# Presentation: 697864

## USDA Rural DevelopmentRural Business and Cooperative Service

-  **Larry Carnahan**
-  USDA Rural Development
-   (620) 784-5431
- larry.carnahan@rurdev.usda.gov

**“****Partners in helping the people of rural America develop sustainable communities”**

## Value-Added Agricultural Product Market Development  Grants

## Value-Added Agricultural Product Market Development  Grants (FY 2001) 

**STATE            #  PROJECTS FUNDED           $AMOUNT**
- Iowa                                 12                     $4,870,378
- North Dakota                     9                       3,222,258
- Kansas                               3                       1,010,997
- Illinois                               3                          600,000
- Minnesota                          3                       1,144,950
- Wisconsin                          3                          846,090
- Michigan                           2                          692,000
- South Dakota                     2                          901,704
- Total                                 37                  $13,288,377
- Nationally                        62                  $19,856,719

## Value-Added Agricultural Product Market Development  Grants (FY 2002)

**19**

**16**

**10**

**33**

**21**

**33**

**67**

**22 **

**15**

**19**

**32 **

**71**

**Nationally 714 Applications for $121 Million dollars**

## Value-Added Agricultural Product Market Development  Grants (FY 2002)

**6**

**8**

**2**

**13**

**9**

**12**

**29**

**9 **

**2**

**7**

**14 **

**12**

**231 Applications Selected for $37.2 Million dollars**

**1**

**13**

**5**

**8**

**5**

**5**

**3**

**4**

**0**

**0**

**1**

**5**

**4**

**4**

**4**

**4**

**4**

**1**

**0**

**0**

**0**

**1**

**2**

**3**

**1**

**0**

**20**

**20**

**9**

**2**

**1**

## 
      The primary objective:

Is to help eligible producers of agricultural commodities, agricultural producer groups, farmer and rancher cooperatives, and majority-owned producer-based business ventures develop business plans for viable marketing opportunities and develop strategies to create marketing opportunities in emerging markets. 

**      ****The primary objective:**
- Is to help _eligible producers_ of agricultural commodities, agricultural producer groups, farmer and rancher cooperatives, and majority-owned producer-based business ventures _develop business_ _plans_ for viable marketing opportunities _and _develop _strategies to create marketing opportunities in emerging markets. _

## The Farm Security and Rural Investment Act of 2002

**Farm Bill Highlights**
**$40 million per year for 6 years**
**Maximum Grant Amount $500,000 ****(priority points will be given for applications under the $500,000 max)**** **
**Applicants must provide matching non-Federal funds at least equal to the grant.**
**Expanded eligibility**

- The Farm Security and Rural Investment Act of 2002

## Value-Added Producer GrantsFY 2003

**New name - VAPG**
**Proposed regulation was published 6/13/03**
-        - public can submit comments until 8/12/03
**Anticipate Final rule and NOFA this fall**
**Anticipate minor changes compared to 2002**
**$28-38 million to be available**

## Is Your Project Eligible?

** ****1) Are the funds being used for an eligible purpose?**
** ****2) Is the applicant an eligible entity?**
** ****3) Does your project meet one of the four categories of value-added activities?**

**Three Questions to Ask?**

## Is Your Project Eligible?

** ****1)  Are the grant and matching funds to be used for an eligible purpose?**
**         ****-  Planning Activity **
**         ****-  Working Capital**
**         ****-  One or the other, not both**

##           Planning Activity

** ****Feasibility Studies**
** ****Business and Marketing Plans**
** ****Legal Evaluations**

## Working capital

-    - **Legal and accounting costs**
**   ****- Salaries **
**   ****- Utilities**
**   ****- Inventories**
**   ****- Supplies**
**   ****- Office equipment**
**   ****- Other operating costs**

##     Is Your Project Eligible?

**If applying for working capital:**
**Must have an acceptable feasibility study**
**       **- completed by qualified, independent third party
-     - project size and location specific
**Also need an acceptable business plan**
**Rural Development must approve prior to funding of the grant**

##           Ineligible Purposes

** ****- Costs associated with buildings or equipment**
** ****- Engineering design for a specific facility**
** ****- Costs incurred prior to closing of the grant**
** ****- Pay for preparation of the grant application**
** ****- Expenses related to ag production**

