# Presentation: 294956

## Value-Added Producer Grant Program

- Rural Business - Cooperative Service
- June 16 and 17, 2004

## Other Related RBS National Programs

- 9006 Renewable Energy/Energy Efficiency Grants   Application deadline: July 19, 2004
- 9006 Renewable Energy Pilot Project
-     Application deadline: August 16, 2004
- Rural Cooperative Development Grants    Application deadline: July 26, 2004

## Value-Added Producer GrantsFY 2004 Overview

- $13.2 million is available as competitive grants
- Maximum grant is $500,000
- Matching funds must be at least equal to the grant
- Announcement was published June 15,2004
- The application deadline is July 30, 2004
- Several changes compared to previous years

##       
The primary objective :

To help eligible producers develop business plans and strategies to create marketing opportunities.

These grants will facilitate greater participation in emerging and new markets for value-added products

**The primary objective :**
- To help _eligible producers_ develop _business plans_ and _strategies_ to create _marketing opportunities._
- These grants will facilitate greater participation in _emerging and new markets _for _value-added products_

## VAPG Applications Nationally

-                                               **FY 2002          FY 2003**
- Total applications                         714                  781
- Applications selected                    231                 184
- $ of applications selected          $37.2 M           $28.7 M
- Average $ per selection             $161,039         $155,978

## Value-Added Agricultural Product Market Development Grant Selections (FY 2002 + 2003)

**7**

**14**

**5**

**30**

**15**

**28**

**48**

**13 **

**5**

**12**

**20**

**32**

**415 Applications Selected for $65.9 Million dollars**

**3**

**19**

**12**

**10**

**8**

**5**

**6**

**6**

**1**

**1**

**2**

**12**

**14**

**9**

**4**

**6**

**5**

**1**

**1**

**1**

**0**

**1**

**3**

**5**

**2**

**3**

**20**

**29**

**9**

**5**

**2**

##     Kansas Projects Awarded                   Grants FY 2003

**Beef Marketing Group Cooperative, Inc**. ($37,500)  To assist with a feasibility study, business and marketing plans for HACCP certified feedlots
**Ethanol Grain Processors, Inc.**
-        ($17,500) To update a feasibility study
-        and develop a business plan for a
-        30mgy ethanol plant
**Rainbow Organic Farms Company**
- ($144,500) Working capital to bring four
-  new branded products to the supermarket
-  shelf

##    Kansas Projects Awarded                    Grants FY 2003

**Heartland Mill, Inc.** ($150,000)
-     For working capital in their organic       wheat processing operation
**National Corn Growers Assn.** ($175,000) A planning grant regarding development of livestock protein blocks using ethanol co-products (DDGS)
**Farmer Direct Foods, Inc.** ($349,033)   Working capital to process hard white wheat bran that will be used two create two new branded products

## Kansas Projects Awarded Grants FY 2002

- Jewel County Sunflower Processing ($41,000)
-        Planning grant - proposed sunflower processing plant.
- American White Wheat Producers Assoc.($218,710)
-        Planning Grant-regarding  the processing  of heavy bran
- Western Plains Energy, LLC ($291,615)
-      Working capital-to assist in the start  up of a 30 mgy ethanol plant
- East Kansas Agri-Energy LLC ($450,000)
-      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.
- 21st Century Grain Processing ($500,000)
-     Working capital-for  milling of hard white wheat and distribution of flour and food grade corn.

## Is Your Project Eligible?

- 1) Is the _applicant_ an eligible entity ?
- 2) Does your _product_ meet one of the four
-      categories of  value-added activities ?
- 3) Are the funds being used for an eligible _purpose _?

**Three Levels of Eligibility**

## Is Your Project Eligible?

**1)  Is the applicant an eligible entity?**
- Independent Producers
- Farmer or Rancher Cooperatives
- Agricultural Producer Groups
- Majority Controlled  Producer Based Businesses

## Agricultural Producer

- Person or entities
- Includes farmers, ranchers, loggers, ag harvesters, and fishermen that engage in the production or harvesting of an ag product
- May or may not own the land or the production resources
- Must have a majority ownership in the ag product to which value is to be added
- Examples:
-     Logger – majority interest in logs harvested, converted to boards
-     Cattle Feeder – majority interest in cattle fed, slaughtered, and sold as box beef
-     Corn grower – majority interest in corn produced, then processed

