The HVADC Cultivator
HVADC Involvement: Value Added Producer Grant Recipients
Through its Incubator Without Walls technical assistance and Farm and Food Funding Accelerator (FFFA) programs , the Hudson Valley Agribusiness Development Corporation (HVADC) routinely helps farms and food producer clients find and apply for federal and state grants. Through one such grant awarding, The USDA Rural Development Value Added Producer Grant (VAPG) program, three HVADC clients have received funding to enable them to advance their businesses.
According to the USDA Rural Department, the VAPG program is available for agricultural producers to engage in value-added activities related to the processing and/or marketing of new products, with the goals of creating new products, expanding marketing opportunities, and bolstering business income. The overall funding of $18 million for 2018 was slated for grant and matching funds that can be used for planning activities or for working capital expenses related to producing and marketing a value-added agricultural product. Some planning activity examples the USDA cites include conducting feasibility studies and developing business plans for processing and marketing the proposed value-added product. Examples of working capital expenses include processing costs, marketing and advertising expenses as well as some inventory and salary expenses.
Planning grants have a maximum award of $75,000 and working capital grants have a maximum award of $250,000; with a matching funds requirement of 50% of total project cost. Those eligible to receive top priority are beginning farmers or ranchers, socially-disadvantaged farmers or ranchers, small or medium-sized farms or ranches structured as a family farm, farmers or rancher cooperatives, or those who are proposing a mid-tier value chain. Independent producers, agricultural producer groups, farmer- or rancher-cooperatives, and majority-controlled producer-based business ventures are eligible. The grants are awarded through a national competition and New York typically has several grants awarded each round.
In 2014, New York was awarded more than $1.8 million. In 2016, 14 grants were awarded throughout the state for more than $2.2 million with more than $100,000 going to two producers in the Hudson Valley. This summer the USDA made the latest round of awards for the program, combining fiscal year (FY) 2017 and FY 2018 funding to provide 248 farm businesses in 47 states and Puerto Rico with $36.4 million in VAPG grants. New York saw 16 VAPG awardees, totaling $2.3 million in awards.
Through the recent awarding, Minkus Family Farms, a year-round onion producer, packer and distributor, will receive $249,052 to promote its locally grown and labeled products, contract with larger regional food retailers, and hire three new employees. The farm is located in New Hampton, Orange County, and was a participant in the 2016 HVADC Farm and Food Business Accelerator (FFBA).
Also a prior HVADC FFBA participant, Fishkill Farms will be using its $249,997 grant to build brand recognition for Fishkill Farm’s Treasury Cider suite of hard cider products. Located in Hopewell Junction, Dutchess County, the farm is an apple farm and cidery. Fishkill will increase on-farm cider sales with marketing materials, social media promotion, and greater use of Treasury Cider products in its prepared food and retail offerings at the on-farm store, restaurant, and visitor center, a popular regional agritourism destination. Two new jobs will be created as a result of this investment.
Westwind Orchard in Accord will use $49,000 to develop an advertising campaign designed to bring consumers to the farm and onsite tasting room, as well as two hire two new employees. “HVADC made it happen,” said Westwind’s owner, Fabio Chizzola. “Working with Mary Ann [Johnson, HVADC Deputy Directory] is incredible, she is a great listener and a great executer. We hired someone to write the grant through HVADC and we worked with him for the second time and it was a piece of cake.” Westwind’s Ulster County based 2017 ciders are being offered in Kingston Wine Shop, Wildebeest restaurant and Rough Draft and Esther Wine Shop.
Between 2001 and 2015, the VAPG program provided 2,345 grants nationally with a total value of $318 million; roughly $136,000 per grant. The grant is authorized and funded through the Farm Bill. A report titled Value-Added Producer Grant Program and Its Effect on Business Survival and Growth (2018), by the Economic Research Service of the USDA, noted that on average, businesses granted VAPGs were initially 89% less likely to fail two years after the grant, as compared to a control group with similar overall dynamics, that did not receive the grant. At the four-year mark, businesses studied maintain a strong-hold as 71% less likely to fail, and by the six-year mark are still 57% less likely to fail.
The report also noted that VAPG-funded businesses also are more likely to provide more jobs than the comparison, nonfunded group, with grant recipients employing five to six more workers within one to five years than the comparison group. With both the recipient and nonrecipient businesses studied employing an average of seven employees, the VAPG winners showed about a 40% average increase.
A separate analysis that looked at the impact of the size of the grant determined that larger grants had greater impacts: an increase of the average size of a grant by $100,000 increases employment, on average, by about four jobs for recipients over the two- to four-year periods considered after the grants. The full report, entitled USDA’s Value-Added Producer Grant Program and Its Effect on Business Survival and Growth, can be found at www.ers.usda.gov/webdocs/publications/88839/err-248_summary.pdf?v=43224.
For more information about HVADC’s Incubator Without Walls or FFFA programs, visit www.hvadc.org.
Photo source (l-r): Westwind Orchard, Minkus Family Farms, Fishkill Farms