## Is Your Project Eligible?

**2)  Is the applicant an eligible entity?**
**Independent Producers**
**       ****- **individuals, business entities, steering committee
**Farmer or Rancher Cooperatives**
**Ag Producer Groups (Commodity Organizations)**
**Majority Owned Producer Based Businesses **
**      ****(50% or more)**
**The last three groups must be entering **
**emerging markets**

## What is an Emerging Market?

**New or developing market for the applicant**
-    - **Old product into a new market**
**  ** -** New product into an old or new market**

## Is Your Project Eligible?

** ****3) Does your project meet one of the four**
**     ****categories of value-added activities for an ag **
**     ****product or commodity?**
-   - Change in the physical state
-   - Production in a manner that enhances its value, as
-     demonstrated by a business plan
-   - Physically segregating in a manner that enhances its value
-   - Used to produce renewable energy on a farm or ranch

## Is Your Project Eligible?

**    ****These Activities Must:**
**Expand customer base for the product or commodity, and**
**Result in a greater portion of the revenues derived from the value-added activity that is available to the producer.**

##     Kansas Projects Awarded                   Grants FY 2002

- Jewel County Sunflower Processing ($41,000)
-        To assist with a feasibility study, business plan , and legal advise regarding a  proposed sunflower processing plant.
- Padonia Grain Farmers, Inc. ($50,750)
-        To conduct a feasibility study and develop a business plan for segregating and marketing high protein corn.
- American White Wheat Producers Assoc.($218,710)
-        For a feasibility study and business plan development regarding  the processing  of heavy bran for use in breakfast cereals and specialty breads.

##    Kansas Projects Awarded                    Grants FY 2002

- Western Plains Energy, LLC ($291,615)
-      For working capital to assist in the start  up of a 30 mgy ethanol plant
- East Kansas Agri-Energy LLC ($450,000)
-      For working capital to assist in the start-up of a 20 mgy ethanol plant.
- Cooperative Ag Services ($500,000)
-     Working capital for the startup operation of a soy bean crushing facility.

##   Kansas Projects Awarded         Grants FY 2002

- 21st Century Grain Processing ($500,000)
-     Working capital for  milling of hard white wheat and distribution of flour and food grade corn.
- U.S. Premium Beef, Ltd. ($500,000)
-    For a feasibility study, business plan, business and legal evaluations for acquisition of a majority ownership interest in a beef packing company

## FOR MORE INFORMATION

-   **Larry Carnahan        620-784-5431 **
** ****Email: 2002farmbillRD@ks.usda.gov**
**Rural Development State Office in Topeka **
**                        ****785-271-2730   **
**          ****Website: www.rurdev.usda.gov/ks **
**        **
**        ****RBS/ Coop Services VADG website:**
**      ****www.rurdev.usda.gov/rbs/coops/vadg.htm****    **
**                                                                        **

## RBS/ Coop Services VADG Website:

-      _**www.rurdev.usda.gov/rbs/coops/vadg.htm**_
** ****Proposed Regulation**
** ****2002 VADG Selections**
** ****VADG 2002 NOFA **
** ****State Office Contacts**** **
** ****Score Sheet**
** ****Application**** **
** ****Tips on Completing Forms**** **
**  ****2001 VADG Recipients **** **

## Questions????

## Application Content and Scoring Criteria

- It is not rocket science
- Follow the NOFA and supply all the info requested
- Be specific and detailed, if vague,  you will lose points
- Should be typed, handwritten may not be legible
- Make it easy for the reviewer to follow and understand
-     - if can’t find the info or doesn’t understand, you will lose points
- If put together hastily, it will show

## Application Process

- An original and two copies of the proposal, with all required forms and documentation, must be submitted in one package to the appropriate **USDA State Office.**
- Electronic submission is encouraged.!

