 50 of ownership control is held by
  independent producers, partnerships, LLCs, LLPs,
  corps, or coops that are 100 owned controlled
  by independent producers
• 10 of VAPG funds will go to this applicant
• Must be entering an emerging market

17
Product Eligibility

• Agricultural Product
• Plant and animal products and their by-products
  to include forestry products, fish and seafood
  products

18
Product Eligibility

• Value-Added
• Change in physical state of product
• Differentiated production or marketing, as
  demonstrated in a business plan
• Product segregation
• Farm or ranch-based renewable energy production

19
Product Eligibility

• Change in physical state of product-Product
  cannot be returned to its original
  form Examples pork chops
  cheese wood paneling
• ethanol/bio-diesel

20
Product Eligibility

• Differentiated Production or Marketing as
  demonstrated in a business plan
• Must show how production or marketing of the
  commodity enhances the value of the final value
  added product
• Working Capital Grant only

21
Product Eligibility

• Product segregation
• Physical barrier separates the commodity from
  other varieties of the same commodity during
  production, processing, marketing increases its
  value
• Eligible Example
• non-genetically modified corn

22
Product Eligibility

• Farm or Ranch-based production of renewable
  energy
• Examples
• ethanol or bio-diesel produced on the farm
• wind or hydro power produced on the farm
• converting animal waste to energy on the farm

23
Activity/Purpose Eligibility

• Planning Grant 100,000 maximum
• Working Capital Grant 300,000 maximum

24
Activity/Purpose Eligibility

• Planning Grants What is eligible?
• Costs associated with business plan development
• Costs associated with a feasibility study
• Cost associated with a marketing study
• Costs for legal guidance
• Costs of other guidance

25
Activity/Purpose Eligibility

• Working Capital
• Funds that are used to operate the venture and
  pay the normal expenses associated with the
  operation of the venture that are eligible uses
  of grant funds
• Venture must be in operation less than 2 years to
  be eligible (except for independent producers)

26
Activity/Purpose Eligibility

• Working Capital Grants What is Eligible?
• Operation costs prior to adequate cash flow
  generation start-up costs
• Legal costs to draft organizational/legal
  documents
• CPA costs to set up accounting system
• Pay salaries, utilities, operating costs
• Finance inventories
• Purchase office equipment, computers, supplies
• Marketing campaign costs

27
Activity/Purpose Eligibility

• Conflict of Interest Person or entity that has
  competing professional interests that make it
  difficult for the same person or business to act
  impartially.
• Example Grant recipient or employee that helps
  conduct the feasibility study
• Matching Funds may not be provided by person or
  entity that has a Conflict of Interest

28
Activity/Purpose Eligibility

• Grant Limitations
• Maximum grant awards
• Planning Grant 100,000
• Working Capital Grant 300,000
• Eligible time period 365 day period between
  October 1, 2008 and November 30, 2009
• Outstanding grants (by applicants) must expire
  11/30/2008

29
Application Requirements

• See Subpart J, 4284.910
• See NOSA, Section IV, Application and Submission
  Information

30
Application Requirements

• 1. SF-424, Application for Federal Assistance
• 2. SF-424A, Budget Information-Non-Construction
  Programs
• 3. SF-424B, Assurances-Non-Construction Programs

31
Application Requirements

• 4. Title page
• 5. Table of contents
• See template Table of Contents page guide
• 6. Executive Summary

32
Application Requirements

• 7. Eligibility Discussion
• 8. Proposal Narrative (35 pages maximum)
• 9. Certification of Matching Funds
• 10. Verification of Matching Funds

33
Proposal Evaluation Criteria

• SCORING AND FUNDING HERE
• Planning Grant criteria
• Working Capital Grant criteria

34
Proposal Evaluation Criteria-Planning

• Nature of proposed venture (0- 8 pts)
• Technological feasibility
• Operational efficiency
• Profitability
• Sustainability
• Likely improvements to local rural economy

35
Proposal Evaluation Criteria-Planning

• Qualifications of Those Doing Work (0-8 pts)
• Who is doing the project and why
• Describe education experience of individuals
  doing work
• Describe the success rate of individuals
• Evidence of individuals commitment availability

36
Proposal Evaluation Criteria-Planning

• Commitments and Support (0-8 pts)
• Producer commitment
• of producers participating now and in future
• Level of commodity production/contribution
• invested
• End user commitment
• Market identified
• Letter of intent or contracts
• Amounts of products to be purchased

37
Proposal Evaluation Criteria-Planning

• Commitments and Support (cont.)
• Third party
• Financial
• In-kind
• Technical assistance
• Explain and include letters of support
  (counted in 35 page limit)

38
Proposal Evaluation Criteria-Planning

• Project Leadership (0-8 pts)
• Describe the leaders qualifications, education,
  experience, knowledge of venture
• -Do explain the qualities skills of the
  individuals that are needed and will contribute
  to this project (may include resumes)

39
Proposal Evaluation Criteria-Planning

• Work Plan/Budget (0-8 pts)
• Define and clearly describe each task to be
  completed, specific time frames, personnel
• Include grant funds matching funds
• Eligible uses
• Detailed source and use table
• Narrative to explain

40
Proposal Evaluation Criteria - Planning

• Amount Requested (0 or 2 pts)
• Points based on amount requested
• 0 - 50,000 2 points
• 50,001 - 100,000 0 pointsWe
  will use amount stated in work plan budget,
  not SF 424 forms

41
Proposal Evaluation Criteria - Planning

• Project Cost per Owner-Producer (0-3 pts)
• 70,001 - 100,000 1 point
• 35,001 - 70,000 2 points
• 1 - 35,000 3 points
• Grant request of producer owners in venture
  points

