Webinar: Value-Added Producer Grant Budget Workshop

grants Jan 17, 2024

Unlocking Funding Opportunities with the 2024 Value Added Producer Grant

Elevate Your Agricultural Business with Expert Insights and Practical Tips

As the agricultural landscape continually evolves, securing funding to support growth and innovation becomes increasingly critical. During the recent "2024 Value Added Producer Grant - Budget Workshop," Stephen from Stewards Unlimited joined host Sydney from ChopLocal to shed light on the intricacies of the Value Added Producer Grant and guide agricultural producers through the application process.

Watch the recording below or scroll down for a summary and full transcript.

 

Identifying the Right Grant for Your Needs

Stephen highlighted that different stages of product development demand specific types of grants. The three primary categories you can apply for include:

  1. Planning Grant

    : Ideal for new product development.

  2. New Market Grant

    : For entering fresh market territories.

  3. Market Expansion Grant

    : Targeted at products that have been sold for over two years and are ready for broader market penetration.

Understanding which grant is compatible with your business stage is the first step toward a successful application. For many, this means recognizing where their product currently sits within the market and leveraging the most suitable grant to maximize potential benefits.

Budgeting for Success: Simplify with Averages

A key takeaway from Stephen’s insights is the importance of simplicity in budgeting. By focusing on straightforward benchmarks and averages, he argues that producers can navigate complex calculations with ease. He shared his own approach, using standardized metrics such as the average weight of a steer or the average per-pound revenue of meat.

Stephen also advises aligning budget planning with realistic projections based on three years of historical sales data. This allows for more accurate forecasts over the next five years, promoting ambitious yet achievable growth.

Securing Your Matching Funds

One hurdle many producers face is the requirement to provide matching funds for the grant. Stephen and Sydney clarified that these funds could come from various sources:

  • Expected revenue throughout the project

  • Value of owner labor

  • Market value of raw commodities

Additionally, demonstrating access to funds can be accomplished through a line of credit, bank account balance, or a third-party commitment letter. This flexibility provides a broader range of options for applicants to meet the matching funds criterion.

What the Grant Covers (and What It Doesn’t)

Knowing what expenses the grant can cover is essential to planning your project effectively. Key areas of coverage include:

  • Material Inputs

    : Costs for additional livestock or other raw commodities.

  • Labor Inputs

    : Post-harvest labor costs directly tied to value-added production.

  • Third-Party Costs

    : Outsourced services that enhance your project.

  • Fulfillment Costs

    : Shipping fees and coordinator salaries.

  • Advertising and Marketing

    : Efforts to increase market presence and customer base.

Conversely, production-related expenses such as new equipment (e.g., freezers) or self payments are not eligible. This distinction is crucial for aligning your budget items with allowable expenses and avoiding disqualification.

ChopLocal’s Role in Supporting Marketing Plans

Sydney noted that while ChopLocal excels in assisting with marketing plans, they do not perform feasibility studies. This partnership can significantly boost your grant application, especially in articulating how marketing efforts will drive revenue and customer base expansion.

Maximize Funding Through Separate Applications

If family members own related businesses, they should apply separately to maximize potential grant amounts. This strategy can significantly increase the total funding an extended agricultural operation receives, allowing for more profound family-scale improvements and innovations.

Stewards Unlimited: Expert Guidance with a High Success Rate

Stressing simplicity and realism, Stephen’s organization, Stewards Unlimited, operates with a comprehensive yet straightforward approach that has garnered a 90% success rate in grant applications. By helping clients maintain focus on five major budget categories—material inputs, labor, third-party costs, fulfillment, and marketing—Stephen's methods streamline the application process.

Moreover, Stephen highlighted the timing element, urging clients to begin preparations early due to variable application windows. Stewards Unlimited offers free consultations and grant alerts, making it an invaluable resource for those seeking funding.

Final Thoughts

With the expertise shared by Stephen and Sydney, agricultural producers are well-equipped to navigate the nuances of the Value Added Producer Grant. By understanding grant types, simplifying the budgeting process, ensuring matching funds, and leveraging strategic support, farmers and producers can significantly advance their operations, driving growth and innovation in the agricultural sector.

 

Full Transcript:

Sydney - ChopLocal [00:00:00]:
Welcome, everyone. We're excited to be back with another set of webinars here this spring in the new year. And so we're excited to be joined by Stephen usury tonight of Stewards Unlimited and have him share a little bit about the value added producer grant and then really open it up to discussion and hopefully have you all get your questions answered as you prepare to write your grant this year. My name is Sydney Hadacek. If you haven't joined before, I am a producer support specialist for Chop Local, and a big part of what I do is organizing this webinar series. So I always like to give a little bit of a plug for what we have coming up. And we've got some exciting ones this spring. And so in February, we are going to be doing an enhanced shipping webinar.

Sydney - ChopLocal [00:00:50]:
You may have seen our previous shipping webinar, but we're going to kind of be doing an updated version. And then in March, we will be inviting back Matt LaRue of Cornell University, and he's going to be talking about a study that they did of farmers markets and share some of the data that they gathered there. And then we'll wrap things up in April by talking about artificial intelligence and how you can use that as a marketing tool for your business. So I do see that somebody has their hand raised. So tonight we'll have the Q a function enabled. So if you have questions, just go ahead and throw them in that q a box and we will get to those. But if you want to register for any more of our webinars this spring, we encourage you to do so. The sign up links, you can find those all at sell choplocal.com.

Sydney - ChopLocal [00:01:44]:
And then always just feel free to reach out with any questions. But with that, I will go ahead and pass things over to Stephen.

Stephen [00:01:52]:
Awesome. Thank you so much, Sydney. Let me share my screen. Are you able to see this?

Sydney - ChopLocal [00:02:07]:
Yep, I can see that.

