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Processing and Marketing of Primary Products

Option closed to new applications

Introduction

Sustainable and profitable production is a core activity of the land-use sectors and therefore supports economic activity in rural areas. Business support can assist diversification and development of farm holdings and support the development of local and national supply chains which in turn supports local communities. Adding value to food and other primary products is a critical factor in achieving viable businesses and will depend on identifying and exploiting a range of business and market opportunities.

Under the SRDP, support can be provided for the processing and marketing of primary products through two different funding mechanisms. Through Rural Development Contracts - Rural Priorities you can apply for support 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

If your project does not fall into one of these categories, there is also a stand alone scheme, the Food Processing, Marketing and Co-operation Scheme (FPMC) within the SRDP, which can provide funding for larger or wider food processing projects. Further guidance on the scope and eligibility for this scheme can be found elsewhere on this website.

This Option of Rural Priorities provides assistance to develop facilities to process and add value to primary products to ensure that more value is retained by both land-holders and rural processors. It aims to encourage innovation and new product development, adding value and co-operation to exploit new markets. The objective is to link producers with processors, and support the development of employment opportunities in rural communities, thus retaining wealth and developing local services.

The objectives under this Option are to:

  • Guide production in line with foreseeable market trends and encourage the development of new products or outlets for primary products
  • Strengthen local supply chains through support for processing and marketing of locally produced food, other agricultural and forestry outputs
  • Share resources and experience to control costs and increase incomes
  • Improve or rationalise marketing channels or processing procedures
  • Improve the profitability, efficiency and transparency of the supply chain
  • Improve the presentation and preparation of products or achieve the better use or elimination of by-products or waste
  • Apply new technology and/or innovation
  • Improve quality beyond normal expected standard
  • Support consumer education

Eligibility

The primary product sectors covered by this Option will be those listed in Annex 1 to the European Treaty (except fishery products) and forestry products. It is expected the following sectors will benefit from assistance for processing and marketing: 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. This list is not exhaustive as support may also be provided to new and innovative products which involve the processing of newly developed crops. Assistance will also be available for the processing and production of drink products where they involve annex 1 products, e.g. fruit drinks.

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

The following items of expenditure are ineligible for grant aid:

  • 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

To ensure value for money we require you to provide 2 competitive quotes for any capital items applied for which are based on actual cost. If, however, you are seeking grant support towards something so specialised it is only available through 1 source then we would accept 1 quote. Please see the guidance on quotes and estimates for more information.

It should also be noted that State Aid Restrictions, which may be subject to further development and change by the European Commission, may preclude certain types of assistance or assistance in particular sectors. If you have any concerns regarding this issue you should contact your Case Officer or your local SRDP office.

 

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 will be largely targeted towards micro, small and medium sized enterprises although larger businesses can be funded at a lower rate. See Section 3 below for definitions.

Eligibility criteria

For food processing proposals, projects will be 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

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. There is no definitive list of eligible projects, but examples of potential proposals could include:

  • the production of tallow from animal fat
  • the processing of oil-seed crops into pharmaceutical products
  • the manufacture of paper from hemp
  • the processing of arable crops and by products into bio-fuels
  • the processing of timber products into woodfuel

Rate of Support

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 EUR 2 million.

Inspections/Verification

In line with the general conditions of Rural Priorities, you may be subject to an on the spot inspection to verify the progress or completion of the development which has been supported.

You will be required to provide evidence that the work has been undertaken and the expenditure made through the production of invoices and evidence of payment. You may also be required, through regular monitoring forms, to provide details of the project and the benefits which the funding has delivered.