42
Proposal Evaluation Criteria - Planning

• Business Management Capabilities (0 - 10 pts)
• Financial management system
• Procurement procedures
• Personnel policies
• Property management system
• Travel procedures
• 2 pts for each topic satisfactorily addressed
  for the business

43
Proposal Evaluation Criteria - Planning

• Sustainability economic impact (0-15 pts)
• Expected sustainability of the Venture
• Expected economic impact on local economy

44
Proposal Evaluation Criteria - Planning

• Business Size (0 pts or 5 pts)
• Annual gross sales
• 10,000,000 0 points
• 0 - 9,999,999 5 points

45
Proposal Evaluation Criteria - Planning

• Administrator Points (0-5 pts, up to 10 of total
  pts)
• Innovative technologies
• Geographic distribution of grant funds
• Underserved areas
• Explain if your venture meets criteria, how
  ask for points

46
Proposal Evaluation CriteriaWorking Capital

• Business Viability (0- 8 pts)
• Points for technical, economic feasibility,
  efficiency and sustainability
• Reference feasibility study and business plan
• Venture in operation 2 years as of 3/31/2008
  (except for independent producers)

47
Proposal Evaluation CriteriaWorking Capital

• Feasibility Study Business Plansubmission
• -Before 9/1/2008-Preference As soon as
  possible after 3/31/08-May submit with
  application

48
Proposal Evaluation Criteria-Working Capital

• Customer Base/Increased Returns (0- 8 pts)
• Expansion of customer base
• Increased returns to producers
• Reference 3 years of pro-forma financial
  statements and assumptions in business plan (do
  not submit)
• Cash flow statements Year 1-monthly Year 2
  3-annual
• Income statements Year 1-monthly Years 2
  3-annual
• Balance sheets Years 1, 2, 3-annual

49
Proposal Evaluation Criteria-Working Capital

• Commitments and Support (0-8 pts)
• Producer Commitments
• of producers participating now and in future
• Level of commodity production/contribution
• invested
• End-User Commitments
• Markets identified
• Letter of intent or contracts
• Amounts of products to be purchased

50
Proposal Evaluation Criteria-Working Capital

• Commitments and Support (cont.)
• Third party commitments
• Financial
• In-kind
• Technical assistance
• Explain and include letters of support (counted
  in 35 page limit)

51
Proposal Evaluation Criteria-Working Capital

• Management Team/Work Force (0-8 pts)
• Labor force availability and quality
• Venture Managers and Operators qualifications
• Education and capabilities
• Experience success with similar ventures

52
Proposal Evaluation Criteria-Working Capital

• Work Plan/Budget (0- 8 pts)
• Define and clearly describe each task to be
  completed, specific time frames, personnel
• Include grant funds matching funds
• Eligible uses
• Detailed source and use table
• Narrative to explain

53
Proposal Evaluation Criteria-Working Capital

• Amount Requested (0 or 2 pts)
• Points based on amount requested
• 150,001 - 300,000 0 points
• 0 - 150,000 2 points
• -We will use amount stated in work plan
  budget, not SF 424 forms

54
Proposal Evaluation Criteria-Working Capital

• Project Cost Per Owner-Producer (0-3 pts)
• 200,001 - 300,000 1 point
• 100,001 - 200,000 2 points
• 1 - 100,000 3 points
• Grant request of producer-owners in venture
  points

55
Proposal Evaluation CriteriaWorking Capital

• Business Management Capabilities (0 - 10 pts)
• Financial management system
• Procurement procedures
• Personnel policies
• Property management system
• Travel procedures
• (0 2 points for each component satisfactorily
  addressed)

56
Proposal Evaluation Criteria-Working Capital

• Sustainability Economic Impact (015 pts)
• -Expected sustainability of Venture-Expected
  economic impact on local economy

57
Proposal Evaluation Criteria-Working Capital

• Business Size (0 or 5 points)
• Annual gross sales10,000,000 0 pts0 -
  9,999,999 5 pts

58
Proposal Evaluation Criteria-Working Capital

• Administrator Points (0-5 pts, up to 10 of total
  pts)
• Innovative technologies
• Geographic distribution of grants
• Underserved areas
• Explain if your venture meets the criteria and
  how ask for points

59
Preliminary Review

• February 15, 2008
• last day to submit DRAFT application for
  preliminary eligibility completeness review
• E-mail to barbara.brewster_at_wi.usda.gov
• PLEASE advise if you will be submitting your
  application

60
Application Process

• Deadline to apply March 31,2008
• Submission options
• Paper form Postmarked by March 31, 2008
• Electronically Received by March 31, 2008
• Do NOT submit
• FAX
• E-mail

61
Application Process

• Via Paper
• One signed original
• Deadline to be Postmarked March 31, 2008
• Address to USDA, Rural Development
  Attn. B CP 4949
  Kirschling Court Stevens
  Point, WI 54481 Phone [phone]

62
Application Process

• Electronically
• Deadline to be received March 31, 2008
• Address http//www.grants.govFunding
  Opportunity No. RDBCP-08-01-VAPGAdobe
  version 8.1.1

63
Application Process

• GRANTS.gov assistanceE-mail support_at_grants.gov
  Phone [phone] (700 am 900 PM EST)

64
FY 2008 Awards

• Announcements by
• September 1, 2008

65
VAPG Program Website

• Website
• http//www.rurdev.usda.gov/rbs/coops/vadg.htm
• All information is available here

66
Additional Program Information

• University of Nebraska Websitehttp//www.fpc.un
  l.edu/Business/grants.shtml

67
Contact Information

• USDA Rural Development
• Business Community Programs
• 4949 Kirschling Court
• Stevens Point, WI 54481
• Ph 715-345-7610
• E-mail RD.BCP.SO_at_wi.usda.gov

68
Questions?

• Good Luck!