Stephen [00:02:09]:
Awesome. All right, I just wanted to start off by saying thank you so much to chop local for hosting. I've worked with a number of people who have interacted with chop local in a variety of ways, and they always have such great things to say. I'm really grateful for being able to work with you guys over the last couple of years, so I think the value that you provide with these educational events is really tremendous. And so I'm excited to join in on the one, particularly about shipping. And so I hope I see a couple of other people on this call there. Also, as a side note, Sydney, you said my last name correctly. Which 80% of people never do.

Stephen [00:02:48]:
So you can feel very good about yourself for that. But I'm excited to be talking about the value added producer grant, and I'll just get right into it. And so a couple of disclaimers before we get going. It's not officially been announced yet. It's been delayed by everything with the budget. But it was supposed to be announced in November, due in February, but in the past it's been due anywhere from October to May. And so I'm still preparing as though it will be due in February. But there might be a little bit more time if the budget is delayed.

Stephen [00:03:24]:
But everything in this presentation is built around previous application cycles. It tends to be pretty consistent each year, and so we feel confident to prepare the applications ahead of time. But obviously there could be a little bit of a change from year to year. We also did a presentation about the value added producer grant last year and it's linked on this slide. I think Sydney's going to send out the slides after this presentation and so I would encourage anyone to go there and look that provides a more comprehensive overview of the value added producer grant. Today we're going a lot deeper into how I generally will structure my budgets and the work plan in order to maximize the grant and really simplify the application process. And so, happy to talk. Do the Q and A at the end, but go to that presentation if you want to have a broader overview that's more holistic in general.

Stephen [00:04:20]:
So in the 2023 presentation, we talked about why the funding is important, the value added producer grant as your first grant application, how to use your current products instead of needing to create new ones, what the grant application has as requirements, and then how to leverage your application moving into the future. Today we're going to be talking about, again why the funding is important. We'll do a very brief overview of the value added producer grant. Then we're going to do a brainstorm for the budget and work plans. We'll go over stewards unlimited and then we'll have plenty of time for questions and answer sessions at the end. So I think that this funding is important because farmers provide a valuable service. I love this quote from Wendell Berry, who says, good farmers who take seriously their duties as stewards of creation and of their lands inheritors, contribute to the welfare of society in more ways than society usually acknowledges or even knows. And so I think that that is why funding like this matters and why I think it's important that people apply for it.

Stephen [00:05:23]:
Because if the smaller farmers or farmers don't apply for it, then the money goes unused and then it doesn't end up being reallocated in future years. So I think it's important, and the work that farmers do for society is extremely important. It is a great application for your first one. The value added producer grant really is focused on farm growth. The two metrics they use to define how competitive you will be is does a project increase your revenue and does it increase your customer base? They have priority points for a variety of people, including small and mid sized family farms. And they are pretty flexible on whether you use the funding for planning or for working in capital grants, which means just running your business, essentially. And the way that the defined value added is pretty vague. So it doesn't mean that you have to make a jam or have some incredible process, really, it's anything that changes physical state.

Stephen [00:06:26]:
It's produced in a way that enhances value, or it's marketed as a local food. So even if you grow tomatoes and you just sell your tomatoes, if you sell them within your own state or within 400 miles of your location, that can be considered a local tomato, and you would be eligible, considering that a value added product. So pretty much everybody can qualify as long as you present it in the right way. And so, even if you're smaller, starting out, or don't have a lot of value addition for the product, you can still qualify for this program. Other eligibility requirements are that you do have to produce 50% of the commodity. So if you're a processor and you buy all of the commodity from producers in order to create a value added product, you would not be eligible for this. You do have to be a producer yourself. You don't have to produce all of it.

Stephen [00:07:28]:
So if you produce half of the milk that goes into a cheese or into an ice cream that you create, you're still eligible. But you do have to produce at least 50% of the root commodity. You can't use grant funding for things like buying land, buildings, or fixed equipment. We'll go into the budget a little bit more in detail later, but there are budgetary restrictions. Grants can be anywhere from one year to three years. And so depending on how your business is growing and where you want to invest funding, you have some room to play there. And then there are structures that are eligible and ineligible. Most people are eligible.

Stephen [00:08:11]:
Particularly, I usually will see people be individual independent agricultural producers. So if you're a business or a sole proprietor, an LLC that owns a business and creates something, you would be eligible. Cooperatives are eligible groups of producers. As long as you're the one who's producing something, you're going to be eligible. There's also an interesting group for harvesters, so people who fish, as long as you have a permit, you're also eligible for this program. Applications usually have a due date from 30 to 90 days from release. Like I said last time I heard, it was supposed to be due in February. So potentially it could still be a 30 day window.

Stephen [00:08:52]:
Hopefully not. Hopefully they'll give us a little bit more time so that maybe the 60 to 90 days, so that people will have a little bit more time to flesh out their applications. But I would recommend starting now. We're a professional service and we've done a lot of these, but it still takes us a pretty long time to complete one. And that's still with a fair amount of involvement from our clients. And so doing it on your own, it will take a little bit more time. It's very doable, but you do have to be able to invest the time. They also require a funding match.

Stephen [00:09:26]:
So it's a one to one match, which means that you would pay 50% and the grant would pay 50% of what the project is. There are a couple of different ways to structure it, but essentially it means if you apply for the full 250, you also need to provide 250, and that would be a total project. That's $500,000. There are a couple of different matching fund options. I'm not going to go too deeply into them now, but you can come back and read this slide or watch the previous presentation in order to see you can use cash. So just use cash flow from your business. You can use the value of owner labor. If they're going to spend 500 hours on the project and their time is worth a certain amount, you can use that value, or you can use the market value of your raw commodity.

Stephen [00:10:15]:
So if you were going to process beef into beef cuts, you would use the market value of one of your steers on the day that you would take it to market, you'd try to approximate that value, and then that would be considered your match. And as long as you tie everything back into revenue and customer growth, you really have a lot of options. The value added producer grant, it really supports a lot of big upfront investments, as long as you can show how it's going to eventually benefit your business. So even if you're just growing the volume of product that you process and sell, and you do maybe some marketing alongside of it, or you show how you're going to be reaching new people. That alone really will increase your revenue and customer base. And so outside of that, you don't have to have significant increases. You don't need to be doing anything too crazy. It really just all ties back into these two things.

