The Impact and Benefits of USDA Research and Grant Programs to Enhance Mid-Size Farm Profitability and Rural Community Success

Introduction

Through Freedom of Information Act (FOIA) requests, proposals from 2001and 2002 for the four USDA programs were examined — the Rural Business Enterprise Grant program (RBEG), the National Research Initiative (NRI), the Initiative for Future Agriculture and Food Systems (IFAFS) and the Value-Added Producer Grant Program (VAPG).1 The table below gives an overview of the four programs for the years considered and information specific to the proposals received through our FOIA request.

The Center’s proven small farm research relevancy assessment tool, modified for this project was used to determine the scale of relevancy of the funded projects to beginning and small– and mid-size farmers and ranchers. This assessment tool was developed by CFRA in cooperation with USDA, researchers and reviewers for the report Public Promises Made — Public Promises Broken, 2000.

Each proposal was reviewed on 16 specific measures relevant to rural community impacts, small  and mid-size farm and ranch profitability, and effects on beginning farmers and ranchers and on agricultural structure. Four reviewers independently scored the proposals for each program; scores were based on a scale of one to ten, with ten the best score. Scores were totaled and converted to letter grades2 based on the percentage of a “perfect score”, 160 points. If information provided was insufficient to score on a particular measure, the total points were reduced by 10 points for each measure, each project was then given an adjusted percentage score on a scale of 100.

1 The 2001 and 2002 version of the VAPG program was named the Value-Added Agricultural Product Market Development Grant Program (VADG).

2 A score of 90 or higher was an “A”, a score of 80-89 a “B”, and so on. Projects scoring 80 or better are considered “good projects”.

Findings

The VAPG and IFAFS programs offered the most benefits of the four programs to small and mid-sized and beginning farmers and ranchers primarily because both programs came into existence shortly after the National Small Farm Commission. The Commission recommended creation of programs to assist small and mid-size farms and ranches to pursue the development of new markets and to create more opportunities for small and mid-size farms and ranches to capture greater value for their production.

The NRI and RBEG programs offer fewer benefits to small and mid-sized and beginning farmers and ranchers primarily because they are not composed to do so. The NRI program is principally a traditional research program based on the scientific aspects of agriculture. The RBEG program is a general business development program, with some states funding agriculturally-related projects.

Despite the recommendations and challenges of the Small Farm Commission and the rhetorical commitment of USDA to small agricultural enterprises, we found that the vast amount of funded projects and program funds do not benefit small and mid-sized and beginning farmers and ranchers and are not relevant to their needs. In fact, rather than benefiting small and mid-sized farms and ranches, we found that these USDA programs funded numerous marketing and value-added initiatives meant to benefit large food distribution and food processing companies. We also found that these USDA programs failed to invest in research that relates to the development of economic opportunities in the context and place that will keep families on the land and promote a new generation of agriculturalists.

CAVEAT: While projects are scored on a traditional letter grade scale, this by no means should be used to judge the merits of any project. The score is only meant to judge the relative contributions to small and mid-size farmers and ranchers, beginning farmers and ranchers and certain components of the rural economy.

All four projects were generally lacking in projects benefiting beginning farmers and ranchers. Given the demographics of agriculture in America, the inability of major USDA research and grant programs to address the topic of beginning farmers and ranchers is disappointing.

The table below details the amount appropriated in fiscal years 2001 and 2002 for each program and appropriations to the projects reviewed. In total, of nearly $500 million dedicated to these programs, about five percent went to projects determined to be beneficial to small and mid-sized and beginning farmers and ranchers.

Program Spending, 2001-2002

Recommendations

Recommendations for Congress

2007 Farm Bill

• The 2007 Farm Bill should reauthorize the Value-Added Producer Grant Program and provide it with $50 million annually in mandatory funding.

• Target funding to RBEG, VAPG, NRI and IFAFS programs (now a subset of NRI) to projects that serve family farmers and ranchers and rural communities using our selected criteria as a guideline.

• A stated goal in the authorizing language of the VAPG program should be to create self-employment opportunities for farmers and ranchers that increase the profitability and viability of small and mid-sized farms and ranches, as well as conserving and enhancing the protection of land, water and other natural resources.

• Prioritize projects that strengthen the profitability and viability of small– and mid-sized farms and ranches and/or increase farming opportunities for beginning farmers and ranchers -- perhaps through a scoring system that provides substantial additional points for proposals advancing this objective.

• The 2007 Farm Bill should include a provision for special outreach and attention to states that have little or low participation in the VAPG program to date. In addition, for all states, a small portion of total VAPG funding should be set aside for grants to non-profit and educational organizations to provide technical assistance for grant proposals.

• Create a set-aside of no less than 10 percent but up to 15 percent of VAPG program funding for projects concerning beginning farmers and ranchers.