## Applicant Eligibility

**   ****Independent Producers**
- Agricultural producers: individuals or entities
- Includes profit or non profit corporations, LLC’s, partnerships, etc.
- Entity must be solely owned and controlled by producers who own a majority interest in the product produced
- A steering committee of independent producers in the process of organizing an association (must form a legal entity before grant period can begin)
- Must produce and own a majority interest in the raw product to be used
- Product is owned from raw commodity thru value added product
- Does not include those who produce under contract for another entity and do not own the product produced

## Applicant Eligibility

**Farmer or Rancher Cooperative**
-  A farmer or rancher owned and controlled business
-     form from which benefits are derived and distributed
-     on the basis of use by each farmer or rancher owner
- Must be 100% owned and controlled by producers who produce the commodity to which value will be added
- Must propose ventures that are entering into emerging
-     markets

## Applicant Eligibility

**Agricultural Producer Groups**
- An organization that represents independent producers
-     ( general farm organizations and commodity groups)
- Whose mission includes working on behalf of independent producers
- The majority of membership and board of directors is comprised of independent producers
- Must identify by name a specific group of independent producers on whose behalf the work will be done
-       - these producers must own and produce the commodity to
-        which value will be added
- Must propose ventures that are entering emerging markets

## Applicant Eligibility

**Majority-Controlled Producer Based Business Venture**
- Venture where more than 50% of ownership and control is held by:
-      - independent producers (Individuals or Partnerships, LLC’s, LLP,s,
-        Corporations or Cooperatives that are themselves 100% owned by
-        independent producers)
- Ownership is determined by: ownership interest of eligible producers/ownership interest of all owners
- Control is demonstrated through voting rights of governing body
- Must propose ventures that are entering emerging markets
- No more than 10% on the grant funds can be awarded to these ventures

## What is an Emerging Market?

- A new or developing market for the applicant
- A market the applicant has not traditionally supplied
- Venture must focus on the emerging market
-  New product into a new or existing market
-  Old product going into a new market

## Is Your Project Eligible?

**2) Does your project meet one of the four**
**     ****categories for a value-added product ?**
- A change in its physical state
- Differentiated production or marketing, _as_
-       _demonstrated in a business plan_
- Product segregation
- Production  of farm or ranch based renewable energy

## Product Eligibility

**A change in the physical state of an**
**agricultural product**
** **
- Examples:
- milling wheat into flour
- making strawberries into jam
- slaughtering livestock or poultry
- corn into ethanol

## Product Eligibility

**Differentiated production or marketing of an **
**agricultural product, as ****demonstrated in a business plan**
- Must have the business plan in place at time of application and be referenced in the application
- Unlikely to be eligible for a planning grant
- An example is marketing of organically produced products

## Product Eligibility

**Segregation of an agricultural product **
- Examples:
- an identity preservation marketing system
-     - Includes labeling that identifies how the
-       product was produced and by whom

## Product Eligibility

-  **Using any agricultural commodity or product**
** ****to produce renewable energy on a farm or**
** ****ranch.**
- Energy generated on farm through the use of ag commodities, wind power, or solar power
-  An example is collecting and converting methane from animal waste to generate energy

## Is Your Project Eligible?

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

## Eligible Purposes

**Planning Activities to determine viability**
**include:**
** **Feasibility Studies
-  Business and Marketing Plans
-  Legal advice and assistance

## Eligible Purposes

**Working capital examples include:**
- Design or purchase an accounting system
- Pay salaries, utilities, rental of office space
- Purchase inventory, office equipment, office supplies
- Conduct a marketing campaign
**  **

**If applying for working capital:**
- Applicant must demonstrate that the venture is in its first or second year of operation at the time of application, unless the applicant is an independent producer
- All W/C applicants must have an acceptable feasibility study and business plan
-        - Rural Development must approve prior to funding of
-          the grant

## Feasibility Studies

- Completed by a qualified, independent third party
- Should include five feasibility components
-          1.  Economic
-          2.  Market
-          3.  Technical
-          4.  Financial
-          5.  Management
-  See RD Instruction 4279-B, Appendix A,
-      Guide for Completion of Feasibility Studies

##           Ineligible Purposes Include:

- Costs associated with buildings or facilities
- Costs associated with fixed or mobile equipment
- Engineering design for a specific facility
- Purchase vehicles, boats, or land
- Pay for preparation of the grant application
- Expenses related to the production of the product
- Expenses not directly related to processing or marketing for the venture

