Working With Grants Like The USDA’s Value-Added Producer Grant

Jim Gage of James D. Gage Consulting works mostly with dairy but more and more in the last 5 years has worked with more different kinds of value-added producers.

Entrepreneurs often rush into the process, for example, finding markets for their products after they start to invest heavily in production. The best entrepreneurs do their due diligence, looking at all aspects of the business, like financing, marketing, product testing, talking to others and hire a team (like lawyers, accountants, etc.) that can help them. The “I can do it” attitude is great, but you need to understand more than production to make a business work, and that takes time, so it makes sense to spend money on getting expertise.

Most of the people he works with don’t understand scale and efficiency. He works with people to understand how to make their product efficiently and get them to the right scale.

There are many hidden costs associated with being a value-added producer. For example, you won’t make a perfect product every time, and entrepreneurs need to build in those costs into their business plan and financing. Things like demos also cost money and should be accounted for. In addition, the Food Safety Modernization Act will increase the costs incurred for on-farm value-added processing, including documentation, workshops and hiring experts. Those are hidden costs for on-farm production and is a reality that should be accounted for and financed appropriately.

Grants ask fundamental business and financial questions. They should strengthen the business approach. Almost any good grant should require you to do a proper due diligence of your business, which you will do anyway. Grants are scored using a point system. Entrepreneurs are evaluated as a business by multiple stakeholders anyway, and scoring is a good process to go through. Grants have rules and paperwork, some of which make sense and some don’t.

To do a grant, you have to have an analytical mind while keeping strategy and operations in mind. Like anything, you should put together a team to help you write it.

Jim has written 70 or so of the Value-Added Producer Grant over the course of 12 years. They can provide up to $250,000 for operational expenses and marketing over a two year period, which can advance businesses greatly. However, the grant can be convoluted and interpretation can change depending on which state office is administering it. You also have to look at the implementation of the grant in addition to the writing period and that you can report back on the grant requirements.