• Eliminate the presidential initiative on energy in the VAPG program, while adequately funding other energy-related programs within USDA and other agencies that could meet the requirements of this initiative.

• Include funding in the Farm Bill to train national and state level Rural Development staff in ways the VAPG program can assist small– and mid-size and beginning farmers and ranchers and rural communities.

• The 2007 Farm Bill should establish a $60 million Farm, Food, and Rural Transitions Competitive Grants to provide new research, education and extension funding for integrated, inter-disciplinary, outcome-based research to improve the competitiveness and viability of small– and moderate-size family farms, enhance natural resource protection and ecological health, create new farm and food system approaches to improved public health, food safety, and human nutrition, and renew the health and vitality of rural communities. The Transitions grants should either be a new stand alone program, a replacement for the existing IFAFS, or a distinct subset of the NRI with its own funding base. Congress should designate the following as specific subprograms with the Transitions program: 1) Agriculture of the Middle; 2) New Farmers and Ranchers; 3) Agricultural and Rural Entrepreneurship; 4) Public Plant and Animal Breeding Genetic Conservation; 5) Ecosystem Services; 6) Renewable Energy; 7) Conservation Effectiveness; 8) Rural Development Strategies; 9) Food System-Public Health Interactions; 10) and Local and Regional Food Systems.

• Direct more NRI resources to programs that directly serve small, mid-size and beginning farmers and ranchers and that help build vitality in rural communities using IFAFS as a model.

• Funding for the rural development and markets and trade topic areas of NRI should be increased. The research done in those areas has great potential to keep small- and mid-sized farm and ranch families on the land and provide potential market initiatives for beginning farmers and ranchers.

• Institute set-asides in each program for beginning farmer and rancher projects.

• Fund training for national and state level Rural Development and CSREES staff in ways these programs can assist small, mid-size and beginning farmers and ranchers and rural communities, including potential beneficiaries in such training programs.

Budget Legislation

• Do not eliminate the RBEG program as proposed in the FY06 and FY07 presidential budgets. RBEG serves a definite and special niche in rural development.

• Adopt the recommendations contained in the Winrock3 report to evaluate USDA programs for their effectiveness in meeting the needs of small- and mid-sized farms.

• Adopt the recommendation contained in the Winrock report to provide additional funding for the USDA Small Farm Program.

3 Hawkes, C., Clancy, K. and DeMuth, S. 2004. USDA Programs: What Do We Know About Their Effectiveness in Improving the Viability of Small Farms. Little Rock, AR: Winrock International.

Recommendations for U.S. Department of Agriculture

• Include farmers and other stakeholders, including organizations representing sustainable agriculture issues and concerns, on the evaluation panels used to evaluate grant proposals.

• Reform the RBEG proposal evaluation procedures to include assessments of economic, environmental, and social and community impacts.

• Clarify to state USDA Rural Development officials that RBEG can be used for agriculture-related projects.

• Institute an on-going program of education for USDA rural development and CSREES staff on the full utilization of their programs and how they can serve different constituencies such as small, mid-size, minority and beginning farmers and ranchers.

• Develop criteria to ensure that agricultural research and development programs simultaneously address issues of farm profitability, environmental protection and rural community success.

• Develop a less complicated and more accessible VAPG application process by:

  • developing a separate, less complex application for smaller grant requests

  • requiring careful reading and review of the grant funding notice and application guidelines by state-level USDA and outside stakeholders prior to publication to identify areas where the guidelines can be improved and simplified before release to the public

  • developing an eligibility assessment tool handbook for potential applicants

  • offering training for grant reviewers

• Eliminate the “project cost per producer” criteria from the VAPG application process. This feature favors sheer numbers rather than merit at the disadvantage of smaller scale projects.

• Make available on the USDA website two models of completed VAPG grant applications, one for the planning grant applicant and one for the applicant applying for a working capital grant.

• Keep state Rural Development offices as the first point of contact for VAPG grant applicants.

Recommendations for the Administrative Branch

Establish a presidential initiative within the VAPG program that specifically targets proposal evaluation points to proposals that add value to rural communities by: creating potential to increase income and self employment opportunities in farming and ranching; benefiting the local economy through social and environmental improvements to the area; increasing diversification of agriculture and industry on the farm and within the local economy; retaining and enhancing small– and medium-sized farms and ranches and preserving productive farm and ranch lands. This would again be in keeping with the goals and outcomes identified by Congress in the 2002 Farm Bill.

See the full report

The Center's Issue Briefs are produced by Jon Bailey, jonb@cfra.org and Kim Preston, kimp@cfra.org from our Rural Research and Analysis Program. Contact either of them for more information.

posted 10-10-06