Stephen [00:11:12]:
So that's a broad overview of the value added. Again, if you've never heard of it before and this is all new, I would encourage you to go back and look at it and then come back and watch this again. But we're going to move on a little bit so that we can get a little bit deeper and have plenty of time for questions. So whenever I work with people, I see that the majority of their budgets will come from five basic categories. And oftentimes I will do like a financial analysis with people before we get too deep into the value added project itself, because we want to understand, is the product financially viable? Right? Like, are you actually making money when you're making this product? And sometimes we found out that the person's not really making money, and that's an important thing to figure out. But the five big areas that are both eligible for the grant and are going to be pretty big on your costs are going to be these five things. They're going to be your material inputs, your labor inputs, any third party costs for things like processing, rent or storage, then you're also probably going to have fulfillment costs and then advertising and marketing. So those five tend to be the big ones that are both eligible for the grant and a major part.

Stephen [00:12:31]:
There are going to be other ones outside of that, but these are the five that I would really recommend honing in on. So I have a couple of example slides of just things that I frequently see and are easy to quickly fill up your budget, right? So if you're trying to get to that $500,000 project mark, these are the things that will take up $100,000 over three years. And then if you have a couple of these things, it will really allow you to reach that maximum quickly. So you have your material inputs that could be your cattle, sheep. You want to make it specific. So say your pasture raised pigs. You could have your swell oysters or your organic zucchini. You also want to think about any materials that are physically a part of your product.

Stephen [00:13:20]:
So they could be jars, they could be the clamshells that you put your product into if you put it into a bag. If you use clips, all of these are the material supplies or the inputs that you're going to be using. Also, a lot of people put labels or stickers you need to understand what the cost and what the requirements of each of these things is. So how many jars do you need based on how many pounds of tomatoes you're going to be harvesting? Right. Or if you're going to be processing cattle, how many labels on average, are you putting per pound of meat or per steer on average? So you want to kind of start to break down and see how much of this thing do I need? And then how much does it cost? Each jar might cost you jars per pound of tomatoes, and then it's much easier to scale up and down based on the volume that you're anticipating for the year. A couple of examples for your labor inputs. It's important to note that you cannot use any production or harvesting labor. And so it can't be anything having to do with raising the animals or going out and weeding the fields or harvesting and collecting.

Stephen [00:14:37]:
But after the commodity is already harvested, it's in a crate or a tote and it's ready to. Either you could choose to sell it wholesale, or you can do some kind of value addition to it. You can do some kind of secondary processing. That's when you can start using labor. So it could be driving product to a processor. I may have actually made a mistake there. I think the driving product to a processor is not eligible, but picking up the product from the processor is. I think, I was not thinking very clearly, but if you do the processing for the commodity in house, you can pay for the labor of the people who are doing the processing.

Stephen [00:15:20]:
So I've worked with people who do. They have their picks slaughtered and then return the meat, and then they do the curing, and they make, like, bacon and sausage and value added pork products. And so all of that labor can be covered by the grant. You can do logistics and fulfillment. So the person who's actually, yes, this is what I was thinking, the driving product to the processor. I think you can cover the labor, but you can't cover other expenses related to it, but logistics and fulfillment. So if you have somebody who coordinates dropping off at the processor, picking up, and then does fulfillment at your place, if you ship out any materials or if you are taking it to somewhere like a farmer's market, that person's salary can be paid in order by the grant because they're coordinating the sale and the management of this value added product. You can also pay for sales, marketing, and customer relationships.

Stephen [00:16:21]:
So a sales manager, somebody who does online marketing, or people who manage relationships and follow up and ensure. So a lot of different labor costs can be covered, and this is pretty common. It's a good way for a lot of farms to invest for the first time in bringing in somebody who's not part of the family. And they can do a variety of these things. They could both do fulfillment and sales, or you can hire two different people to do part time, a variety of these tasks. So this is a pretty common one that will be a lot of people's budgets. Processing is another really big one. Oftentimes this is for people who are beef or animal agriculture.

Stephen [00:17:07]:
This is one of the biggest ticket items. So you maybe pay your processor $1,000 per head to process your beef into beef cuts, and all of that can be covered by grant funding. You may also need to pay for rent. So if you do the processing in house, you can pay for the labor to do the processing. You can pay for the upkeep and maintenance, utilities, any of the expenses related to processing you can cover. If you have to store product either at your location or at a third party location, you can pay for your rent. You can rent out freezer space. It's important to note that you can't buy new freezers because that's considered equipment, but you can rent space if it's needed.

Stephen [00:17:54]:
You can also rent retail locations if it's an important part of your distribution or your sales strategy. It's pretty flexible for renting, pretty much anything, but it's just purchasing these things that you're usually not allowed to do. I may go back for a moment and mention that the material inputs, the cattle, sheep, pasture raised pigs, oysters or zucchini, any of these things, the grant can also pay for that extra 50%. So if you think that you can sell 100 head of cattle worth of beef for whatever reason, but you can only produce 50, the grant can actually buy that additional 50 head of cattle, and you can buy them at market rate from another rancher, and the grant can do that. So it's a really nice way for people to be able to take their current success and invest in something like marketing and expect to grow, but still have the flexibility of buying additional inputs instead of having to invest a lot in raising all the animals from day one and not being as certain about the effectiveness of the marketing. The ability to raise more animals and then purchase ones with demand has worked out for a lot of people that I've seen, so it both can take up a big portion of your budget and it can ease the stresses of growing through marketing. Fulfillment costs are another big one. I've worked with people who will completely outsource all of their fulfillment, they like doing something like they're expanding their shipping strategy and they know that it's complex and so they would rather pay a third party to just handle everything for them.

