Value-added producers benefit from grants, according to report

By Cora Fox,, Center for Rural Affairs

Businesses that receive Value-Added Producer Grants (VAPG) are less likely to fail and are more likely to hire employees, according to a May 2018 U.S. Department of Agriculture (USDA) Economic Research Service (ERS) report.

The VAPG program, administered by the USDA, supports farmers and ranchers who want to access value-added markets by offering funds for business and marketing plan development; feasibility studies; and working capital for processing costs, advertising, and some inventory and salary expenses. Value-added goods can be fruit made into jam or milk made into cheese, which both fetch a higher price than the base ingredients.

Taking a look at 1,020 businesses, the USDA study found those supplemented with VAPG dollars were 89 percent less likely to fail within two years of receiving the grant, compared to nonrecipient businesses of the same age and characteristics.

Additionally, the research found VAPG-funded businesses are more likely to hire employees. Between one and five years post-award, grant recipients employed five to six additional employees, on average. Prior to receiving funds, no significant difference in employment levels was found.

Lastly, the study found the success of a business correlated to the amount of funding received. After two years, businesses awarded with more dollars were less likely to fail. The increase also corresponded with job creation, as those with higher funding allotments were more likely to employ more workers.

The results show VAPG is important. Businesses that receive funding invest in their communities, support rural economies, and create jobs.

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