Farm Diversification

WHAT CAN I GET SUPPORT FOR?
The Food Processing, Marketing and Co-operation Scheme (another part of the SRDP 2007-2013) can provide funding for large food processing projects. However, this funding option provides support for smaller (farm-scale) projects aiming to process and market primary products and is available for:

• on farm/near farm processing and marketing of food and drink products
• the processing and marketing of agricultural and horticultural raw materials into non-food products
• adding value to timber products

WHO CAN APPLY?
Individuals, partnerships, businesses (including social enterprises) and groups of producers who are involved in the processing and marketing of primary agricultural, horticultural or forestry products. Support is largely targeted towards micro, small and medium sized enterprises although larger businesses can be funded at a lower rate.  For non food and forestry products, assistance may be available to all forms and sizes of business, from individual on-farm processors to larger, independent processing Companies.  However, for food processing proposals, projects are only eligible for assistance if:

• They do not have separate accounts for the farm business and processing business
• Turnover is less than £150,000 for the processing business

The Scottish Government has provided a list of sectors that are eligible for assistance (although they highlight that it is not exhaustive) which includes:

• red meat (in particular beef, lamb and venison)
• pigmeat
• milk and milk products
• eggs
• poultry
• cereals
• oil producing crops
• fruit and vegetables (including potatoes, wood and timber products)

WHAT SUPPORT CAN I GET?

In the Highlands and Islands assistance is up to 50% of the eligible costs, and up to 40% elsewhere in Scotland. However, support at the maximum rate is limited according to the size of the business, as follows:

• On farm/near farm food processing and marketing. The maximum turnover of the processing business is limited to £150,000.
• The processing and marketing of agricultural and horticultural raw materials into non-food products. The maximum rate of assistance is limited to micro, small and medium-sized enterprises, i.e. those businesses which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million. For businesses with fewer than 750 employees or with a turnover of less than the EUR 200 million, the maximum aid intensity is halved. If the business is part of a larger Group of Companies, these employee and turnover limits are determined by those of the ultimate Holding or Parent Company.
• Adding value to forestry products. Support is limited to micro-enterprises, i.e. those businesses which employ fewer than 10 persons and which have an annual turnover not exceeding €2 million.

Eligible costs include the development, improvement or expansion of new or existing facilities, together with the purchase of plant and equipment. Assistance may also be available to support a range of business development activities to further benefit the processing operation. The purchase of second-hand equipment, is also eligible for assistance, under the following conditions:

• The seller of the equipment must provide a declaration stating its origin, and confirm that at no point during the previous seven years has it been purchased with the aid of national or community grants
• The price of the equipment must not exceed its market value and must be less than the cost of similar new equipment 
• The equipment must have the technical characteristics necessary for the operation and comply with applicable norms and standards

Items of expenditure are ineligible for grant aid include:

• Working capital
• Vehicles for external transportation (forklift trucks, or similar, are eligible) 
• Harvesting equipment
• The Company's own labour and equipment costs 
• Consumables 
• Repair and maintenance costs 
• Office equipment and other furniture (specific telephone equipment, computers, and software related to the development are eligible) 
• Landscaping and ornamental work 
• General costs, such as fees relating to planning, building and works, etc., exceeding 11% of the total cost of the project.

REGIONAL PRIORITIES?
Applicants are reminded that they must demonstrate how their proposal will help deliver the desired outcomes set out at local level as expressed in the Regional Priorities (clickable map).  As such it is recommended that applicants discuss their proposal with their local consultant at an early stage.