Stephen [00:19:49]:
It's pretty expensive, but a lot of people will do it. Alternatively, you can use the cost of buying the shipping boxes. Coolers, dry ice liners, all of these are shipping supplies. All of those can be covered by the grant. It does end up needing to be broken down. So this is another plug for the shipping webinar, because this is one of the biggest things that I work with a lot of people and they don't really know, because if you want to include it in the grant, you need to understand, what are my boxes? How much does it cost per box? How many pounds can go in one box on average? So you need to break down things and understand how many boxes you would need in order during the grant project and how much does it end up costing. So working through that with people and can be really difficult. So going to the webinar would be extremely helpful to understand how to put that into something like the value added producer grant.

Stephen [00:20:48]:
You can also cover your shipping fees, which from UPS or FedEx can be pretty significant, especially depending on your location. The grant can cover those. Or if you're hiring a third party just to deliver it locally, rather than shipping it through the mail, it can cover something like that. If you just have a fulfillment coordinator who's on your staff, it can cover their salary. So anything related to the sale or distribution of the product is also generally covered. The last big category that I usually see is advertising and marketing. This oftentimes is a pretty big one because a lot of people have a really great product. They've worked on it for two plus years.

Stephen [00:21:36]:
They've seen a lot of growth, but it's all been organic, word of mouth, and they are interested in investing in marketing in order to grow the demand and reach more customers. And so the expenses that I'll usually see are things like updating a website, helping to offset management fees, paying for farmers market fees, doing paid advertising, whether through Google, Facebook, or some other online forum, being able to hire an advertising agency, somebody who can actually come in and do the marketing for you. You can either hire an agency that's a third party, or you can hire somebody onto your own staff who can come in and manage it for you and their salary could be covered. You can also invest in training programs. So I've seen people buy things where it's a couple of hundred, couple thousand dollars to buy the program, and then you're in it for six months. And then you've learned to be able to do the marketing yourself. It can offset those kinds of costs, and it can pay for things like software subscriptions, such as shop Local, where I think you pay a monthly fee in order to be part of the community and receive benefits. And so it can pay for those kinds of subscriptions, whether it's shop local or other kinds of sales and marketing softwares.

Stephen [00:23:02]:
Big ineligible budget items that are pretty common are you can't ever pay yourself, you can't ever pay a family member or anybody's business. So you can't rent your building because your other business owns the building. You can't rent it to yourself through the grant, that kind of thing. You can't rent your brother in law's truck in order to do the grant, or you can't pay your sister to do the marketing for you. Unfortunately, even if she does have a professional marketing firm, they consider it a conflict of interest. And so you can't pay any family members and you can't pay your own businesses, even if it's a different business to do anything. You also can't do anything related to production. So you can't buy feed, you can't put up fences, you can't pay for labor related to growing or harvesting the commodity.

Stephen [00:23:56]:
It all has to start at the point of it's already been harvested, it's already been produced, and it's ready to be sold, or it can be further processed and further enhanced in some way. The last big one that I usually see is you can't build any new structures and you can't buy anything that's worth more than $5,000 per unit. Right. So you can't buy a truck, you can't buy a freezer, you can't buy equipment. Anything that's over $5,000 is considered equipment. And so it's really more these small supplies or services or salaries that this grant is focused on. So usually I create a work plan based on estimated growth. So with these five things, we also then look at three years of sales data.

Stephen [00:24:48]:
So we work through with clients and we say, looking at your records and we want to look at what are the last three years of sales volume, your sales revenue, the number of customers that you've had each year, and the product pricing. So all four of these numbers should be specific to the one value added product that you want to do. So even if you have a whole farm and you have a CSA box and you sell pork and you sell beef and you do baked goods. Really, you would only want these four numbers for your beef in particular or for your CSA box in particular. And each year you can compare them in order to show a percent increase year by year. And see, is this particular product growing? Regardless of whether the rest of the business is growing or how financially profitable you are, is this one product in isolation profitable and growing from there? Usually you'll say, usually you want to apply for it because it's having some success. So you can see over the last three years, yeah, it's been doubling every year for the last three years, and it's really growing a lot. And so now we want to look out into the next five years, looking at your market, you want to predict how will those four numbers grow over the next five years.

Stephen [00:26:10]:
So a lot of people work with a business planning organization in order to make realistic projections. Numbers are never perfect, but I find that a lot of producers can make an educated guess. And as long as you can back it up, the value added producer grant can support some pretty ambitious growth. So a lot of times, as long as you can say, here's our market, this is why we think we're not crazy to say that we're going to be growing this much. As long as you can make a good case, you generally don't have to worry about ambitious growth. Um, and then after you understand where you think you're going to be going over the next five years, how these four different numbers are going to grow over the next five years, you can also estimate your input requirements. Because if you understand those five categories per pound of commodity grown or per steer, then you'll be able to understand, well, next year we're planning to harvest 50 head. And if we understand how much do we pay in processing per head, how much do we pay for logistics and transportation, it becomes a lot easier to predict where you'd be able to spend different amounts of money in the budget.

Stephen [00:27:38]:
Although prices always increase and the market is always subject to change. Usually I'll pull together budget numbers which assume that prices are consistent. I make sure that I add a disclaimer and saying that we're predicting that the price of processing won't change over the next five years, which it definitely will. But you can say that if it changes, we'll be able to increase our pricing to reflect the change or the increase in price. And as long as you're showing that you are relatively profitable, the value added usually will accept that, and I've not ever had much pushback. When you do this, though, it does make it a little bit less accurate than an actual business plan or an actual financial forecast that professional business consultancy or business planning organization would pull together. And so when you use these, you do have to update them more frequently because there's more assumptions that go into the numbers and you don't want to just kind of assume that it will remain constant. It's more.

Stephen [00:28:49]:
Things are subject to flux. When I'm going through this process, I always will use a lot of averages in order to simplify the budgeting process. So an example would be that you could say an average steer from your ranch is 1400 pounds. You might range anywhere from 1200 to 1500, or there are some that are smaller than that. But what you want to do is be able to say, on average, we harvest at 1400 pounds. And so then you can say, every steer in our project is going to be 1400. Even if it's not, you're going to say it's just going to average out to about 1400. You then say maybe the average pounds of beef after harvest is 400 pounds.