- Original

- Copy

- Copy

## Application Forms and Proposal Format

**www.rurdev.usda.gov/rbs/coops/vadg.htm**** **
**Forms may be downloaded by clicking on the form number  **
**Application For Federal Assistance SF-424**
**Budget Information - Non-Construction Programs SF-424A**
**Assurances - Non-Construction Programs SF-424B**
** ****Proposal Format  **** **

## Proposal Format

**Table of Contents**
**Proposal Summary**
**Eligibility Statements**
**Proposal Narrative**
**Verification of Matching Funds**** **

## Table of Contents

-  located following the required SF-424 forms
-  include page numbers for each component
-  pagination to begin following the Table of Contents

## Proposal Summary

- Not to exceed one page, must include the following:
-   title of the project
-   description of the project including goals and tasks
-   names of the individuals responsible for completing
-      the tasks
-   expected timeframe for completing all tasks (should
-      normally not exceed one year)
-   state whether the grant is for planning  or working
-      capital

## Eligibility Statements

-  A detailed discussion, not to exceed two pages
- Describe how you meets the definition of an eligible applicant
- If a producer group, identify the group of producers on whose behalf the work will be done
- Describe all other organizations  involved in the project
- State the percentage that will be owned by producers
- Discuss the value-added product to be produced including the category of value-added

## Proposal Narrative

- Not to exceed 35 pages (Times New Roman, 12 pt.) and must include the following:
**Project Title:**
-    Must be brief, not to exceed 75 characters
-     Describe the major thrust of the project
**Goals of the Project:**
-    A clear statement of the ultimate goal of the project
-     Describe the value-added venture to be developed

## Proposal Narrative (continued)

**Information sheet**:
-    - A one page sheet which lists each of the evaluation
-       criteria followed by the page numbers of all relevant
-       material in the proposal which supports that criteria
**Evaluation Criteria:**
-    - Each of the criteria must be addressed in narrative form
-       with any specific supporting documentation included
-    - Financial statements used to support will not count as
-       part of the 35 page limit.

## Verification of Matching Funds

- If in cash, furnish a copy of a bank statement or a copy of the confirmed commitment from the funding source
- If in-kind match is included, provide verification of all commitments and how they are valued
- Applicants must certify that matching funds will be available and spent at the same rate as grant funds
- Other Federal grant funds cannot be used as matching funds

## Areas to Watch

**Clearly state how you meet the definition of:**
-         - an eligible applicant
-         - an eligible value-added activity
-         - eligible use of grant and matching funds

## Areas to Watch

**Clearly document the source and amounts of matching funds**
**      ****-**** **must be equal or greater than grant funds
-       - should not be dependent on future earnings
-       - if in kind, how is it valued

##  Scoring Criteria     Grants for Planning Purposes

**1. Nature of the Proposed Venture                    (Maximum 5 Points)**
**2. Qualification of Those Doing the Studies      (Maximum 5 Points)**
**3. Project Leadership                                          (Maximum 5 Points)**
**4. Commitment                                                    (Maximum 5 Points)**
**5. Work Plan/Budget ****	****	****	****       (Maximum 5 Points)**
**6. Amount Requested **
**$450,000 - $350,001                                             .5   Point**
**$350,000 - $250,001****	****                                      1     Points**
**$250,000- $150,001****	****                                      1.5  Points **
**< $150,000****	****	****                                      2     Points**
**7. Project Cost Per Producer ****	****	****       (Maximum 5 Points)**
**8. Presidential Initiative of Bio-energy Production****	****  **
**                  ****(5 percent of total score)**
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##                              Scoring - Planning Purpose1. Nature of the Proposed Venture         (maximum of 5 Points)

- Describe in detail the proposed venture
-  explain what the venture is to accomplish
-  describe the technology involved
-  examples of the technology used in similar ventures
- Describe how the customer base for the product will be increased
- Explain how the project will produce more profits for the producer-owners
- More points will be awarded to ventures with proven technology
- and that have a good chance of  being viable and sustainable. Also
- for the greatest expansion of markets and increased profits.

##  Scoring - Planning Purposes2. Qualifications of Those Doing the Studies (Maximum of 5 points)           

- Describe their credentials: education and experience in doing this type of study
- the success rate of other ventures based on their studies
- Include resumes
- Points will be awarded based on  qualifications,
- demonstrated skills, and a successful track record

##                      Scoring - Planning Purposes      3. Project Leadership (Maximum of 5 points)

- Describe the individuals who are the members of the steering committee or the individual who is leading this effort
- provide information on education, business experience, financial experience, knowledge of the venture to be undertaken, and other relevant information
- Include resumes
-   Points will be based on demonstrated relevant leadership
-   skills. Backgrounds in business, finance, and the
-   venture’s technology will score higher.

