North Dakota Agricultural Products Utilization Commission (APUC)

     The Agricultural Products Utilization Commission (APUC) is often described as a key component in the state's support of cooperative development activities.  It has been a very popular source of funding for feasibility studies and other start-up costs, such as legal and accounting services, for new generation cooperatives.  This role, providing financial grants to a cooperative during its organizational stages, is a critical source of external support for cooperative development (Cobia). 

     APUC's mission is "to create new wealth and jobs through the development of new and expanded uses of North Dakota agricultural products" (APUC Biennial Reviews). Originally founded in 1979 to promote ethanol production, APUC's mandate evolved to include adding value to all of the state's agricultural products.  It operates within the state's Department of Economic Development & Finance.  Based on the Commission's success, several other states have requested information about the program (Hanson).  Minnesota has a similar program, entitled Agricultural Utilization Research Institute (AURI).  AURI was founded in 1987, and has also been noted for its support of cooperative development.

     APUC provides North Dakota farmers, ranchers, and ag-related business owners with funding to pursue business development activities.  In its Biennial Review, 1995-1997, APUC reported that since 1993, more than 160 projects had been funded.  Funds are available through four main grant programs:
 

  • Basic & Applied Research Grants
  • Marketing  & Utilization Grants
  • Cooperative Marketing Grants
  • Farm Diversification Grants


     The largest portion of APUC funding goes to the Cooperative Marketing category (APUC Outcomes Assessment Committee).  This grant category was added to APUC's program as part of the state's $21 million "Growing North Dakota" economic development legislative package that was initiated in 1991 (Vogel).  Of particular importance to new generation cooperatives have been the Cooperative Marketing and Marketing & Utilization Grant categories.  The Cooperative Marketing type of grant is awarded to groups or individuals working collaboratively on the production, processing, or marketing of agricultural products.  The Marketing & Utilization type of grant is awarded to assist in the development of a marketing plan, including feasibility studies and business plan development.   Cooperatives that have received support from APUC include Prairie Pasta Producers, Northern Plains Premium Beef, United Spring Wheat Processors, North American Bison Cooperative, and Dakota Growers Pasta Company.  Some other cooperative projects that have been awarded grants include:
 

  • Dakota Dairy Specialties, formed by dairy producers to process their milk into specialty cheeses
  • Heart of the Valley Bean Cooperative, formed to market dehydrated bean products for its members
  • Western Dakota Pork Cooperative, formed to add value to members' barley by feeding it to hogs 


APUC Funding Sources

     Funding for APUC comes from several government sources, both state and federal, including the state's Alcohol Motor Vehicle Fuel Tax Fund and a federal grant from the Rural Development Administration.  In the period 1995 to 1997, APUC had $2,452,395 available for its grant programs, and in the period 1997 to 1999 the available grant funds amounted to $2,425,616 (APUC Biennial Reviews).  The breakdown of APUC's funding for the 1997 to 1999 biennium was as follows:

$1,014,243 Alcohol Motor Vehicle Fuel Tax Fund
$1,750,000 Highway Tax Distribution Fund
$1,083,219 General Fund Appropriation
$   500,000 Rural Business Enterprise Grant (received from the Rural 
Development Administration).

     This amounted to $4,437,462, of which $2,452,616 was available for grants, $1,750,000 for the state's ethanol incentive program, and $171,846 for administrative expenses (APUC Biennial Review 1997-1999).

Application Process

     Grant applications are accepted on a quarterly basis, at which time APUC's nine directors review the requests.  Applicants meeting the eligibility criteria for board review are given 30 minutes at the quarterly meeting to present their proposal.  The projects are judged according to an individual point scoring system.  Funding decisions are generally made the day after proposals have been presented (APUC Biennial Review 1997-1999).
 

Economic Impact

     In order to assess the impact that APUC programs had on the North Dakota economy, in 1996 the North Dakota State University's (NDSU) Department of Agricultural Economics analyzed 11 projects that had been funded under the Cooperative Marketing grant category.  Included among these 11 projects were Dakota Growers Pasta Company and North American Bison Cooperative.  The study found that total APUC funds of  $867,381 granted to these 11 projects helped create businesses that directly added $84.5 million to North Dakota's annual economy.  Secondary economic benefits amounted to an additional $160 million each year.  Thus, APUC asserted that its direct annual return on investment for these 11 projects was $97 for each dollar spent, and its total return (including secondary benefits) was $297 for each dollar spent. 

     The 1996 study performed by NDSU concluded by saying, "the projects sponsored by the North Dakota Agricultural Products Utilization Commission are adding value to the state's agricultural commodities and thereby creating new jobs, gross business volume, and tax revenues for the state economy.  The economic contributions of these projects is substantial on a statewide basis, and even more impressive at the local level" (Leistritz).

References

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