Stephen [00:29:32]:
Of course, it'll be more or less, depending on the weight of the animal. But on average, you're going to get 400 pounds of meat per steer harvested. Then you look at your average revenue per pound. Of course, depending on the cut of the meat, it's going to be much lower or much higher. But there are tools provided. I think Cornell has a pretty nice one where you can put in how many pounds you get of your hamburger and how much you get of your sirloin and how much you're charging for each, and it'll spit out an average price per pound. And so then this makes it very clear, rather than trying to manage all those numbers in your calculation, you're just saying $15 on average per pound. That means that if you get 400 pounds of animals or of meat from an average animal, and your average pricing is $15 per pound, that means you're generally going to receive $6,000 per steer that you harvest.

Stephen [00:30:34]:
It's back of the napkin. It's not precise, but it's good enough. And it shows the gist of what you're trying to communicate. And this is generally how you can really reduce the amount of time that you spend and the confusion on a budget. From there, you can move down and say the average cost of processing, you've already said that it's 1400 pound steer. And so now the average cost of processing that steer might be 1500 I've seen this number vary quite a bit depending on the location, but you can just standardize it. Most processors will have a per pound price, and so you can base it off of your average steer. If you're choosing to do something like shipments, then you would be able to move on and say, how do we standardize the amount of shipments that we're going to be sending out per steer? You can say that on average, our shipment size is about ten pounds.

Stephen [00:31:29]:
This will also help you build out your projections for what you're going to be spending on boxes, dry ice, how much you're going to pay in your shipping fees. Because you can say, we're probably going to sell some that are bigger, some that are smaller. Some people choose to only offer one size. I think that's a really nuanced decision to make. But when you're doing the projections, this can help you get into the ballpark of how much you would need to spend. So you could say, on average, maybe we're sending ten pounds per package. That means that we have to have a box of this size, and it means that we need to send out 40 packages in order to ship out a full steer's worth of beef. Because it's ten pounds per package and 400 pounds per steer, then you know that you need to ship out 40 different packages, and that's per steer.

Stephen [00:32:21]:
Based on the number of steers that you're planning to process and sell as part of the grant, you can then quickly come up with an estimate for what your shipping budget might look like. I like to create benchmarks for easy calculations in general. For the beef example, I'll frame everything in terms of per steer. So even though you can say you're paying this much per pound, I always try to move everything back and say, how much am I paying per steer? Because then as I'm looking at my budget and I'm scaling it up and down, I can know if we add one additional steer in next year or the year after, that will add this much in budget cost and it will add this much in revenue, and then it's a lot easier to move your budget up and down based on the number of steer that you're going to be including in the grant project. If we assume the 40 packages in order to ship a steer, it means if you had $6 per package, instead you're viewing it as $240 per steer. Or if your shipping fees are $23 per package, 920 per steer. This does assume 100% shipping, which is another factor that a lot of people won't. That you might not do, but it allows you to scale up and down without getting lost in the weeds.

Stephen [00:33:49]:
So usually what I'll do from here is I'll look at it and I'll look at my five big categories. I use the idea of what is our projected growth we're going to be processing. Last year we processed 40 head. Next year we think if we had the stock and we invested in marketing, we could sell 60 head worth of product. We want to grow by 50% next year. We think that's realistic. You can use that 60 number in order to fill out the budget and say, all right, we already know that every head is this much in processing, it's this much in shipping fees and this much in shipping materials. And you can easily go up and down and look at the next three years.

Stephen [00:34:36]:
Summing together the categories, you can see each year how much total would be eligible for the grant. And then depending on how much is eligible each year, I'll usually decide then how long the project should take. So we know that there's no downside to applying for the full grant amount. Some grants, they like it if you only apply for a smaller amount, and maybe they grade you differently. If you apply for a small amount versus a big amount, value added producer grant does not matter. They grade all of the applications, and then they start at the top of the list and go down. And so as long as you're not just adding things that aren't relevant for your grant, there won't be any risk to having a full grant that applies for the full 250. So, generally, I work with people in order to try to maximize and create projects that are $500,000 in scope over three years.

Stephen [00:35:35]:
But if you can do it in two years, that's better for you because you're allowed to apply for multiple grants as long as you're applying for either a new product or a new customer base. If you finish your grant in two years, that means the third year you'd be able to apply for another one. So there can be advantages to trying to do it faster if the costs involved in your operation are sufficient. And it's also easier to move money up or down. So you can spend it faster than you originally anticipate. If you think you're going to spend the money over three years, but then you have a lot of demand over the first year, then you can actually spend the money a little bit faster and they don't really have a problem with it, or you can delay it a little bit and take a bit more time if you need it. I usually, though, will tend to opt to have a simple budget that lasts three years rather than something complex that only lasts for two years. So if you are trying to include strange costs that the reviewers are not familiar with, and you're finding that you have to explain it a lot in order to say, why do I need this strange piece of technology that doesn't really fit very well with my initiative, then that can be something that will get you marked down and you're spending a lot of time trying to justify it.

Stephen [00:37:05]:
And then when you're administering the program, you have to manage a lot of little budget items, which can be tedious and not really good for either you or for your grant administrator. And so generally, if you can keep it to those five categories and have big budget items for those five categories, that's what I've seen be the most successful. When you start having 20 different things, that's when people will start to nitpick a little bit. And so generally better to keep to the five big categories. A brief overview about our organization. So we've seen a lot of success helping organizations. I skipped over. We help small farmers by identifying and evaluating new funding opportunities.

Stephen [00:37:57]:
We help design competitive project which further farms goals and then win funding through proposal development. We like becoming a one stop shop for our people, and we like connecting them with other service providers and being a network connector just in time, being there at the right time with the right resources. So we've helped secure millions in USDA funding, including ran Lu Dairy, just under four hundred k for yogurt production. Barreras family farm in Nebraska has actually won. I didn't update this slide, but they've won two value added producer grants, so just under five hundred k. And then in their second year of farming, Riverview Farms received a $50,000 grant. So you don't have to be a big farm that has a long history. You can be a relatively young farm and still be competitive for this program.

