Energy upgrades among projects that qualify for funding
There’s no such thing as free money, but top operators should be aware grants are a funding vehicle that can offset the cost of farm investments.
“Grants are a way to incentivize agricultural development,” explains Chris Cassidy, national renewable energy adviser, USDA. “They’re meant to be part and parcel of larger endeavors. So it’s not a fix-all, it’s not a freebie, it’s not a free lunch. It’s a way to assist us in moving forward.”
Particularly for grants funded by tax dollars, eligible projects tie directly into national focus areas. For example, many grants help fund farm projects involving energy efficiency, renewable energy, sustainability, farm-to-school and value-added agriculture, notes Sarah Beth Aubrey, author, speaker and executive coach to the agriculture industry, and a facilitator for the Top Producer Executive Network.
Eligible Improvements. Funding for grants comes primarily from the federal government and states. Private industry provides a handful as well. Awards to farms can range from $1,500 for a small project to $500,000 for a large one, Aubrey says. Projects might include:
- Upgrades to a grain-drying system
- Installation of an anaerobic digester at a livestock operation
- Addition of a solar array
- Improvements to irrigation
In all cases, producers must provide matching funds. One example: Some on-farm renewable energy systems are eligible for grant funding under USDA’s Rural Energy for America Program (REAP). USDA will award up to 25% of eligible project cost, not to exceed a half-million dollars to individual applicants. Many times, projects must be completed and verified before a grant check is cut, essentially reimbursing the producer.
For 2015, REAP had $80 million in available grant funding and $200 million in loan guarantees, Cassidy points out. More than 2,000 applications were anticipated, of which 1,500 will receive funding.
Approval of a guarantee loan does not mean the government will award a grant to cover the balance of a project, adds Jeff Jobe, program director for USDA’s rural business programs in the state of Iowa. Both types of funding are applied for and awarded competitively.
Producers who want grant funding must first know the ins and outs of the project they’d like to complete. Then, they should begin their search with help from free resources such as USDA offices and Extension services, Aubrey advises.
Plan Thoroughly. Once producers have identified a grant program and determined they meet the criteria, they should be prepared to document how much it will cost and which contractors they’ll use. Some require energy audits or design plans.
“You need to have the matching funds ready,” Aubrey notes. “Show how you will access whatever is not covered by the grant.”
Farmers must also evaluate expected returns and award timetables. They might want to retain a grant writer for large grants, Cassidy says. For producers with a clear strategy and time on their side, grants can be an important key to easing the cost of improvements.