Getting started on a value-added project can be a daunting task, but producer groups don’t need to do it alone. The 2002 Farm Security and Rural Investment Act, which is part of the Farm Bill is designed to provide grants that assist with value-added projects.

Jeff Jobe, Cooperative Services USDA Rural Development, says there are three questions you should ask to determine if your project is eligible for this government aid.

1. Are the funds being used for an eligible purpose? Planning and working capital are the most common eligible uses for the funds, says Jobe.

2. Is your project an eligible entity? Jobe says independent producers, farmer or rancher cooperatives, agricultural producer groups or commodity organizations, and majority owned producer-based businesses are eligible.

3. Does your project meet one of four categories of value-added activities? These include:

  • Change in the physical state of the product,
  • Production of an agricultural commodity or produced in a manner that enhances its value, as demonstrated through a business plan,
  • Physically segregate an agricultural commodity or product in a manner that enhances the value of that commodity or product,
  • Any agricultural commodity or product that is used to produce renewable energy on a farm or ranch.

In addition these activities must expand the product or commodity’s customer base and result in a greater portion of the revenues derived from the value-added activity available to the producer.

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 via the Web site

Jobe says grants have limited funds and applications are selected using a competitive scoring system. He offers the following recommendations:

  • Address all selection factors
  • Provide all application materials
  • Submit the application early
  • Be clear and concise