## Matching funds

- Amount must be at least equal to the grant amount
- Cash by applicant, or cash or in-kind by third party
- Applicant cash match must be verified by current bank statement
- Third party match must be verified by letter from third party
- Cannot use other federal grants
- Must certify available and will be spent at a rate equal or greater than grant (match must be funded prior to a request for grant reimbursement)
- Must be for grant eligible purposes
- In-kind must conform to 3015.5 and 3019.23
- Expected program income may not be used to fulfill the matching requirement at the time of application

## Other Project Eligibility

- Project time frame must be 365 days or less
- Project must be scheduled to begin within 90 days of expected award announcement date (within 90 days of 10/1/04)
- If presently has VAPG, the grant period for that grant must be scheduled to expire within 90 days of expected award announcement date
- Can submit more than one application, but only the highest ranking one will be funded
- Can receive only one planning and one W/C grant for the same project (grants must be in different years)
- Application must be considered complete

## Application Process

- _Complete_ applications, with all required forms and
-     documentation, must be _received_ no later than
**    ****July 30, 2004 at 4:00 p.m**. **Eastern **time
- Late applications will not be accepted
- Applications can be in paper or in electronic format
- No fax or hand delivery
- If in paper form, signed original and one copy, in one envelope
- If electronic, must be in pdf format, in one file
- Follow the announcement for font, page set up, etc.

## Application Process

**Submit completed paper applications to:**
**    **DynAccSys
-     Attn: Bitsy Keko
-     101 Donner Drive
-     Oak Ridge, TN 37830
**Email completed electronic applications to:**
**    **VAPG@duncanltd.com
**    **

## RBS/Coop Services VAPG Website:

-  _[www.rurdev.usda.gov/rbs/coops/vadg.htm](http://www.rurdev.usda.gov/rbs/coops/vadg.htm)_
- Up to date program information
- June 15, 2004 Announcement
- Program regulations
- Application forms and content requirements
- Tips on Completing Forms
- 2001, 2002, and 2003 VAPG Selections

## Application Process

**A Complete Application consists of:**
- 1. SF-424 “Application for Federal Assistance”
- 2. SF-424A “Budget Information - Non-Construction Programs”
- 3. SF 424 B “Assurances - Non-Construction Programs”
- 4. Survey on Ensuring Equal Opportunity for Applicants (non profits only)
- 5. Title Page
- 6. Table of Contents
- 7. Executive Summary (NTE 1 page)
- 8. Eligibility Discussion (NTE 4 pages)
- 9. Proposal Narrative (NTE 35 pages)
- i.    Project Title
- ii.   Information Sheet
- iii.  Goals of the Project
- iv.  Work plan
- v.   W/C applications, 3 years financial proforma
- vi.  Performance Evaluation Criteria
- vii. Proposal Evaluation Criteria
- 10. Verification of Matching Funds
- 11. Certification of matching funds

## Application Process  

- Follow the announcement exactly and supply all the information in the format requested
- Incomplete applications will not be considered for funding
- Additional pages submitted above the limits in the announcement will not be considered
- Be specific and detailed, if vague,  you will lose points
- Make it easy for the reviewer to follow and understand
-      -  if the reviewer can’t locate the information, you will lose points
- Take adequate time to prepare the application

##     For a Proposal Format Template

- K-State VABDP is updating a template
-  On the internet at: _[www.agmanager.info](http://www.agmanager.info/)_
- Click on agribusiness
- K-State VABDP will provide assistance in reviewing your applications
- Send draft application as an email attachment to:  _[coltrain@agecon.ksu.edu](mailto:coltrain@agecon.ksu.edu)_
- Send at least one week before the 7/30/2004 deadline
- Contact David Coltrain: 785-532-1523

## Application Review Process

- Application will be assigned to a RD State Office based on the address of the applicant or project location
- RD State Office will determine eligibility and completeness
- If eligible and complete the proposal will be assigned to three different independent reviewers
- The independent reviews will cover criteria 1-5,  maximum 50 points
- If  too much variation, two supplemental reviews, delete high and low
- The state office will review criteria 1 and 6-10, maximum of  45 pts.
- The RBS Administer may assign up to 5 points for criteria 11
- Scores totaled and applications ranked
- After reviews, grants are awarded from the highest score down until the money is gone