Stephen [00:38:52]:
The other thing that we do a lot of is helping people identify new opportunities. So we work with people throughout the agricultural supply chain, all throughout the United States. We're based out of Tennessee, but we work with people across the US. And because we are identifying these things already and doing the work, we like to share these opportunities for free with other people. We have a grant alert emails that we send out, and so if you're interested in receiving an email, whenever there's a grant that might be applicable for your business, we have a verification survey that you can take and you tell us a little bit about if you grow organically, if you're a woman owned business, if you're in Illinois versus in Texas, and then we send you opportunities that we think would be a good fit for you and then happy to share the love. We also frequently will post a lot of these opportunities on Facebook, Instagram and LinkedIn if you would like to connect with us there. So we're doing the work anyways. We want the word to get out and would love to share it with you as well.

Stephen [00:40:02]:
So next steps are know you've already done the hard part of seeking new information, but feel free to check out my website. Reach out. We're happy to discuss the value added in particular. I'm excited to get into some of our Q A sections, but yeah, feel free, if anything was unclear, to reach out as well after this.

Sydney - ChopLocal [00:40:24]:
Perfect. Thank you, Stephen. So now we'll kind of move into our Q A section, and I know that a few people have submitted questions as he was speaking, so feel free to keep doing that and we will just kind of start to move through them. So one of the questions that I wanted to ask is, how is the application different if it's for a new product versus one that you've had for a while? Is it best to be working on a new product?

Stephen [00:40:55]:
So I wouldn't say that it's best to be working on a new product. There are some differences in what the application requirements will be. So there are three different types. If it's a brand new product, you can do a planning grant, which means you can work with a business planning organization or a marketing organization to create a business plan or feasibility study. That's one kind of application. Another one is a new market, which means maybe you don't want to plan. You do want to spend money to implement and to pay for labor, pay for materials, things like that. But if you haven't sold this product for two years, then you need to have a feasibility study completed by a third party.

Stephen [00:41:43]:
And so you would need to have that at the point of submission. And that shows that somebody other than you thinks that it's a good idea and that it's a really strong investment. And so I would recommend if you're wanting to go that route, you reach out very quickly because most of the times those organizations take longer than a month in order to develop something like a feasibility study. And so it can be a tight timeline if you want to get it done before the grant. The third option is if you've sold the product for over two years, then all you have to have is like a marketing strategy, right, which can vary in quality, but it just shows how you're expanding. You already have sales data for the product, you already can be reasonably confident that you know what you're doing, and now you're just trying to get your product to a new market, which means you're just trying to expand into a new metropolitan area, or you're trying to open up a storefront, or you're trying to start shipping online instead of just in person. And those ones, you have to have a marketing strategy, but you don't have to have quite the same feasibility study. So generally when I work with people, I try to find the things that they've been selling for over two years because it's far simpler to apply and you already have a lot of data to back up your assertions.

Stephen [00:43:08]:
I also view it like money into your business is money into your business. And so if you get a 250K grant for a product that's over two years, you can turn around and use that extra cash flow, that extra profitability to fund the, the new product as well. So it's compensating or reimbursing you for things that you probably would have been spending money on anyways. So now you have the extra liquidity to invest in this new product, and then two years later, you've already sold that new product for two years and you're able to then apply for the same market expansion project for that one.

Sydney - ChopLocal [00:43:51]:
As a little side note, you did mention needing a marketing plan. Chop local can help with those. If that is something that applies to your business, we can't do the feasibility study. But if you do need a marketing plan, we can help you work on that. Another question, and hopefully I word this correctly. So if you're moving to pasture, raised layers from conventional chickens, does that count, like starting the organic vegetable production? So would movable fencing and housing be eligible in this situation?

Stephen [00:44:28]:
So you can't cover anything related to production. So movable fencing and housing are related to the production of the eggs. What you could cover, though, is your cartons for your eggs. You could cover the labor for somebody to sell it, to take it to the farmers market. You can pay for marketing of the eggs, things like that. You could purchase additional eggs to add to your product and then sell it, things like that. But it can't be anything related to before the eggs are picked up out of the house and put somewhere. You can't cover any of those costs perfect.

Sydney - ChopLocal [00:45:07]:
So this is maybe kind of your opinion here. So is it worth the time to go for a $20 to $30,000 grant? It seems like this is a lot of big budgets.

Stephen [00:45:19]:
I would say it's worth it to go for it. I would say that the process that I go through is very comprehensive, and so I kind of do overkill every time. Right? So I do more than is asked for in the grant, because if somebody's paying me to do their grant for them, I don't want to miss out or make a mistake that would cost them the grant or not include enough detail. So I put in a whole lot more effort than is probably required. You can pull together a grant and be awarded without working with anybody like me. And I would encourage you, if you're doing a 20 or 30k grant, to apply under your own. I'm happy to chat with you, too, and help kind of like, give you some tips about it and then have you help make sure that you can have something that's not disqualified right away. But that is kind of the pushaway that I give with based on fees that you might pay me or pay another grant writer.

Stephen [00:46:26]:
Yeah. Generally you might want a bigger grant in order to get a better return on your investment.

Sydney - ChopLocal [00:46:33]:
Can family members with different but related businesses in value adding apply together, or should they apply separately?

Stephen [00:46:42]:
I would say that they should apply separately. In general, it does depend a bit on the situation. The person applying needs to be the one who's the producer. So if only the person producing who owns the commodity through production can apply for the grant. And so if all of you produce independently of each other, I would say you all should apply individually, because then you can get 2525-2525 otherwise, it would just be whoever owns the commodity can apply on their own. You can apply together, but there's been very few circumstances I've seen where it's better to apply together because they don't really have a mechanism for prioritizing that kind of application, whereas many grants do. I've not seen it for this one.

Sydney - ChopLocal [00:47:38]:
So this person operates under retail exempt. Are they eligible for the grant?

