Value-Added Producer Grant: Overview and Upcoming Webinar

vapgThe Illinois Rural Development State Office will be hosting an online Value-Added Producer Grant meeting from 1:30 – 3:30 pm on Monday, February 23rd.  This training session will primarily consist of an overview of the program including applicant, product, project, and fund usage eligibility, grant limits, matching funds requirements and sources, application procedures and structure, etc.

There is no need to register for this training.  If you or someone you know is interested, all you need to do is:

1)      Log in by clicking the blue “Join WebEx Meeting” link and enter the meeting password of “VAPG” when prompted, and

2)      Dial into the toll free teleconference number 888-844-9904 and enter the participant passcode: 2005656

Please note that the webinar does not include audio capabilities, so everyone will have to dial into the teleconference to hear the presenter.



PROGRAM PURPOSE – The VAPG Program provides grant funds to agricultural producers for planning activities or working capital expenses to help them enter into value-added activities related to the processing or marketing of bio-based value-added products.

WHO’S ELIGIBLE – Applicants must qualify as one of the following in order to be an eligible applicant:

  • Independent Producer – Individuals or entities (including profit, NFP, LLCs, partnerships, or LLPs) where the entities are solely owned or controlled by agricultural producers or agricultural harvesters.
  • Farmer or Rancher Cooperative – A business owned and controlled by independent producers that is incorporated as a cooperatively operated business.  The majority of ownership and financial control must be held by independent producers.
  • Agricultural Producer Group – An organization that represents independent producers, whose mission includes working on behalf of the independent producers and the majority of whose membership and board of directors are comprised of independent producers.  Examples include general farm organizations such as the Farm Bureau, Illinois Soybean Association, IL Beef Association, and IL Corn Growers Association.
  • Majority-Controlled Producer-Based Business Venture – Entities (other than cooperatives) where a majority of the financial ownership and voting rights reside with independent producers who own and produce more than 50% of the raw commodity that will be used in the value-added venture.

VALUE-ADDED CATAGORIES:  Value must be added to the raw agricultural commodity in one of the following ways:

  • A change in physical state of the commodity (e.g. milk to cheese, grapes to wine).  Only eligible if the commodity cannot be returned to its original state after the physical change.
  • Produced in a manner than enhances the value of the commodity when compared to standard production methods (e.g. organic vegetables, antibiotic free pork).
  • Physical product segregation – Separation of a commodity produced from other varieties of the same commodity produced on the same farm.  Separation must be present during production, harvesting, processing, and marketing and must justify an increased value of the commodity  (e.g. non-genetically modified corn and genetically modified corn grown on the same farm, but separated by a distance or a structure so that no cross-pollination occurs)
  • Farm-based renewable energy – A farm commodity used to produce renewable energy (e.g. corn to ethanol).
  • Production or marketing of locally-grown agriculture food products.  Locally grown is defined as products being marketed within 400 miles of where they were grown or within the state borders of where they were grown.

USES OF FUNDS:  Funds can either be used for planning purposes or working capital expenses.  Applicants may apply for one or the other, but not both in the same year.  Eligible planning expenses include hiring a qualified consultant to create a business plan, feasibility study, or marketing plan.  Eligible working capital expenses include post-harvest labor, inventory, office & processing supplies, facility rent, utilities, marketing expenses, consulting fees, etc.  All expenses must relate directly to the value-added process.

INELIGIBLE USES OF FUNDS:  VAPG funds cannot be used for any of the following purposes:

  • Plan, repair, rehabilitate, acquire, or construct a building or facility including a processing facility
  • Purchase, lease purchase/rent-to-own, or install equipment, vehicles or land
  • Pay any expenses not directly related to the value added venture
  • Pay any expenses related to the production or harvesting of the raw agricultural commodity to which the value will be added
  • Research and development
  • Pay wages to or purchase goods/services from an owner or immediate family member of an owner of the venture


  • Grant funds must be matched dollar for dollar by the applicant.  Matching funds can be in the form of cash, line of credit, or in-kind contributions.  Cash contributions cannot include other federal grant funds.  Matching funds must be spent on eligible planning or working capital expenses.
  • Except for independent producers, applicants must prove that they are entering an emerging market.  An emerging market is a new or developing geographic or demographic market that is new to the applicant or the applicant’s value-added product.  The applicant cannot have supplied the value-added product to the new market for more than two years at the time of application submission.
  • Independent producers who are part of the applicant organization must produce at least 51% of the raw commodity that is used in the value-added process, and they must be producing an equivalent amount at the time of application submission.
  • Independent producers must own the commodity from its raw, unprocessed state through the value-added procedures (certain exceptions apply for mid-tier value chain projects).
  • Working capital applications of $50,000 or more must already have a business plan and feasibility study completed that meet the requirements of the Agency (certain exceptions apply for Independent Producers).
  • Maximum planning grant award is $75,000.  Maximum working capital grant award is $200,000.  These limits may change periodically depending on appropriations.

CONTACTS: For more information about this program, visit or contact any of the following:

Matt Harris                                          Ron Firkins                                     David Chestnut                                               Business Cooperative Specialist        Business Programs Director           Business Cooperative Specialist                     2118 W. Park Court                             2118 W. Park Court                        2118 W. Park Court                               Champaign, IL, 61821                        Champaign, IL, 61821                    Champaign, IL61821                                 Voice (217) 403-6211                        Voice (217) 403-6217                     Voice (217) 403-6249                                 Fax (855) 832-8690                           Fax (855) 832-8690                       Fax (855) 832-8690