##                             Scoring - Planning Purposes 4. Commitment (Maximum of 5 points)

**Describe the level of producer commitment including:**
-  the number of producers currently involved
-  the number of producers who could become involved
-  cash contributions from producers
-  level of production from the producers
**Describe the potential commitment of end-users of the **
**value-added product to be produced including:**
-  possible markets identified
-  potential buyers contacted

## Scoring - Planning Purposes 4. Commitment (continued)

-  **Describe other commitment including technical**
** ****assistance, financial support, and reference letters:**
- local and state development organizations
- commodity associations
-  local and state government
- Institutions of higher education
- Others
- Higher producer, end-user, and  local support
- will result in more points.

## Scoring - Planning Purposes 5. Work Plan/Budget (Maximum of 5 Points)

- Discuss the tasks to be completed, when it will be done, who
-  will do it, how long it will take, how much it will cost
- Each task must be clearly defined and described in detail
- The work plan must present the order in which the tasks will be undertaken and the estimated time for completing each task
- The budget must present a detailed breakdown of estimated costs and allocate these costs to each of the tasks to be undertaken.
- The grant and matching funds must be identified and allocated to
-      the various tasks
-  Logical, realistic, and economically efficient plans and budgets will
-  result in higher scores.

##                      Scoring - Planning Purposes 6. Amount of Grant Requested           (Maximum of 2 points)

** **
-  1/2 point for requests between $450,000 and  $350,001
-  1 point for requests between $350,000 and  $250,001
-  1 1/2 points for requests between $250,000 and $150,001
-  2 points for requests of $150,000 or less

##  Scoring - Planning Purposes 7. Project cost per producer that is an owner           (Maximum of 5 points)

- Divide the grant request by the total number of independent
- producers that are owners of the venture
- Up to $2000 =            5 points
- $2001- 8000 =           4 points
- $8001- 32,000 =        3 points
- $32,001- 125,000 =   2 points
- Over $125,000 =       1 point
- Points will be based on the largest number of producers
- that are owners benefited for the least cost

##                    Scoring - Planning Purposes 8. Bio-energy Production

- For applications that focus on the Presidential initiative of
- bio-energy production, five percent of the total score of
- the first seven criteria will be added to the final score
- For example, if an application scores a total of 30 points on criteria one through seven, 1.5 additional points
-    (30 x 0.05) will be added, making the final score 31.5

## Scoring Criteria Grants for Working Capital

**1. Business Viability ****	****	****                (Maximum 5 Points)**
**2. Customer Base/Increased Returns           (Maximum 5 Points)**
**3. Commitment ****	****	****	****                (Maximum 5 Points)**
**4. Management Team/Work Force              (Maximum 5 Points)**
**5. Work Plan/Budget ****	****	****                (Maximum 5 Points)**
**6. Amount Requested **
**$450,000 - $350,001                                    .5       Point**
**$350,000 - $250,001****	****	****	****1        Points**
**$250,000- $150,001****	****	****	****1.5     Points **
**< $150,000****	****	****	****	****2        Points**
**7. Project Cost Per Producer ****	****	****  (Maximum 5 Points)**
**8. Presidential Initiative of Bio-energy Production **
**               ****(5 percent of total score)**

## Scoring - Working  Capital1. Business Viability (Maximum of 5 points) 

-  - Describe in detail the technical and economic feasibility
-    of  the venture (reference the feasibility study and business plan)
-  - Describe the organizational structure and operational
-    aspects of the venture
-  - Discuss how the venture will operate efficiently and be
-    sustainable
-  More points will be awarded to those proposals
-  demonstrating the venture will be efficient and sustainable

##                  Scoring - Working  Capital 2. Customer Base/Increased Returns              (Maximum of 5 points) 

- Describe how the customer base for the product being
-        produced will expand
- Provide documented estimates of this expansion
- Describe how more profits will be returned to the
-        producer/owners

## Scoring - Working  Capital  2. Customer Base/Increased Returns (continued) 

-   Provide 3 years of pro forma financial statements,
-       including an explanation of assumptions used
-        -  must include cash flow statements, income statements, and
-            balance sheets
-  -  Income statements and cash flow statements must be monthly
-      for  the first  year, then annual for the next two years
-  -  the balance sheet should be annual for all three years
-  More points will be awarded to those proposals that demonstrate the
-  greatest expansion of the customer base and increased returns to
-  producers