Stephen [00:47:51]:
I don't really know. I guess I'm happy to check into that. I'm not really sure how they relate, so it might just be unclear. I might not understand retail exempt as well as I think.

Sydney - ChopLocal [00:48:06]:
Okay, I'll make sure this person gets in contact with you.

Stephen [00:48:11]:
Okay. Yeah, I can reach out and ask.

Sydney - ChopLocal [00:48:15]:
Perfect. For the cash match. Do you have to have the cash on hand at the beginning, or can it be expected revenue throughout the project.

Stephen [00:48:24]:
So it can't be expected revenue. Unfortunately, you don't have to have it on hand at the beginning. I think the trick here is that it can either be a line of credit, it can be cash in a bank account, or what I've seen a lot of people do is they get a letter from a third party that says that they will make the funding available for the project. So if you have, Grandma has an IRA, her retirement account, that might have a chunk of money sitting in it, she can say that she would make that money available. And then because you're not going to be spending the full grant amount on day one, you're likely going to be spending it little by little. You never actually have to receive any money from the person who says that they are endorsing the project. You can spend a little bit and then get reimbursed by the grant, and then you have that money to spend a little bit and then get reimbursed by the grant and spend a little bit and get reimbursed. And so each month you can get reimbursed.

Stephen [00:49:27]:
And so you can cash flow the project that way as well. But you just have to have some way of saying that you have access to 250, which is kind of outdated. They're going through a process right now where they're trying to refine the program. And I think this might be one of the areas where they make an update that very few people who need this grant have access to sitting in a bank account.

Sydney - ChopLocal [00:49:53]:
So this one is asking for an example. Can you give an example of a meat slaughter or processing facility centric grant application that you've worked with or that you think might fit this grant?

Stephen [00:50:08]:
Me slaughter and processing shop centric grant application. I have worked with a lot of meat producers. Right. And so I think the downside of what you're asking is that if you're a meat shop and you don't produce the animals, then you would not be eligible. So you can't buy meat from a processor in order to make a value added product like sausages, and then that be eligible for the grant. If you are both a rancher, you produce your own animals and then you also do the butchering and processing that is eligible. And I've worked with people like a chicken processor up in New York that they raise around 3000 birds a year, and then they process them in house, they rent out a processing space, they do the processing for the birds, and then they sell them. And so all of that was covered by the grant.

Stephen [00:51:14]:
But you do have to be the one who's actually producing the animals.

Sydney - ChopLocal [00:51:20]:
Okay. If I want to buy a storage container to house my tomato and cucumbers for packaging and marketing, can I count that cost as my match and then get matching funds for shelving, wiring and cooling? Long one?

Stephen [00:51:38]:
Yeah. Technically. No. Actually, technically, kind of, yes. It depends a bit on your role development office, because a storage container is probably less than $5,000. And so the USDA defines equipment as something that is above $5,000 and has a useful life of longer than a year. And so it depends a bit on your local rural development office. I would recommend reaching out to them and asking, do you think this is equipment? Or can I say that this is a logistics supply? Right.

Stephen [00:52:16]:
If they say that you're allowed to classify it as a logistical supply, then you could get a storage container, and then it would also cover the shelving wiring. Not so much. That's more of a construction cost and cooling. It depends. Probably not. But a lot of these infrastructure and building things are usually not going to be eligible. But you could pay for a lot of the shelving, and there are a number of other things that you could probably cover with the grant. It just might not be that infrastructure cost.

Stephen [00:52:55]:
Alternatively, though, if you get the grant for whatever amount, and you take a grant agreement to a bank and you say, hey, the US government has just said that they will give me $250,000 over the next three years, can I get a line of credit or an equipment loan? Most banks are going to be okay with that because they know that you will have financing from the grant, and so you would be able to use that to leverage to get financing from somewhere else that could help pay for some of these infrastructure costs. So that's one approach that I've seen people take in the past.

Sydney - ChopLocal [00:53:36]:
Okay, another question. If we already have some minimal sales in a certain area, would that disqualify us?

Stephen [00:53:49]:
Um, I'm not sure exactly what the question is. Having sales does not disqualify you. If anything, having sales makes you more competitive because they want to see that you already know what you're doing. You have skin in the game. They don't want to take a risk. A lot of grants are like giving because somebody's in a bad situation, but this grant is not trying to help out somebody who's not having any luck. This grant is to say, you're doing well, let's make you do even better. So if that's how you mean it, I would say that having sales is a good thing.

Stephen [00:54:29]:
But even if you do have minimal sales, as long as you can show the projections and say, maybe we haven't had great sales over the last couple of years, but based on these market trends and these numbers and these new customers, we think that we will be growing by this much over the next couple of years. And as long as you can substantiate that somehow, you can still be competitive.

Sydney - ChopLocal [00:54:53]:
Okay. As a processor, who buys the animals, keeps them for a couple of months, and then processes them, does that count as a producer or just a processor?

Stephen [00:55:07]:
So this is a great question. I've seen people who finish cattle for three months be successful. So people who. They don't raise them from calf, they buy cattle, they finish them on hay for three months, and then they send them to the processor. In this example, they weren't the processor themselves. But I don't think that would be a problem, you being the processor versus sending it to a processor. They don't give a very specific deadline. One of the challenges with the value added producer grant is that it's evaluated at your local rural development office.

Stephen [00:55:45]:
So a lot of this is like, does your local rural development office think that that qualifies or not? So they're the first people who say yes. No. I think that you could qualify, though.

Sydney - ChopLocal [00:56:01]:
Okay. Can the value added producer grant be used for non food products like fiber or flowers?

Stephen [00:56:15]:
Yes.

Sydney - ChopLocal [00:56:17]:
All right.

Stephen [00:56:18]:
I think so.

Sydney - ChopLocal [00:56:21]:
I do. And I'll just maybe start this question. But if you want to expand on it, you can. There are a few questions about what Stephen charges for this, and I encourage you, if that is your question, to reach out to Stephen on this contact form that he has so that he can kind of give you an answer that applies to your business isn't just a generalized answer. So feel free to expand on that if you want to.

