The Economic Research Service of the USDA recently released a new report assessing the impact of the Value-Added Producer Grants program on the survival and growth of rural businesses. The report, “USDA’s Value-Added Producer Grant Program and Its Effect on Business Survival and Growth,” combined data on the VAPG program from USDA’s Rural Business-Cooperative Service with data from the National Establishment Time-Series to estimate the impacts of the program on employment growth and business survivability in comparison to similar businesses that did not receive assistance through the program.
The results of yesterday’s ERS study demonstrate the effectiveness of the program’s investments in supporting business development and job creation. The ERS report shows that businesses that received VAPGs were less likely to fail than similar businesses that did not receive support through the program. According to the report, VAPG recipients were 89 percent less likely to fail two years after the grant and 71 percent less likely to fail four years after the grant, when compared to similar non-recipients. Moreover, on average, VAPG recipients provide more jobs (five to six more employees) for their communities than similar non-recipient businesses.
“The new ERS report demonstrates clearly how impactful and important direct investments in programs like the Value-Added Producer Grants Programs are to empowering local communities and increasing rural economic opportunity,” said Wes King, Policy Specialist with the National Sustainable Agriculture Coalition. “This report underscores the shortsighted nature of the House Agriculture Committee’s recently-passed Farm Bill, which for the first time since VAPG was created failed to directly invest in the program at all.”
Small-scale entrepreneurship is the one economic development strategy that consistently works in rural communities. Over half of all new jobs created in most rural areas come from small business ventures. The purpose of the VAPG program is to help family farmers and ranchers build and expand these types of businesses in order to boost farm income, create jobs that can’t be outsourced, empower their communities and increase rural economic opportunity.
Congress created the VAPG program in the early 2000s in a time of depressed commodity prices, similar to the circumstances that persist today, in order to help farmers add value to their operations and spur rural economic development. This goal is no less relevant today. In fact, in 2018, the farmer share of the consumer dollar has dropped to the lowest level since USDA began collecting that information in 1993. Only 14.8 cents of every dollar spent by consumers on food ends up in the pockets of American family farmers and ranchers today. The VAPG program is specifically designed to counter that reality and help American producers capture more of the consumer dollar through agricultural entrepreneurship.
“It is simply mindboggling that at a time in which America’s family farmers and ranchers are struggling with depressed commodity prices and the specter of trade wars that the House Agriculture Committee would not invest in successful programs like VAPG that are creating good jobs that can’t be outsourced,” said King. “The National Sustainable Agriculture Coalition hopes that the Senate Agriculture Committee does not follow the path of the House Agriculture Committee, and instead continues to invest in programs that support farmers and ranchers in the creation of value-added enterprises.”
A summary of the ERS VAPG study can be found at https://www.ers.usda.gov/.