##  Scoring Criteria     Grants for Planning Purposes

** ****1.  Nature of the Proposed Venture****                              ****(0 - 25 Points)**
** ****2.  Qualification of Those Doing Work                    (0 - 10 Points)**
** ****3.  Project Leadership                                               (0 - 10 Points)**
** ****4.  Commitment s and support                                 (0 - 10 Points)**
** ****5.  Work Plan/Budget ****	****	****                          (0 - 10 Points)**
** ****6.  Amount Requested                                               (0 - 5 points)**
** ****7.  Project Cost per Owner-Producer                      (0 - 5 Points)**
** ****8.  Small Farm                                                            (0 or 5 points)**
** ****9.  Community and Industry Support                     (0 – 10 points)**
**10. Presidential Initiative of Bio-energy                   (0 or 5 points)  **
**11. Administrator Points                                            (0 – 5 points)**
**	**

**	**

**	**

**	**

**	**

**	**

**	**

##                                         Scoring - Planning Purpose1. Nature of the Proposed Venture    (0 - 5 Points by three independent reviewers and 0 - 15 points     by servicing State Office )

- Describe in detail the proposed venture
- Explain what the venture is to accomplish
- What is the commodity, the process, and the product
- How will the customer base will be increased
- How more profits will be available for producer-owners
- Projects will be evaluated for technical feasibility,
- operational efficiency, profitability, sustainability, and
- improvement to the rural economy

##                 Scoring - Planning Purposes2. Qualifications of Those Doing Work          (0 - 10 points by three independent reviewers)           

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

##                      Scoring - Planning Purposes     3. Project Leadership       (0 - 10 points by three independent reviewers)

- Describe the individuals on 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, etc.
- 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. Commitments and Support    (0 – 10 points by three independent reviewers)

**Describe the level of producer commitment including:**
-  the number of producers involved or to be involved
-  cash contributions and level of production
**Describe the potential commitment of end-users including:**
-  possible markets identified and output to be purchased
- Reference support groups and commitments, letters should be
- available upon request

##                                  Scoring - Planning Purposes 5. Work Plan/Budget     (0 – 10  points by three independent reviewers)

- Discuss the tasks: when, who, how long, and cost
- Each task must be clearly defined and described in detail
- Present the order in which the tasks will be undertaken and the estimated time to complete
- Present a breakdown of estimated costs and allocate to each of the tasks
- The grant and matching funds must be allocated to each task
- Grant & match funds should be spent at the same rate on each task
-  Logical, realistic, and economically efficient plans and budgets will
-  result in higher scores.

##                                          Scoring - Planning Purposes 6. Amount of Grant Requested      (0 – 5 points by Servicing State Office points)

** **
-  1 point for requests between $450,000 and  $350,001
-  2 points for requests between $350,000 and $250,001
-  3 points for requests between $250,000 and $150,001
-  4 points for requests between $150,000 and $50,001
-  5 points for requests of $50,000 or less

##                                         Scoring - Planning Purposes   7. Project cost per owner-producer                 (0 - 5 points by servicing State Office)

- Divide the grant request by the total number of independent
-  producers that are owners of the venture
- $1-$10,000 =              5 points
- $10,001- $25,000 =    4 points
- $25,001- $50,000 =    3 points
- $50,001- $125,000 =  2 points
- $125,001-$250,000 = 1 point
- $250,001-$500,000 = 0 points
- Must provide a list of names, husband and wife can be two
- if both are owners

##                                           Scoring - Planning Purposes 8. Small Farm    (0 or 5 points by servicing state office)

- An independent producer applicant
- Farm has annual gross sales of $250,000 or less
- Average of the past three years from tax returns
- If eligible, will be awarded 5 points.

##                                             Scoring - Planning Purposes 9. Community and Industry Support   (0 – 10 points by servicing State office)

- Submit a description of support letters from:
-     - Local business assn.
-     - Industry assn.
-     - Political institutions
- Must present actual letter at time of award

##                                     Scoring - Planning Purposes 10. Presidential Initiative of Bio-energy      (0 or 5 points by servicing State Office)

-  Applications that have at least 51% of project costs
-      dedicated to activities for a bio-energy project
- No points for biomass, wind, solar, or hydro energy
- Must be more than 50% for on farm use
-  If eligible,  will be awarded 5 points

##                          Scoring - Planning Purposes 11. Administrator points      (0 – 5 points by the RBS administrator)

