Producers wear many hats throughout the year including job creator for the local grain elevator, feed supplier, implement dealer, insurance agent, and seed and fertilizer companies. This role of rural economic developer can increase greatly when producers commit to adding value to the commodities they grow by creating new business ventures on the farm.

For the past 15 years USDA Rural Development’s Value-Added Producer Grant (VAPG) program has provided funds to farm-related businesses to help them grow, diversify and create jobs in rural America by turning raw commodities into value-added products, expanding marketing opportunities and developing new uses for existing products.

PROCESSING: Converting an old vacant building, once used by a lumberyard into a modern milk processing facility and retail store, was a large undertaking for Dan and Debbie’s Creamery.

“More than $570,000 in VAPG funds were awarded to six Iowa businesses in 2016,” says Jeff Jobe, USDA Rural Development’s business and cooperative programs director in Iowa. “Generating new products, creating and expanding marketing opportunities, and increasing producer income are the goals of this successful program.”

Capturing more value
Dan and Debbie’s Creamery Inc., a family-owned business in Ely, a small community near Cedar Rapids and Iowa City, is a recent VAPG receipient. Last year the business received a $151,544 working-capital grant to assist with product expansion and marketing efforts for its expanding line of cheese curds, ice cream and nonhomogenized whole milk. Two years ago the creamery also received a $5,870 planning grant to help develop a business and marketing plan.

Dan and Debbie Takes have been milking cows together for nearly 20 years and have always thought about ways to capture more value for the milk produced from their 150-head herd to give their children opportunities to stay in the business.

In 2013, the family purchased an old building that was used by a local lumberyard. The 8,100-square-foot structure had been vacant for six years, and it was a large undertaking to transform it into a retail store and modern milk processing facility.

Expanding marketing opportunities
“It has been our family’s dream to expand our 19-year-old dairy operation by opening a processing facility, and taking this big leap has allowed our entire family to be involved in various capacities of the business,” says Josie Rozum, sales and marketing manager, Dan and Debbie’s Creamery, and one of the five siblings with a role on the farm or business.

FARM FRESH: Cheese curds and other dairy products from Dan and Debbie’s Creamery can be found in Hy-Vee grocery stores in Cedar Rapids, Marion, Iowa City and Coralville, as well as local coffee shops and restaurants.

Family members and employees have been working nonstop since opening the processing facility and retail location in July. “We are having a lot of success expanding our wholesale base through grocery stores, local coffee shops and restaurants,” Rozum says. “It’s humbling to see consumers buy our products and appreciate them and where they come from.”

Dan and Debbie’s Creamery products can now be found in Hy-Vee grocery stores in Cedar Rapids, Marion, Iowa City and Coralville.

“We have always put a great amount of care into our farm and animals,” says Rozum. “That same care is now put into our finished products. The quality and care that’s carried from farm to table is what value-added products are all about. The USDA grant has allowed us to dedicate our time to make our products the best they can be, all while telling our story.”

Value-added producer grantsVAPG grants can be used for a range of purposes to develop new agricultural products or additional markets for existing ones. They can support local and regional food systems, further the development of the growing bioeconomy, and finance the distribution of local and regional products.

VAPG funds were also awarded to five other Iowa businesses in 2016:
• Batey Ltd. of Mount Pleasant received a $49,900 grant to help process wood chips into food-grade pellets.
• Great River Maple LLC of Garnavillo received a $49,520 grant to help package and market new products, including organic maple syrup, bourbon maple syrup, maple cream and maple sugar.
• Siouxland Energy Cooperative of Sioux Center received a $250,000 grant to install technology to produce cellulosic ethanol from corn grown by its producer-members.
• Kirk and Jolene Pisel of Gilmore City received a $49,575 grant to help create a new product, brand and markets for Pisel Farm ground beef.
• North Iowa Fresh LLC of Belmond received a $20,765 grant to develop a feasiblity study to assess various ways of connecting local producers with consumers.

Apply early for grant
The 2014 Farm Bill increased funding for VAPG planning and working-capital funds. Examples of eligible planning activities include feasibility studies and business plans for processing and marketing the proposed value-added product. Examples of working capital expenses include processing, marketing and advertising costs.

The maximum grant awarded is $75,000 for business planning activities and $250,000 for working capital, and a 50% matching fund is required. “We strongly encourage producers to contact their local USDA Rural Development office early so we can help answer questions and review their information prior to submitting a final application,” says Jobe. “This is a nationally competitive grant program, so it is important to have a complete and accurate application.”

The application deadline for the 2017 VAPG program will be announced later this spring. More than 130 grants have been awarded in Iowa since 2001. For more information about USDA Rural Development’s VAPG program, call 515-284-4663 or visit the agency’s website.

Leach is public information coordinator with USDA Rural Development in Iowa.