Mid-Tier Value Chains in Value Added Producer Grant Program
Blog entry written by Michael Boland, professor at Kansas State University and director of the Arthur Capper Cooperative Center.
Earlier this year, I wrote about the Value Added Producer Grant (VAPG) program. The latest Notice of Funding Availability (NOFA) can be found at http://www.rurdev.usda.gov/rbs/coops/vadg.htm. This popular program has been funded annually through Congressional appropriations since 2001. The NOFA provides streamlined paperwork for those applying for less than $50,000 and provides additional information on the matching funds requirement. Each year includes new areas of emphasis that reflect Congress’s current priorities. Past areas of emphasis included renewable fuels such as wind and crop-based ethanol.
A new category this year is the designation of reserve funding for Mid-Tier Value Chain. This category requires applicants to show the development of a “Local or Regional Supply Network of interconnected food-related business enterprises through which food products move from production through consumption in a local or regional area of the USA, including a description of the network, its component members, and its purpose.” Many new food networks have been developed, especially in the area of locally-grown foods and these would be eligible applicants for this year’s program.
The Mid-Tier Value Chains are required to show that the project funded by VAPG must have “at least two alliances, linkages or partnerships within the value chain that link independent producers with businesses and cooperatives that market value-added agricultural products in a manner that benefits small- or medium-sized farms that are structured as a family farm, including the names of the parties and the nature of their collaboration.” This assures that the network is moving beyond the immediate farm gate and into other food chains in the food economy system.
The Mid-Tier Value Chains must also show the value created in two or more farms will benefit the competitiveness and profitability of those operations, provided they are structured as family farms. The applicant must also satisfy the definition of an eligible Agriculture Producer Group (APG)/ Farmer or Rancher Cooperative (COOP)/Majority-Controlled Producer Based Business Venture (MCPBBV) applicant organization whose definition was discussed in my May blog. The Mid-Tier Value Chain applicants required at least one (written) agreement “with another member of the supply network that is engaged in the value chain on a marketing strategy; or that the eligible Independent Producer applicant has obtained at least one agreement from an eligible APG/COOP/MCPBBV engaged in the value-chain on a marketing strategy.” This provides information to show the sustainability of the network.
Lastly, the Mid-Tier Value Chain applicant must own and produce more than 50 percent of the raw agricultural commodity used to create the value added product and show an increase in revenues and customer base for that raw material product.
Examples of eligible Mid-Tier Value Chain networks could include a network of Amish farms marketing members’ milk as cheese branded and labeled and sold through a wholesaler or broker, a cooperative owned by family farms that markets fruit and vegetables from the members’ through a local supermarket chain, or a collection of specialty meat farms (e.g., natural or organic) that processes the meat in a local processing facility and markets the meat through a supermarket.
I have watched the VAPG program evolve every year since its inception through my role as a reviewer for this program, researcher of this program, and educator to many individuals associated with this program. Each year, I am amazed at the creativity and value being generated in rural America by family farmers. This program is very unique in the sense that it provides matching funds for individuals or groups of family farmers, producers, and ranchers to investigate and develop value-added products.
In the mid and late 1990s, I taught a marketing class to undergraduate students in the College of Agriculture at Kansas State University. As part of that class, a team of five students worked with a farm family in Kansas on a marketing plan for various products including exotic meats (bison, emu, ostrich), value-added soaps and gels, frozen vegetable products, and other products. We worked with more than 20 farm families over a four year period. Nothing like a VAPG program existed at the time. Now a colleague of mine has worked with similar groups through an Innovation Center and Kansas State has several centers working with farm family entrepreneurs. It is amazing to see the infrastructure that has developed to engage with farmers, producers, and ranchers in this type of activity. The VAPG program has played an important role in creating and nurturing these activities. The application process is a lot easier than in past years and even if you are not funded, you will receive some good feedback from reviewers such as myself.