To provide for grants to assist value-added agricultural businesses.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Value-Added Development Act for 
American Agriculture''.

SEC. 2. AGRICULTURE INNOVATION CENTER DEMONSTRATION PROGRAM.

    (a) Purposes.--The purposes of this section are to carry out a 
demonstration program under which agricultural producers are provided--
            (1) technical assistance, including engineering services, 
        applied research, scale production, and similar services to 
        enable the producers to establish businesses for further 
        processing of agricultural products;
            (2) marketing, market development, and business planning;
            (3) overall organizational, outreach, and development 
        assistance to increase the viability, growth, and 
        sustainability of value-added agricultural businesses.
    (b) Nature of Program.--The Secretary of Agriculture (in this 
section referred to as the ``Secretary'') shall--
            (1) make grants to eligible applicants for the purposes of 
        enabling the applicants to obtain the assistance described in 
        subsection (a); and
            (2) provide assistance to eligible applicants through the 
        research and technical services of the Department of 
        Agriculture.
    (c) Eligibility Requirements.--
            (1) In general.--An applicant shall be eligible for a grant 
        and assistance described in subsection (b) to establish an 
        Agriculture Innovation Center if--
                    (A) the applicant--
                            (i) has provided services similar to those 
                        described in subsection (a); or
                            (ii) shows the capability of providing the 
                        services;
                    (B) the application of the applicant for the grant 
                and assistance sets forth a plan, in accordance with 
                regulations which shall be prescribed by the Secretary, 
                outlining support of the applicant in the agricultural 
                community, the technical and other expertise of the 
                applicant, and the goals of the applicant for 
                increasing and improving the ability of local producers 
                to develop markets and processes for value-added 
                agricultural products;
                    (C) the applicant demonstrates that resources (in 
                cash or in kind) of definite value are available, or 
                have been committed to be made available, to the 
                applicant, to increase and improve the ability of local 
                producers to develop  markets and processes for value-
added agricultural products; and
                    (D) the applicant meets the requirement of 
                paragraph (2).
            (2) Board of directors.--The requirement of this paragraph 
        is that the applicant shall have a board of directors comprised 
        of representatives of the following groups:
                    (A) The 2 general agricultural organizations with 
                the greatest number of members in the State in which 
                the applicant is located.
                    (B) The Department of Agriculture or similar State 
                organization or department, for the State.
                    (C) Organizations representing the 4 highest 
                grossing commodities produced in the State, according 
                to annual gross cash sales.
    (d) Grants and Assistance.--
            (1) In general.--Subject to the availability of 
        appropriations, the Secretary shall make annual grants to 
        eligible applicants under this section, each of which grants 
        shall not exceed the lesser of--
                    (A) $1,000,000; or
                    (B) twice the dollar value of the resources (in 
                cash or in kind) that the applicant has demonstrated 
                are available, or have been committed to be made 
                available, to the applicant in accordance with 
                subsection (c)(1)(C).
            (2) Initial limitation.--In the first year of the 
        demonstration program under this section, the Secretary shall 
        make grants under this section, on a competitive basis, to not 
        more than 10 eligible applicants.
            (3) Expansion of demonstration program.--In the second year 
        of the demonstration program under this section, the Secretary 
        may make grants under this section to not more than 10 eligible 
        applicants, in addition to any entities to which grants are 
        made under paragraph (2) for such year.
            (4) State limitation.--In the first 3 years of the 
        demonstration program under this section, the Secretary shall 
        not make a Agricultural Innovation Center Demonstration Program 
        grant under this section to more than 1 entity in any State.
    (e) Use of Funds.--An entity to which a grant is made under this 
section may use the grant only for the following purposes:
            (1) Applied research.
            (2) Consulting services.
            (3) Office equipment.
            (4) Hiring of employees, at the discretion of the board of 
        directors of the entity.
            (5) The making of matching grants, each of which shall be 
        not more than $5,000, to agricultural producers, so long as the 
        aggregate amount of all such matching grants shall be not more 
        than $50,000.
            (6) Legal services.
    (f) Limitations on Authorization of Appropriations.--For grants and 
assistance under this section, there are authorized to be appropriated 
to the Secretary not more than--
            (1) $10,000,000 for fiscal year 2002;
            (2) $20,000,000 for each of fiscal years 2003 and 2004.
    (g) Report on Best Practices.--
            (1) Effects on the agricultural sector.--The Secretary 
        shall utilize $300,000 per year of the funds appropriated 
        pursuant to this section to support research at a land-grant 
        university into the effects of value-added projects on 
        agricultural producers and the commodity markets. The research 
        should systematically examine possible effects on demand for 
        agricultural commodities, market prices, farm income, and 
        Federal outlays on commodity programs using linked, long-term, 
        global projections of the agricultural sector.
            (2) Department of agriculture.--Not later than 3 years 
        after the first 10 grants are made under this section, the 
        Secretary shall prepare and submit to the Committee on 
        Agriculture, Nutrition, and Forestry of the Senate and to the 
        Committee on Agriculture of the House of Representatives a 
        written report on the effectiveness of the demonstration 
        program conducted under this section at improving the 
        production of value-added agricultural products and on the 
        effects of the program on the economic viability of the 
        producers, which shall include the best practices and 
        innovations found at each of the Agriculture Innovation Centers 
        established under the demonstration program under this section, 
        and detail the number and type of agricultural projects 
        assisted, and the type of assistance provided, under this 
        section.

Summary: Value-Added Development Act for American Agriculture - Directs the Secretary of Agriculture to make grants to eligible applicants for an agricultural innovation center demonstration program to assist value-added agricultural businesses. Authorizes up to ten initial grants. Sets forth permitted fund uses.