What does the raw commodity rule say?
AgMRC's program page says applicants must own and produce more than 50% of the raw commodity used in the value-added product. In other words, the program is for producers who are adding value to their own crops or livestock, not for processors who buy most of their inputs elsewhere.
The exact wording and any exceptions appear in the current notice of funding opportunity, so read that document and confirm with Rural Development.
If you grow several crops or raise several kinds of animals, be clear about which commodity is the base of the value-added product and show records for that one.
Why does this rule exist?
VAPG is meant to increase the share of the food dollar that goes to producers. If the product is mainly made from commodities bought from others, the benefit flows less directly to the farm. The rule keeps funds aimed at producers.
AgMRC also notes that applicants must show the value-added product will bring in more revenue to the producer than the raw commodity alone.
Understanding the intent of the rule helps you write a stronger case, since you can explain how the product keeps value on your farm.
How do I show I meet it?
Expect to document what you grow or raise, how much you produce, and how much of it will go into the product. Records such as production logs, sales records, lease agreements, and tax schedules can help. For a group or cooperative, you may need to show that member producers supply the commodity.
Keep your numbers consistent across the application. A mismatch between your narrative and your budget raises questions.
A short written statement describing your production, signed and dated, can help tie your records together, but it does not replace actual documents.
- Production records for the raw commodity
- A simple supply chart showing source and volume
- Lease or ownership documents for the land or animals
- Member lists and contribution data for groups
What if I need to buy some inputs?
Many products use ingredients you do not grow, such as sugar, spices or packaging. The rule is about the primary raw commodity, but how it is counted is a detail in the notice. Ask your Rural Development contact how your product's ingredients would be treated.
If you plan to expand beyond your own production, ask how that affects eligibility over the life of the grant.
What mistakes cause trouble?
Assuming a share-rent arrangement or a purchasing agreement counts as producing the commodity, mixing up who owns the crop or animals, and failing to show the volumes are all common. Another is describing a product where most revenue comes from reselling others' goods.
If you have any doubt about whether your setup qualifies, ask before you invest time in a full application.
If you are a new producer with only one season of records, say so openly and add any supporting evidence such as a lease, purchase receipts and a production plan.
- Assuming a purchase agreement counts as production
- Mixing up who owns crops or animals
- Leaving out volumes and acres
- Describing resale of others' goods as value-added
What should I ask Rural Development?
Ask how the raw commodity is defined for your product, what records they prefer, how to treat purchased inputs, and what the rule means for a cooperative or producer group. Request answers in an email so you can refer back to them.
A lender or CPA can help you organize the records in a way that matches how you actually operate.
Do other eligibility rules matter too?
Yes. Beyond the raw commodity rule, the notice describes which applicant types can apply, which products and activities count as value-added, and which costs are eligible. It also sets out requirements for the match, for financial information and for compliance with federal rules. Missing any one of these can make an application ineligible even if the project is strong.
Read the eligibility section more than once, and then ask Rural Development to confirm your reading of any point that is unclear. A short phone call before you write can save weeks of work on an application that would not have qualified.
Key takeaways
- AgMRC says applicants must own and produce more than 50% of the raw commodity.
- Documentation of what you grow and how much goes into the product is essential.
- Purchased inputs and shared-ownership arrangements need clear answers from Rural Development.
- Read the current notice; wording and exceptions can change.
Sources and official links
Last reviewed: November 12, 2026. Written by the Farm Money & Grants Editorial Team. Educational only, not tax, legal or financial advice. See our editorial policy.