Governor’s New Grant Fund Recognizes Unique Needs of Ag-Based Businesses

9/22/2012 7:00 AM
By Matthew J. Lohr Virginia Agriculture Commissioner

Ever since I became the Commissioner of Agriculture two years ago and gained a broader view of agriculture throughout the entire state, I have noticed that Virginia really values its farmers.

Of course agriculture is the state’s largest industry, and I’m sure that earns us some points right there. But I think there is a deep-seated appreciation of our farmers in Virginia and a realization of how much they contribute to our quality of life.

In talking with commissioners from other areas, I realized that not every state has quite the same level of appreciation.

Like any other state, we have our detractors. As a whole, however, I feel quite confident saying that Virginia takes as good care of its farmers as any other state, and perhaps better than many.

Let me cite the newly created Agriculture and Forestry Industries Development (AFID) Fund as a recent and excellent example of how Virginia strives to keep agriculture as our No. 1 industry.

Because our agricultural system is so efficient, farmers seem to do more with less than any other group of workers I know. We often employ fewer people than other industries but have a tremendous output.

In what other industry can three or four family members and a couple of paid workers produce 600,000 broilers ... or a couple of hundred beef cattle ... or 287,000 gallons of milk each year?

I can’t think of another industry that has the same impact as farming. Did you realize that each American farmer feeds his or her own family plus 155 other people around the world?

Since the employee base on family farms tends to be low, it has been difficult for farmers to receive some of the incentive and development grants that are available to the rest of the population. But this year, Gov. Bob McDonnell and the Virginia General Assembly fixed that. They established the AFID Fund. This fund takes into account the efficiency of agriculture and makes grants available for expansion and development that normally would go to businesses employing far more people.

It’s a brand new program. We only announced it a couple of weeks ago, but I am very excited about the possible outcomes.

Let me explain briefly why we need such a program and then how it works.

Despite being the commonwealth’s largest industries, agriculture- and forestry-related projects often have trouble qualifying for many traditional economic incentives because of their relatively small size, lower wages, lack of interstate competitiveness, seasonality and other factors unique to agriculture.

The primary purpose of these new grants is to attract economic development prospects involving agriculture and forestry operations to locate or expand in Virginia. The prospects must be processing/value-added facilities using Virginia-grown products.

The criteria for making the grants or loans include:

Amount of jobs expected to be created.

Anticipated amount of private capital investment.

Anticipated additional state tax revenue expected to accrue to the state and affected localities as a result of the capital investment and jobs created.

Anticipated amount of Virginia-grown agricultural and forestal products used by the project.

Projected impact on agricultural and forestal producers.

A return on investment analysis to determine the appropriate size of any grant or loan.

An analysis of the impact on competing businesses already located in the area.

The AFID is funded at $1 million each in this fiscal year (July 2012 to June 2013) and next fiscal year (July 2013 to June 2014). AFID funds are broken into two categories — $750,000 statewide going to large grants to assist local efforts in expanding current or attracting new agriculture and forestry processing or value-added facilities using Virginia-grown products, and $250,000 dedicated to small grants to assist localities in improving local economic development efforts relating to agribusiness. The guidelines and application for these smaller grants will be coming out later his year.

All of the funds will be allocated as grants to political subdivisions, so it is important for farmers and agribusinesses to work with their local government economic development officials to build their businesses.

It is important to know that if the locality is interested in applying for the grant and providing the required local match, then they should contact Stephen Versen, our AFID program contact, at stephen.versen<\@>vdacs.virginia.gov or 804-786-6911, to discuss the program and share initial project details.

More information on the AFID program, including program guidelines, can be found on our website at vdacs.virginia.gov/agribusiness/afid.shtml.

This fund will have a lasting impact on farmers by attracting industries that create new markets for Virginia-grown products. It does so by requiring at least 30 percent of the agriculture and forestry products used by the grant’s beneficiary to come from the commonwealth.

Having an incentive that rewards companies buying Virginia-grown products, the program encourages every company locating or expanding in Virginia that uses any kind of raw agricultural or forestal commodity to take a hard look at getting those materials in the commonwealth.

Through this process, these companies engage with VDACS, Cooperative Extension, producers and other segments of the agricultural community and discover a whole new segment of Virginia dedicated to their company’s success.

I believe the program will also encourage businesses to make long-term investments in the commonwealth. You see, the types of businesses this fund supports are almost by definition place-based and tied to the land. Long after these incentive dollars have been spent, the new or expanded businesses will continue to use local producers in their critical supply chain to continue to add to the local economy for the long term.

While the program is brand new and no projects have been formally announced, I can tell you that judging by the phone calls coming in, we should see a great deal of variety in the projects funded.

Some of the inquiries we’ve already received include two different cheese projects, improvements to an existing a saw mill, two projects that would process and preserve local foods for sales year round (particularly to schools), and a project to upgrade feed mill equipment at a local farmers’ cooperative.

I’ve said it before, but I’ll say it again: The diversity of agriculture in Virginia is tremendous, but it is not as amazing as the creativity of our farmers and agribusinesses.

I am excited about this program and the new markets they will create for Virginia farmers and forestland owners throughout the state.

One of Virginia’s strongest draws, both for tourists and businesses, is our beautiful countryside and vibrant rural communities — two things made possible by a strong agricultural and forestry sector. In order to keep these sectors strong, especially in the face of rising development pressure, robust new markets for Virginia-grown products must continue to develop.

That’s the beauty of the new AFID program. By working with localities to strategically invest in new and expanding businesses that use Virginia-grown products, we are helping to create the new markets our producers need. Their success translates to higher values for the working lands that sustain their production. This means vibrant rural economies and farmland that stays in farming.

And it is exactly this kind of cycle — development supporting agriculture, agriculture preserving our rural communities and rural communities attracting new development — that we hope the AFID program will encourage.

Matthew J. Lohr is commissioner of the Virginia Department of Agriculture and Consumer Services (VDACS).


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