Impacts of the Value Added Producer Grant Program on Business Outcomes

Posted on 05/08/2018 at 09:20 AM by Christa Hartsook

Access to readily available financial capital is a key to success for small businesses. USDA’s Rural Business-Cooperative Service (RBS) administers several grant and loan programs to support businesses in rural areas. The Value-Added Producer Grant (VAPG) program provides grants to help farmers and ranchers add greater value for agricultural commodities, such as through additional processing or marketing of new products. Some examples of adding greater value may include processing berries into jam, meat into sausage, wheat into flour, and corn into ethanol, as well as organic production. With these grants, the VAPG program aims to generate new products, initiate and expand marketing opportunities, increase producer earnings, create new jobs, and contribute to community economic development.

The number of grants and the amount of grant money obligated under the VAPG program have fluctuated substantially since the program began in 2001. Between 2001 and 2015, the program provided a total of 2,345 grants to farmers and ranchers—a total value of $318 million, or about $136,000 per grant on average.

Highlights

  • Between 2001 and 2015, USDA provided 2,345 Value-Added Producer Grants (VAPGs), with a total value of $318 million, to farmers and ranchers to help them add greater value for agricultural commodities, such as through additional processing or marketing of new products.

  • Businesses that received a VAPG between 2001 and 2013 were less likely to fail than similar nonrecipient businesses, and the effect persisted even 6 years after receiving grants.

  • Between 2001 and 2013, businesses that received a VAPG and similar nonrecipient businesses had 14 employees on average at the time of grant award; the grants enabled VAPG recipients to employ 5 to 6 more workers than the nonrecipient businesses in the 5 years after grant receipt.

Read the full report at USDA ERS.

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