- Recognize innovative technologies
- Insure geographic distribution of grants
- Encourage projects in under served areas
- If applicant wishes to be considered, must include
- explanation and information in the application

## Scoring Criteria Grants for Working Capital

** ****1.  Business Viability****                                                        ****(0 - 25 Points)**
** ****2.  Customer Base/Increased Returns                   (0 - 10 Points)**
** ****3.  Commitments and Support                               (0 - 10 Points)**
** ****4.  Management Team and Work Force               (0 - 10 Points)**
** ****5.  Work Plan/Budget ****	****	****                        (0 - 10 Points)**
** ****6.  Amount Requested                                             (0 - 5 points)**
** ****7.  Project Cost per Owner-Producer                    (0 - 5 Points)**
** ****8.  Small Farm                                                         (0 or 5 points)**
** ****9.  Community and Industry Support                   (0 – 10 points)**
**10. Presidential Initiative of Bio-energy                 (0 or 5 points)  **
**11. Administer Points                                               (0 – 5 points)**
**	**

##                            Scoring - Working  Capital 1. Business Viability    (0 – 10 points by three independent reviewers and 0 – 15     points by the servicing state Office) 

- Describe in detail the technical and economic feasibility of  the venture
-  Reference the feasibility study and business plan
- Discuss the financial statements submitted
- More points will be awarded to those proposals
- demonstrating the venture will be efficient and
- sustainable

##                      Scoring - Working  Capital 2. Customer Base/Increased Returns    (0 – 10 points by three independent reviewers)

- Describe how the customer base for the product will expand
- Provide documented estimates of this expansion
- Describe how more profits will be returned to the producer/owners
- Reference the 3 years of pro forma financial statements, including an explanation of assumptions used
-               -  include cash flow and income statements, balance sheets
- More points will be awarded to those proposals that demonstrate the
- greatest expansion of the customer base and increased returns to  the
- producers

##                                           Scoring - Working  Capital 3. Commitments and Support   (0 - 10 points by three independent reviewers) 

**Describe the producer commitment  including:**
- the number of producers and their level of production
- financial resources invested and their use
- signed delivery agreements or letters of intent
**Describe who will purchase the output of the venture**
- the amount to be purchased
- completed marketing studies or markets that have been identified
- marketing agreements or letters of intent from the potential end-users
**Points will be awarded based on the greatest level of documented **
**commitment**

##                                    Scoring - Working  Capital 4. Management Team/Work Force       (0 – 10  points by three independent reviewers

- Describe 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

- These following criteria are the same as for a planning grant:
- 5.   Work Plan/Budget
- 6.   Amount of Grant Requested
- 7.   Project cost per owner-producer
- 8.   Small Farm
- 9.   Community and Industry Support
- 10. Presidential Initiative of Bio-energy
- 11. Administrator points

## 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

**Qualification of those doing studies **(Planning)
- 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 is specifically identified to complete the study
**Project Leadership **(PL)** or Management Team **(W/C)
- 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, and third party
- Do a detailed work plan and budget
-     - make sure adequate narrative to explain the numbers
- Adequately document your number of producer/owners
- Look at the scoring criteria for:
-     - Amount of grant requested
-     - Cost per producer/owner
-      You may want to reduce your requested grant amount to
-      add more score points

## Application ProcessAreas to Watch

- Follow the announcement exactly
- Supply all information specified for the application to be considered complete
- Clearly state how you meet the definition of:
-         - an eligible applicant
-         - an eligible value-added activity
-         - eligible use of grant and matching funds
- Verify and certify matching funds

## FOR MORE INFORMATION

- Larry Carnahan    620-784-5431
- Email: _[larry.carnahan@ks.usda.gov](mailto:larry.carnahan@ks.usda.gov)_
- Rural Development State Office    785-271-2730
- Website: _www.rurdev.usda.gov/ks__ _
- RBS/Coop Services VADG website:
- _[www.rurdev.usda.gov/rbs/coops/vadg.htm](http://www.rurdev.usda.gov/rbs/coops/vadg.htm)_
- Application template at: _[www.agmanager.info](http://www.agmanager.info/)_
- David Coltrain  785-532-1523
- Email: _[coltrain@agecon.ksu.edu](mailto:coltrain@agecon.ksu.edu)_
- Agricultural Resource Marketing Center (AgMRC)_ _website: _www.agmrc.org_