Stephen [00:56:52]:
I will say that one of the unique things about my business is that we charge flat fees upfront based on the level of effort. So you may hear about some grant writers that do a percentage of the award, but for a number of reasons, I don't like doing that. It feels a bit unethical to me, because it tends to be a much higher percentage where it seems like you're not taking a whole lot of risk up front, but then you pay much more when the grant is awarded. So we've always adopted the model of we are upfront, we do this work for you, and then you own everything that we create. So if you don't like us, then you don't ever have to work with us again afterwards. And you own the materials and you can do whatever you want with them instead of being obligated to continue to work with us because we work on a percentage basis and we develop the materials that are then owned by us instead of by you.

Sydney - ChopLocal [00:57:53]:
To that point. Are your services booked out for this next grant cycle or are you available to book new clients for this grant we are.

Stephen [00:58:04]:
Considering? I'm very cautious because over the last year I've heard from multiple sources that it's going to be due in February. And so I'm preparing to not really take on too many new clients because if it's due in February, there's not going to be a whole lot of time to ensure that we have a quality product and enough time that we can really make sure we have a good product. But if it ends up being due later, then we probably will end up doing some more. So I would love to talk to anybody who's interested. Happy to help point you in the right direction, even if we don't work together. I think this is an amazing program for farmers. Love getting the word out. So happy to share what I can.

Stephen [00:58:49]:
We also operate on surge pricing, which means that our most expensive prices right now, so we charge the most for people who want to start the month that the application is due. But the week after the application is due, we start working on applications for the next year. And that comes at a significantly lower price than the people who are signing up right now. So even if we don't end up beginning to work together this year, happy to have a conversation about what it might look like to support an application next year at a lower price.

Sydney - ChopLocal [00:59:26]:
If you feel comfortable, go ahead and share what the success rate is on acquiring this grant.

Stephen [00:59:32]:
So we have a 90% success rate. Unfortunately, the ones that we've not gotten were because the unexpected scores at the state level. And so we've gotten a lot better at reaching out to the offices where we are submitting and talking through the applications with the local representatives because they are the first people who look at it. Your application gets three scores, one from your local office and then two from the federal level. We always do really well at the federal level, but sometimes the local one can hurt us, which is because in many cases they don't get that many applications.

Sydney - ChopLocal [01:00:16]:
Do you guys help handle the reporting side of the grant after it's been awarded?

Stephen [01:00:21]:
To be honest, not usually. We've offered sometimes, and a lot of times, people who need help, we've helped them out a little bit, but the reporting is pretty simple. It's also highly dependent on your local office. I've had some rural development offices who they say, just email me all the receipts, I'll fill out the forms for you and we'll figure it out. No worries. Other ones, they need you to fill out the form. Exactly. And send it in.

Stephen [01:00:50]:
Already done well, so we don't include that as part of our fee because we found that most people don't need it. Or if you do, you just need help kind of getting it kick started, and then you can carry it on from there. So we're happy to help you kick start it for free and then from there. Usually most people can handle it.

Sydney - ChopLocal [01:01:15]:
If we win a grant, when do the funds become available?

Stephen [01:01:19]:
This is somewhat subject to the government. Usually we see it come in about six months afterwards. So for the ones that we are submitting, we were anticipating submitting them in February, and we have the project starting in July. And so we say about a six month break between when you submit your application, you might hear back after three or four months, and then it might take another month or two before you actually get to start spending the money.

Sydney - ChopLocal [01:01:55]:
Okay. Um, so I'm going to kind of ask this one, but I feel like a lot of it has kind of been discussed throughout the presentation. So is there a place where we can review the questions from a previous grant? And I guess I say that because, yeah, I think that a lot of the questions do repeat themselves. And a lot of the things that Stephen talked about, like those are the things that you can start preparing for even before the grant comes out. But feel free to talk more about.

Stephen [01:02:33]:
I am kind of like a toolkit. It should be available from. If you just type in value added producer grant into Google, the rural development value added producer grant webpage should have the toolkits from last year. There are a couple tabs, and so it's like contact, how to apply. You do have to find those tabs, and I think it's on one of those where it'll have a bunch of links, and one of them is called either a worksheet or a toolkit or something like that. And that generally is 90% the same every year. I would say the biggest part of that, it's many, many pages, and it can get overwhelming. But the biggest part, usually what we spend 70% to 80% of our time on starts in section six, and it's 6.1.

Stephen [01:03:29]:
It's like the nature of proposed venture, and it has four different sections where it says, talk about the technical feasibility, the financial feasibility, the management capacity, one other thing. And then it has a work plan and a budget. And that's really the big pieces where I would start. If you start at the top and work your way down, you'll just get exhausted. And so it's best to start in section six, because that's really where you'll figure out how to do the work plan and the budget, which is also what we started on here today. And I would recommend starting out with your work plan and your budget first.

Sydney - ChopLocal [01:04:11]:
Okay. Well, with that, maybe we'll wrap up questions as far as things go from our end. I will go ahead and send out the slides in the recording within about 24 to 48 hours here tonight. If you have any other questions about the grant specifically, though, I encourage you to reach out to Stephen. They do great work at Stewards Unlimited and can really be helpful in the grant application process. So, Stephen, if you have anything else to add, go ahead.

Stephen [01:04:44]:
I would just say, thank you so much. This has been great. I love talking about it. You may have been able to tell I get quite verbose talking about the value added producer grant, so don't hesitate to reach out. And I'm happy to talk longer with anybody. And we do free consultations, so really reach out, even if this isn't a great fit for your organization right now. Like I said, we do the grant alerts, and if I talk to you, I'm going to take a lot of notes, and then I'll have an idea of what other grants would be relevant for you. And like I said, it's a no cost newsletter, so we can send them to you as they come across our desk.

Stephen [01:05:23]:
And then you just are exposed to more opportunities. So love to chat more with anybody.

Sydney - ChopLocal [01:05:30]:
Awesome. Well, thank you guys for joining us tonight. Hopefully we see you again here in the upcoming months and have great night.

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