## Scoring - Working  Capital 3. Commitment (Maximum of 5 points) 

-  **Describe the producer commitment  including:**
- the number of producers who will participate
- their total level of production
- financial resources invested in the venture and their use
- any signed delivery agreements or letters of intent to deliver product to the venture
-  **Describe who will purchase the output of the venture**
-  the amount of output to be purchased
-  markets that have been identified
- any completed marketing studies
- any letters of intent or signed marketing agreements from the potential end-users

## Scoring - Working  Capital  3. Commitment (continued)

**Describe other commitment including technical**
**Assistance, financial support, reference letters.**
- local and state development organizations
- commodity associations
- local and state government
- others
- Points will be awarded based on the greatest level of
- documented commitment

##  Scoring - Working  Capital 4. Management Team/Work Force   (Maximum of 5 points) 

- Describe in detail the qualifications of the individuals who will manage and operate the venture
- Discuss the education and experience of the management team, especially that experience in managing similar ventures
- Include resumes
- Describe the availability and quality of the labor force needed to operate the venture
-  Points will be awarded based on the greatest demonstrated
-  level of relevant skills and experience

## Scoring - Working  Capital5. Work Plan/Budget (Maximum of 5 points) 

- Discuss the tasks to be completed, when it will be done, who
-  will do it, how long it will take, how much it will cost
- Each task must be clearly defined and described in detail
- The work plan must present the order in which the tasks will be undertaken and the estimated time for completing each task
- The budget must present a detailed breakdown of estimated costs and allocate these costs to each of the tasks to be undertaken.
- The grant and matching funds must be identified and allocated to
-      the various tasks
-  Logical, realistic, and economically efficient plans and budgets will
-  result in higher scores.

##                     Scoring - Working  Capital 6. Amount of Grant Requested         (Maximum of 2 points)

- 1/2 point for requests between $450,000 and $350,001
- 1 point for requests between $350,000 and $250,001
- 1/2 points for requests between $250,000 and $150,001
- 2 points for requests of $150,000 or less

## Scoring - Working Capital7.  Project cost per producer that is an owner (Maximum of 5 points)

-  Divide the grant request by the total number of
-  independent producers that are owners of the  venture
-  Up to $2000 =          5 points
-  $2001-8000 =           4 points
-  $8001-32,000 =        3 points
-  $32,001-125,000 =   2 points
-  over $125,000 =       1 point
- Points will be based on the largest number of
- producers/owners benefited for the least cost

## Scoring – Working Capital 8. Bio-energy Production 

- For applications that focus on the Presidential initiative of
- bio-energy production, five percent of the total score of
- the first seven criteria will be added to the final score
- For example, if an application scores a total of 30 points on criteria one through seven, 1.5 additional points
-     (30 x 0.05) will be added, making the final score 31.5

## Scoring Areas to Watch

**                ****For Working Capital****:**
**                    ****Business Viability and  **
**            ****Customers Base/Increased Returns**
-  Adequate feasibility study and business plan
-  Financials should have adequate documentation
-     to support the projections and assumptions

##             Scoring Areas to Watch

**           ****For a Planning Activity:**
**      ****Qualification of those doing studies**
- If you can document who will be doing your work and they are well qualified with a history of successes, you will score higher than if  no one specific is to complete the study

## Scoring Areas to Watch

**Project Leadership or Management Team**
- Committees, boards, and multiple individuals
-     with varied education, experiences and skills score higher than a single individual

## Scoring Areas to Watch

**   ****Thoroughly document commitment and support**
-         - producer
-         - end user
-         - third party
-    Get those third party endorsement letters

## Scoring Areas to Watch

**   ****Do a detailed work plan and budget**
-     - allocate costs to each task
-     - include a time schedule for the task
-     - account for the use of grant and matching funds
-     - make sure adequate narrative to explain the
-       numbers

##       Scoring Areas to Watch

**Look at the scoring criteria for:**
- Amount of grant requested
- Cost per producer/owner
- You may want to reduce your requested
- amount slightly to add more score points

##          For an Application Template

- Food Processing Center at the University of Nebraska-Lincoln
- Website: fpc.unl.edu
- Scroll part way down the page and under Value Added Development Grant, click on templates

## Questions????